Tag Archives: crisis
Homes in Australia are less affordable, particularly in Sydney and Melbourne
Homes in Australia are less affordable but there are wide variations across the country with price growth having an effect in some locations. The latest affordability index from the Housing Industry Association (HIA) fell by 2.9% in the June quarter to 79.7 as an interest rate cut was negated by house prices rising and sluggish earnings growth. HIA chief economist Harley Dale said that during the second quarter of 2015 affordability deteriorated by 3.6% in capital city markets, driven by Sydney and Melbourne and described this as ‘a stark contrast’ to a 2.7% improvement for regional Australia. Compared to the second quarter last year, capital city affordability worsened by 0.6% while in regional Australia affordability saw a 5.2% improvement. ‘The large differences in the results for the capital city Affordability Index and its regional counterpart, together with the variation in outcomes between capital cities, exposes the folly of sweeping generalisations which refer to an Australian housing boom,’ said Dale. ‘That is simply not what is occurring. ‘In many parts of Australia the extremely low interest rate environment is delivering historically favourable affordability conditions. It is against this backdrop that authorities have escalated their requirements for the rationing of credit to residential investors. The risk is that this will obstruct new housing supply, aggravating affordability conditions in markets around Australia,’ he added. Meanwhile the latest HIA new home sales report, a survey of Australia’s largest volume builders, recorded its fifth rise in six months in June 2015. Total seasonally adjusted new home sales increased by 0.5%. Dale said that detached houses drove the modest increase in new home sales in June this year, with a 1.7% rise offsetting a 2.9% decline in the sale of multi-units and New South Wales and Victoria continue to display upward momentum in detached house sales, but the other three mainland states are heading in the opposite direction. A breakdown of the figures shows that detached house sales increased by 3.5% in New South Wales, by 1.5% in Victoria, and by 4.2% in Queensland. Detached house sales fell by 2% in South Australia while in Western Australia sales eased by 0.9%. Detached house sales increased by 7.9% in New South Wales and 0.6% in Victoria while quarterly sales fell by 7% in Queensland, 10.2% in South Australia and 3.1% in Western Australia. Continue reading
Ireland needs 21,000 new houses a year, but smaller homes are required
Demand for new housing In Ireland will continue to increase in accordance with population trends and a reduction in household sizes with 21,000 new homes needed per year for the next three years. Details from the National Housing Statement by the Housing Agency points out that the population is currently at its highest for 150 years at 4.5 million and demand for homes is high as a result. It also shows that affordability is an issue for those looking to buy in the greater Dublin area. Overall house prices have increased across the country with the median price nationally at €152,000, up from €140,000 in 2013. In Dublin it is €260,000, up from €220,000 in 2013. Rental prices have also increased, particularly for apartments. Nationally rents were 6.9% higher in the first quarter of 2015 compared with the same period in 2014 with growth of 9.6% in Dublin and 5.3% outside Dublin. Mortgage arrears and negative equity remain a serious concern, the report says, with a total of 110,366 mortgages in arrears at the end of 2014 but it adds that changes mean that smaller homes will be needed because household requirements have changed and the average household size has fallen dramatically. ‘Proportional household composition has changed and we see an increase in smaller households and a corresponding decrease in larger households. The average household size in the country has fallen significantly over the last nine years from an average of 3.04 in 2002 to 2.77 in 2011. Based on an assessment of regional trends, it has been calculated that it will fall further to 2.67 by 2018 so the majority of new housing will now accommodate fewer people,’ it says. Minister for State with responsibility for Housing, Paudie Coffey, said that the report provides a much needed analysis of the true picture of housing supply and demand in Ireland along with future projections, allowing for emerging imbalances to be identified and rectified at an early stage. ‘It contributes greatly to an overall understanding of housing needs in Ireland, ensuring that the most up to date and comprehensive data is available relating to current housing supply and emerging needs. Importantly, this data will help ensure policy responses are evidence based and needs led, as we endeavour to build sustainable communities for the present and future generations,’ he added. According to Conor Skehan, chairman of the Housing Agency, the data is now in place to ensure housing needs are met through a whole suite of initiatives which are underway including those addressing issues such as housing supply, housing land availability, and provision of social housing ‘Keeping those initiatives on target requires accurate data and progress reports on extent to which these needs are being met. This is the first of a series of annual reports to deliver a state of the nation picture of what housing needs are and how we are addressing housing supply,’ he explained. Continue reading
UK property prices down slightly between June and July, says latest index
Residential property prices in the UK fell slightly by 0.6% between June and July and annual house price growth has slowed to 7.9%, according to the latest monthly index from the Halifax. It shows the fragility of the housing market recovery as different lenders show prices rising and falling, but only by marginal amounts so there is some stability in the housing market. Just a few days the Nationwide reported in its monthly index data that prices increased by 0.4% in July and annual property price growth edged up to 3.5%. Meanwhile one set of data said that prime property prices in central London are still falling and another showed a slight rise. Both the Halifax and the Nationwide show that the average home price is now nudging £200,000. Today’s data from the Halifax put it at £198,883. The Halifax index also shows that sales increased by 5% between May and June. Confidence in the outlook for house price growth remains substantially higher than at the beginning of 2015, according to Stephen Noakes, managing director of retail customer products at the Halifax. He believes that the market is robust, pointing out that house prices in the three months to July were 2.4% higher than in the previous quarter. However, this measure of the underlying rate of house price growth has eased and annual house price growth also declined, to 7.9% from 9.6% in June and is at its lowest since December 2014. ‘The underlying pace of house price growth remains robust notwithstanding the easing in July. Continuing economic recovery, earnings growth in excess of consumer price inflation and very low mortgage rates all underpin housing demand,’ said Noakes. ‘Supply is highly restricted with the stock of homes available for sale falling further to new record lows. This combination of well supported demand and tight supply is likely to ensure that house price growth remains relatively strong in the near term,’ he added. He also pointed out that the Halifax housing market confidence tracker shows that confidence in the outlook for house price growth hit its highest level in four years following the general election in May, but dropped back in June. Price Optimism (HPO) hit +68 in May 2015, and although it slipped back slightly in June to +64, it remains substantially higher than at the beginning of 2015 when it was +52. Jonathan Samuels, chief executive of Dragonfly Property Finance, pointed out that despite the fall in prices during July, house prices overall are still rising. ‘The dominant narrative within the UK property market continues to be weak supply and strong demand,’ he said. He explained that demand is strong because of mortgage rates being at record lows, more people in work, low inflation and a generally positive economic outlook, however, the increasing likelihood of an interest rate rise in the not too distant future has the potential to recalibrate demand and the market as a whole. ‘After so many years of 0.5% rates, even a… Continue reading
