Tag Archives: real-estate
Majority of home owners in Australia concerned about property values
More than two thirds of Australians are concerned that Australia’s housing is vulnerable to a significant correction in values, according to the latest housing sentiment survey. Some 68% of respondents to the September CoreLogic RP Data TEG survey said they believe the housing market is vulnerable to a significant correction in values. However, the findings are a reduction from the previous quarter results where 75% of respondents indicated they were concerned about a significant downturn, but despite the apparent improvement in consumer perceptions, a significant proportion of the community are wary of substantial value falls across the nation’s largest and most important asset class, which according to CoreLogic RP Data is worth an estimated $6.2 trillion. ‘While we don’t envisage dwelling values will fall substantially, the probability of declines in Sydney, and to a lesser extent in Melbourne, after such a strong run of capital gains isn’t unlikely,’ said CoreLogic RP Data head of research Tim Lawless. ‘Home values are already trending lower in Darwin and Perth. It was less than three and a half years ago that capital city dwelling values fell by 7.4% between October 2010 and May 2012,’ he pointed out. Additionally, 95% of survey respondents believe that foreign demand is pushing property values higher, with 19% indicating that foreign buyers were responsible for placing ‘extreme’ upwards pressure on home values. Only 5% of survey respondents thought foreign buying activity wasn’t pushing home values higher. According to Lawless, the results are a stark reminder that the true extent of foreign buying of residential properties across Australia continues to lack transparency, despite the House Economics Committee Report on Foreign Investment in Residential Real Estate being handed down almost a year ago. He added that the latest statistics haven’t been updated since the 2013/14 financial year. Some 55% of survey respondents thought that the current housing market conditions represented a good time to buy a property, down from 60% in June. Respondents based in Sydney, where housing market conditions have been running the hottest, were the most pessimistic about buying conditions, however 29.7% of respondents still thought that now was a good time to be getting into the market. Alternatively, more than 70% of survey respondents thought buying conditions were ripe in the Australian Capital Territory, Adelaide, regional Queensland and Perth. The proportion of survey respondents who thought property values will rise over the coming six months has been trending lower, with respondents who thought home values will rise over the next six months dropping from 49% in March and 48% in June to just 40% of all respondents in September. Continue reading
UK property price set to rise by an average 17% by end of 2020
House price growth across the UK’s mainstream markets has exceeded expectations in 2015 but there is still room for further increases providing interest rates do not rise too steeply, according to new research. The timing and pace of interest rate rises, coupled with patterns of economic growth at a regional level, will dictate the distribution and sustainability of any increases, says the report from international real estate adviser Savills. The firm forecasts that prices will rise by an average of 17% by the end of 2020, ranging from 21.6% in the South East to 12% in the North East, assuming that mortgage rates do not exceed 4.5%. Any combination of higher house price growth or high mortgage rates could leave affordability looking stretched. Much depends on the speed at which interest rates rise. If rates rise too quickly mainstream house price growth will be quickly curtailed. On the flipside, if rates remain low for too long, there is a risk that prices will rise too far, creating affordability issues further down the line when they do eventually rise,’ said Lucian Cook, head of Savills residential research. ‘That risk has been mitigated by recent mortgage regulation which, by stress testing affordability, caps the amount people can borrow relative to incomes. That is likely to cap price rises, particularly in London, where house price to household income ratios are highest, thanks to growth seen over the past 10 years,’ he added. London’s mainstream markets are expected to underperform its hinterland, with average growth of 15.3% forecast over the next five years, though this will range from 20% to just 10% depending on specific location and post downturn levels of house price growth. Lower value outer London boroughs have greater remaining capacity for house price growth than higher value parts of the capital, having grown in line with the South East and East of England rather than London itself over recent years. While Walthamstow and Lewisham are expected to show the strongest growth, outperforming the mainstream submarkets of boroughs such as Hammersmith and Fulham and Richmond. The strongest price rises are therefore expected in parts of the south and east of England, which offer value relative to the capital so should benefit as the ripple gains traction. Growth beyond will depend on the strength of regional wealth generation and the ability of cities such as Manchester and Birmingham to act as catalysts to reinvigorate their housing markets. At the same time, annual transaction levels, at just over 1.2 million this year, are expected to reach 1.3 million in 2020, far short of the pre-crunch norm of around 1.7 million, as deposit affordability continues to act as a brake on demand and the changes to the taxation of buy to let property restrict the ability of some landlords to expand their portfolios. Continue reading
UK prices up almost 10% year on year, latest index data shows
UK house prices increased by 1.1% between September and October and re up 2.8% quarter on quarter and 9.7% year on year, the latest property index shows. This means that the average house price is now over £200,000 at £205,240, according to the Halifax index data and the report says that house price optimism remains high. The 1.1% monthly rise followed a previous month’s fall of 0.9% and the market is up and down with the quarterly figures being more reliable in terms of indicating overall trends, according to Martin Ellis, the Halifax’s housing economist. He pointed out that house prices over the three months from August to October with growth of 2.8% were higher than in the preceding three months and the quarterly rate of change increased from September’s 2% and was a little above the 2.5% average over the first nine months of the year. Some 68% of Britons expect average property prices to be higher in 12 months’ time with just 5% expecting it to be lower, according to the latest quarterly Halifax Housing Market Confidence Tracker. The Halifax report also points out that figures from HMRC show that home sales increased again in September. UK home sales increased by 1% between August and September, to 106,030. This was the second successive monthly rise. Sales in the three months to September were 4.4% higher than in the preceding three months. Mortgage approvals are also on an upward trend despite falling in September. The volume of mortgage approvals for house purchases, a leading indicator of completed house sales, increased by 4% between the second and third quarter of the year despite a 2.5% decline in September. Approvals in the three months to September were 10% higher than in the same three months last year. However, supply remains at a record low. New instructions by home sellers declined in September for the eighth successive month. This contributed to the stock of homes available for sale remaining at record low levels. ‘Improving economic conditions and household finances, together with sustained low mortgage rates, have boosted housing demand during 2015. Strengthening demand is filtering through in to higher sales levels although the ongoing shortage of supply is acting as a significant constraint on activity,’ said Ellis. ‘The imbalance between supply and demand is likely to persist over the coming months, maintaining upward pressure on house prices,’ he added. Rishi Passi, chief executive officer of Oblix Capital, believes growth on this scale isn't sustainable. ‘Wage increases and low inflation are bolstering household finances, helping to take some of the sting out of these increases,’ he said. ‘The diminishing prospect of an interest rate rise also means lenders are continuing to offer historically attractive rates to the market, which is good news for first time buyers and developers alike,’ he added. Continue reading
