Tag Archives: news
New home sales down month on month in Australia
New home sales in Australia fell by 4% month on month in September, with the level of activity down from the April peak by 5.2%, the latest new data shows. Detached house sales declined in four out of the five the mainland states with only Victoria seeing growth at 3.1%, according to the New Home Sales report from the Housing Industry Association (HIA). They fell by 19.8% in South Australia, by 8.6% in Western Australia, by 5.9% in Queensland and by 0.5% in New South Wales. In Victoria detached house sales increased by 3.1%. ‘Following the peak level of sales that occurred in April this year, sales activity has trended lower only very modestly. This augers well for actual new home building activity in 2015/2016,’ said HIA economist, Diwa Hopkins. ‘A fresh record level of building activity during this financial year could have been achieved and could have been of strong benefit to the broader domestic economy but increasingly restrictive credit conditions are likely to curtail the boom in new home building,’ she pointed out. ‘The deterioration in credit conditions is likely to weigh more heavily on new home building activity beyond 2015/2016. We have therefore pared back our forecasts for activity over our forecast horizon beyond the end of the current financial year,’ she added. Meanwhile, separate research shows that offshore investment into Australia's commercial property market shows no signs of abating this year. Foreign investors accounted for 28% of transaction volumes by value in 2014 and already in the first half of 2015 the level is 27%. The Australian market is remaining attractive to offshore buyers, as commercial real estate assets continue to provide relatively high income returns in global context, according to the report from real estate firm JLL. It points out that Australian office assets are attractively priced for investors seeking high yielding, stabilised assets in a mature market, comparing well against major cities in Europe, Asia, and America. And even taking into account localised differences such as higher rent free incentive levels in Australia, yield spreads still favour the Australian market. ‘In Australia, yield compression has continued unabated, especially for prime grade assets, across all sectors and many markets. The weight of capital remains significant and the global portfolio tilt toward real estate continues,’ said Simon Storry, JLL's head of International Investments Australia. While 2014 was a record level of foreign investment into Australia, at the half year mark, 2015 levels are close to the record 28% of transaction volumes recorded in 2014. Storry said that the depreciation of the Australian Dollar has allowed offshore investors to be far more competitive and they seem to have a much greater desire to deploy substantial pools of capital in what they see as an undervalued market globally. Continue reading
British property rents up 2.7% annually, fastest rate in three years
Private rental prices in the UK increased by 2.7% in the 12 months to September 2015, but there are considerable regional variations, according to the latest data from the Office of National Statistics. Private rental prices grew by 2.8% in England, 1.6% in Scotland and 0.5% in Wales, while excluding London they increased by 1.8% year on year. In the capital city they were up 4.1%. Rental prices increased in all the English regions. The largest annual rental price increases were in London followed by the South East at 2.7% and the East also at 2.7%. Rental price increases have been stronger in London than the rest of England since November 2010. The ONS index report says that the rental market in Great Britain continued to show signs of strength with rental prices now growing at their joint fastest annual rate since October 2012. Increasing demand for rental properties coupled with low supply may be supporting price growth, it adds. August’s ONS House Price Index showed that house price growth has typically been stronger than rent price growth for a number of years. The Bank of England’s Agents’ Summary of Business Conditions for the third quarter of 2015 reported the long term growth in demand for rental properties continued in the three months to September. The Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS) for September confirmed this robust growth, noting the strongest tenant demand since the second quarter of 2012 in the third quarter of 2015. Despite signs of a slight increase in supply growth, growth in demand continues to outpace supply. While the latest RICS release did suggest a marginal increase in new landlord instructions, the longer term trend within the wider housing market is one of under supply, the report points out. Reflecting the Bank of England’s August Inflation Report, which noted that supply remains weak within the housing market, the Association of Residential Letting Agents reported a dwindling supply as the average number of properties held per branch fell by 5.8% in August. According to Rob Weaver, director of investments at property crowdfunding platform, Property Partner, it is no surprise than rents rose the most in London, as the supply issue in the capital is especially pronounced. ‘We need to build more homes, but there are a number of obstacles getting in the way, from slow moving planning departments to the practice of land banking. Recent initiatives such as the Government's decision to make it easier to convert commercial property into residential property are a step in the right direction,’ he said. ‘Unused office space is a way to tackle the housing shortage without eroding the green belt. We need more initiatives like this from both the public and private sector if we are to get Britain building and genuinely improve supply,’ he added. Steve Bolton, founder of Platinum Property Partner, also believes that a shortage of suitable properties, coupled with strong demand, both… Continue reading
UK house prices continue to creep upward, latest index shows
House prices in the UK increased by 0.6% in October, taking the average price of a home to £196,807, according to the latest index to be published. The data from the Nationwide, one of the country’s main lenders, prices are now up 3.9% year on year. The report points out that over the past five months annual price growth has remained in a fairly narrow range between 3% and 4%, broadly consistent with earnings growth over the longer term. ‘While this bodes well for a sustainable increase in housing market activity, much will depend on whether building activity can keep pace with increasing demand,’ said Robert Gardner, Nationwide's chief economist. He also pointed out that fixed rate mortgages have remained the most popular because of ongoing uncertainty about when the Bank of England might introduce an interest rate rise. ‘Historically low interest rates have helped to offset the negative impact of rising house prices on affordability. Indeed, even though house prices are at an all-time high, the cost of servicing a typical mortgage is still close to the long term average as a share of take home pay,’ Gardner explained. He said that fewer variable interest rate mortgages should help to insulate many households from the impact of higher interest rates but he warned that the majority of recent fixes are for relatively short time periods with 65% for two years and 30% for five years. ‘Nevertheless, the housing market should be able to cope with higher interest rates in the year ahead, provided the increase is modest and the economy and the labour market remain in good shape,’ he said ‘Guidance from the Bank of England suggests that the increase in interest rates is likely to be gradual, and that they are expected to settle at a level somewhat below the average prevailing before the financial crisis, which should help ensure borrowing costs remain manageable,’ he added. Alex Gosling, chief executive officer of online estate agents HouseSimple believes that as building activity is highly unlikely to keep up with demand, average house prices are likely to continue to rise and rising interest rates could affect many home owners. ‘It's hard to believe but many home owners have never known a conventional interest rate environment, and when it finally comes it could well prove a shock. If the economy holds firm then gradual rate rises will be better accommodated, but the extent of the impact of a rate rise on the market remains a great unknown,’ he explained. ‘What we can say with near certainty is that if rates rise sharply, many borrowers could get caught out. Thankfully people are moving to fixed rate mortgages to protect themselves,’ he added. According to Mark Dyason, director of Edinburgh Mortgage Advice, borrowers know higher rates are coming sooner or later and they are thinking ahead. ‘First time buyers and people with smaller deposits are especially likely to select a fixed rate because that's what most lenders are… Continue reading
