TSI
Average residential rents in Australian capital cities falling
Residential rental rates in Australian capital cities fell by 0.2% last month, down to $487 per week, but are up 1.1% over the past 12 months. It is the slowest annual rise in capital city rents recorded by the CoreLogic RP Data monthly rental report since date was first gathered in December 1995. The firm’s research analyst Cameron Kusher said that the sluggish pace of rental appreciation continues to be attributed to the ongoing boom in home construction across Australia’s capital cities accompanied by record high participation in the housing market from investors. A breakdown of the figures shows that Sydney and Hobart have recorded the greatest increases in weekly rents and over the past three months rents are lower in all cities except for Sydney, Melbourne and Canberra. The report says that Sydney and Melbourne are recording relatively stronger rental growth despite a large surge in new supply and high levels of investment purchasing. Sydney and Hobart also recorded the greatest annual increases in weekly rents while rents in Perth, Darwin and Canberra continue to decline. With home values growing faster than rents, gross rental yields are at a record low level and continue to edge lower, the report adds. Continue reading
UK mortgage lending still down compared to a year ago
Home lending levels recovered in May compared to April, but were still down compared to a year ago, the latest figures from the Council of Mortgage Lenders show. First time buyers saw a decline in lending volumes compared to last year, but up slightly on the previous month while home mover lending saw a similar trend with volumes up slightly on April but down year on year. Home owner remortgage activity also declined compared to the previous month and compared to the same period last year. However, buy to let lending continues to grow year on year, mainly driven by remortgage activity and also saw a slight month on month increase due to higher buy to let house purchase lending activity. ‘House purchase lending in May was slightly up on the previous month, suggesting the market might be waking up after a subdued first quarter,’ said Paul Smee, director general of the CML. ‘Activity has broadly been down on last year but we expect it to rise in the summer months as, with historically low interest rates and a competitive lending environment, borrowing conditions are relatively favourable. But we cannot ignore the continuing affordability constraints caused by high house prices relative to earnings which will work in a contrary direction,’ he added. The CML report also shows that, as previously reported, gross lending in May was £15.9 billion, up from £15.8 billion in April but down from £16.8 billion in May last year. Under normal circumstances, a slight increase in the number of loans to first time buyers in May would be a sign that their prospects are on the rise this summer. But Patrick Bamford, director of mortgage insurance Europe for Genworth, pointed out that average deposits have risen significantly over the last year, not just because of rising house prices, but because the squeeze on affordability is disadvantaging buyers without a sizable amount of cash to put towards a house purchase. ‘For many would be home owners, especially those without the Bank of Mum and Dad to fall back on, saving more than 5% is simply not a realistic aim. Despite more high loan to value (LTV) products being available at lower rates, market pressures are preventing lenders from offering these products to those buyers who traditionally rely on this type of loan,’ he said. ‘In order to drive a genuine recovery of the high LTV market, the government needs to introduce a permanent system of private mortgage insurance to accompany its planning reforms. First time buyers will only be able to access affordable homes if we make affordable mortgages permanently available to them,’ he added. However, the CML figures also shows that competitive mortgage rates mean first time buyers are paying a record low proportion of their monthly income to service the capital and interest rate payments of their mortgage. This is the lowest level since the CML began tracking this in 2005. Continue reading
New single UK wide property index set for early 2016 launch
A new official UK wide residential property index is set to be published for the first time in the first half of next year, it has been confirmed. Work on the index has been slower than anticipated due to access to property data delaying the finalisation of the methodology to be used, according to an update report from the Office of National Statistics. Since a consultation was launched last year work has been focussed on securing the necessary approval for implementation of the new house price index, taking forward the legal work to secure access to property attributes data and further investigating the commitments made in the consultation response. The ONS said that good progress has been made in a number of areas. Firstly, each of the departments involved has now had approval for implementation of the new index. Secondly, in response to feedback from the consultation, the use of GOV.UK has been investigated as a central publication point for the new index. Indeed, as a result of this investigation, it is proposed that the new UK house price index will be published via the Land Registry pages of GOV.UK providing a single and central access point for users. Further details will be made available in due course. However, a spokesman explained that securing the access to property attributes data has been slower than anticipated, which has meant the analysis required to finalise the methodology for the new index has been delayed. ‘It is expected that this access should be resolved shortly,’ the spokesman added. Over the next few months the focus of the development work will be to finalise access to the data required for the new index. This will allow the index methodology to be finalised and subsequently an article to be published fully explaining the new methodology and production process for users. Work will also be done to begin testing the production of the new index and start planning the implementation of the new index and the transition for users. Further details regarding the transition for users will be made available later in the year. ‘Whilst there is still a large amount of work to take forward, it is anticipated the new index will be ready for publication in the first half of 2016,’ the ONS spokesman added. Continue reading
