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Residential rents in Australian capital cities up 0.1% month on month
Residential rents across Australian capital cities were virtually unchanged in October, down by 0.1% over the previous month, according to the latest index data. Rents were lower in four of the eight capital cities covered by the CoreLogic RP Data rental review report and the annual rate of change increased slightly from 0.5% in September to 0.6% in October. There is an ongoing softening in the rental market, according to CoreLogic research analyst Cameron Kusher, who said that with just two months remaining to the end of the year it seems that rental growth will be very soft over 2015 as a whole. ‘The construction boom across the capital cities, coupled with slowing population growth, low mortgage rates and the recent heightened level of activity from investors are the major contributing factors to the slowing rental growth,’ he explained. He pointed out that Sydney, Melbourne and Brisbane have continued to record rental rises over the last year however, each city is seeing a slowing in the pace of rental growth relative to 12 months ago. 'Clearly, the increase in investment stock is providing landlords with little scope to lift rental rates while the low mortgage rate environment provides little incentive to push yields higher,’ Kusher said. A breakdown of the data shows that rental rates were $483 per week and they have increased by just 0.2% over the first 10 months of the year while they have risen by 0.6% over the past 12 months. Only Sydney and Melbourne have recorded rental increases greater than 2% over the year. Rents have fallen over the year in Perth and Darwin, while the remaining capitals have seen rents rise by less than 2% over the year. It is anticipated that the rate of rental growth will continue to slow over the coming months due to increased supply of housing and rental stock and slower migration rates. Looking across the individual capital cities, over the past year, Sydney and Melbourne have recorded the greatest increases in weekly rents. Over the past month, weekly rents have moved lower across every capital city except Sydney, Hobart and Canberra where they rose and in Melbourne where they were unchanged. Over the past three months rents are lower in all capital cities except for Sydney and Melbourne. Continue reading
Country house market in UK above £2 million seeing recovery
The UK’s country house market has seen a marked recovery in the £2 million plus sector in the third quarter of 2015 compared to the previous two quarters, according to the latest research. The analysis report from Strutt & Parker also shows that sales levels are now not far off where they were in the fourth quarter of 2014, suggesting that the market uncertainty from the general election has perhaps filtered out. Strutt & Parker’s UK outlook for the remainder of 2015 looks positive and it predicts that there will be sufficient growth in the final quarter of the year to hit the forecast of 5.0% for 2015. Growth over the next few years is also forecast as positive with 5% per annum anticipated. There are, however, uncertainties for the UK market and the upcoming European Union referendum and potential interest rate rises adds further pressures. Despite this, sensibly priced and good quality properties, both regionally and in prime central London, will continue to do well, the firm believes. ‘There remains some uncertainty over the near term outlook for the national housing market. The gradual strengthening in growth within the UK economy is still being met by some caution against risk and interest rates are expected to begin rising early to mid 2016,’ said Stephanie McMahon, head of research at Strutt & Parker. ‘Once rates do begin to rise they may have a dampening effect on the national housing market, most specifically in the mainstream markets where the majority of purchases are dependent upon mortgages,’ she explained. ‘However, two factors should cushion this impact. First, interest rate rises are likely to be gradual, estimated to reach circa 2% to 2.5% over the next five years. Secondly, the majority, 75% to 80%, f recent mortgages have been at fixed rates. Both of these factors should mean that any adjustments in purchasers’ behaviour should also be gradual,’ she added. Her colleague, James Mackenzie, head of the country house department at Strutt & Parker, also agrees that the prime country house market is showing signs of improvement with a lack of high value property on the market and growth in demand over the quarter. ‘However, buyers are incredibly price sensitive as the cost of stamp duty is still a major hurdle. We are hopeful for a normalised autumn and winter,’ he added. Guy Robinson, head of regional residential agency at Strutt & Parker, pointed out that activity in the summer and early autumn months has shown encouraging signs of an improving market. ‘Last quarter, there was strong demand from buyers which has translated into agreed sales. The number of new instructions has remained static, consistent with the previous period,’ he said. Continue reading
Call for UK mortgages to be more user friendly for older people
Building Societies in the UK are being urged to review the maximum age limits for mortgage borrowers to support home owners needing finance into and in retirement as life expectancy rises. This is one of nine recommendations contained in an interim report entitled Lending into Retirement, from the Building Societies Association (BSA) which points out that the UK already has 11.6 million people over the age of 65. By 2034 it is estimated that around a quarter of the population will be 65 plus and lifestyle changes, including divorce, mean that people are tending to buy later and go for longer repayment terms. BSA research shows that around half of 25 to 34 year olds think they will need a mortgage that lasts into retirement and the average age of an unassisted first time buyer has already hit 31. The report also calls for more availability of suitable housing options for older home owners who want to move to a property that meets their changing needs and better cross departmental co-ordination to rationalise Government policy on the treatment of older borrower’s housing wealth. It would also like to see the delivery of regulation that encourages innovation along with the provision of clear information that empowers older consumers and points out that working with insurers would develop policies that enable lenders to mitigate the different risks involved in lending to older borrowers. Other areas for improvement include make holistic financial planning in retirement available, the formation of a cross-industry alliance with other bodies focused on the needs of older consumers and the creation of a mortgage product that adapts to the different stages of a person’s life. ‘We have been working together as a sector to look at this issue and we are making some early recommendations for change. Some put the ball firmly in our court, others can only be delivered in partnership and a few may require regulatory change,’ said Dick Jenkins, chair of the BSA. He explained that the Financial conduct Authority has been involved in preparatory work. ‘We have also sought the views of many others and these will now contribute to the next stage of the project, to deliver progress for those who want, need and deserve to buy a home of their own into and in retirement,’ he added. According to BSA head of mortgage policy, Paul Broadhead, it is natural for the building society sector to kick-start and lead this work. ‘We already tend to have a more flexible approach to lending with higher and sometimes no age limits and a willingness to assess applications considering an individual’s circumstances,’ he said. ‘As the average age of a first time buyer continues to increase, borrowing into retirement is becoming increasingly commonplace, rather than a niche form of lending. This report identifies a number of areas that need further attention if we are going to meet the inevitable growth in demand for borrowing into, and in, retirement,’ he added. ‘The time… Continue reading
