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Property tax having a detrimental effect in Australia, says analysis report
Few things have as detrimental an impact as property stamp duty on household finances in Australia, according to the Housing Industry Association, the voice of Australia’s residential building industry. The HIA’s Summer 2015 Stamp Duty Watch report shows that during November 2015, the typical stamp duty bill nationally rose to $19,045 from $17,653 in June, an increase of 7.9%. The cost of stamp duty is equivalent to almost four months’ worth of earnings, with stamp duty causing mortgage repayments to increase by $1,165 per year, or $34,955 over a 30year loan term. ‘The cost of stamp duty has a significant negative multiplier effect causing a downward financial spiral for households. Apart from the immediate effect of being over $19,000 worse off, stamp duty results in mortgage interest payments increasing by about $15,900,’ said HIA senior economist, Shane Garrett. ‘Damage from the tide of stamp duty doesn’t stop there. Home buyers have smaller deposits after stamp duty is paid and must bear larger mortgage debt. As a result, significantly higher LMI charges must then be paid,’ he explained. Garrett pointed out that on a standard home purchase of $527,000, stamp duty can push the LMI premium up by another $7,855. If that’s not bad enough, a further layer of mortgage interest is added on top of the LMI premium if it is capitalised. ‘The end result is that the typical stamp duty bill of $19,045 can snowball up to about $50,000 once LMI and mortgage interest are factored in. This is an unacceptable burden to place on ordinary home buyers,’ he added. Garrett also pointed out that as state governments rely more and more on revenue from stamp duty, they have been blinded to the obvious consequences of these costs have on prospective first home buyers. Indeed, the most recent Productivity Commission report also noted the huge disincentive that stamp duty places on older households wishing to downsize. A breakdown of the figures show that in November 2015, Northern Territory home buyers continued to suffer the highest stamp duty bills at $25,600, followed by Victoria at $24,700 and New South Wales at $23,600. Queensland continued to offer the lowest stamp duty bills by a comfortable margin at $6,300 followed by Tasmania at $9,300. Stamp duty bills are the fourth highest in the ACT at $18,400, with Western Australia in fifth place at $16,300 and South Australia in sixth at $15,400. Continue reading
Agents predict a good year for French property sales to overseas buyers
Having seen prices fall in recent year, the residential property market in France is set for stability in 2016 with agents predicting that it will be a good year for overseas buyers. In particular agents believe that low interest rates for mortgages in France and a better currency exchange rate for British buyers will entice many into buying a home in the country in the coming year. It is still a buyers' market but properties are definitely selling much better than previous years. When owners are keen to sell and are willing to be realistic with their prices, a buyer is usually found quickly. Among those predicting a strong year for sales in France is Tim Swannie, director of Home Hunts. The firm is seeing interest from UK based clients as well as buyers from across mainland Europe, particularly Scandinavian countries, Belgium, the Netherlands and Switzerland, and also from the Middle East, China, South Africa and the United States. He pointed out that the French Riviera property market has remained relatively buoyant throughout the economic crisis but really took off in 2015 and he believes that it will continue in the same direction in 2016. ‘I think prices will remain stable and we may even see a small increase. Other areas which are proving very popular are Provence, Languedoc Roussillon and the Dordogne as well as vineyard properties around the Bordeaux area,’ he explained. Trevor Leggett, chairman of Leggett Immobilier, describes the current market as offering buyers a ‘once in a decade’ opportunities. ‘British buyers have benefited from a weak euro, cheap borrowing and the lowest French property prices in years. Subsequently they have been snapping up bargains all over France. In 2014 sales to UK buyers made up 70% of our business, last year this rose to 77%,’ he said. The average age of people buying was 53 and the bulk of buyers were people approaching, or at, retirement age. ‘We know that France always comes out on top of the quality of life surveys and it has one of the world's best healthcare systems so it's no surprise many people want to spend their golden years here,’ said Leggett. ‘However, we also saw a significant number of young professionals and families snapping up bargains, we saw a rise in the 40 to 50 age group with many families looking to take advantage of the excellent education system and a less stressful way of life,’ he added. The firm found that south west France was exceptionally popular with data showing increased sales in all regions. The biggest increase in buyer numbers was along the south coast in Languedoc Roussillon and PACA. The firm didn't see any significant changes in average spend but did see quite a big jump, around 25%, in buyers seeking a mortgage for their purchase. ‘This leads us to believe that buyers have confidence in the French market and the prospects of long term capital growth with fixed rate… Continue reading
Private sector housing rent arrears up in UK
Cases of private rented sector tenants in the UK seriously behind on rent are rising once more, up 13.8% between the second and third quarters of 2015, new research shows. Those more than two months behind on rent now number 84,200, the most households since the second quarter of 2013, according to the latest Tenant Arrears tracker report from estate agency chains Your Move and Reeds Rains. In absolute terms this represents a quarterly increase of 10,200 additional households in potentially serious financial difficulties. On an annual basis, this means 13,200 more households are in significant arrears than a year ago, or an annual increase of 18.6% since the third quarter of 2014, when this figure previously stood at 71,000 across the UK. On a historical basis, the latest deterioration in serious tenant arrears remains relatively mild, remaining considerably below the record 116,600 such cases seen in the third quarter of 2012. However the latest figures for the third quarter of 2015 represent the highest levels in more than two years. The report points out that in part, the increase in absolute numbers of serious arrears due to the overall growth in the size of the UK private rented sector. As a proportion of all private tenancies, just 1.6% are in serious arrears of more than two months. This compares to a peak proportion of 2.9% of tenants in the first quarter of 2008. ‘The chance of an individual tenant falling into serious arrears remains very low. In general, renting works for most people. Over the last decade the private rented sector has expanded at an unprecedented pace, providing homes for millions of households at the same time as absorbing the worst financial crisis in living memory,’ said Adrian Gill, director of estate agents Your Move and Reeds Rains . ‘In the current climate, optimism feels increasingly reasonable. Most households are beginning to earn more, the cost of living is stable and the chance of falling into unemployment is diminishing. For the majority of tenants, paying the rent is becoming easier rather than harder,’ he pointed out. ‘But beneath this rising tide there are inevitably some households and individuals who are not yet feeling any new economic buoyancy. As others bid rents higher there will be a minority who are still struggling to keep up. Landlords and tenants have a mutual responsibility to be aware of this small but significant risk,’ he added. In quarter three of 2015 there were a total of 26,712 court orders for the eviction of tenants, on a seasonally adjusted basis. This is 4.3% lower than was seen in the second quarter when seasonally adjusted eviction orders stood at 27,909, and 7.8% fewer evictions than 28,959 a year before in the third quarter of 2014. Breaking 11 previous consecutive quarters of improvement, landlords’ own finances have remained in stable health between the second and third quarter of 2015. In the latest figures there are currently 5,700 cases of buy… Continue reading
