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New home building market in Australia gets boost
Loans to both investors and owner occupiers for house building in Australia increased at the end of 2014, pointing to ongoing strength in new home building in 2015. In December 2014, the number of loans to owner occupiers for the construction of dwellings edged higher by 0.8% and over the December 2014 quarter, these loans increased by 1.1% to a level 9.8% higher than in the December 2013 quarter. The data published by the Australian Bureau of Statistics also show that lending to owner occupiers purchasing newly constructed homes fell by 1.8% during December, and down 4% over the quarter. The value of lending to investors for the construction of new housing jumped by 44.2% during the month of December 2014 and over the quarter the value of lending increased by 16%. ‘Housing construction loans, in both the owner occupier and investor segments of the market, finished 2014 on a strong note. This provides a very positive signal for activity in the residential construction sector in 2015,’ said Housing Industry Association economist, Diwa Hopkins. ‘Investors are likely to continue playing a key role in adding to the stock of new housing in 2015. The owner occupier side of the market, however, appears to be losing some momentum,’ she explained. ‘While overall owner occupier lending levels remain strong, some signs have emerged that the growth typical of 2013 and much of 2014 may now be moderating,’ she added. The housing finance release follows substantial upward revisions by the ABS to the level of activity among first time buyers and shows that their participation in the market is much higher than earlier thought. In 2014, lending to first time buyers accounted for around 15% of the total, higher than a decade ago. ‘The key to housing affordability for first home buyers and trade up buyers alike is a supply of dwellings commensurate to the needs of a growing population. The strong performance of the residential construction sector in 2014 has provided vital assistance in this regard,’ Hopkins pointed out. A regional breakdown of total number owner occupier loans for new housing in December 2014 compared with the same month in 2013 shows the strongest increase occurred in Tasmania with growth of 74.2%. The Northern Territory saw growth of11.8%, Western Australia was up 11.1%, the Australian Capital Territory up 5.9%, New South Wales up 2.9%, Queensland up 2.8% and South Australia up 0.3%. Victoria was the only state to see a fall at 1.9%. Meanwhile, the latest result for the HIA New Home Sales Report, a survey of Australia’s largest volume builders, highlights a second consecutive rise for sales in the month of November 2014. ‘Renewed upward momentum in the multi-unit segment drove growth in overall new home sales in late 2014, a trend unlikely to be reversed when the December result comes through,’ said HIA chief economist Harley Dale. Total seasonally adjusted new home sales increased by 2.2%… Continue reading
Home repossession in UK down 26% in 2014, year on year
The number of home repossessions in the UK fell 26% in 2014 compared to the previous year, the lowest since 2006, according to the latest data from the Council of Mortgage Lenders (CML). Out of the 21,000 total number of repossessions, 16,100 were on owner occupied properties, and 4,900 were on buy to let properties, the data also shows. At 0.3%, the repossession rate on buy to let mortgages was higher than the 0.17% on owner occupier loans, despite the fact that the underlying arrears rate was lower on buy to let lending than on home owner lending. The CML said that this is unsurprising, as lenders offer extended forbearance to owner occupiers to help them get through periods of financial difficulty without losing their home. Some 1.05% of all mortgages were in arrears equivalent to 2.5% or more of the mortgage balance, down from 1.29% at the end of 2013 and 1.12% at the end of the third quarter of 2014. In numerical terms, this equates to 116,800 loans, down from 124,400 at the end of the third quarter, and 144,600 at the end of 2013. Within the total number of mortgages in arrears, there was also a decline in all of the individual arrears bands. Even among the heaviest arrears band, more than 10%, there was a 14% decline year on year to 24,700 cases at the end of 2014, some 5% lower than at the end of the third quarter. The two main traditional drivers of mortgage difficulty are income shocks such as unemployment and interest rates. The CML report points out that both factors are relatively benign at present, assisting the decline in both arrears and repossessions, supported by effective lender practices. Looking ahead, the CML and lenders are very aware that, at some future point, interest rates will rise, and that this will put increased pressure on some household finances. The CML and lenders urge customers to plan ahead for this, to reduce the risk of shocks whenever interest rates do eventually rise. ‘The relatively low rate of repossession among owner occupiers at around one in 600 mortgages last year, should help to reassure borrowers that, if they do face payment difficulties, lenders will work with them to try to resolve their problems. Repossession is only ever a last resort,’ said CML director general Paul Smee. No one should be lulled into a false sense of security that the current low interest rates we are experiencing will last forever, though. Rules are in place to ensure lenders assess future affordability, but these are not a substitute for careful borrowing,’ he explained. ‘It's essential for borrowers themselves to have one eye on the future. Think through any borrowing taken on now to ensure it will still be affordable if and when rates rise,’ he added. Continue reading
London mayor reveals plans for 26,500 new homes along the Thames
A blueprint for creating thousands of new homes along the River Thames has been published by the Mayor of London, Boris Johnson. The draft London Riverside Opportunity Area Planning Framework (OAPF) sets out the planning, regeneration and design guidance that will lead to the creation of 26,500 new homes and up to 16,000 jobs across the boroughs of Barking and Dagenham and Havering, and a small part of Newham. The Mayor has identified 38 Opportunity Areas across the capital. Opportunity Areas are London's major source of brownfield land with significant capacity for new housing, commercial and other development linked to existing or potential improvements to public transport accessibility. By establishing Opportunity Areas, and working closely with London boroughs and partner agencies, the Mayor will be best able to deliver significant social and economic regeneration. The London Riverside Opportunity Area stretches from the Royal Docks to Rainham Marshes, a total distance of 12 kilometres. The document, which is now open for consultation, sets out the Mayor's strategic priorities and long term vision for the area over the next 20 years, how the area should evolve into a sustainable and successful part of the city and how it relates to the wider south east of the UK. In order to transform the London Riverside into a thriving new part of London, the planning framework discusses the importance of improved transport connections. This includes the potential extension of the Gospel Oak London Overground line, a new railway station at Beam Park, improvements to the A13 and new river crossings. ‘The capital is now home to a record number of people and we are working tirelessly to ensure we have the homes, jobs and transport infrastructure to support the city's unprecedented growth. London Riverside can deliver genuinely affordable high quality housing for Londoners in a fantastic Thameside setting,’ said Sir Edward Lister, Deputy Mayor for Planning. Much of the land in the London Riverside is already in the Mayor's ownership and the framework also recommends speeding up the development of publicly owned land assets to deliver the jobs and homes the city needs. Continue reading
