Tag Archives: crisis
New home approvals recover in Australia after slow start to the year
New home approvals in Australia recovered in February after a decline in the first month of 2016, according to the latest data to be released. Home building approvals increased by 3.1% during February after beginning the year on a much slower note, says the new report from the Housing Industry Association (HIA). But there was a 1% fall in detached house approvals while the more volatile multi-unit segment achieved growth of 7.7% and over the year to February, new dwelling approvals totalled 232,194. According to HIA senior economist Shane Garrett the flow of data over recent months indicates that approvals may have hit their high point in the year to October 2015, with a record 239,250 approvals registered over that 12 month period. ‘The monthly lift in approvals activity during February is welcome but it seems increasingly likely that approvals peaked late last year and that the volume of new home building activity is set to ease as 2016 progresses,’ he said. ‘Our latest forecasts indicate that the about 200,000 new dwelling starts will take place during 2016, a reduction of 9.2%from last year. This would still represent a very high level of output by historic standards,’ he explained. ‘However, the risk remains that new home building output will fall below the levels required to meet long term demand. The onus remains on policy makers to tackle this problem, and confront issues like planning delays, land supply shortfalls and heavily inefficient taxes like conveyance stamp duty,’ he added. A breakdown of the figures shows that total seasonally adjusted new home building approvals saw the largest increase in Tasmania with growth of 24.5%, up 14.3% in New South Wales and up 9.5% in Queensland. Approvals declined in Victoria by 12.8%, in South Australia by 10.9% and in Western Australia by 7.6%. In trend terms, approvals saw a 9.2% fall in the Northern Territory but rose by 5% in the Australian Capital Territory. Continue reading
UK housing market boosted by April additional homes stamp duty deadline
The UK housing market received a fillip from increased activity among those looking to beat the April deadline for the new stamp duty charges on additional homes, a new report shows. The latest analysis from real estate firm Knight Frank points out that demand rose in many regions, with the Council for Mortgage Lenders reporting that gross mortgage lending in February hit the highest level since 2008. It says that activity may ease from April, but in the wider UK market the fundamentals of a lack of supply and low mortgage rates are underpinning the market. Also, in the London and South East markets the effect of uncertainty in the run-up to the European Union referendum is likely to be felt more keenly. ‘In the prime central London market, we expect differing levels of growth in the east and the west this year, underlining the very localised nature of the market,’ said Gráinne Gilmore head of UK residential research at Knight Frank. The report explains that property prices in prime central London fell by 0.1% in February, taking the annual change in values to 1% and the market remains highly localised with stronger performance in areas such as Islington, City and Fringe and South Bank. In comparison, price falls were seen in markets including Knightsbridge, South Kensington and Chelsea over the last year. ‘Overall, demand in prime central London was relatively subdued in the first two months of 2016 as a result of the higher levels of stamp duty and ongoing volatility in global financial markets,’ said Gilmore. ‘Further domestic uncertainty, in the shape of a London Mayoral election in May and an EU referendum in June, means this is likely to continue as buyers adopt a wait and see approach,’ she added. In the country market, prices rose by 3.1% in 2015 and the report says that the market is still being driven by prime properties in urban locations, with buyer demand concentrated on areas with effective transport links and good schools and amenities. In Scotland, prime country house prices ended the year up by 0.1%. Prime central London rents fell by 0.1% in February, the fifth consecutive monthly decline. As a result, the annual rental value growth in prime central London fell to -0.2%. ‘Uncertainty over taxation and slowing price growth in the sales market has resulted in relatively high supply levels, especially at above £1,500 per week. As a result, tenants feel little urgency to agree deals, putting pressure on rental values,’ Gilmore pointed out. The report adds that average UK rents rose by 2.6% in Great Britain over the 12 months to January 2016, according to latest figures from the Office of National Statistics. Continue reading
Larger number of UK landlords now considering setting up limited companies
With buy to let landlords in the UK now facing paying more property tax and facing cuts to mortgage tax relief, increasing numbers are considering moving their property investments into limited company vehicles. Some 41% of 1,400 landlords taking part in a survey commissioned by Paragon Mortgages indicated that they are considering moving their portfolio into a limited company following the Chancellor’s decision to limit tax relief available to landlords last year. A further 5% have already established limited companies. For larger landlords with 20 or more properties, 14% are already operating as limited companies, while 63% are considering it. In terms of portfolio growth, 43% of landlords surveyed agreed that the stamp duty increase will affect their buy to let purchasing plans over the next couple of years. This figure rises to 63% for larger landlords with 20 or more properties. Despite uncertainty about what impact the changes to tax relief and stamp duty might have however, tenant demand amongst landlords is still perceived as being high. Demand for rented property in the fourth quarter of 2015 was strongest in the South West where 40% of landlords reported demand to be rising. Landlords in the North East experienced the weakest demand, with just 24% of landlords reporting increased demand. Reflecting this demand, average yields have also remained stable and averaged 5.6% across the country, unchanged on the previous quarter. The North West saw the highest yields, at 6.2%, while outer London had the lowest, at 5.1%. ‘Recent government interventions into the buy to let market are now beginning to impact landlord sentiment and plans. The fundamental drivers of the market however, tenant demand and yields, remain strong so there are competing dynamics at play,’ said John Heron, director of mortgages at Paragon. ‘It is interesting to see that concern about the impact of changes to stamp-duty and tax relief is greatest among larger landlords. This concern is likely to grow now that the government have confirmed that landlords with larger portfolios will have to pay the increased rate of stamp-duty on buy to let purchases,’ he added. Continue reading
