Tag Archives: europe
Home values in Australian capital cities flat, latest index data shows
Residential property values were flat in capital cities in Australia last month with Sydney, Canberra and Adelaide seeing price falls. The downturn in these cities were offset by values rising across the remaining five capital cities, according to the latest CoreLogic RP Data home value index. The Sydney housing market was the main drag on the December results, with dwelling values down 1.2%, while values were down 1.5% in Adelaide and 1.1% in Canberra. The remaining capitals saw a rise in dwelling values, led by a 2.3% rise in Perth values and a 1% rise in Melbourne over the month. After dwelling values had been broadly rising since June 2012, the December quarter results revealed a 1.4% fall in dwelling values across the combined capitals, the largest quarter on quarter fall since December 2011. Six of the eight capital cities recorded a negative result over the December quarter, with weaker conditions in Sydney and Melbourne acting as the greatest drag on capital city performance, according to CoreLogic RP Data head of research Tim Lawless. The largest quarterly fall was recorded in Sydney, where dwelling values were down 2.3% over the final three months of the year, followed by Melbourne, where dwelling values were 1.9% lower. The only capital cities to show a rise in dwelling values over the December quarter were Brisbane with growth of 1.3% and Adelaide up 0.6%. This was in contrast to the first three quarters of 2015, where capital city dwelling values rose by 9.3%, largely driven by a 14.1% surge in Sydney values and a 13.3% increase in Melbourne. In stark contrast, the final quarter of 2015 showed Sydney as the weakest performer of any capital city, with dwelling values down by 2.3% while Melbourne recorded the second weakest result with a fall of 1.9%. The complete 2015 calendar year results reveal a 7.8% increase in capital city dwelling values which is the lowest rate of capital gain over a calendar year since 2012 when values slipped 0.4% lower over the full year. Highlighting the diversity in the capital city housing markets, dwelling values fell across four of the eight capitals in the 2015 calendar year. The largest of these falls were recorded in Perth, down by 3.7%, and Darwin down by 3.6%. Hobart and Adelaide also showed subtle falls of 0.7% and 0.1%. Despite the recent weakening of housing market conditions in Sydney and Melbourne, the two largest capital city housing markets still recorded much stronger annual gains than all other capital cities, 11.5% in Sydney and 11.2% in Melbourne. Dwelling values in Brisbane and Canberra were up a more sustainable 4.1% over the year. ‘The wealth created from housing in Sydney and Melbourne has been exceptional over the past 12 months. In dollar terms, Sydney home owners have seen approximately $82,000 added to their wealth thanks to the strong capital gains over the year while home owners in Melbourne have seen the value of… Continue reading
UK Mortgage intermediaries set for record lending in 2015
Mortgage intermediaries in the UK are expected to have secured a record breaking share of new mortgages in 2015, according to a new report from the Intermediary Mortgage Lenders Association (IMLA). Its research into the changing face of mortgage distribution has found that its share of new mortgages by value passed 70% for the first time during the second quarter of 2015 to reach 71%. The third quarter witnessed brokers arranging loans valued at £33.3 billion, the highest quarterly total since the beginning of 2008. As a result, IMLA’s analysis shows brokers were responsible for 69% of new lending by value during the first nine months of this year, up from 61% for the same period in 2014. It puts them firmly on track to surpass the record 66% annual share achieved during 2007. The £85.9 billion of lending intermediaries arranged from the first to the third quarters of 2015 already exceeds the annual totals of 2009 to 2013, and was just 12% short of the 2014 total of £98 billion. The IMLA report examines how mortgage distribution has changed following the deregulation of the market in the 1980s, and looks at how technological advances could change distribution in the future. It attributes the general upward trend in brokers’ market share over the past three decades to several key changes; the widening range of lenders, including the emergence of lenders exclusively using broker distribution; growing complexity of mortgage features and pricing; and most recently regulatory changes including the Mortgage Market Review (MMR). By requiring mortgage sales staff to provide advice rather than just information, with the additional qualifications that requires, the MMR has led many lenders to de-emphasise their branch networks and some smaller lenders to end direct distribution altogether. With increased lender competition, a greater range of products and more would-be borrowers falling into ‘non-standard’ categories, today’s market also leaves brokers well positioned to identify those products that are best suited to a particular customer’s needs. However, IMLA’s analysis also shows brokers’ increased share of activity has not been uniform across the market. Proportionally remortgagers and home movers are using the intermediary channel more than ever, yet the proportion of first time buyers arranging their mortgages directly with their lender increased from 32% to 37% between 2006 and 2014. Despite brokers reclaiming market share this year, the percentage of first time buyers going direct remains higher than it was in 2007 when the intermediary channel was at its strongest. This may be influenced by lenders’ marketing activities to first time buyers. While technological advances have traditionally strengthened direct channels within financial services, the IMLA report observes that this has not happened in mortgage lending where the majority of customers still feel the need to speak to a professional. It suggests this is partly due to the complexity of mortgages as a product, and the sheer number of products available on the market. Furthermore, considerations such as term length and the size of the… Continue reading
Income producing potential of UK property set to top the agenda for investors in 2016
The income producing potential of various property asset classes is expected to be top of investors’ agendas in 2016, according to a new outlook analysis report. Average UK house prices are set to rise 5% in 2016, but the speed and timing of interest rate rises will dictate the pace and sustainability of price growth, according to the predictions from real estate advisors Savills. In the commercial market, average total returns on UK property investments are likely to slow to approximately 7.5% while in the agricultural market Savills has downgraded its forecasts for the next five years given recent market evidence and the short to medium term expectations for commodity prices and therefore farm profitability. The firm says that income and the ability to unlock the latent value of individual assets through active management are likely to be priorities, due to the current stage of the property cycle and the medium term prospect of interest rate rises, regulation and tax policy in the residential sector, and the outlook for commodity prices in the agricultural sector. In the commercial and residential markets Savills expects a shift towards investment in regional markets, given where recent capital growth has left yields. The referendum on membership of the European Union (EU) presents the greatest uncertainty for UK real estate in 2016/2017, according to Savills, as the outcome has potential implications for all three sectors. The prospects for a pre-referendum investment slowdown may well depend on how close polling companies believe the outcome will be, the report suggests. The report explains that annual house price growth stood at just 3.9% at the end of October, with annual housing transactions appearing to have peaked at 1.2 million per year so the forecast for 2016 is 5% for average UK house prices. It points out that stamp duty changes have left the top end of the London market looking both fully priced and fully taxed suggesting a further delay in the return to trend rates of house price growth. Meanwhile, the mainstream market is more dependent on what happens to the cost of borrowing. ‘Capacity exists for short term price growth if rate rises are delayed further, but rising interest rates will squeeze affordability, making house price growth dependent on earnings and the pace of economic growth,’ the report says. It adds that in some areas in London, for example Ealing, Acton, Greenwich, Lewisham and Waltham Forest, may buck this trend as they attract more affluent buyer groups. Attractive commuter towns will also continue to offer good medium term price growth, particularly where travel times are shortened by rail improvements. Also demand for private rented accommodation will continue to rise. The restriction in tax relief and additional 3% stamp duty charge for buy to let landlords may result in rising private rents and shift investor focus towards higher yielding sectors of the market, particularly key regional cities, it suggests. While Government policy… Continue reading
