Investment
Majority of Australians feel the housing market is heading for a downturn
Two thirds of Australians now think the housing market is vulnerable to a sustainable downturn with the sentiment affecting all regions of the country, a new poll shows. While the survey results suggests that respondents are concerned about a crash in home values, this remains unchanged from a year ago, and lower than the 68% of respondents who indicated ‘yes’ to this question six months ago. The higher proportion of respondents who were concerned about a large correction in the housing market was broad with all regions indicating at least 61% of respondents were concerned about a housing market crash, according to the CoreLogic-TEG housing market sentiment survey. The result indicates that a significant proportion of the community are wary of substantial value falls across the nation’s largest and most important asset class, which according to CoreLogic RP Data is currently worth an estimated $6.5 trillion. Recent housing market forecasts from CoreLogic RP Data and Moody’s Analytics indicate dwelling values are likely to experience falls, however the peak to trough declines are likely to be short lived and relatively slight, followed by a longer period of relatively sedate housing market conditions. Home values are already trending lower in Perth and Darwin with both cities recording a peak to current fall of 4.6%. Additionally, the pace of capital gains in Sydney and Melbourne, where dwelling values have surged higher over the past two growth cycles, is moderating in what has been a controlled trajectory to date. The survey also revealed a slowdown in the proportion of survey respondents who think now is a good time to buy; 61% indicated they would consider buying a home, however a year ago the reading was much higher at 71%. Perceptions around buying conditions worsened across most regions over the past 12 months, with Tasmanian and Sydney buyers the most pessimistic about buying conditions. Only 40% and 50% of respective respondents in these cities indicated they felt it was a good time to buy. However, buying sentiment improved over the past year in some of the weakest markets where listing numbers are higher and housing prices have reduced. The proportion of survey respondents who indicated that current market conditions represent a good time to buy increased by 1% over the year in Perth while buyer sentiment in the Northern Territory increased by a substantial 20% compared with a year ago. When survey respondents were asked whether they thought home values would rise, fall or remain stable over the coming six and 12 months, most respondents expect values to remain stable, however 17% of respondents are expecting values to fall over both the next six and 12 months. A year ago, 49% of survey respondents were expecting dwelling values to rise over the coming six months compared with only 31% over the most recent quarter. Respondents based in Sydney have seen the most substantial deterioration in the proportion expecting values to rise over the next half year. A year ago,… Continue reading
Sales to first time buyers increased in UK in March
Sales to first time buyers in the UK were up in March and real estate agents expect to see further increases in sales to the group following the buy to let stamp duty changes. Some 28% of total sales in March went to people buying their first home, an increase of 4% compared to February, according to the latest housing market report from the National Association of Estate Agents (NAEA). The report also says that 39% of estate agents expect the stamp duty change which saw the introduction of 3% rate on buy to let properties and second homes to increase availability for first time buyers as interest from investors slows. More than a third of estate agents, some 36%, argue sales to first time buyers will pick up further, due to less competition for properties. Overall, the supply of houses available to buyers soared by54% in March from 35 properties available to buy per branch in February to 54 in March. On the other hand, demand decreased last month, when agents reported an average 417 house hunters registered per member branch, down from 463 in February when demand for housing was at the highest level in 12 years. In March, estate agents also reported a decrease in the number of properties selling for more than asking price. Only 7% of agents saw this happen in March compared to 11% in February. ‘The last few months first time buyers have had to compete with landlords for the same properties and those landlords have really pushed hard to complete ahead of the rise in stamp duty,’ said Mark Hayward, NAEA managing director,. ‘Now, in theory things should get easier for first time buyers as we have seen with a slight increase in sales this month and as those seeking to buy to let will tail off,’ he explained. ‘However in reality, it’s unlikely in the long term that first time buyers will notice a huge difference, as prices remain high and housing is in short supply. The Government needs to significantly increase the number of homes that are being built in this country to really make a difference to those that are struggling to get on the housing ladder,’ he added. Continue reading
UK households believe that the rate of house price growth has slowed
Households across the UK perceive that the value of their home rose in April, but it was a slight decline compared to the previous month. It indicates that households perceive the rate of house price growth has slowed marginally, according to the House Price Sentiment Index (HPSI) from Knight Frank and Markit Economics. ‘Slightly weaker house price sentiment follows a period of healthy market activity between January and March which was in part promoted by purchasers trying to complete purchases ahead of the April introduction of the extra 3% stamp duty on additional homes,’ said Gráinne Gilmore, head of UK residential research at Knight Frank. ‘Activity across the market may now become more muted, and in addition, the debate around the EU Referendum may convince some buyers to adopt a wait and see approach, although the UK’s position in the European Union will not affect one of the key fundamentals in the market, an undersupply of new homes being built and existing homes for sale when compared to demand,’ she explained. The future HPSI, which measures what households think will happen to the value of their property over the next year, also slipped back in April compared to the previous month. Gilmore pointed out that while still indicating that households across the UK expect the value of their home to rise over the next 12 months, this is the lowest reading recorded by the index so far this year. Sentiment on future house price growth was lower in nine of the eleven regions covered by the index month on month, with the biggest fall in sentiment occurring in the East of England. Tim Moore, senior economist at Markit, believes that after a strong start to the year, UK property market conditions appear slightly more subdued in April, especially in relation to households’ expectations for price growth. ‘While perceptions of current price growth are still firmer than at any time in 2015, expectations for the next 12 months moderated in April and were among the lowest recorded over the past three years,’ he said. ‘This divergence between relatively brisk current price momentum and softer expectations ahead in part reflects heightened uncertainty about the near term economic outlook. Moreover, the latest survey highlights another brake on the number of UK households intending to purchase a property over the next two years, with this index down appreciably from its peak in February 2015,’ he added. The details of the index shows that some 5% of UK households said they planned to buy a property in the next 12 months, down from 5.5% in December. On a slightly longer term basis, the proportion of households across the UK planning to buy a property within the next two years was 10.8%, the lowest proportion since the index began in April 2014. The survey suggests that demand for property from households in London will be amongst the strongest across the country within this time, with 15.6% of households there indicating their intention… Continue reading
