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US pending home sales fall slightly but still well above a year ago
Pending home sales in the United States retreated in August but remained at a healthy level of activity and have now risen year on year for 12 consecutive months, the latest real estate data shows. A modest increase in the West was offset by declines in all other regions but demand continues to outpace supply, according to the index report from the National Association of Realtors. The Pending Home Sales Index, a forward looking indicator based on contract signings, decreased 1.4% to 109.4 in August from 110.9 in July but is still 6.1% above August 2014 when it was 103.1. Lawrence Yun, NAR chief economist, said that even with the modest decline in contract signings, demand continues to outpace housing supply and elevate price growth in numerous markets. ‘Pending sales have levelled off since the middle of summer, with buyers being bounded by rising prices and few available and affordable properties within their budget. Even with existing housing supply barely budging all summer and no relief coming from new construction, contract activity is still higher than earlier this year and a year ago,’ he explained. According to Yun, sales in the coming months should be able to roughly maintain their current pace. However, he warns that there are looming speed bumps that have the potential to impact housing. ‘The possibility of a government shutdown and any ongoing instability in the equity markets could cause some households to put off buying for the time being. Furthermore, adapting to the changes being implemented next month in the mortgage closing process could delay some sales,’ Yun added. The national median existing home price is expected to increase 5.8% in 2015 to $220,300. Yun forecasts total existing home sales this year to increase 7% to around 5.28 million, about 25% below the prior peak set in 2005 when they were 7.08 million. A breakdown of the figures shows that the PHSI in the Northeast fell 5.6% to 93.3 in August, but is still 8.9% above a year ago. In the Midwest the index inched down 0.4% to 107.4 in August and is now 6.5% above August 2014. Pending home sales in the South declined 2.2% to an index of 121.5 in August but are still 4.1% above last August. The index in the West rose 1.8% in August to 104.9 and is now 7.6% above a year ago. Continue reading
Property prices gap between Sydney and other cities in Australia widens
The gap between property price growth rates in the eight Australian capital cities has widened, according to the latest figures to be published. The data from the Australian Bureau of Statistics shows that said over the year to June 2015, the price index rose by 9.8% with a 4.7% increase occurring during the June 2015 quarter. Sydney led the way with price growth of 18.9% far more than any other capital city. Next Melbourne with growth of 7.8% but all other cities were some way behind, opening u a considerable gap. Brisbane saw price growth of 2.9%, followed closely by Canberra with growth of 2.8%, then Adelaide with 2.7% and Hobart with 1.5%. But in the other cities prices have fallen year on year. Perth saw a fall of 1.2% and Darwin a decline of 1.8%. Annual house price growth was 10.5% with prices in the semidetached home sector increasing by 7.5% over the same period and according to the Housing Industry Association (HIA), the voice of Australia’s residential building industry, the variation in price growth across the capital cities is remarkable. ‘On the one hand, price growth is very robust in both Sydney and Melbourne, while prices have actually eased back a little in cities like Perth and Darwin,’ said HIA Senior Economist, Shane Garrett. ‘The wide divergence of dwelling price growth across the capitals is indicative of the mixed economic conditions across Australia. It highlights the challenges in prescribing ‘one size fits all’ policy responses to the housing market,’ he explained. ‘The strength of dwelling price growth in Sydney is receiving much attention. However, the upturn in Sydney prices follows a decade which saw the city lag far behind the other seven capitals in terms of price growth,’ he pointed out. ‘Price pressures ultimately represent the inadequate response of supply to much stronger demand conditions. We need to see more flexibility in the planning process and in the release of new residential land in order to take the heat out of prices,’ he added. Continue reading
Investment in student housing set to rise in the UK
London’s full time student population is expected to rise by 50% in the next 10 years while capital flows into student housing is expected to triple reaching £5.7 billion by the end of 2015, new research shows. Indeed, direct investment in the UK student housing market has surged over the past two years, rising from under £500 million in 2010 to £3.8 billion over the first half of 2015 and £1.5 billion in London, says the report by property firm JLL. Non-European Union students have been the fastest growing segment, with numbers increasing by 50% over 10 years and a recent study by London First shows that international students bring a net benefit of £2.3 billion per annum to London's economy supporting 60,000 jobs in the capital. The research further highlighted that rising house prices and constraints on mortgage lending have forced more people into rented accommodation. More students are also renting and 28% of London’s student population are living in Houses of Multiple Occupation (HMOs). The provision of university managed accommodation has not kept pace with the growth in student numbers and the increasing quality and quantity of PBSA stock has provided students with a welcome alternative to the rising rental costs of HMOs, the report points out. Additionally, two of the fastest growing segments of London’s student population are overseas and postgraduate students, who have occupied much of the PBSA (Purpose Built Student Accommodation). ‘We have seen extraordinary growth in UK student numbers over the past 20 years and while UK student numbers are now stabilised, international student numbers set to rise dramatically in the next decade,’ said Philip Hillman, chairman of JLL’s Alternative Division. ‘The provision of good quality student accommodation was traditionally the responsibility of the universities but in recent years, most new accommodation had been provided by private investors and developers,’ he explained. ‘The Gross Value Added supported by student spending throughout the UK is of the order of £25 billion per annum. This represents 1.03% of UK GDP. Put in perspective, this figure is equivalent to one third of the total contribution of the aviation sector to UK GDP,’ he added. According to Himanshu Wani, associate director of UK research at JLL, purpose built student accommodation in the UK has seen a significant rise in investment activity, with projected capital flows into the sector of £5.7 billion by the end of 2015, up from £1.7 billion in 2014. ‘This is especially pronounced in London, with one of the largest student populations globally, supporting strong demand for student housing. Indeed, with the London student population expected to rise by 50% by 2025, one of the main challenges will be developing sufficient supply,’ he said. The report points out that student housing is one of the largest sub-sectors within the ‘alternative’ property asset class. Alternatives comprise all of the real estate sectors beyond traditional office,… Continue reading
