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US pending home sales up 1.1% in March, but with regional variations
Pending home sales in the United States continued upwards in March and reached their highest level since June 2013, according to the latest index figures. The Pending Home Sales Index, a forward looking indicator based on contracts signed, from the National Association of Realtors climbed 1.1% to 108.6 in March from an upward revision of 107.4 in February and is now 11.1% above March 2014. The index has now increased year on year for seven consecutive months and is at its highest level since June 2013. NAR chief economist Lawrence Yun said that contract signings picked up in March as more buyers than usual entered this year's competitive spring market. ‘Demand appears to be stronger in several parts of the country, especially in metro areas that have seen solid job gains and firmer economic growth over the past year, While contract activity being up convincingly compared to a year ago is certainly good news, the increased number of traditional buyers who appear to be replacing investors paying in cash is even better news. It indicates this year's activity is being driven by more long term home owners,’ he explained. Yun expects a gradual improvement in home sales in the months ahead but says insufficient supply and accelerating prices could be a drawback to sales reaching their full potential. ‘Demand in many markets is far exceeding supply, and properties in March sold at a faster rate than any month since last summer. This in turn has pushed home prices to unhealthy levels, nearly four or more times above the pace of wage growth in some parts of the country. Simply put, housing inventory for new and existing homes needs to improve measurably to improve affordability,’ he added. A breakdown of the figures shows there is considerable regional variation. The index fell 1.5% in the Northeast fell, the fourth month in a row it has done so but is still 0.6% above a year ago. In the Midwest the index fell 2.5% but is 11.3% above March 2014. Pending home sales in the South increased 4% and are 12.4% above last March while the index in the West rose 1.7% in March and is now 15.6% above a year ago. Continue reading
House building land prices fall for first time since 2012, latest index shows
After several quarters of slowing growth, the average value of green field residential development land in England and Wales fell in the first quarter of the year, the first decline since December 2012. Prices fell by 1.8% in the first three months of 2015, taking the annual change to -0.5%. However the picture across the country is more mixed with the land index from real estate consultants Knight Frank showing that development land prices in prime central London also stalled in the first three months of the year. Land values in price central London remained unchanged in the first quarter, the first time they have not risen since the index began in 2012. But on an annual basis, prime central London development land prices were up 18.5% in the first quarter. This slowdown is the result of a gradual slowing in price growth over several quarters, according to Grainne Gilmore, head of UK residential research at Knight Frank. ‘Across the country, many house builders have been replenishing their pipeline of land over the last 12 to 18 months, both consented and strategic. For strategic land, they have started guiding it through the planning system. As such, demand for consented land has eased. Sites which are oven-ready and perfectly located are still attracting interest however,’ she explained. She pointed out that there has also been a notable trend emerging of an increased appetite for strategic land among larger house builders as this can result in higher margins. But on a short term basis, the development land market, much like the housing market, has also been affected by the upcoming election, with some developers and house builders deferring decisions in recent months until the outcome of the election is clear. ‘All the parties have pledged to boost housing supply in the years to come, through a variety of schemes from brownfield regeneration funds to support for small to medium sized builders,’ said Gilmore. ‘A theme that is set to continue through the election and the rest of the year is the increased cost of building. Material and labour costs continue to rise, and this is also putting downward pressure on land prices,’ she added. Continue reading
Property prices in Australian cities holding steady and up almost 8% year on year
Residential property values across Australia’s capital cities increased by 0.8% in April, down from the 1.4% increase recorded in March, the latest index data shows. Overall values increased over the past month across every capital city except Canberra where values showed a 1.5% drop over the month, according to the CoreLogic RP home value index. CoreLogic RP Data head of research, Tim Lawless, said that despite the slower month on month reading, the annual rate of growth has seen a slight rebound, with dwelling values now 7.9% higher over the past 12 months across the combined capital city index. ‘Annually, the rate of capital gain has slowed since April last year, however, since the February rate cut the Sydney and, to a lesser extent, Melbourne housing markets have caught a second wind which is reflected in the higher rate of capital gain as well as the very strong auction results and rapid rate of sale for properties sold via private treaty,’ he explained. ‘Despite the slight annual rate of growth upswing, capital gains remain lower than their annual peak recorded in April last year when dwelling values were rising at the rate of 11.5% per annum across the combined capitals index,’ he added. According to the April results, capital city dwelling values have been trending higher over the past 35 months, recording a cumulative increase of 25.3% between the end of May 2012 and April 2015. ‘While the combined capitals trend of dwelling value growth has been substantial, the rate of growth across the Sydney housing market stands head and shoulders above the other capital cities over the cycle to date,’ said Lawless. He pointed out that Sydney dwelling values are now 40.2% higher relative to the May 2012 trough. ‘If you factor in the previous 2009/2010 phase of growth, Sydney values are now up 65.4% after the global financial crisis,’ he added. A breakdown of the figures show that Melbourne is the only other capital city that comes close to this measure where dwelling values are 52.3% higher post GFC. The next highest rate of growth is Darwin where values have moved 26.5% higher, followed by Canberra at 19.8%, Perth at 15.2%, Adelaide at 12.2%, Brisbane at 8% and Hobart at 1.2%. ‘While the headline growth figures remain strong it is clear that some markets are winding down. The rate of growth in Perth and Darwin has slowed substantially in line with the wind down of major infrastructure projects associated with the resources sector and the housing market in Canberra has also softened post federal election,’ Lawless said. The performance of houses versus apartments has shown some interesting trends of late. Detached homes are continuing to outperform the multi-unit sector, with capital city house values up 8.3% over the past year while unit values have risen by a lower 5.6%. This trend is more noticeable in the key growth markets of Sydney and Melbourne. Sydney house values are up 15.5% over the past year while… Continue reading
