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Capital city rents edging lower in Australia
Rents in capital cities in Australia increased slightly by 0.1% in April, but overall rental rates edged lower and have now fallen by 0.2% over the past 12 months. This takes the average rental rate to $490 a week for houses and $467 a week for units across combined capital cities, according to the data from the latest CoreLogic monthly rental review report. Five of the eight capital cities saw a modest rise in rents over the past 12 months, including Sydney up 1.4%, Melbourne up 1.7%, Adelaide up 0.5%, Hobart up 1.1% and Canberra up 2.5%. Perth with a fall of 8.9% and Darwin with a decline of 12.6% both experienced large drops in rent rates and have collectively pulled the combined capital average lower while in Brisbane rents dropped by 0.6%. ‘We anticipate that the weakness in the rental market will persist over the year and rents will continue to fall over the coming months. The annual change in rental rates continues to be at its slowest pace since before 1996,’ said Research analyst Cameron Kusher. ‘At the same time last year, rental rates increased by 1.7% which indicates a sharp slowdown in rental growth over the past year,’ he pointed out, adding that factors contributing to a slowing in rental growth include falling real wages, excess rental supply in certain areas and lower rates of population growth, all of which have impacted on demand for rental accommodation. ‘With dwelling approvals at recent record highs and construction activity set to peak over the next 24 months, accompanied by many new properties still to settle, we anticipate that the weak rental market conditions will persist with rental growth continuing to slow and, or, fall in most capital cities,’ Kusher explained. He also pointed out that based on current market conditions, landlords won’t be in a position to lift rental rates and may actually need to reduce rents in order to keep their tenants. ‘We see renters as holding a stronger negotiation position and where they now have the potential to upgrade into higher grades of accommodation for a similar, or lower rents,’ Kusher said. Canberra is the only capital city where the annual rental change is currently stronger than it was a year ago. Kusher said this highlights the weakness in rental market conditions is being felt across all other capital city markets. With rental rates increasing in some cities in April, rates in Sydney, Adelaide and Hobart are at record highs. In all remaining cities, rental rates are now below their highs with the declines recorded respectively down 0.1% in Melbourne, 0.8% in Brisbane, 13.7% in Perth, 17.3% in Darwin and 5.4% in Canberra. The results show that as rental changes outpace home value changes, gross rental yields have trended lower and have hit record lows of 3.3% for houses and 4.2% for units. ‘In our two largest capital cities, we’ve seen rental yields move to record lows of 3.1% for houses and… Continue reading
Property sales up over 20% month on month due to property tax change
Property sales in Scotland increased by 21% month on month to record the strongest March for homes sales in eight years, the latest index figures show. The rise was partly due to buy to let landlords rushing to beat the extra 3% property tax imposed on additional homes at the beginning of April, according to the index report from Your Move. The data also shows that Midlothian recorded record high house prices and the fastest increase in sales, rising 48% in the first quarter of 2016 year on year while overall property values were up 0.8% month on month in March, the quickest rise since August 2015. However year on year property prices in Scotland are down 9.7% year on year, taking the average house price to £169,379. Christine Campbell, Your Move managing director in Scotland, pointed out that sales in Scotland were not as high as elsewhere in the UK where transactions soared by 60% month on month in March. She said that the more modest increase in Scotland may have been due to John Swinney announcing the property tax changes a month later than George Osborne, so many second home buyers may not have had time to plan their investments. But Scottish sales for the first quarter of this year are still well above the same period in 2015, up 18% year on year and Campbell explained that the construction of new homes in Midlothian has enabled the area to become the only place in Scotland where house prices stand at a record high in March. She also pointed out that while house price growth is down year on year, it’s important to remember that this was due to the huge spike in house prices back in March 2015, following a rush of sales brought forward to avoid the introduction of the LBTT. ‘But with buy to let landlords opting to buy flats and other more affordable properties, this hasn’t translated into too much price turbulence. House prices have generally risen by between 0.01 and 0.8% each month since July 2015, which suggests the current spurt is healthy and sustainable,’ said Campbell. She also pointed out that an uplift in million pound home sales has propelled East Renfrewshire up the rankings in March, with house prices in the area increasing faster than anywhere else in Scotland, up 8.1% month on month. These additional high end home sales mean the area now also has the highest average property value of any area at £257,529. Continue reading
New housing construction in UK rising, but output slowed slightly in March
New housing construction in the UK is rising, although there was a slight slowdown in output in March of this year. The latest figures from the Office of National Statistics show that new housing output fell by 0.3% in March month on month. Overall output in the construction industry was estimated to have decreased by 3.6% compared with February 2016 and in the first quarter of 2016 it was estimated to have decreased by 1.1% compared with the fourth quarter of 2015. And year on year between the first three months of 2016 and the first quarter of 2015 output was estimated to have decreased by 1.9%. However in the first quarter of the year there was an increase of 4.8% in total new housing output compared with the fourth quarter of 2015, the data also shows. Both public and private new housing reported increases of 4.2% and 4.9% respectively and all new housing has shown underlying growth since the second quarter of 2013, with the exception of the third quarter of 2015. When compared with the same period a year ago, there was an increase of 3.4% in total housing, with private housing increasing by 7.5% offset slightly by a fall in public new housing of 14.3%. The level of private new housing is the main contributor to the level of total new housing, with public new housing having a much smaller contribution, the ONS report says. The level of private new housing has been increasing gradually since early 2013 and in the first quarter of 2016 was at its highest since records began in 1997 at £6.3 billion, while the level of total new housing is also at its highest at £7.5 billion. Charles Holland, head of residential development and investment at Marsh & Parsons, pointed out that public and private sector housing are the only sectors to have witnessed an increase in construction output quarter on quarter. He does not believe that the slight fall in March is a major issue because home construction is heading in the right direction. ‘London needs to build more new homes than anywhere else in the country. But they also need to be delivered at the right price,’ he warned. ‘It’s not just enough for the new Mayor of London to pledge an annual quota for house building. While that’s challenging in itself, it needs to be coupled with affordability to truly work for everyday Londoners,’ he explained. ‘House building efforts in London need to cater for the £250,000 to £850,000 price range, as this is where we see the strongest and most urgent buyer demand from first time buyers and growing families,’ he added. The new Mayor Sadiq Khan has revealed that an audit of City Hall's preparedness to tackle the housing crisis has found that the delivery of affordable homes is at a near standstill. Last year saw the lowest number of new affordable homes since current records began in 1991with just 4,880 being built. He has… Continue reading
