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Australian office leasing market growth led by New South Wales
The New South Wales office leasing market is leading the way in the Australian commercial market in the first half of 2015, with almost twice as much office space leased year on year. There has been a 13% increase in the number of leasing deals done nationally in 2015, compared to the first half of 2014, according to figures from Colliers International. The amount of space leased is up 22% from 198,360 square meters last year to 241,551 square meter this year, led by New South Wales with 112, 937 square meters leased year to date, compared to 64,629 in the first half of 2014. Cameron Williams, Colliers International National Director of Office Leasing, said there was increased traction nationally at the larger end of the market. ‘This is in contrast to 2014 enquiry data, which is a reflection of what we are seeing on the ground. Larger firms are driving demand for office accommodation in 2015 compared to 2014, when we saw smaller space in strong demand,’ he said. ‘Our enquiry data for the second quarter of 2015 also shows a significant shift in the industries searching for office space,’ he added. The research also reveals that in 2014 the government sector dominated as they put large requirements into the market. However, moving into the second half of 2015 it is business services, communications and finance that are catching up and dominating both in enquiry levels and leasing deals being negotiated. Businesses searching for substantial office accommodation were driving demand across key office CBD markets, with the business services, communications and finance sectors accounting for the lion’s share of enquiries. Overall, enquiries for office space nationally increased by 31% from the second quarter of 2014 compared to the second quarter of 2015 for office space in the 1,000 square meters to the 3,000 square meters category. Sydney in particular saw an increase in this category, with a 25% rise in demand from the first quarter of 2015 with 51,003 square meters to 63,650 square meters in the second quarter. Williams said activity was increasing in the Sydney CBD office market, particularly in the last quarter. ‘The big change has been growth. The tenants that are in the market at the moment are predominantly growth driven,’ he explained. ‘The growth in the market is mostly being driven by technology companies and finance. At the smaller end of the market there has been a lot of activity from Asian investment companies that have a preference to be located in Sydney’s midtown,’ he said. ‘This growth is naturally having a positive impact on net absorption and lessors are becoming more confident,’ he added. Continue reading
House price growth confidence hit new high in UK after general election
Confidence in the outlook for house price growth in the UK hit its highest level in four years following the general election in May, but dropped back last month. The dip in confidence in June comes despite continued rise in real wage growth, together with record low numbers of homes available for sale pushing average house prices over £200,000 for the first time ever, according to the Housing Market Confidence Tracker report from the Halifax. House Price Optimism (HPO) hit +68 in May 2015, and although it slipped back slightly in June to +64 it remains substantially higher than at the beginning of the year when it was +52 in the January survey. Nevertheless, while the May high was short lived, the percentage of Britons predicting an increase in the average property price of more than 5% over the next 12 months has still risen from 34% to 38% in the last quarter, comparing the March and June 2015 measures, respectively. This increased optimism also corresponds with a fall in the net figure for buying sentiment from +35 in February 2015 to +25 in June 2015. Some 56% said in June they think it will be a good time to buy property over the next 12 months, compared to 61% who said this in February 2015. At the same time there’s been an increase in the net figure for selling sentiment from +27 in February 2015 to +32 in June 2015. With the Governor of the Bank of England saying improving economic figures means an interest rate rise has moved closer, 48% expect mortgage interest rates to be higher in 12 months’ time compared to 45% in the first quarter of the year. Londoners are less likely than those in any other region to say it is a good time to buy at 38% compared with 56% of Britons overall, making it the only region where the proportion who think the next 12 months will be a bad time to buy exceeds the proportion who think it will be a good time. Those in the South East are more confident than in any other region that house prices will be higher in 12 months’ time at 90% compared to 69% of Britons overall, with those in the North East and the West Midlands the least likely to say this, both at 59%. ‘Economic growth, together with increasing real earnings growth and historic low mortgage rates are all supporting the continued rise in house price optimism. It’s not been a smooth increase though as while there was a noticeable spike in optimism straight after the General Election result, this has now fallen off slightly,’ said Martin Ellis, housing economist at the Halifax. ‘A key factor in maintaining optimism over house price growth has been the fact that the stock of homes available for sale is currently at record low levels. If this growth is to be sustainable then we need to… Continue reading
UK mortgage lending still down compared to a year ago
Home lending levels recovered in May compared to April, but were still down compared to a year ago, the latest figures from the Council of Mortgage Lenders show. First time buyers saw a decline in lending volumes compared to last year, but up slightly on the previous month while home mover lending saw a similar trend with volumes up slightly on April but down year on year. Home owner remortgage activity also declined compared to the previous month and compared to the same period last year. However, buy to let lending continues to grow year on year, mainly driven by remortgage activity and also saw a slight month on month increase due to higher buy to let house purchase lending activity. ‘House purchase lending in May was slightly up on the previous month, suggesting the market might be waking up after a subdued first quarter,’ said Paul Smee, director general of the CML. ‘Activity has broadly been down on last year but we expect it to rise in the summer months as, with historically low interest rates and a competitive lending environment, borrowing conditions are relatively favourable. But we cannot ignore the continuing affordability constraints caused by high house prices relative to earnings which will work in a contrary direction,’ he added. The CML report also shows that, as previously reported, gross lending in May was £15.9 billion, up from £15.8 billion in April but down from £16.8 billion in May last year. Under normal circumstances, a slight increase in the number of loans to first time buyers in May would be a sign that their prospects are on the rise this summer. But Patrick Bamford, director of mortgage insurance Europe for Genworth, pointed out that average deposits have risen significantly over the last year, not just because of rising house prices, but because the squeeze on affordability is disadvantaging buyers without a sizable amount of cash to put towards a house purchase. ‘For many would be home owners, especially those without the Bank of Mum and Dad to fall back on, saving more than 5% is simply not a realistic aim. Despite more high loan to value (LTV) products being available at lower rates, market pressures are preventing lenders from offering these products to those buyers who traditionally rely on this type of loan,’ he said. ‘In order to drive a genuine recovery of the high LTV market, the government needs to introduce a permanent system of private mortgage insurance to accompany its planning reforms. First time buyers will only be able to access affordable homes if we make affordable mortgages permanently available to them,’ he added. However, the CML figures also shows that competitive mortgage rates mean first time buyers are paying a record low proportion of their monthly income to service the capital and interest rate payments of their mortgage. This is the lowest level since the CML began tracking this in 2005. Continue reading
