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Home sales down by 0.9% in Canada in June but prices up over 11% year on year
Nationally home sales fell 0.9% from May to June in Canada while prices were up 11.2% year on year, according to the latest index data. It means that monthly falls in sales activity has left transactions down 2.6% below the record set in April 2016, the home index from the Canadian Real Estate Association of Canada (CREA) also shows. There is also considerable price differences depending on location. For example if Greater Toronto and Greater Vancouver are left out of the equation prices are up 8.4% year on year. Sales activity was down from the previous month in about half of all markets in June, with declines in Greater Vancouver, the Fraser Valley and Greater Toronto having eclipsed gains in comparatively less active housing markets. ‘While national sales activity remains strong, there are still significant differences in housing market trends across Canada,’ said CREA President Cliff Iverson. ‘While home sales activity and price growth are running strong in B.C. and Ontario, they remain subdued in other markets where home buyers are cautious and uncertain about the outlook for their local economy,’ he added. A breakdown of the figures show that two storey single family home prices continued to post the biggest year on year gain at 15.5%, followed by one storey single family homes up 14%, townhouse/row units up 13.6% and apartments up 9.8%. While prices in nine of the 11 markets tracked by the index posted year on year gains in June, price growth continues to vary widely among housing markets. Greater Vancouver with price growth of 32.1% and the Fraser Valley up 35.5% posted the largest annual gains. Greater Toronto recorded price growth of 16%, Victoria was up 15.7%, up 10.6% in Vancouver Island, up 7.9% in Greater Moncton, up 4.1% in Calgary, up 3.6% in Regina, up 1.9% in Greater Montreal and up 1% in Ottawa but prices fell by 4.1% in Calgary year on year and by 1.4% Saskatoon. The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which remain two of Canada’s tightest, most active and expensive housing markets. The actual, not seasonally adjusted, national average price for homes sold in June 2016 was $503,301, up 11.2% year on year. However, if these two housing markets are excluded from calculations, the average price is a more modest $374,760 and the gain is trimmed to 8.4% year on year. June sales extended trends observed the previous month, according to Gregory Klump, CREA’s chief economist. ‘As was the case in May, the monthly decline in national sales activity was led by the Lower Mainland of British Columbia and markets in or around the GTA,’ he said. ‘In keeping with the law of supply and demand, exceptionally low inventory combined with high demand continues to translate into strong price growth in these housing markets, where year on year price gains have been running in double digit territory since late last year,’ he pointed out. Actual,… Continue reading
Brexit hits UK commercial property market sentiment
Sentiment in the UK’s commercial property market has dampened significantly since the referendum vote to leave the European Union with investment demand falling sharply, most notably in London. The heightened sense of caution is visible across both investment and occupier sides of the market, with uncertainty pushing rental and capital value projections into negative territory, according to the latest commercial property market survey from the Royal Institution of Chartered Surveyors. It shows that and increasing share of respondents across the UK now feel the market is in an early downturn phase and the 12 month capital value and rental projections have now moved into negative territory. On a UK wide basis, occupier demand failed to rise for the first time since 2012. The headline net balance fell from +21% previously to a reading of zero in the second quarter of the year. Declines were reported in the office and retail areas of the market but demand proved somewhat more resilient across the industrial sector. The regional breakdown shows the occupier demand gauge moderated across all parts of the country, although the shift was most noticeable in London. Alongside this, availability remains constricted, with the supply of leasable space more or less unchanged in the office and retail sectors during the second quarter, while industrial availability continued to decline. Worries over a potential hit to business confidence, caused by political and economic uncertainty, appear to be reflected in respondents’ rental outlook. This is especially the case over the shorter term. Indeed, the headline three month rent expectations net balance dropped from +26% to -7% in the second quarter. The office and retail sectors experienced the steepest decline, with the reading for both now comfortably in negative territory. In the industrial sector, although the net balance softened notably, it remains positive given the very tight supply and demand conditions. When the results are disaggregated, the rental outlook is most negative in London. Over the next 12 months, rents are projected to fall by around 3% at the all-sector level. Within this, rents across the secondary retail sub market are expected to come under the most significant downward pressure. The survey report points out that the weakness in demand is perhaps even more visible on the investment side of the market. During the second quarter the investment enquiries series fell sharply, posting a net balance of -16%, down from +25% in the first quarter of the year. What’s more, all traditional sectors covered in the survey experienced a drop-off in investor interest. Foreign investor demand declined at an even greater rate, as the net balance fell to -27%. While respondents in virtually all parts of the UK noted a decline in overall investment enquiries, the trend was again most pronounced in London. In fact, at -41%, the investment enquiries gauge for the capital was the weakest since 2009. Back at the UK wide level and, despite a softening demand backdrop, the supply of… Continue reading
Private rented sector in UK seeing rapid growth, new tenant survey reveals
The private rented sector is continuing its rapid growth across the UK and is now well established as the second biggest form of tenure after home ownership, new research shows. It has overtaken the social rented sector and large scale investment into the private rented sector (PRS) by funds and other institutions is set to treble over the next five years boosting growth further, according to the new tenant survey from real estate firm Knight Frank. The Tenant Survey carried out by YouGov on behalf of Knight Frank estimating that total investment will rise to £50 billion over the next five years and large scale investors are operating an average gross to net yield of 26% for new Build to Rent developments. It also shows that some 53% of tenants favour a six month or one year tenancy for rented accommodation and 52% said living close to work or their place of study is a key priority while 30% said the main reason for moving between rented properties was to ‘upgrade’ to a nicer or larger property. The survey found that 38% of tenants have lived in five or more rental properties and while the majority of respondents had moved within a mile of their previous property, some 19% had moved more than 60 miles, indicating a relocation for work or study, highlighting the flexibility of PRS as a tenure. Some 24% of Londoners are prepared to pay 50% as a maximum amount of their gross annual income on rent, up from 22% last year and a quarter of those living in the PRS do not want to, or don’t know if they want to buy a home in the future. Of those that express a desire to eventually buy a home using a mortgage, less than half are currently saving towards a deposit. Also, a quarter of those living in the private rented sector live alone, while 34% live in a couple without children. Some 43% of 18 to 24 years olds share with other adults in a flat share. Grainne Gilmore, head of UK residential research at Knight Frank, pointed out that the private rented sector is continuing to grow in size, with around 5.4 million, or 20% of households now being let out to private tenants. ‘There has been a generational shift in the private rented sector. More households are now living in rented accommodation for longer, and while housing affordability is certainly a factor here, rented accommodation is also becoming an established flexible form of tenure, an attribute welcomed especially among younger workers,’ she explained. Indeed, this was confirmed in last year’s Tenant Survey, with 38% of under 35s saying they didn’t want a mortgage or that renting suited their lifestyle, rising to 49% for those aged under 25. The number of under 45s living in the sector has more than doubled, to nearly 3.1 million over the last decade, and those aged 25 to 34… Continue reading
