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More supply sees residential property rent growth slow in the US
Annual rent growth in the United States has slowed for the third month in a row but rents are still rising faster than historical norms, according to the latest index data. Rents appreciated 4.5% year on year in October, down from 5.3% in September, down from a high of 6.6% in July and it is mostly due to more properties, specifically apartments, coming onto the market, the Zillow real estate market report shows. A breakdown of the figures shows that tents in large multifamily buildings rose 3.9% annually, while single family home rents grew 4.5%. Overall, newly built apartment buildings are finally opening for new residents and slowing the rate of rental appreciation across the country, but rents are still rising much faster than the historical norm and continue to rise faster than incomes, according to the report. The report points out that multifamily housing starts have been increasing since late 2009, and as units become available, the pace of rental appreciation is slowing. Lack of inventory has been a leading cause of the ongoing rental affordability crisis, especially in fast growing markets. Even the hottest rental markets, which have seen double digit rent appreciation for the past five months, are growing at a slower pace although rents are still rising there more than twice as fast as the national average. The San Francisco metro has the fastest rental appreciation among the nation's 35 largest markets. Rents there are up 15.2% from last year, but they were growing as fast as 19% annually in June and July. ‘Rental appreciation has started to slow down in part due to more rental supply. Many of the bigger multifamily rental projects that were begun a couple years ago in cities nationwide are finally starting to open for occupancy, easing pressure on rents somewhat,’ said Zillow chief economist Svenja Gudell. ‘But despite this recent slowdown in rental appreciation, the rental affordability crisis we've been enduring for the past few years shows no signs of easing, especially as income growth remains weak. It will take a lot more supply, and a lot more renters turned home owners, to fully reverse this trend,’ Gudell added. As rents have grown and rental affordability continues to suffer, the stability and relative affordability of homeownership may be pushing some qualified renters to make the jump to home ownership. A widely expected December rate hike from the Federal Reserve could be an additional incentive for buyers to enter the market while rates remain low. Reflecting this, home values are growing at their fastest pace since November 2014, up 4.3% to a Zillow Home Value Index of $182,800. Continue reading
London mayor gives approval for over 12,600 new homes in Greenwich
The Mayor of London has given his seal of approval for the city's largest single regeneration development in the Greenwich Peninsula which includes over 12,600 new homes. A revised masterplan on the previously disused gasworks will create an entire new district formed of five neighbourhood zones and 12,678 homes on the 80 hectare site. Developers Knight Dragon are already in the process of building a further 2,822 homes on the site, which will bring housing delivery on the Greenwich Peninsula to 15,720. Plans also include 220 serviced apartments, 24,000 square metres of retail use, 60,000 square metres of business use, two new schools and two new hotels. The development will also feature a 40,000 square metre film studio, a visitor attraction and increased green open space including an extension to the existing Central Park. In August, Greenwich council gave outline planning permission for the site, which runs along the River Thames, and the Mayor Boris Johnson has now also given the masterplan the go-ahead. The Greenwich Peninsula site is part of the Mayor's ambitious plans to release surplus public land to boost construction jobs, drive investment and deliver the additional housing to meet a growing population. Of the developable land taken on by the Mayor in 2012 some 99% is now in the development pipeline, while the Greenwich Peninsula is a key element of Johnson's City in the East masterplan, which looks to deliver at least 200,000 homes in east London over the next 20 years. ‘This gigantic site at Greenwich Peninsula has sat dormant for far too long, so I'm pleased that since City Hall took control of this land, we are already beginning to see construction underway. This will not only provide thousands of much-needed new homes for Londoners, but also bring jobs as part of the wider regeneration towards the east of the capital,’ said Johnson. Developers Knight Dragon has 2,882 homes already under construction as part of existing planning permission, of which 1,002 are affordable. The masterplan approved by the Mayor includes 2,928 affordable homes, while a review mechanism has been included in plans, which could deliver an additional 1,572 affordable homes. The affordable housing mix, which will be delivered in all five neighbourhoods in the new district, will be split between social rent and intermediate. Councillor Danny Thorpe, Royal Borough of Greenwich Council member for regeneration and transport explained that the Council has long held a vision to make the most of the huge potential offered by the Greenwich Peninsula. ‘The approval of this planning application makes it one of the most exciting developments in London, bringing huge long term regeneration benefits to the peninsula and cementing it as a new district for London,’ he said. ‘We are particularly proud that, at a time of critical housing shortage, this development will deliver so many affordable homes, of which more than two thirds will be for social rent, at no more than 50% of market rent…. Continue reading
House prices growth in UK cities on track for 10% growth in 2015
City level house price inflation in the UK is on track for 10% growth in 2015 as price increases accelerates in large regional cities, according to a new index report. Cities have seen annual house price growth of 9.4% per annum and the large regional cities outside southern England are recording an acceleration in growth off a low base, says the Hometrack UK Cities House Price Index. In Glasgow prices are up 8.3%, in Manchester up 7% and in Liverpool up 5.1%, meaning that these cities are registering the highest rates of annual house price growth since 2007. Glasgow house prices currently average £110,000, less than half the £229,300 average price across all the 20 cities measured by the index. House prices in Glasgow stopped falling three years ago and have since risen by 13%. In the last 12 months they are up by 8.3%, the highest rate of growth since August 2007. Manchester house prices have been recovering since 2012 and average house prices have risen by 17% over this time to £141,200. In the last 12 months house prices across Manchester have grown by 7%, the highest rate of growth since July 2007. Liverpool has registered the weakest house price performance of all the British cities covered by the index. House prices declined between 2007 and early 2013 and have since increased by 10.5%. In the last 12 months the rate of growth has risen to 5.1%, the highest since August 2007. Despite this modest recovery, the average price of £109,800 is still 13% lower than the 2007 peak. The recovery emerging in large regional cities contrasts strongly with the rise of London’s house prices where average values are up by 70% since 2009 and by over 100% in the highest value markets in central London. The report says that it is these high value markets that are now recording some of the weakest levels of house price growth as tax and currency changes impact demand after a period of stellar price appreciation. Kensington and Chelsea has seen prices fall by 2.6% and in the City of Westminster they are up by only 1.3%. ‘Improving consumer confidence and low mortgage rates are boosting demand in cities where the recovery in house prices is in its infancy. While southern cities have been in recovery mode for over six years with price gains of up to 70%, the large regional cities have seen far more modest price rises over just the last three years,’ said Richard Donnell, director of research at Hometrack. ‘Further house price growth is likely to improve market confidence as it pushes down loan to values on mortgaged homes and creates capacity for households to access cheaper credit. Many corporate investors and developers are looking to the major regional cities in search of better value for money in new investments relative to London,’ he explained. ‘The outlook for the next 12 to 18 months… Continue reading
