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Sydney soars ahead with strong price growth compared to other Australian cities
Home values in Australia’s capital cities increased by 1.4% in March with Sydney leading the way with strong growth of 3% while prices elsewhere were relatively flat, the latest index shows. On a quarterly basis prices increased by 3% in the first three months of 2015, the CoreLogic RP Data Home Value Index also shows. However, although value growth has started 2015 on a strong note, the annual rate of growth has moderated back to 7.4% which is the slowest annual growth rate since September 2013. On top of the 3% monthly price rise, values in Sydney are up 5.8% on a quarterly basis and 13.9% on an annual basis. With stronger housing market conditions over the first three months of the year, annual home value growth across the Sydney market has rebounded after slowing to 12.4%, according to head of research Tim Lawless. He pointed out that Sydney is the only housing market where dwelling value growth remains in double digits, with the next strongest performer, Melbourne, showing a much lower rate of annual capital gain at just 5.6%. Each of the remaining capital cities have recorded an annual rate of growth which is less than 3% with values having declined across Perth, Darwin and Hobart over the year. The index data also shows that since home values began their current growth phase in June 2012, prices across the combined capital cities have increased by 24.3%. ‘Most of this growth is emanating from Sydney. Over the current growth phase, Sydney dwelling values have increased by 38.8% with Melbourne second strongest at 23.6%. On the other hand, total dwelling value growth over the current cycle has been less than 10% in Adelaide, Hobart and Canberra,’ said Lawless. He also explained that while the overall quarterly rate of growth is strong it is important to note that it is lower than the 3.5% increase in home values over the first quarter of 2014. While dwelling values continue to rise across most cities, weekly rents are failing to keep pace. Across the combined capital cities dwelling rents have risen by just 1.7% over the past year which is a stark contrast to the 7.4% capital gain in dwelling values over the same period. Sydney is showing the highest increase in weekly rents over the year at 3.3% while Perth has shown the most substantial correction, with weekly rents down 4.1% over the past 12 months. The fact that dwelling values are moving higher at a much faster pace than rents is causing gross rental yields to consistently compress across each of the capital cities, the index report says. Since the middle of 2013 the average gross rental yield across Australia’s combined capital cities has reduced from 4.3% to 3.6%. Gross rental yields are now approaching record lows in both Melbourne and Sydney at 3.3% and 3.6% respectively. ‘Despite the headwinds of softer labour markets, very low rental yields, increased oversight on lending conditions and heightened economic uncertainty,… Continue reading
Prime central London rental values up for third month in a row
Rental values in the prime central London rose by 0.2% for the third consecutive month in March, pushing annual growth to 4%, the highest rate in more than three years. The rental value index is now at the same level it was during the summer of 2012, when London hosted the Olympic Games, according to the latest report from real estate firm Knight Frank. Rental values subsequently dipped as the sales market strengthened but growth returned at the start of 2014 but the lettings market benefited as the UK economic recovery took hold and companies began hiring more staff. Annual growth was 4%, the highest rate in more than three years but the report says that some landlords are hesitant to agree deals because they believe the sales market could strengthen. The number of tenancies, viewings and new prospective tenants are up markedly on 2014 rental yields at 2.92%, an increase on March 2014, the report also points out. The report points out that jobs in London’s financial services sector rose 17% in February compared to 2014 and according to recruiters this is due to oil price stability and subsiding concerns over a Greek exit from the euro zone. However, it is not a clear cut picture, the report says, and activity and stock levels have been dampened by the kind of indecision that has affected the sales market. ‘While some vendors have become landlords in order to wait out the general election to obtain more clarity around the future political landscape, the overwhelming mood of uncertainty has led to hesitancy as the election draws closer and campaigning steps up,’ said Tom Bill, head of London residential research at Knight Frank. He pointed out that some property owners who had considered the rental option have been reluctant to sign two year tenancy agreements while there is a possibility the sales market could strengthen in the second half of the year, depending on the outcome of the election. ‘Either way, demand in the lettings market remains strong. In the year to February 2015, the number of tenancies increased by 37% compared with the preceding 12 month period,’ Bill said. Meanwhile, the number of viewings rose 16%, property inspections increased 14% and the total number of new prospective tenants registering grew by 18%. A stronger lettings market and slower price growth in the sales market resulted in rental yields of 2.92% in March, higher than a figure of 2.83% recorded in the same month last year. Continue reading
Demand for homes in central London property market picks up
Buyer demand in the residential real estate market in central London picked up during the early months of 2015, according to a new report. The market is still busy below £1 million but has quietened between £1.5 million and £5 million as Stamp Duty changes and the possibility of a mansion tax take their toll, says the analysis from real estate firm JLL. However, underlying demand is still strong and the fundamentals remain the same and an excess of demand over available supply, which continues to support the market. The report also points out that development activity continues to rise with 26,500 units now under construction, a 23% increase during the second half of last year and a 41% rise throughout the course of 2014. The majority of units underway are in outer core locations where there was a 34% increase in the second half of last year with core markets seeing a more modest increment of 8%. The number of units starts during the second half of last year, at 8,700, was a 45% increase compared with the first half of 2014. According to JLL although the general election is now just a month away it has been impacting the central London sales market since 2014. For example, Labour's mansion tax proposal is affecting the market above £1.5 million as people adopt a wait and see attitude. ‘The general election does not seem to have deterred London's developers. The number of units underway has increased significantly over the past couple of years and the election is not halting this,’ said Neil Chegwidden, director in the residential research team at JLL. ‘It is also interesting to see that London's developers believe that the outcome of the general election is more important to their businesses than the Mayoral election next year. So it is good news that new supply is on the rise, but we continue to fall short of London's targets and it will be intriguing to see what impact a new government might have on this vital issue,’ he added. The report also looks at the legacy of the 2012 Olympic Games on the east of London and says that 10 years on from the successful bid the East Village already has its first residents and construction is underway at Chobham Manor, one of five neighbourhoods within the Park. It also says that this part of London has a wealth of development and regeneration potential that reaches far beyond the sphere of influence of the Olympic Park and the raised profile of the area is encouraging developers to bring schemes to the market. Construction levels have escalated in recent years. At the end of 2013 there were just 2,900 private residential units under construction, now there are 6,600, a 125% increase. A quarter of all new residential units under construction are in East London led by the 6,800 units at Queen Elizabeth Park and the close to 6,500 units at Stratford City… Continue reading
