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Annual residential rents up 1.3% in Australia, but cities show differing rates
Annual rental rate for houses and apartments in Australia increased by 1.3% in the third quarter of 2014, according to the latest data to be published. In the capital cities, house rents remained flat at 0% growth while rental rates for units increased by 2.4%, the RP Data quarterly rental review also shows. According to RP Data national research director Tim Lawless, investors entering the rental market need to be aware that rents aren't rising anywhere near the pace of capital gains which is pushing rental yields lower, particularly in Sydney and Melbourne where values have increased the most at a time when rents aren't doing comparatively much at all. For houses, Darwin currently holds the highest weekly median rental rate at $660 followed by Sydney $525, Canberra $480, Perth $462, Brisbane $400, Adelaide $350, Melbourne $390 and Hobart at $330. For units, Darwin once again emerged as the most expensive market on the rental rate front by recording the highest weekly median rental rate for the quarter at $550 followed by Sydney $500, Perth $450, Brisbane $390, Canberra $383, Melbourne $370, Adelaide $300 and Hobart $275. Lawless noted that while detached house rents remained unchanged across the combined capital cities over the quarter, this cannot be said for each individual city. Brisbane is only city where rents remained unchanged. A breakdown of the data shows that Melbourne saw 2.6% rise, Darwin and Hobart both saw growth of 1.5%, Adelaide was up 1.4% and Sydney by 1%. Perth saw rents fall by 2.7% and Canberra a fall of 2%. RP Data analysts reported that over the third quarter of 2014 capital city rental rates for both houses and units remained unchanged. Across the combined capital cities, rental rates for houses were recorded at $430 per week, while median weekly rental rates remained at $420 for units. On a national level house rents also remained steady over the three months to September at $400 per week, while for units, rents fell by 1.3%, down $5 over the quarter to $390 per week. Across the unit market, none of the capital cities recorded a rise in rents over the September quarter and the majority of cities saw rents remain steady over the three months. Canberra rents fell by 3.2% to $383 per week and Hobart rents fell by 1.8% to $275. ‘The performance of rental markets are diverse, however the common theme is that generally the rate of capital gain is outpacing the change in weekly rents which is driving rental yields lower,’ said Lawless. ‘This is happening at a time when investment demand is at record levels and trending higher, which highlights that most investors are focussing on capital gains and ignoring the low yield scenario. The softer rental conditions are likely the result of the surge in investor related activity which is seeing more rental supply hit the market,’ he added. Continue reading
October saw a further dip in property valuations in the UK, latest research shows
The UK housing market has now cooled following a pick-up in valuations activity in September with October seeing the total number of valuations fall by 20%, new data shows. However, on an annual basis, housing market activity decreased by 10%, an improvement from a slightly steeper fall of 12% over the 12 months to September 2014, according to the latest report from Connells Survey & Valuation. ‘While the housing market is now less animated than in September, the slowdown is broadly in line with seasonal expectations and is not an alarm bell. On average, we have seen a 16% drop from September to October every year since 2010,’ said the firm’s Corporate Services Director. But he pointed out that beyond seasonal factors, there are other things contributing to this slowdown. ‘The introduction of stricter policies designed to restrain uncontrolled growth and protect against a return to the property bubble of 2008 have tempered the housing market. For instance the recent loan to income cap which came into force in October seems to have had a considerable impact,’ he explained. ‘We may see a further seasonal lull in the housing market as we approach the holiday season. And looking further ahead, the General Election in May 2015 is also likely to bring increased caution with the prospect of policy uncertainty,’ he added. The research report also shows that buy to let performed the strongest with a noticeably small annual dip of 7% compared to the rest of the market. Even on a month on month basis this section of the housing market did better than the others with the smallest drop of 17% since September. ‘Buy to let was the strongest performing sector in a clear indication that lenders are focusing on low risk investors as a result of increased regulation. Policies like loan to income caps have introduced stricter lending rules but crucially do not apply to the buy to let sector. There are now an array of competitive rates out there, especially on low LTVs,’ said Bagshaw. First time buyer valuations made up almost a third of total activity in October but the number of valuations for first time buyers was still down 18% compared to the previous month, and 11% lower on an annual basis. Other owner occupiers moving home saw a month on month dip of 21%, as well as the biggest annual drop of 16% compared to October 2013. ‘While Help to Buy has supported many first time buyers to get on the property ladder, other new policies have introduced fresh limits to promote responsible lending. These new caps seem to have affected first time buyers and home movers the most,’ Bagshaw said. ‘The impact of Stamp Duty on buyers is also not to be ignored. Though it has been a permanent feature of the housing market for a while, the prospect of a hefty tax bill… Continue reading
England sees 10% rise in new homes, still way short of demand
The number of new homes in England increased by 10% from 2012 to 2103, official figures show but experts are still warning that this is not enough to meet demand. The increase to 136,620 new homes still this leaves net house building in England 39% below the 2007/2008 peak of 223,530 new homes. The data from the Department for Communities and Local Government shows there were 130,340 new build homes, 4,470 from conversions and 12,520 from changes of use. There were also 1,330 other gains and a loss of 12,520 through demolition. The data also show that greater London has seen the faster progress with 12% annual growth in the number of net new homes built in the capital. A net 23,580 new homes built in London represent 17% of all those built in England in 2013/2014 with Newham and Southwark leading the way for new homes over the last year, seeing 1,970 and 1,650 extra homes respectively. Andrew Bridges, managing director of specialist London estate agents Stirling Ackroyd, pointed out that nothing else can solve a fundamental shortage of homes in the long run, apart from building more. ‘People are beginning to believe they could be better off at this point next year. But in terms of affording a home, the financial marathon is far from over and this is particularly true in our capital city,’ he explained. He pointed out that while it is encouraging to see such a pick-up for the new homes industry, even with 10% growth per year it would be 2020 before as many homes are being built each year as in 2008. ‘Accelerating this progress will be vital, with even more homes near transport and jobs. Nowhere is this squeeze more tightly felt than in London,’ said Bridges. Research by his firm shows areas in Southwark, Hackney, Tower Hamlets and Newham will lead the way for new homes over the next decade. ‘So the fact that two of these boroughs are already leading London’s home building effort is encouraging. But opportunities abound and the demand is there for hundreds of thousands of new homes,’ he said. ‘London’s economy is moving faster than ever, more than playing its part in the UK’s wider recovery. But keeping that dynamo spinning will require homes for the millions working to make that reality. Developers now appear to be rising to the challenge,’ he added. Continue reading
