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UK landlords report lowest void periods in 2014
The average void period experienced by UK landlords fell in 2014 with the lowest recorded in the fourth quarter of the year, down to 2.6 weeks, the latest sector survey shows. This was down from 2.8 weeks in the fourth quarter of 2013 and void periods have now not risen beyond 3.5 weeks over the past 13 years, according to the quarterly survey from specialist buy to let lender Paragon Mortgages. The first quarter of the year saw the average void period remain at 2.8 weeks then it dropped slightly to 2.7 weeks in the second quarter and returned to 2.8 weeks in the third quarter before falling again in the final three months of the year. Void periods have remained low over the period of the survey, averaging between 2.6 and 3 weeks since 2001. The lowest recorded void period was 2.5 weeks in the fourth quarter of 2002, and the highest at 3.5 weeks in the second quarter of 2010, which was during the peak of the financial crisis. ‘Although void periods have fluctuated slightly over the past year they have continued to remain low, peaking at 2.8 weeks,’ said John Heron, managing director of Paragon Mortgages. ‘It is encouraging to see that in the fourth quarter of 2014 void periods reduced to the lowest point recorded since 2012, only slightly above the lowest average void period reported by our research at 2.5 weeks,’ he pointed out. ‘The low average void periods we have seen over the past year, and in previous years, reflects the strong and growing demand we have seen for private rented property together with effective property management by landlords and letting agents in renting out properties,’ he added. ‘This is positive news for landlords and, as tenant demand continues to rise, it is possible that void periods may decrease even further in 2015,’ he concluded. Continue reading
Australian office markets see trend away from mining industries
Just over one million square metres was leased across Australia’s office markets in 2014 and the year saw a trend away from mining and its associated industries to the services sector. Non-mining sectors took at least 80% of the stock, while 35% of the space leased occurred in the Melbourne market, according to Savills Australia’s latest research. The report found of the 1,050,425 square metres of office space reported leased in CBD and suburban markets nationally, property and business services was the dominant sector leasing 29% of the stock. Other non-mining sectors including finance, government and IT, accounted for a further 50%, while the mining and utilities industry accounted for just 17% of the total. In the CBD markets, which accounted for just under 700,000 square metres, the property and business services sector leased 33% of the stock. The Melbourne market, which is dominated by the service sector, took the majority of space with 35% of the national total. Savills national head of research, Tony Crabb, said the figures underscored the trending shift away from mining and associated industries to the service sector. ‘These are the sort of figures that we expected given the end of the mining investment boom with Melbourne and Sydney leading the way and Perth and Brisbane struggling to adjust to the new status quo,’ he explained. ‘It’s a good news story for Sydney and Melbourne and not so good for Perth and Brisbane, but it’s important to note that this is a cyclical rather than a structural phenomenon and one which the mining states will recover from just as Sydney and Melbourne are now doing,’ he added. Crabb expects vacancy rates to reflect the fluctuating fortunes of the markets with the non-mining states recording minimal change on last year’s figures while Perth and Brisbane struggled with vacancy rates of around 12% and 14%. He pointed out that given the stronger leasing trend, incentives in the Sydney and Melbourne markets were likely to come off post global financial crisis highs, but would remain high in Perth and Brisbane. He also expects some tightening in vacancy rates would also come from withdrawal of stock. ‘We forecast an increase in the amount of occupied space with up to 700,000 square metres of space is expected to be withdrawn, leading to a tightening in the vacancy rate in some CBD’s, especially for prime buildings as upgrade activity accelerates,’ said Crabb. ‘As for incentives, they are mostly paid for by higher face rents. In Sydney, where the incentive has risen from 20% to over 30%, face rents have grown by more than the value of the incentive, this is also the case in Melbourne, Perth and Adelaide with Brisbane the exception,’ he commented. Continue reading
UK year on year house price growth down in first few weeks of 2015
Annual house price growth in the UK continued to moderate at the start of 2015 with the latest housing index showing it slowed to 6.8% in January compared to 7.2% in December 2014. However, the data from the Nationwide Building Society also shows that month on month prices increased by 0.3%, taking the average price to £188,446. ‘After taking account of seasonal factors, UK house prices are currently 2.4% above their pre-crisis peak. The further moderation in the pace of price growth is unsurprising, given the slowdown in housing market activity in recent months,’ said Robert Gardner, Nationwide's chief economist. He pointed out that the number of mortgages approved for house purchase has been around 20% below the level prevailing at the start of 2014 and surveyors continue to report subdued levels of new buyer enquiries. However, he added that the reasons for the slowdown in activity remain unclear. ‘Unemployment has continued to decline and wage growth has started to outstrip increases in the cost of living for the first time since the financial crisis. Surveys suggest that consumer confidence remains elevated, a view corroborated by healthy gains in retail sales over recent months,’ explained Gardner. ‘Although house price growth continues to outpace income growth by a significant margin, affordability does not appear stretched at a national level. The cost of servicing a typical mortgage remains close to the long run average as a share of take home pay, in part thanks to the ultra-low level of mortgage rates,’ he added. Gardner also explained that the supply side developments are crucial in determining the pace of price growth. ‘Surveyors continue to report a dearth of new homes coming on to the market, which may help to explain why house price growth has remained fairly robust, despite a more noticeable decline in housing demand since the summer,’ he said. ‘If the economic backdrop continues to improve as we and most forecasters expect, activity in the housing market is likely to regain momentum in the months ahead,’ he added. He also said that it is encouraging that the number of new homes built in England was up 8% in the year to the third quarter of 2014. ‘However, this is still 34% below pre-crisis levels and little over half the expected rate of household formation in the years ahead,’ he concluded. Continue reading
