News
New home sales in Australia up every month so far this year
New homes sales in Australia have increased in each of the first four months of 2015, according to the latest survey of the country’s largest volume builders. However, the increase of 0.6% in April was the slowest growth pace of the four months, the new homes sales report from the Housing Industry Association shows. But HIA chief economist Harley Dale said that this is still a strong result off the back of a healthy March quarter. The April result for total seasonally adjusted new home sales comprised of two small gains, a 0.4% rise for detached house sales and 0.9% growth for multi-unit sales. ‘The profile for new home sales in 2015 is consistent with a new home building cycle where further upward momentum resides largely in the multi-unit sector and where the eastern seaboard states are driving the further growth,’ Dale explained. In terms of detached house sales, both New South Wales, Victoria and Western Australia posted monthly gains in April but Queensland recorded a disappointing decline, according to Dale. Sales in South Australia continued to weaken and are at an 18 month low. A breakdown of the figures show that in April 2015 private detached house sales increased by 7.2% in New South Wales, by 2.7% in Victoria, and by 0.9% in Western Australia. Private detached house sales dropped by 9% in Queensland and were down by 1.9% in South Australia. In the April 2015 quarter detached house sales increased in by 0.5% in New South Wales and by 7.4% in Victoria but declined by 4.7% in South Australia, by 4.4% in Queensland and by 1.6% in Western Australia. ‘This profile is broadly consistent with our forecasts for detached house commencements, with the exception of Queensland which is looking weaker than we were expecting,’ said Dale. Continue reading
British private rental sector producing good investment returns
British Landlords have seen total annual returns of £111.5 billion in the last year, as the private rented sector continued to grow, according to a new buy to let report. The sector grew by nearly 150,000 households in the year to March, with rented accommodation accounting for 77.4% of new households created across all tenures, says the report from Kent Reliance. This rapid growth has led the firm to forecast that on present trends, the sector will increase from 4.8 million households in Great Britain to 5.5 million by 2020. The expansion of the sector has supported the rise in its value. At the end of March, the total value of property owned by landlords in Great Britain stood at £990.7 billion, increasing by 11% in the last year. The sector’s value is now equivalent to 43.1% of the value of the UK’s Stock Market, up from just 12.2% 15 years ago. House price inflation also contributed towards the increase in the sector’s value, the report says. Although slower than its recent peak last year, annual inflation remains brisk at 7.5%. This is also supporting gross total annual returns. By the end of March, the average property generated return of £24,221 in rental income and capital gains, just £1,000 less than the average salary over the past 12 months, equivalent to 12.5%. Across the country as a whole, this meant that annual returns seen by property investors totalled £111.5 billion, some £67.2 billion in capital gains, and £44.3 billion in rents. In total, this figure was £5.8 billion higher than the £105.7 billion landlords saw in March 2014, although it represented a decline compared to the recent peak of £137.5 billion in September, when capital gains were at their highest in at least seven years. Andy Golding, chief executive of OneSavings Bank, which trades under the Kent Reliance and InterBay brands said it shows that buy to let has come of age, moving from a niche asset class to one big enough to rival the stock market. ‘Landlords are seeing the benefit of a structural change in Britain’s housing market, with tenant demand ever strengthening. Yes, house prices are showing signs of steadying somewhat, but growth remains brisk,’ he explained. ‘Long term price inflation is not in danger, given the gaping chasm between growing demand for housing and the number of houses being built each year. Combined with the dearth of high LTV lending to first time buyers, this will continue to buoy demand for rental accommodation, as well as landlords’ returns, and the sector will continue to expand,’ he pointed out. ‘Supporting the growth in the number of experienced landlords with growing portfolios is crucial to providing the investment necessary in the sector to match demand. The mortgage market is playing its part, with remortgaging vibrant, and an increasing array of second charge… Continue reading
Spanish property market recovery fastest in the Balearic Islands
The Spanish Balearic Islands, which reported some of the lowest house price falls in Spain during the six year economic downturn, is now experiencing the fastest and highest rises in the country. The strong property market is being supported by a healthy tourism sector and a multi-national house buying population, according to Alejandra Vanoli, managing director of Mallorca Sotheby’s International Realty. She pointed out that Calvia alone has 19,000 non-Spanish residents from 100 different countries and this year the firm is selling more houses than ever. In Ibiza it is a similar story. According to Glynn Evans, the firm’s managing director in Ibiza the international buyers are attracted by exciting culinary business ventures from multi-Michelin starred chefs, supercar and powerboat championships, 70 metre plus berths for the finest private mega yachts and several new five star hotels. On top of this, at the end of April, the Bank of Spain confidently declared an end to the property crisis. José Luis Malo de Molina, said that ‘the adjustment in the housing sector, in principle, is complete’ and ‘the process of price adjustment, in principle, has already bottomed out’. The mortgage market is also well into recovery. Data from Spain’s National Institute of Statistics show that property loans in the Balearics, for example, were up 36.2% in February 2015 over the previous year, above the national average of 29.2%. Meanwhile, the Spanish rental sector is also improving. Average rents increased by 0.2% in April, compared to the previous month, to €6.98 per square meter per month, according to the data from property portal Fotocasa, and year on year they increased by 1%. ‘In the last few months we have gone from registering widespread declines in home rental prices, to registering increases in every region except one. Rental prices, therefore, are starting to increase in most of the country,’ the Fotocasa report said. But rents are still down 31.1% since the peak of the rental market in May 2007 when it was €10.12 per square meter per month and all regions have seen serious declines since the peaks before the economic downturn. Rental prices have fallen the most in Aragon with a decline of 41.9%, are down 37.8% in Cantabria, down 36.5% in Valencia, down 35.9% in Castilla-La-Mancha, down 34.8% in Murcia, down 30.5% in Rioja, down 30% in Asturias and down 29.5% in Andalucia, since the peak of the market. However, prices increased in April month on month in all regions except in Castilla-La Mancha where they fell by 0.1%. Rental prices increased the most in La Rioja with growth of 4.2%, they increase by 3% in the Balearic Islands, and by 0.9% in Madrid. Continue reading
