Investment
Rental prices in Auckland steady as activity rise, new data shows
Property rental activity is rising across Auckland, New Zealand’s biggest city, while rental values are steady, according to the latest data to be published. The average weekly rent across Auckland in August increased just $4 to $496, up less than 1% on July and just 6% year on year from $467 in August 2014. This compares to a 15% increase in residential property sale prices Auckland wide. ‘This indicates that landlords are not pushing to recover the full current purchase price, presenting Auckland renters with reasonable value for money,’ said Kiri Barfoot, of real estate firm Barfoot & Thompson. Growth in the number of large central city apartments and sizable family homes in the Eastern suburbs were strong drivers behind the overall, albeit minor increase, she pointed out. ‘These large and luxurious apartments in the city and substantial homes to the east are attracting top prices,’ she added. August’s weekly average for a three plus bedroom apartment in the city was $806, while a five plus bedroom home in the Eastern suburbs attracted $1,051 on average. Meanwhile, the more rural areas of Manukau and Franklin were the cheapest areas to rent, offering three bedroom homes for under $400 average, at $395 per week. Auckland rental prices have increased by 6.3% over the last 12 months, from an average of $467 to $496. Compared to August 2014,the average weekly rent for one bedroom properties has risen by 4.2% while two bedroom homes are up by 5.9%, three bedroom by 5.7%, four bedroom by 5.4% and five or more bedroom by 5.3%. Franklin/Manukau Rural remains the cheapest area to rent a property, across all property sizes. The Central City is the most expensive area for one, two and three bedroom properties. The Eastern Suburbs continue to have the highest priced large properties, with four bedroom properties receiving an average of $783, and five plus bedroom properties receiving $1,051. Barfoot also said that the city is seeing a rapid increase in online property rental activity with applications up by 28% in August compared to July. It signals an early start to the traditionally busy spring and summer periods and the August data shows a 61% rise when compared to the early winter month of May. Rental property searches online also increased by 26% between July and August. ‘It’s a typical spring trend, but we are seeing it take hold earlier each year as people try and get in ahead of the crowds. It is likely activity will also peak earlier this year, prior to, rather than after, the Christmas holidays,’ said Barfoot. She said that property managers are reporting that many tenants are thinking ahead to next winter and seeking homes that were warm and dry. ‘Homes with insulation and efficient heating, such as heat pumps, are highly sought after and we encourage our landlords to upgrade their properties in this way,’ she pointed out. To help manage the growing numbers the company has… Continue reading
Over a year on from new UK mortgage rules, many are still unaware of the change
Two thirds of potential house buyers in the UK been left in the dark about the new mortgage rules which were introduced last year, new research has found. The survey by mortgage lender and broker Ocean Finance shows that some 31% of people who plan to buy a property within the next two years are unaware that mortgage rules were overhauled more than a year ago. A further 35% of potential buyers did know that mortgage regulations had changed, but said they felt confused by the new rules. In April 2014, the biggest piece of mortgage regulation in a decade came into force. The changes, brought in by the Financial Conduct Authority, mean lenders must take additional steps to ensure borrowers only get a mortgage they can afford. In practice, the new mortgage rules mean that borrowers will face increased scrutiny from lenders about their incomes and their expenditure including spending on things such as childcare, holidays and entertainment. Yet 70% of those questioned were unaware that lenders are required to look closely at their spending. Consequently, a quarter said they haven’t changed their spending habits to help them qualify for a mortgage. Of those who do know that lenders are required to examine spending, more than a fifth have reduced their spending on treats and have stopped contributing to life assurance and pensions to keep a greater proportion of their income in their bank accounts. Just 24% of aspiring home buyers questioned were aware that the new rules also test their ability to afford a mortgage if interest rates rise. And even fewer people, 16%, knew that the rules would also test their ability to withstand changes to their personal circumstances. To help demystify the new rules and ensure they are prepared to apply for a mortgage, almost a fifth of potential buyers have sought advice from an independent mortgage broker. Almost 30% have looked online for information about the rules and 14% have relied on their friends or family for advice. Worryingly, a third have not sought any advice on applying for a mortgage. The research shows that a third of potential home buyers are so concerned about the tougher mortgage rules that they expect to have to delay buying a house so they can save for a bigger deposit and get into a stronger position to obtain a mortgage. ‘More than a year after the new mortgage rules were introduced, potential buyers are still in a state of confusion about what they mean in reality. Even more worrying is that a large chunk of people who are gearing up to apply for a home loan are not even aware that the mortgage rules have changed,’ said Gareth Shilton, Ocean’s spokesperson. ‘As an industry, we need to do more to educate buyers and to guide them through a process which many people are finding understandably daunting. For anyone who plans to apply for a mortgage in the next year,… Continue reading
Better planning and more land needed to meet UK housing targets
House builders across the UK say policy makers should boost resources for local authority planning departments, increase skills and training for the construction sector and step up the delivery of public sector land to help increase the supply of new homes. The House Builder survey from international real estate firm Knight Frank, which contains the views of builders and developers across the country, also suggests that two thirds believe that the maximum number of new homes that can be delivered per year is 180,000 or less with only 9% thinking the government’s target of 200,000 is possible. The report points out that while activity in the house building sector has continued to pick up over the last year, the supply of new homes is still falling well short of demand. Boosting supply, where new housing is most keenly needed, is a key priority if the UK housing market is to avoid long term distortion. However, while nearly 60% of respondents expect housing completions to rise over the next year, with 18% saying the rise could be between 10% and 25%, around half expect no change in the delivery of affordable homes over the next 12 months. Just 9% of respondents said that under current market conditions it would be possible to deliver more than 200,000 homes a year, every year. More than 90% of respondents are expecting construction costs to rise again over the next 12 months and two thirds expect that development land prices will rise again this year. Indeed, the report found that rising labour and build costs are expected to pose the greatest risk to the sector in the coming year and some 56% of respondents said that the Community Infrastructure Levy (CIL) was weighing on development volumes The biggest policy change that would help boost development volumes would be recruiting more people to Local Authority planning departments, according to respondents. ‘The imbalance between the demand for new homes and the number of units being built is well-recognised, by the industry and political parties alike. In the 12 months to April 2014, some 141,000 homes were built in the UK, up by 4% on the previous year,’ said Grainne Gilmore, head of UK residential research at Knight Frank. ‘However, official household growth projections suggest an additional 230,000 potential households a year in the UK. Below these headline figures, there is a recognition that the right type of homes must be built in areas where there is the most housing need, typically adjacent to existing urban areas,’ she explained. ‘This has led to tensions about the greenbelt, with a lack of consensus on how to expand accommodation in some of the UK’s most thriving towns and cities. Nearly one half of the respondents to the housebuilder survey said that rules around developing on greenbelt land should be loosened,’ she added. The report points out that policy makers from all political parties are keen to encourage development on brownfield land and the… Continue reading
