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UK estate agents say controversial fracking plans already affecting home sales
Estate agents operating close to potential fracking sites in the UK are warning that the controversial technique is likely to wipe tens of thousands of pounds off the values of nearby properties. It could also make homes harder to sell with agents in areas already targeted by fracking companies reporting concerns from prospective buyers over looming shale developments, with some sales already falling through as a result. The findings from a survey of estate agents conducted by leading marketing research agency Redshift and for environmental campaigners Greenpeace UK in three key areas where energy firms are planning to carry out fracking in West Sussex, Manchester, and Lancashire, shows that 67% believe fracking could bring down prices. A majority of them estimate the loss in value could be up to 11% with two agents putting it as high as 41% to 70%. With the price of the average house in the UK estimated at £272,000, even just a 10% drop in value could translate into a loss of tens of thousands of pounds. Some 54% said they are concerned fracking could reduce property sales near potential sites. Most of those who say they’re concerned believe more than one in 10 purchases could be affected, with nine dealers putting the estimate as high as 25 to 50% of all sales. One in four respondents also say home buyers have expressed concerns about the prospect of fracking in the area, with four estate agents reporting some customers have pulled out as a result. The Department for Energy and Climate Change is expected to auction off licence blocks to fracking firms over an area covering more than half of Britain in the coming months. The government has previously stated there’s no evidence that fracking will affect house prices. But three quarters of the estate agents said fracking should not be permitted until more research is done. James Nisbet, who lives a few hundred metres from one of the Lancashire sites says a few potential buyers have pulled out of purchasing his £375,000 house after learning about the looming energy development. ‘We have had six viewings so far, all with very positive feedback, but no one wants to commit to buying with the fracking shadow hanging over us. I’ve been hearing the same story from quite a few people in the area. We have lived here for 15 years. I really like this place and I don’t want to move, but I also don’t particularly wish to stick around to see what fracking will do to this community,’ he said. Paula Higgins, chief executive of the Home Owners Alliance, said it is worrying that homeowners who happen to live in fracking zones are being kept in the dark on how fracking will affect them. ‘Some are already starting to bear the brunt through aborted… Continue reading
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
Improved economy helps UK commercial property markets
The last year has seen a marked shift in the commercial property markets in the UK, powered by improved economic fundamentals which drive the underlying occupier base, according to new reports. The broad based improvement in economic growth, aided by low inflation, has seen improvements in both consumer and business confidence, which should lead to rental growth where demand outstrips supply, says the latest analysis from Cluttons. The firm’s Commercial Property Market Outlook report indicates that the industrial sector is now showing similar performance to offices, as Cluttons predicted last year. Office total returns for the past 12 months are at 23% with capital growth of 16.8%, compared to the industrial sector which has delivered a total return of 22.7% bolstered by capital growth of 15.1%, driven primarily by yield compression. ‘As we forecast last year, sheds are now matching offices for performance. One reason is that prime logistics take-up has improved over the past year, driven by manufacturers, especially in the automotive sector, and retailers with supply constraints in key locations,’ said John Barrett, head of valuations at Cluttons. ‘Apart from the strong supply/demand fundamentals aided by supply shortages due to a lack of speculative development in recent years, the case for investment in the industrial sector is helped by low obsolescence and the squeeze on land supply from higher land value uses. This is especially the case in London and the south east,’ he explained. ‘With prime yields now stabilising across most markets, income growth is replacing yield compression as the primary driver of future performance. Average income return is at 6%, so it's still a good time to invest in property,’ he added. ‘However this is not universal. Tricky' secondary property remains hard to sell across all market sectors and this may present opportunities for investors prepared to take risks for higher returns,’ he concluded. Meanwhile, the latest research from real estate advisor Savills shows that UK commercial property returns continue to remain attractive in comparison to other asset classes as average prime yields stay stable for the third consecutive month at 4.59%. Savills Market in Minutes report found that the average total return on UK commercial property stands at 18.63% to the end of the first quarter of 2015, in stark contrast to oil, copper and gold, which offer returns of -42.57%, -16.4% and -8.9% respectively. The firm predicts that due to the strong level of demand property should continue to outperform many other asset classes this year. The report suggests that against this backdrop of stability, a split between property asset classes is set to emerge over the next three months. At present, in the office market the gap between prime regional yields at 5% and prime city of London yields at 4.25% is historically narrow. Still, it is likely that central London office yields will harden in the near future, primarily due to the weight of money that is targeted at larger office lots in the UK, something… Continue reading
