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Apartment prices likely to remain high in Hong Kong despite promise of more supply
The Hong Kong government has signalled that it is determined to tackle the imbalance between housing demand and supply and confirmed that it will make residential sites available for construction. This year’s land sale programme will inlcude 29 residential sites and the Hong Kong Monetary Authority has announced a seventh round of cooling measures for the residential small to medium sized apartments market which is likely to reduce transactions in the short term. Most of the enw residential sites are likely to be in the New Territories and provide around 16,000 new homes. Taking into account land supply in general it is expected that some 19,000 units could be provided in 2015/2016, meeting the government’s supply target. According to the latest monthly Hong Kong Review report from Knight Frank prices in the small to medium sized sector have been rising since 2010 despite the implementation of various cooling policies. The international real estate firm thinks the latest measures may affect sales in the coming months but will have a limited effect on prices due to strong demand from first time buyers. For residential properties worth HK$7 million or below, the maxium Loan to Value ratio (LTV) has been lowered to 60% from the previous 60% to 70%. For borrowers buying a second property the maximum debt servicing ratio has been lowered from 50% to 40%. Office sales have also been slow. In February only a few major transactions were recorded, but the report says there were signs of investors returning to the market. Grade A office prices in major business districts have not seen notable growth since the end of 2014. ‘However, rental growth is expected to support capital appreciation and we expect investors to continue to increase their focus on the office sales market this year,’ the report explains. In the office leasing market divergent trends have been seen. On the one hand finance, insurance and medical beauty companies are continuing to expand and driving up office demand. But sourcing and logistic firms face intense competition from cities such as Shanghai and Singapore and prefer to relocate to reduce costs. ‘Looking ahead we believe Grade A office rents on Hong Kong island will continue to increase in 2015, mainly driven by strong demand from companies looking to expand in these areas with limited supply and where vacancy rates remain low,’ it concludes. Continue reading
Home affordability in UK cities deteriorates to 2009 levels
The past year has seen a deterioration in affordability in UK cities, driven by rising house prices across the country, with Oxford names as the least affordable. Stirling in the most affordable and Aberdeen as seen the highest house price growth since 2005, according to the latest Lloyds Bank Affordable Cities Review. The average UK city house price has risen by 7%, from £181,667 in 2014 to £195,107 in 2015 and this has resulted in affordability in the nation’s cities worsening in the last 12 months from 5.8 to 6.1 times gross average annual earnings, the second successive annual decline in affordability. Affordability in UK cities is, on average, now at the same level as in 2009 but is 15% lower than the peak of 7.2 times earnings in 2008 at the height of the last housing market boom. The overall improvement in affordability across UK cities as a whole over the past seven years has been caused by a combination of an average house price decline of 6% and an increase in the gross average annual earnings in UK cities of 11%. Oxford’s average house price is 11 times the gross average earnings in the city. At an average price of £361,469, houses in Oxford are more expensive compared with local average earnings than any other UK city. This is partly due to Oxford’s attractiveness to commuters working in London. Winchester at 10.11, Cambridge at 9.76, Chichester at 9.19 and Brighton and Hove at 9.10 make up the top five least affordable cities. Greater London is not far behind with average property prices 8.75 times average gross annual earnings. This average figure disguises considerable variations across the capital with central boroughs being significantly less affordable than the Greater London average. The data also shows that Lichfield at 6.95, York at 6.83 and Leicester at 6.54 are the least affordable cities outside southern England. Stirling remains the UK’s most affordable city despite a deterioration in affordability over the past year. The average property price in the Scottish city of £158,645 is 3.9 times gross average annual earnings. Four of the 10 most affordable UK cities are in Northern Ireland due primarily to the relatively low house prices in the country with Londonderry at 3.92, Belfast at 4.49, Newry at 4.51 and Lisburn at 4.63. The most affordable cities in England are Lancaster at 4.03 and Bradford at 4.17. ‘House price rises in the past two years have resulted in a deterioration in home affordability in the majority of UK cities, and generally widening the north/south affordability divide as the market has been strongest in the south,’ said Andy Hulme, Lloyds Bank mortgages director. ‘The UK’s most successful cities economically have tended to see the strongest property price rises. Aberdeen, the country’s oil and gas capital, has recorded the biggest gains over the past decade whilst London has been the top performer during the economic recovery,’ he added. An analysis reveals a significant north/south divide in city… Continue reading
Optimism returns to UK housing market after mid 2014 dip, says BSA
Regardless of potential uncertainties such as the forthcoming general election, optimism has returned to the UK property market after a dip in the middle of 2014, a new survey shows. Some 36% of respondents to the property tracker index from the Building Societies Association said they believe that now is a good time to buy a home. The rebound since September is particularly marked by a substantial drop in the number of people who think now is a bad time to buy. Taken together, the Property Tracker index has bounced back from a 9% low in September 2014 to 23%. It points out that the dip in 2014 coincided with the introduction of new mortgage regulations and the announcement by the Financial Policy Committee of actions to limit lending in the housing market. Results now indicate that transaction volumes may begin to slowly pick up after cooling off late last year. Despite average wages increasing and high levels of employment, raising a deposit is the greatest barrier to buying a home. Overall, 59% of those surveyed say that this is the biggest hurdle they have to overcome, up by three percentage points on December 2014. The future prospect of a rise in the Bank Rate is an issue for many. Over one in 10 borrowers say that they would be forced to miss a payment on a bill if interest rates rose by 1% over the year ahead. A further 12% said that making loan repayments would be a constant struggle. ‘Optimism in the housing market is back after a long, slow winter. Conditions in the mortgage market and the wider economy are improving and this confidence is driving consumer sentiment, especially those looking to purchase a home,’ said BSA head of mortgage policy, Paul Broadhead. ‘Consumers and providers are also cheered by the fact that house building is starting to increase, household finances are less squeezed and inflation has fallen to 0%. Even if deflation happens, provided it is short lived and is not generated by a fall in demand in the economy, it should not be damaging,’ he pointed out. ‘The Financial Policy Committee will keep watching property prices and sales volumes carefully. It, saw the need to act last year and now has a range of new tools at its disposal. A more sustainable cure for the affordability challenge is increased housebuilding,’ explained Broadhead. ‘Earlier this month we asked for a revolution in the provision of new housing in our discussion document Housing at the Heart of Government. Like millions of others, we now await the outcome of the general election to discover whether housing will sit at the top of the political agenda as promised,’ he added. According to Paul Smith, chief executive officer of haart estate agents, it should be remembered that the last two years have been full of very positive news, particularly for first time buyers. He pointed out that they have benefitted from the introduction of… Continue reading
