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Sydney and Melbourne continue to see strong home price growth at start of year
The Australian housing market has started the year on a strong footing with strong gains recorded across Sydney and Melbourne, pushing capital city dwelling values 1.3% higher. But the latest home value index from Core Logic RP Data shows that a two tier housing market persisted over the first month of 2015 as performance varied substantially between capital cities. The largest cities, which have more influence over the combined capital city index due to the high number of dwellings, continued to push the aggregate index higher. Melbourne values were up 2.7% compared with December and Sydney values increased by 1.4%. Hobart also recorded a strong monthly result with values up 1.6%. Three capital cities recorded a decline in values over the month, with Darwin down 1.3%, Adelaide down 1.2% and Perth values down 0.6%. The quarterly data shows a clearer picture for housing market conditions, with the combined capitals index recording a 1.9% over the three months ending January 2015. While Sydney continued to be the standout for capital gains, the most significant increase in values over the past three months was recorded in Hobart with a rise of 4.4%, eclipsing the 2.4% capital gain in Sydney, which was the second highest quarterly reading across the capitals. According to the firm’s head of research, Tim Lawless, having Hobart produce the strongest results over the past quarter is certainly a unique occurrence. ‘Generally, Hobart has recorded the lowest rate of capital gain since the onset of the global financial crisis, however housing market conditions have been improving,’ he said. ‘Local economic conditions have been improving and Hobart homes are the most affordable of any capital city. Additionally the market is benefitting from the return of lifestyle buyers. After Darwin, the southernmost capital is also showing the second highest gross rental yields of any other capital city,’ he added. Despite Hobart’s strong quarterly capital gain, Sydney still holds as the city with the highest rate of capital gain over the past 12 months where property values are currently 13% higher. The annual gain in property prices across the combined capitals index was 8% at the end of January, ranging from a 13% gain in Sydney to a 0.3% reduction in Canberra. Sydney has also shown the highest aggregated capital growth of any capital city in the years since the global downturn. Lawless pointed out that since the beginning of 2009, Sydney has been a stand out housing market. From January 2009 through to January 2015 Sydney home values have increased by 57%. The second highest rate of growth over the same period has been in Melbourne where values are 50% higher. There is a significant gap between the next best performers over the same six year period. Darwin has seen less than half the level of growth at 24%, followed by Canberra at 18% and Perth at 17%. At the other end of the spectrum is Hobart where homes values are unmoved over the… Continue reading
UK landlords can choose from record number of buy to let mortgages
Record number of buy to let mortgages are now available in the UK with landlords able to choose from 817 different products, up 16% quarter on quarter, the latest index shows. Lower LTV fixed rate mortgages are now cheaper than equivalent tracker products, even before rates rise, according to the latest Buy to Let Mortgage Costs Index from Mortgages for Business. Mortgage charges have fallen further for lower LTVs while landlords at higher LTVs pay extra fees. However, the cheapest mortgage rates and lowest fees have been reserved for low loan to value ratios. ‘This unprecedented pick up reflects the huge increase in demand as well as the wider importance of the buy to let industry,’ said David Whittaker, managing director at Mortgages for Business. ‘Looking at total lending in 2014 the trend is clear. For a second consecutive year the value of the buy to let market grew by almost a quarter. We anticipate further growth in 2015 but at a slower rate as the market takes an inevitable breather after such a huge sustained spurt,’ he added. The research suggests that fixed rate mortgages are proving to be better value than their respective tracker counterparts, particularly for lower loan to value borrowers. Low LTV mortgages now outperform their tracker equivalents at two, three and five year periods. Likewise, at medium LTVs, the costs for a two year fixed rate is 4.4% compared with 4.7% for the tracker equivalent, while for three year products the costs are the same and only 0.3% higher than the tracker products for five years. Even for fixed rate high LTV mortgages, the current cost of borrowing is only marginally higher than tracker products. To fix for five years at a high LTV is just 0.4% more than the corresponding tracker. Only one in a hundred landlords now opts for a one year initial mortgage term. More widely, the popularity of short term mortgages continues to wane as 52% opted for a two year deal, down from 57% six months ago despite the very attractive two year rates on offer. By contrast longer term mortgages are growing in popularity, with the proportion choosing five year mortgages rising from 15% in the second quarter to 18% in the fourth quarter. ‘It’s astounding that fixed rate mortgages are already better value than their respective tracker counterparts. Again the real advantage is for the ‘safest’ landlords with the lowest LTV loans. But even though tracker products are a little bit cheaper at higher LTVs, in these cases too it soon won’t be enough to compensate for the likely increase in cost of trackers when rates inevitably rise,’ said Whittaker. ‘If customers are paying only a few percentage points above the negligible Bank base rate, then if this jumps it could mean a huge proportional increase in future costs. Capital markets are still reeling from tumbling inflation and a dovish outlook from the Bank of England that no one would have predicted… Continue reading
Rental home loan deposit scheme for certain employees in UK widened
The UK government has announced wide support for a new rental deposit loan scheme that will become available to thousands of potential tenants. Housing Minister Brandon Lewis said that the aim is to create a bigger, better private rented sector through a scheme that offers deposit loans to Whitehall staff looking to take up new tenancies in the private rented sector. The scheme, which works in the same way as a staff season ticket loan, will allow employees to borrow some of their salary upfront in order to pay for rental deposits, which is then repayable from salary payments over up to a year. It is available to be taken up in both the public and private sectors. The Department for Communities and Local Government last October became the first government department to roll the scheme out to its staff, with ministers pushing other parts of government and the public sector to follow suit. The department is working with the Department for Business Innovation and Skills to increase availability across the private sector. ‘This move will mean thousands of people will be offered a helping hand to rent privately through season ticket style loans from their employers. I hope to see more employers in the public and private sector joining the scheme in the near future,’ said Lewis. The scheme was created by the homelessness charity Shelter and the Greater London Authority was another public body to introduce the scheme for its staff. The tenancy deposit scheme can be adapted by different employers to suit their needs, but generally employees are offered interest free loans to pay their deposits when they move into a privately rented home, which are then paid back through their salary over the course of up to a year. Continue reading
