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UK new house building target not over ambitious, analysis suggests
The UK Government’s target of building a million new homes over the next few years is not as ambitious as some may think, according to a new analysis from the Royal Institution of Chartered Surveyors (RICS). The individual components of the goal includes 200,000 Starter Homes, an initiative still working its way through parliament, and 135,000 shared ownership properties about which little has been said to date. Trying to access the success of such a programme it about the official data on housing starts, according to RICS chief economist Simon Rubinsohn, and these show that a mere 144,000 new units were begun through the course of 2015. But he points out that other data produced by the Department for Communities and Local Government (CLG) casts some doubt on the accuracy of the quarterly figures which are produced on a high frequency basis and released within a short period following the end of the quarter. He explains that there is arguably more value to be gained by focusing on the less frequently released net supply numbers, which are based on completions rather than starts, as they reflect the additions to the stock of housing units for habitation. The quarterly completions series showed an additional 125,000 homes built in 2014/2015, the last full year for which data is available, while the annual net supply series puts completions at 155,000. Rubinsohn adds that net conversions added close to nearly 5,000 additional units over the period and this was supplemented more than 20,000 units from ‘change of use’. The latter figure has increased sharply over the past few years as a result of Permitted Developments Rights enabling the shift from office class to residential. And then demolitions amounted to just over 10,500 in 2014/2015. ‘So pulling this altogether, in the last financial year, there may have been 125,000 housing completions in England, 155,000, just over 180,000 or, after demolitions, 170,000. And on the basis of the higher number (gross additions to supply), the government doesn’t appear that far off its ambition for 2020,’ Rubinsohn argues. ‘None of this is designed to minimise the fundamental nature of the housing crisis which reflects the fact that household formation is still projected to comfortably outstrip projections for the supply of new units even on the most generous calculations,’ he says. ‘This is also clearly visible in the estimates by our professionals for medium term growth in house prices and rents. The February Residential Market Survey suggested both are likely to increase by at least another fifth over the next five years comfortably outstripping the probable rise in wages,’ he adds. Continue reading
Property price growth eases in Australian capital cities
The rate of residential property price growth in capital cities in Australia eased during the final quarter of 2015, according to the latest data from the Australian Bureau of Statistics. The annual growth rate of home prices across Australia’s eight capital cities eased to 8.7% in the final quarter of 2015, driven in part by a deceleration of Sydney dwelling price growth. A breakdown of the data shows that year on year price growth remained strongest in Sydney with prices up 13.9%, followed by Melbourne with growth of 9.6% and Canberra with prices up 6%. In Brisbane prices increased by 4.2%, by 3.5% in Hobart and by 3.3% in Adelaide but prices fell by 3.2% in Darwin and were down by 2.9% in Perth. ‘From an affordability perspective, the slowdown in dwelling price growth to a more sustainable pace is a welcome development,’ said Shane Garrett, senior economist for the Housing Industry Association. He also pointed out that the quarter saw a narrowing of the gap between the capital cities in terms of price growth whereas in previous quarters, the divergence in the pace of price growth from city to city was very large. ‘During 2015, a record 220,000 new dwellings commenced construction across Australia. The additional supply is playing an important role in containing the severe price pressures in markets like Sydney and Melbourne,’ Garrett explained. ‘Ensuring an adequate supply of new housing in the future requires root and branch reform in areas like planning, land supply and the taxation burden on residential building,’ he added. Continue reading
Research reveals few homes for sale in London under UK average
Affordability is a major issue for Londoners with new research showing that more than a quarter of boroughs don’t have a single home for sale less than the country average of £191,812. Indeed, average London property prices currently stand at around £530,409 and in nine out of 32 London boroughs, 28%, it is impossible to find a property with an asking price under the Land Registry average. The figures from online estate agents House Simple show that Bexley is the only borough where you can buy a property for less than £100,000, with a studio flat currently on the market for just £94,995 while in Tower Hamlets there are no properties on the market for less than £250,000. The research also found that just four or 12.5% London boroughs have property where the buyer would not pay stamp duty with the threshold kicking in at £125,000. In almost half of the boroughs, the most affordable property for sale today is a studio flat, which are typically just 100 to 110 square feet in size compared to the average UK one bed flat which measures 495 square feet. ‘These figures reveal how desperate the plight is for ordinary Londoners on average salaries, hoping to buy their first property. How can they feasibly afford to buy when average property prices in the Capital are over £530,000?’ said Alex Gosling, House Simple’s chief executive officer. ‘Although this research reveals there are properties for sale below the UK’s average house price, the pickings are extremely slim and you’re getting very little square footage for your money. It’s a studio or nothing in many boroughs,’ he pointed out. ‘It’s not surprising that more and more people are starting to move out of London for value. Why pay £200,000 for a studio flat when you can buy a house for the same money just an hour commute away. It’s likely in the future we will see less and less people putting their first foot on the property ladder in London,’ he added. Continue reading
