Tag Archives: real-estate
Sales of new homes in Australia at their highest since 2010
The new homes sector in Australia has seen strong growth in March 2015, taking sales volumes to their highest level since early 2010, according to the latest survey. Overall new home sales were up 4.4%. There was an 11.3% rise in multi-unit sales and a 2.6% rise in detached home sales in March, according to the latest new home sales report covering the largest volume builders by the Housing Industry Association. ‘The monthly rise in both the detached and multi-unit segments of the market is an encouraging result. However, the broader trend is that growth over the past year has been driven by multi-unit sales, while detached house sales have tracked sideways,’ said HIA economist Diwa Hopkins. ‘The residential construction sector continues to be the main bright spot in the broader domestic economy, with updates to the sector showing its ongoing strength. Lower lending rates will provide added support to residential construction activity, which is emerging as a key area of growth mitigating the effects of the downturn in mining investment and construction,’ she added. A breakdown of the figures show that detached house sales increased by 5.9% in Victoria, 4.2% in New South Wales and also 4.2% in Western Australia. They declined by 5.8% in South Australia and by 2.3% in Queensland. In the March 2015 quarter, detached house sales increased by 5.2% in Victoria and by 4.3% in Queensland. In Western Australia they fell by 6.4%, in New South Wales by 3.6% and in South Australia by 1.4%. However, the latest renovations report from the HIA shows that this sector of the property market is struggling. Over the past three years the volume of renovations activity has fallen by 15%. The performance of South Australia typified the national trend. Over the 2012/2013 period, renovations activity the state declined from $2.10 billion to $1.78 billion, a drop of 15.1%. ‘The importance of the home renovations market is often underestimated. Valued at $29.66 billion during 2014, the renovations sector accounts for over one third of all residential construction activity and about 2% of GDP,’ said HIA senior economist Shane Garrett. ‘Big ticket expenditure items like home renovation jobs tend to suffer disproportionately at times when economic growth is slow and when unemployment is drifting upwards. The deceleration of wages growth to its lowest rate in almost two decades has also challenged the renovations sector,’ he explained. The report envisages a further decline of 2.8% in renovations activity during 2015. However, activity will experience an 8.2% uplift between 2015 and 2018, as a result of low interest rates and the gradual recovery of economic activity. Continue reading
UK mansion tax could affect thousands of ordinary home owners, expert warns
If a mansion tax is introduced in the UK on higher value homes the knock-on effects could prove disastrous for thousands of ordinary home owners, it is claimed. Owners who still have mortgages on their properties or who have invested for their retirement in property and benefitted from the rise in values rise over time will be affected the most, according to Chestertons estate agency. The Labour party, the Liberal Democrats and the Greens are all proposing some form of levy on higher value homes so any deal between the parties that sees Ed Miliband become the next Prime Minister would surely see a mansion tax brought forward, probably within the first few months of the new administration taking power. For those with a mortgage, the levy would be an effective ‘tax on debt’, according to Chestertons Group chief executive officer Robert Bartlett. ‘Let's be clear, this is a wealth tax in every way but name. Details are scant on how it will work in practice, or how much revenue it might raise, but the threshold of what qualifies as a mansion would likely fall around the £2 million mark,’ he said. ‘We know the vast majority of these homes are in London and, while Miliband himself jokes that his current London home would fall into this bracket, it will be no laughing matter for thousands of ordinary Londoners,’ he explained. ‘Unless you are very rich, you are likely to have a mortgage on your home. Let's say your home is worth £2.5 million but you have a £1.5 million mortgage. That means your asset value is only £1 million, but you will be taxed as though you own the property outright. This would potentially make this tax the UK's first ever tax on debt,’ he pointed out. He added, that even if the property is owned outright, perhaps having been bought with a mortgage which has now been paid down in full, then the mansion tax could prove problematic for many households. ‘Older householders may be particularly hard hit, especially if they are retired and on a reduced income. They are also less likely to be able to remortgage to release capital. They could be forced to sell up and downsize to avoid a tax they simply can't afford. In many cases they may have to move away completely if more affordable homes are not available in their local area,’ said Bartlett. ‘The implementation of a new tax with a threshold beginning at £2 million would also likely have an immediate impact on values. Properties worth around £2.25 million for instance could drop to under the £2 million threshold overnight, which could send many home owners into negative equity. Thus in turn the tax may not bring in as much as calculated,’ he explained. He also believes the threshold could creep downwards. ‘It is very easy for a government to change tax thresholds and I expect that we will quickly see the £2… Continue reading
Sales and rental markets in prime central London feeling election effect
Both property prices and the rental markets in prime central London are being affected by the uncertainty surrounding the next UK government as the election remains too close to call just hours before polling opens. Prices in this sector rose by 0.3% in April and have been broadly flat in recent months with annual growth dipping to 2.8% in April, according to the latest report from real estate firm Knight Frank. Indeed, it is the lowest rate since November 2009, a period when the market had begun to rebound following the collapse of Lehman Brothers the previous year. After an exceptionally strong run of growth that saw prime central London property cement its global reputation as a safe investment, political uncertainty has now replaced economic uncertainty, according to Knight Frank associate Tom Bill. ‘During an election campaign where the opinion polls remain deadlocked and a clear cut outcome is not immediately guaranteed, some sellers are waiting for more clarity before acting, which has led to pent-up demand,’ he said. He pointed out, however, that irrespective of the outcome, a growing number of vendors are lining up properties for sale once the election is over, which suggests there will be a bounce in transaction levels. He also explained that in the sales market demand remains robust, primarily on the back of a strengthening UK economy but also from overseas buyers who view London as an attractive place to live given the shifting nature of geo-political uncertainty around the world. ‘Tight supply and strong demand has in some instances led to a stand-off between buyers and sellers in the expectation that more stock will appear after the election. As a result, viewings were 14% lower in the year to March 2015 than the previous year,’ said Bill. ‘While there is less political uncertainty in lower price brackets and price growth broadly remains stronger below £2 million, there remains strong appetite for higher value property. Some deals have been done as sellers have adjusted asking prices down to reflect the fact growth has cooled across the various price bands,’ he explained. ‘It is also worth noting that annual price growth in prime central London has been slowing for three years, which means that some degree of political uncertainty is already priced in,’ he added. According to Bill, over the last year, the prime central London lettings market has benefited from uncertainty in the sales market surrounding the outcome of the general election and a number of buyers have opted to rent until the outcome is clear, though demand has been more broadly driven by the strengthening UK economy. ‘As the election moves closer, this trend has become less marked as a universal sense of hesitation permeates both the lettings and sales markets. Some prospective tenants have been holding out for the election result before deciding whether to rent or buy which, combined with the Easter holiday, led to fairly subdued activity across many markets in April after a strong… Continue reading
