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City apartments set to remain popular buys in Australia in 2015
Investor appetite for city apartments in Sydney and Melbourne will remain strong in 2015, as low interest rates attract first home buyers and investors, according to a new analysis. The outlook for interest rates is mixed but headline indicators such as unemployment, construction activity and GDP point to a period of weaker overall economic growth which will result in interest rates remaining steady in the short to medium term, says the latest property outlook report from Colliers International. ‘This is good news for the residential sector and points to continuing demand side momentum. The low interest rate environment is a key driver of residential activity in the current market, and we anticipate it will provide supportive conditions for strong investment activity in 2015,’ it explains. It predicts that Sydney, Melbourne and Brisbane residential markets will have the strongest residential growth, as weaker economic conditions in Western Australia will lead to a slowdown in development and investment activity in 2015. It also points out that developments in central locations with close proximity to public transport, work and retail amenities will be in higher demand. Consequently, this demand will see the number of apartment developments grow in Melbourne, Sydney and Brisbane throughout 2015. The Melbourne and Sydney CBDs have been the strongest performing markets, with the volume of apartments under construction in the next five years to reach and 18,000 and 6,000 respectively, buoyed by strong offshore demand, and a rapidly rising inner city population, a trend we anticipate will continue in 2015. Next year is set to see Australian property experience a continued increase in investment volumes, improved tenant demand and structural change across various sectors. The analysis also suggests there are two key themes for the year ahead that will see technology continue to change the property industry and investors continue to diversify from core assets to other markets and sectors. According to John Kenny, chief executive of Colliers International Australia and New Zealand, 2014 was the year that investment in property continued to accelerate, New South Wales returned as a growth economy and the market saw signs that leasing demand was on the return. ‘Ownership of Australian property continued to become concentrated amongst fewer owners. Strong flows of capital continued to enter the Australian property market both from offshore and overseas,’ he said. He pointed out that by the middle of November transaction volumes were well up on 2013 levels and although total volumes are still some way off the 2007 peak, some sectors such as the national industrial market and the Melbourne CBD office market have now exceeded volumes in that year. ‘The majority of sales are now to Australian investors. This is not surprising given that Australian investors are now recognised as the most confident in the world, according to our most recent Global Investor Sentiment Survey,’ he added. Offshore investors also continued to enter the market with new groups emerging, particularly from… Continue reading
UK asking prices down 3.3% in December, latest Rightmove index shows
This year is ending with the largest ever monthly fall in the price of property for sale in the UK with the average asking price down by 3.3%, the latest index figures show. This has reduced annual price growth to 7% compared with 8.5% the previous month and is a further indication of the slowing pace of growth, according to the data from Rightmove. However, it points out that it is important to note that the recovery remains countrywide with all regions recording positive price growth for the year and Rightmove forecasts a national average rise in new seller asking prices in the range of 4% to 5% for 2015. According to Miles Shipside, Rightmove director and housing market analyst, whilst a near £9,000 drop is the biggest ever reduction in the price of newly marketed property compared to the month before and a sign of a market continuing to cool, a fall is not unexpected in December. ‘Though sellers are fewer in number at this time of year, those that do come to market are often keener to sell so price lower in a bid to stand out. The overall picture for the year is still one of a much recovered property market, with sellers and their estate agents confident enough to be putting property on the market at a higher price on average than a year ago, although we predict a slower pace of price growth in 2015. This means that sellers and agents will have to work harder to achieve a sale next year,’ he explained. Rightmove predicts the South East will see the highest growth in prices next year as the London ripple effect continues and stock shortages remain acute. These factors mean that the East and South West regions also look set to perform better than the northern regions. It also says that London will not be the price rise powerhouse leading the rest of the country as it has been in 2014. Sectors of the London market will continue to re-adjust with several different forces at play. Shipside pointed out that affordability has already been stretched to its limit in some inner London locations, and there are also winners and losers with the Stamp Duty changes. The threat of mansion tax on properties over £2 million will remain a deterrent until at least May’s election. While buyer demand has tailed off during the second half of the year, there are now signs of fewer sellers coming to market too. In the last four weeks, 76,823 new sellers have come to market, down 4% on the same period a year ago and the second consecutive month that there has been a year on year fall. Rightmove also says that there are factors that could see this trend continue into 2015, exerting some modest further upwards price pressure. Stricter lending criteria may prevent some home-owners from being able to fund the trade up to the next… Continue reading
New starter home initiative announced by UK government
A new scheme offering 100,000 first time buyers in the UK new homes with a 20% discount has been announced by the Prime Minister as part of a major push to help people onto the housing ladder. Aspiring home owners will be asked to register their interest in buying via the Starter Home initiative from the start of next year, an initiative that has been brought forward by at least six months earlier than planned. There will be a change to the planning system to free under used or unviable brownfield land from planning costs and levies in return for a below market value sale price on the homes built on the site. Developers and councils are being asked to respond to the proposals to ensure the changes will unlock a range of sites across the country. Many of the country’s leading house builders and councils are already looking at sites that could be used for new homes. The 100,000 homes will be available to first time buyers under the age of 40 as part of the initiative and work on the first raft will start next year following a consultation period that is due to end on 09 February 2015. At the heart of the Starter Homes initiative is a change to the planning system. This will allow house builders to develop under-used or unviable brownfield land and free them from planning costs and levies. In return, they will be able to offer homes at a minimum 20% discount exclusively to first time buyers under the age of 40. Currently, builders can face an average bill of £15,000 per home in Section 106 affordable housing contributions and tariffs, often adding tens of thousands to the cost of a site. Under the proposals, developers offering Starter Homes would be exempt from those Section 106 charges and Community Infrastructure Levy charges. The homes could then not be re-sold at market value for a fixed period, making sure that the savings are passed onto homebuyers. Already leading house builders, including three of the nation’s largest and councils from up and down the country have pledged their support for the initiative, which will bring much needed homes onto sites that have previously been deemed unviable and are lying unused. More than 30 house builders have said that that they support the plans and would consider bringing forward land to develop the new, discounted houses, from next year. A new design panel, including world famous architects such as Sir Terry Farrell and Sir Quinlan Terry will be established to ensure that new homes are not only lower cost but also high quality and well designed, giving hardworking house buyers attractive homes that meet the demands of modern life. ‘Hard working young people want to plan for the future and enjoy the security of being able to own their own home. I want to help them do just that. Under this scheme, first-time buyers will… Continue reading
