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Property prices and rental values expected to continue rising in Ireland in 2016
Property values increased across all regions in Ireland in 2015 and that trend is likely to continue in 2016 according to the annual residential property review and outlook report from the Society of Chartered Surveyors Ireland (SCSI). SCSI members expect the price of an average three bedroom semi-detached property to increase by between 4% and 8% in 2016 depending on location. According to the national survey of over 700 estate agents and chartered, property values are estimated to have risen by approximately 8.8% nationally in 2015 but to have moderated to 4.8% in Dublin. In 2014 Dublin property values rose by 19.5%. In Leinster values are estimated to have increased by 9.4% while in Munster and Connacht/Ulster they rose by 10.4% and 8.8% respectively. John O’Sullivan, chairman of the SCSI Residential Agency Professional Group said that the Central Bank’s lending rules had dampened price growth in Dublin and displaced it to neighbouring counties which have experienced an uplift in values over the past 12 months. ‘This happened because potential buyers were unable to justify the cost of buying in Dublin or were unable to access the necessary finance. According to our survey, 47% of Dublin based respondents believe that, in the absence of the Central Bank rules, values in Dublin would have grown by between 9.8% and 14.8%. That’s 5% to 10% more than the actual increase,’ he pointed out. ‘Most of the growth in values nationally accrued from the regions. The ongoing economic recovery is starting to spread across the country and further increases in property values in the regions can be expected in 2016 as incomes and expectations for the future continue to improve. The outlook remains fragile however and is dependent largely on the employment opportunities and investment for regional towns,’ he added. The report also shows that the private rental market experienced another year of continued growth with average rental values increasing by 12% nationally. The growth in rental prices is now outperforming the growth in property values across each of the regions. Respondents to the survey have attributed this trend to the shortage of supply in the sales market which is putting disproportionate pressure on the rental market. According to the survey SCSI members predict further increases in rental values in 2016, with the average rental value for a three bed semi-detached property expected to increase by a further 5% to 7% depending on location and two out of three said they believed that the new rent freeze legislation had increased the cost of renting for tenants. O’Sullivan noted that the rental increases have come about not just as a result of the broad undersupply of housing nationally, but also because of the difficulties that potential buyers are having accessing finance to purchase a house. ‘Allied to this, the collapse in construction output has resulted in virtually zero supply of social housing units to accommodate the growing social housing lists. Consequently, this cohort of tenants has had to seek accommodation… Continue reading
UK’s private rented sector sees evictions rise to record high
A rise in evictions in the private rented sector and the use of Section 21 accelerated possession procedures is a stark insight into the severity of the UK’s housing shortage, it is claimed. It is also a reflection of the impact increased legislation is having on the private rented sector, according to Paul Shamplina, founder of specialist landlord possession services firm Landlord Action. The latest figures from the Ministry of Justice show that total evictions last year reached a record high of 42,728. Whilst overall possession claims fell during the year to 148,043, the number of accelerated possession cases continued their upward trend reaching 37,663 in 2015, up 4.5% on 2014 and up 10.5% on 2013. ‘Rising rents and welfare cuts are undoubtedly to blame for the growing number of evictions. With a shortage of affordable properties, particularly in the capital, the imbalance of supply and demand has pushed rental inflation well beyond the levels at which tenants’ wages have risen,’ said Shamplina. ‘Many simply can’t keep pace and are falling into arrears. We’re seeing more subletting scams and cases of tenants renting out properties on holiday websites in order to cover their rent than ever before,’ he added. According to the figures the proportion of claims made using accelerated procedure has increased from 7% in 1999 to 25% in 2015. Shamplina explained that there are several reasons for this including rising house prices, uncertainty over future buy to let tax implications and concerns over increased legislation such as Right to rent and the Deregulation Act which have been the catalysts for many self-managing landlords to consider selling up. They use Section 21 as a way to gain possession of their property as quickly as possible. In other circumstances, where tenants are in arrears, Landlord Action says many landlords still opt to use a section 21, instead of Section 8. Some landlords feel they won’t be able to collect rent arrears so this allows them automatic right of possession without having to give any grounds (reasons) once the fixed term has expired. Other landlords are being forced down the Section 21 route because local councils are advising tenants to remain in properties until a possession order has been granted by the courts. This means they can apply for re-housing and do not make themselves voluntary homeless. ‘A section 21 usually enables landlords to gain possession much quicker on a no-fault basis, so they can re-let the property, which is often more financially viable than chasing arrears. I believe use of the Section 21 process for landlords will continue to grow year on year because of councils’ pushing the problem back onto private rental sector landlords,’ said Shamplina. Continue reading
New home sales and lending in Australia ended 2015 strongly
Seasonally adjusted new home sales in Australia finished last year strongly, recording a 6% increase in December, according to the latest data from the Housing Industry Association. The growth has bee driven by both the detached house and multi-unit segments of the market. Data shows detached house sales increased by 2.2% while multi-unit sales were up by 21.1%. HIA chief economist Harley Dale said the current healthy national construction volumes are expected to continue throughout the first half of 2016 but there are likely to be very large differences in new housing conditions across States. ‘The updates we receive for leading indicators in coming months will be closely watched to determine the magnitude of any risk that the second half of 2016 is materially weaker for new home building than the first half of the year,’ he added. A breakdown of the figures show that detached house sales increased in three of the five mainland states, up 5.2% in Queensland, up 5% in Western Australia and up 1.1% in Victoria. Sales fell 2.1% in South Australia and by 0.1% in New South Wales. During the December 2015 quarter detached house sales increased in Queensland by 4.3% and by 0.3% in New South Wales. Sales fell 15.4% in Western Australia, 10.2% in South Australia and 4% in Victoria. Meanwhile, the latest figures from the Australian Bureau of Statistics show that the monthly volume of new home loans to owner occupiers hit a six year high during December 2015. That means that the pipeline of new home building is likely to remain strong during early 2016, according to HIA senior economist, Shane Garrett. He pointed out that the December data is the best since November 2009. ‘This time around, new home building is benefitting from record low official interest rates, strong demographic demand and resurgent labour markets in New South Wales and Victoria,’ he added. During December, the number of owner occupier loans for the construction of new homes increased by 1.8% with growth of 12.4% in loans for newly constructed homes. Compared with a year earlier, total owner occupier loans for the construction and purchase of new dwellings are 5.3% higher. ‘During November, the major banks unilaterally increased their variable mortgage interest rates. While the figures seem to suggest no immediate impact on new home lending, the risk remains that such tactics could undermine our industry’s ability to meet Australia’s long term housing needs,’ Garrett explained. A breakdown of the figures shows that the number of new home loans increased, in annual terms, most strongly in the Northern Territory with growth of 29.3%, up 21.7% in New South Wales and up 12.3% in Victoria. New home lending volumes also rose in Queensland by 4% but lending volumes fell in Tasmania by 29.6%, in Western Australia by 19.8% and in the Australian Capital Territory by 0.5%. Continue reading
