Tag Archives: real-estate
Fringe of prime emerging property markets in London expected to lead growth
Prime property prices in emerging locations in London showed a small rise of 1.3% in the second quarter of 2015 and are down slightly by 0.84% compared to the same period in 2014, new data shows. Demand in South West London continued to be driven by sales, mainly flats, below the £937,500 threshold, following changes to stamp duty at the end of 2014, according to the latest quarterly report from real estate firm Douglas and Gordon. In contrast, larger houses priced above £1.3 million in emerging prime were muted, compounded by the stamp duty issues and mortgage market concerns. In some areas, such as Battersea and Battersea Park, some prices were down 10% year on year. Clapham and Southfields led price increases in the sector, up 3.5% and 3.9% respectively. A weaker second half in 2014 means that for these areas prices have caught up to where they were 12 months ago. Rental growth was also strong, up 1.7% in the quarter, continuing the areas robust performance during a difficult year in the sales market. However, this growth is expected to slow once the sales market picks up. Overall total returns, capital and rental growth, remain attractive for professional investors in emerging prime and capital values are expected to climb 10% in the next 12 months. ‘Whereas there is some evidence of a post-election bounce, unsurprisingly many are taking their time to make decisions and a continuation of the anticipated bounce needs to be tempered with a dose of realism,’ said Ed Mead, the firm’s executive director. He expects the market for more expensive family homes to remain firm in the next 12 months due to the prospect of a mansion tax that affecting the market before the election now no longer there. But he pointed out that volumes are still very thin and the firm’s emerging prime index is only back to where it was 12 months ago. His prediction is for fringe areas to perform best as buyers search for new up and coming areas to buy in. Continue reading
US housing negative equity rates falling, latest data shows
The housing market negative equity rate in the United States is falling but more than half of underwater home owners are nowhere near resurfacing, the latest research shows. More than 4 million US home owners owed the bank at least 20% more than their properties were worth in the first quarter of 2015, according to the report from real estate firm Zillow. That means those homes would have to appreciate at least 20% for their owners to have any chance of breaking even on a sale. While home values are forecast to continue rising, they are expected to do so at a slower pace than recent years. Overall the national negative equity rate dropped to 15.4% in the first quarter, down from 18.8% in the first quarter of 2015. The data also shows that the rate of negative equity improved in all of the 35 largest housing markets in the first quarter of 2015, a sign that, metro by metro and home by home, the country is continuing to recover from the lax lending rules and subsequent housing market bust of the last decade. At the peak of the real estate crisis, more than 15 million home owners owed more on their mortgages than their homes were worth, putting them in negative equity. Foreclosures, short sales and rapidly rising home values freed nearly half of those home owners, leaving 7.9 million home owners upside down at the end of the first quarter of 2015. Home owners who remain underwater will likely be the toughest to free from negative equity, the report points out. It also explains that while spring and summer are the busiest buying and selling seasons and this year there is high demand for homes in the bottom third of the market, a disproportionate number of those home owners are simply stuck in their homes and can't afford to sell to buyers looking for homes in their price range. The rate of underwater home owners was much higher among the homes with the least value. More than 25% of those who own the least valuable third of homes were upside down, compared to about 8% of the most valuable third of homes. The imbalance was even more pronounced in some markets. In Atlanta, for example, 46% of low end home owners were underwater, compared with 10% of high end home owners. And in Baltimore 32% of low end home owners were in negative equity compared to 9% of those who own the highest value homes. ‘It's great news that the level of negative equity is falling, but what really worries me is the depth of negative equity. Millions of Americans are so far underwater, it's likely they may not re-gain equity for up to a decade or more at these rates,’ said Zillow chief economist Stan Humphries. ‘And because negative equity is concentrated so heavily at the lower end, it throws a real wrench in the traditional housing market conveyor belt. Potential… Continue reading
Australian city property prices up almost 10% year on year
Property prices in Australian cities increased by 2% in the second quarter of 2015 and are now 9.8% higher compared to a year ago, the latest index data shows. The figures from CoreLogic RP Data reveal that the growth has gained momentum as the year has progressed and the firm’s head of research, Tim Lawless, believes interest rates cuts in February and May have contributed in pushing capital gains higher. ‘Growth conditions had been moderating from April last year through to the end of January 2015. With the RBA cutting the cash rate in February, there was an instant buyer reaction across the Sydney and Melbourne housing markets where auction clearance rates surged back to levels not seen since 2009, capital gains once again accelerated,’ he explained. He pointed out that Sydney and Melbourne homes are selling in record time, some 26 days and 32 days respectively. But growth is not even. While Sydney and Melbourne have seen dwelling values increase by 16.2% and 10.2% over the financial year respectively, every other capital city has seen growth of less than 5% and values are down over the year in Darwin by 2.9% and Perth by 0.9%. According to Lawless, the current housing growth cycle clearly highlights a divergence in capital gains across the capital cities. Since values started rising in May 2012, Sydney homes have seen a 43.1% surge in values and Melbourne values are up by 25.9%. Despite softer market conditions in Perth, property values are currently up 12.8%, the third highest growth rate across the capitals. Simultaneously, Brisbane's property market has shown the fourth highest rate of growth at 12.4% followed by Adelaide at 10.4%, Hobart at 9.6%, Darwin at 8.9% and Canberra at 8.8%. ‘The three tiers of housing market performance can be best explained by economic and demographic factors where it's no coincidence that New South Wales and Victoria are recording the strongest economic conditions coupled with the strongest rates of migration which is fuelling housing demand. These states are more sheltered from the mining sector downturn and have benefited from the strong multiplier effect of housing construction as well as a vibrant financial services sector,’ said Lawless. ‘The Perth and Darwin markets are weakening in line with the downturn in the resources sector and an associated weakening in infrastructure investment and a marked slowdown in migration. Brisbane, Adelaide, Canberra and Hobart are seeing softer economic conditions and population growth compared with Sydney and Melbourne, however housing markets have shown some level of growth over the year,’ he added. Looking at the performance of detached housing versus apartments over the financial year, houses are clearly outperforming units in the capital gains stakes. Over the financial year, house values were 10.4% higher across the combined capitals index while unit values increased by a much lower 5.6%. The same trend where houses are showing a higher capital gain than units is evident across each of the capital cities except Hobart… Continue reading
