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New home lending rises in Australia as interest rates are cut
New home lending in Australia saw a healthy rise during June, up 2.3% and up 6.3% compared to the same month in 2015, the latest data from the Australian Bureau of Statistics shows. The Reserve Bank of Australia cut its interest rate at the beginning of May so June’s housing finance results are the first month’s data to fully capture the effect of cheaper mortgage costs. According to Shane Garrett, Housing Industry Association (HIA) senior economist, prospective home buyers seem to have taken advantage of the lower interest rate environment. ‘June was also dominated by the close federal election campaign which was the source of some uncertainty across the economy. This data indicates that the benefits of lower interest rates trumped any reluctance by buyers to enter the market during the tight election race. It’s therefore likely that the interest rate cut will help bolster activity on the new home building side,’ he explained. A breakdown of the figures shows that the strongest growth in new home lending over the year to June 2016 was in Victoria with an uptick of 19.1%, followed by New South Wales with growth of 10.8% while there was a more measured increase in Queensland of 4.3%. Over the same period, there were substantial reductions in other states, most notably a fall of 20.7% in Western Australian, a fall of 17.7% in the Northern Territory and a more modest fall of 3.5% in Tasmania. New home lending to owner occupiers in South Australia and the ACT during June 2016 was comparable with the level a year ago. Meanwhile, the HIA’s New Home Sales Report, a survey of Australia’s largest volume builders, shows that total new home sales ended 2015/2016 on a higher note. The overall trend is still one of modest decline for new home sales but a bounce of 8.2% in June 2016 highlights the resilience of the national new home building sector, according to HIA chief economist, Harley Dale. ‘The overall profile of HIA new home sales is signalling an orderly correction to national new home construction in the short term, as are other leading housing indicators. Below the national surface, the large geographical divergences between state housing markets have been a prominent feature of the current cycle and that will continue,’ he explained. Comparing the second quarter of 2016 with the same period last year shows that detached house sales were down sharply in South Australia by 21.4%, in Western Australia by 27.5% and in down by 7.3% in New South Wales but up by 17% in Victoria and by 7.1% in Queensland. Overall the sale of detached houses bounced back by 7.2% month on month in June 2016 while multi-unit’ sales continued their recent recovery, up by 11.5% after a lift of 4.9% in May. In the month of June 2016 detached house sales increased in all five mainland states with the largest increase in Queensland at 14.9% and up by 9.1% in Western… Continue reading
Average UK house prices up 8.7% year on year in June, official data shows
Average house prices in the UK increased by 8.7% in the year to June 2016, up from 8.5% in the year to May 2016, according to the latest national house price index compiled by the Office of National Statistics (ONS). This took the average UK price to £214,000 in June 2016, some £17,000 higher than in June 2015 and £2,100 higher than the previous month but it should be noted that the data was recorded before any Brexit effect would be discernible. The HPI report says that strong house price growth has been seen since the end of 2013 but there is regional variation and in June the main contribution to the increase in UK house prices came from England. On a regional basis house prices increased by 9.3% in England over the year to June 2016, with the average price in England £229,000. Wales saw house prices increase by 4.9% to £145,000 while in Scotland, the average price increased by 4.6% to £143,000. The average price in Northern Ireland is was £123,000. London continues to be the region with the highest average house price at £472,000, followed by the South East and the East of England, which stand at £309,000 and £270,000 respectively. The lowest average price continues to be in the North East at £124,000. However, the East of England has replaced London as the region which showed the highest annual growth, with prices increasing by 14.3% in the year to June 2016. Growth in London remains high at 12.6%, followed by the South East with a 12.3% annual growth. The lowest annual growth was in the North East, where prices increased by 1.5% over the year. Richard Snook, senior economist, PwC, pointed out that the figures only capture one week of market activity after the vote to leave the EU on 23 June, so it is too early to draw any firm conclusions from this set of data. ‘Nevertheless, we expect that the vote to leave the EU will have a significant impact on the housing market. In our main scenario, average UK house property growth will decelerate to around 3% this year and around 1% in 2017,’ he said. ‘Cumulatively, our estimates suggest average UK house prices in 2018 could be 8% lower than if the UK had voted to stay in the EU,’ he added. According to John Goodall, chief executive officer of peer to peer platform Landbay, high demand drove the uplift in prices, with mortgage lending volumes jumping 16% in June alone. He pointed out that all eyes will be on next month’s figures, and early indications suggest house prices growth cooled slightly in July, but adding that any Brexit effect won’t be seen immediately. Increased house price growth in June could also have been due to the new stamp duty rate for buy to let purchasers, according to Andrew McPhillips, chief economist at Yorkshire Building Society. ‘This caused landlords to flood the market to beat the new rate,… Continue reading
Buy to let property investors in UK still positive post Brexit
Confidence in the lending environment remains unchanged for buy to let property investors in the UK after the historic vote to leave the European Union, according to new research. The survey, which explores the views of property professionals in the wake of the UK’s decision to leave the EU, reveals that some 57% of property investors are feeling very confident or fairly confident about the lending environment over the next six months, compared to 59% in January 2016, the latest survey of property professionals from Shawbrook Bank shows. It says that this confidence is reflected in the proportion of investors looking to buy an additional buy to let over the next year at 58% compared with 56% in January 2016, and suggests Brexit has not had an immediate impact on people’s future investment plans and their attitudes towards buy to let investing. However, while Brexit may not have de-railed investor plans, it is still cited as the biggest challenge this group will face over the next year, according to 32% of investors. While 44% remain unsure of what impact Brexit will have and how the subsequent changes to property prices and market competition will impact them, 42% think the result will negatively impact property investors. Only 14% believe the result will have positive implications. Similarly, property investors are feeling a lot less confident about the prospect for the UK economy with 48% of investors fairly concerned or very concerned about the economic outlook, an increase of 19% from six months ago. Some 54% of investors are more negative in their outlook and believe that falling house prices would be the main negative consequence while 23% think it will be decreased competition. In contrast, 37% of those that predict positive outcomes see decreased competition in the market due to uncertainty as the main positive consequence, 24% cited less regulation and red tape while 20% said falling house prices. Property prices are one area which property investors expect to see significant changes over the next six to 12 months. In January 2016 some 67% of property investors predicted a small increase in property values and 6% predicted a small decrease. The latest figures reveal that 42% are anticipating a small decrease in prices and only 21% are predicting a small increase over the next 12 months. ‘As a lender, it is encouraging to see sustained confidence in the lending market since the beginning of the year at a time when the sector has seen a great deal of change,’ said Stephen Johnson, deputy chief executive officer and managing director of property finance at Shawbrook Bank. ‘Seeing this optimism reflected in investors’ plans to acquire new buy to let properties is a promising sign that the specialist market shows no signs of slowing despite uncertainty. At Shawbrook, we have not yet seen any real change in customer behaviour and there is still a great deal of activity across the commercial business,’ he explained. ‘While the aftermath of… Continue reading
