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Property prices in Australia up the most in Sydney and Melbourne
Property prices in Sydney and Melbourne continue to be the highest in Australia although the two cities are seeing growth ease slightly, the latest index shows. Prices increased by 0.3% in Sydney and 0.6% in Melbourne in October compared with a national average of 0.2%, according to the CoreLogic RP Data index. Overall prices increased by 1.4% quarter on quarter and are 10.1% higher year on year although the combined capitals index has been easing since July this year when the index was rising at 11.1% per annum. According to CoreLogic RP Data’s head of research, Tim Lawless, a range of factors are contributing to the slowdown. ‘It’s not just the fact that mortgage rates have recently risen outside of any lift in the cash rate. We are also seeing approximately a 30% premium on investment related mortgage rates, tighter lending standards and borrowers generally requiring a larger deposit,’ he said. ‘Gross rental yields at record lows and affordability constraints are acting as a further disincentive, particularly in Sydney where the median unit price is equal to, or higher than the median house price in every other capital city,’ he explained. ‘Additionally, new housing supply is moving through record levels which should help to ease the upwards trajectory of home values,’ he added. He pointed out that since the end of 2008, the Sydney housing market has recorded a cumulative capital gain of 77% while Melbourne values have moved a cumulative 66.6% higher over the same time frame. Based on the median selling price at the end of 2008, Sydney home owners have accrued approximately $316,000 in gains from the housing market compared with around $246,000 in Melbourne. ‘While the rate of growth is significant, it is important to remember that this growth is across two cycles. Dwelling values were broadly tracking backwards during both the 2008 calendar year and between late 2010 through to the middle of 2012,’ said Lawless. The only capital city where home owners have seen the value of their homes move lower since the end of 2008 is Hobart where the CoreLogic RP Data index is down 0.4% since the end of the global financial crisis. The weakest housing market conditions continue to be found in Darwin and Perth where values are down 3.7% and 3.6% respectively over the past 12 months. According to Lawless, the slowdown in resources related infrastructure spending has caused ripples of economic weakness that are likely to persist for some time. ‘Capital expenditure relating to the mining and resources sector has fallen substantially which means tougher labour conditions and little in the way of migration which has previously fuelled housing demand in these areas,’ he said. Continue reading
Demand for prime rental property in central London falls
Demand for rental property in central London’s prime market has fallen in recent months as global companies curb costs resulting in rental values falling in October. Rents in this sector were down 0.5% last month, the steepest decline in two years and annual rental value growth slowed to 1.5% after peaking at 4.2% in May. The data from the latest rental report from real estate firm Knight Frank also shows that the number of tenancies agreed in September was 12% lower than the same month in 2014 and average prime gross rental yields were flat at 2.95%. According to Tom Bill, head of London residential research at Knight Frank, it has been a year of two halves for the prime central London lettings market. Annual rental value growth peaked at 4.2% in May, the month of the general election, as demand transferred from the sales market. ‘The cause was uncertainty around property taxation and increased rates of stamp duty mean it remains a live issue, particularly in the super prime £5,000 plus per week price bracket. However, anxiety around the global economy has dampened demand since the summer,’ he said. ‘The uncertainty has centred on events in China, which has caused companies to curb relocation budgets and recruitment plans. The falling oil price has also impacted sentiment among energy companies,’ he added. He pointed out that advertising giant WPP, whose performance is a useful barometer of how much companies are either cutting costs or spending, said in October firms were feeling risk averse due to geo-political concerns. Rival Publicis said there had been an ‘unusually large’ number of clients postponing or cancelling campaigns. ‘Adding to the sense of a weaker global economy, speculation has grown that the European Central Bank is likely to extend or increase its quantitative easing programme in December in order to stimulate inflation. Against this backdrop, demand for prime rental property has slowed,’ Bill explained. The largest monthly drops were a fall of 2% in South Kensington and a decline of 1.2% in Chelsea, two areas where demand has been traditionally strong among financial services tenants. However, Bill also pointed out that despite these near term uncertainties, the UK economy is performing strongly and the longer term outlook is positive. ‘London will remain one of the most attractive places on earth to do business,’ he concluded. Continue reading
UK rents rise the most in the West Midlands, latest data shows
Tenants in the West Midlands have seen rents increase the most with the latest data showing 59% have seen a rise in September, the highest of all regions in the UK. This is compared to 22% of letting agents in London noticing rent increases since last month, and a UK average of 32%, according to the monthly private rental sector report from the Association of Residential Letting Agents (ARLA). The survey also found that renters in the East Midlands are likely to be most successful when finding a rental property, with an average of 272 managed properties per member branch, compared to the UK average of 182. However, London has the lowest number of managed rental properties, with only 124 properties managed on average per branch, despite the huge population which ARLA says proves that the issue of supply is plaguing the capital. Demand for rental properties is the most prominent in the North West, with agents registering on average 40 new prospective tenants per branch in September, the most out of all regions. Demand continues to be prevalent in the South with ARLA agents in London, South East and the South West all registering an average of 39 new prospective tenants per branch. Agents in the East Midlands and Scotland are seeing the least number of new tenants coming through their doors. Tenants in the East of England seem the happiest, as they stay in rented homes for the longest duration, with most staying for 20 months at a time. However, those living in the North West only tend to live in each property for an average of 15 months at a time, perhaps explaining why it has the highest prospective tenants per branch. The report also revealed that rental properties in London have an average of six viewings before they’re let, the highest amount of viewings out of all regions in the UK. This could be down to the battle for space in the capital and the fact that as soon as a property goes on the market in London, many people flock to see it straight away to fight the competition of other renters. This is compared to properties in the East of England being let after an average of three viewings. ‘It’s interesting to see how tenants across the country are affected in different ways when it comes to the rental market; each region has its own issues, whether it’s lack of suitable housing, no available housing at all, or over inflated rent prices,’ said David Cox, ARLA managing director . ‘It’s a surprise to see that those renting in the West Midlands are suffering from rent increases the most, when many of us would automatically think tenants in London would be the most prone to rent increases due to the competition in the capital,’ he explained. ‘The rental property market remains a significant… Continue reading
