Tag Archives: australia
UK govt revises its medium term house price growth forecast downward
The UK government thinks house prices will grow sat a slower rate than previously expected in the medium term, mainly due to changes in lending. The latest forecasts from the Office for Budget Responsibility (OBR) reveal that overall, house prices are expected to rise by 34.1% by the first quarter of 2021 with the outlook revised from the last guidance which was issued in March. The OBR cites changes to the regulatory environment as well as changes to lenders’ behaviour brought about by the Mortgage Market Review (MMR) which came into play in April 2014 as reasons for the revision. As a result, the estimated cumulative level of house price growth by the first quarter of 2020 is 5% lower than it was in the March forecast so the growth prediction is now 34.1% by the first quarter of 2021. The OBR has also revised its forecasts for Stamp Duty revenue which is now forecast to raise £11.5 billion in 2015/2016, rising to £17.3 billion in 2019/2020 compared with the March forecast of £10.4 billion £18 billion respectively. So, compared with its March forecast, SDLT receipts are expected to be £1.1 billion higher in 2015/2016 but £0.7 billion lower by 2019/2020. The OBR said it has changed its short term forecast for stamp duty receipts because residential property transactions were higher than expected at the end of the 2014/2015 financial year, a trend it expects will continue. In the long term, lower house prices relative to the March forecast reduce receipts by around £1.2 billion in 2019/2020. Meanwhile, the selling market is expected to be busier this summer. Traditionally the prime months for selling houses were March through to the end of June with a second period of activity in September and October. These two seasons reflected the end of spring and school summer holidays. However, according to real estate firm Knight Frank there has been a change in recent years, with the market continuing through the usually quieter summer months. The number of properties sold by Knight Frank between June and August 2014 was in fact 25% higher than in 2013. ‘The increase in summer activity is a reflection on a number of factors including the popularity of holidays being taken in the UK and thus being able to see a house more quickly and the rise of the internet allowing holiday makers to browse their tablets and phones whilst relaxing,’ said Rupert Sweeting, head of Knight Frank Country. ‘We are seeing this happen again this year principally as the election made many buyers put their decisions on hold until after the result was known. As a result the market is six to eight weeks late. We already have a high level of house bookings going forward this month and in August,’ he added. Continue reading
Australian city property prices up almost 10% year on year
Property prices in Australian cities increased by 2% in the second quarter of 2015 and are now 9.8% higher compared to a year ago, the latest index data shows. The figures from CoreLogic RP Data reveal that the growth has gained momentum as the year has progressed and the firm’s head of research, Tim Lawless, believes interest rates cuts in February and May have contributed in pushing capital gains higher. ‘Growth conditions had been moderating from April last year through to the end of January 2015. With the RBA cutting the cash rate in February, there was an instant buyer reaction across the Sydney and Melbourne housing markets where auction clearance rates surged back to levels not seen since 2009, capital gains once again accelerated,’ he explained. He pointed out that Sydney and Melbourne homes are selling in record time, some 26 days and 32 days respectively. But growth is not even. While Sydney and Melbourne have seen dwelling values increase by 16.2% and 10.2% over the financial year respectively, every other capital city has seen growth of less than 5% and values are down over the year in Darwin by 2.9% and Perth by 0.9%. According to Lawless, the current housing growth cycle clearly highlights a divergence in capital gains across the capital cities. Since values started rising in May 2012, Sydney homes have seen a 43.1% surge in values and Melbourne values are up by 25.9%. Despite softer market conditions in Perth, property values are currently up 12.8%, the third highest growth rate across the capitals. Simultaneously, Brisbane's property market has shown the fourth highest rate of growth at 12.4% followed by Adelaide at 10.4%, Hobart at 9.6%, Darwin at 8.9% and Canberra at 8.8%. ‘The three tiers of housing market performance can be best explained by economic and demographic factors where it's no coincidence that New South Wales and Victoria are recording the strongest economic conditions coupled with the strongest rates of migration which is fuelling housing demand. These states are more sheltered from the mining sector downturn and have benefited from the strong multiplier effect of housing construction as well as a vibrant financial services sector,’ said Lawless. ‘The Perth and Darwin markets are weakening in line with the downturn in the resources sector and an associated weakening in infrastructure investment and a marked slowdown in migration. Brisbane, Adelaide, Canberra and Hobart are seeing softer economic conditions and population growth compared with Sydney and Melbourne, however housing markets have shown some level of growth over the year,’ he added. Looking at the performance of detached housing versus apartments over the financial year, houses are clearly outperforming units in the capital gains stakes. Over the financial year, house values were 10.4% higher across the combined capitals index while unit values increased by a much lower 5.6%. The same trend where houses are showing a higher capital gain than units is evident across each of the capital cities except Hobart… Continue reading
Population growth is adding to hot property markets in Australian cities
A pick-up in population growth in Australia has added fuel to the already hot housing markets of Sydney and Melbourne, where house prices continue to surge, a new report suggests. Population growth is not only the key to Australia’s economic growth and output, but it also plays a central role in housing demand and price growth, according to the analysis from international real estate firm Knight Frank. In Sydney population trends have been a lead indicator towards house price growth. Despite easing over the past 12 months, overseas migrants have underpinned Australia’s recent population growth, accounting for approximately 58% of population gains over the past five years. The importance of overseas migration has become more apparent over the past decade as Australia’s immigration policies have been geared to meet the needs of the Australian labour market, with temporary visa programmes, predominately working holiday and temporary 457 visas, accounting for over half of all overseas visas issued in recent years. The report also points out that subsequently, population growth over the past decade has been a reflection of a pick-up in temporary migration as opposed to permanent migration. While recent population statistics published by the Australian Bureau of Statistics shows that population growth nationally has eased from its recent peak in 2009, to average 1.5% over the 12 months to September 2014, the report says that what is more of note is the rate of population growth by city. Indeed, despite remaining high by historical standards, population growth in the dominant resource capital cities of Brisbane and Perth has fallen sharply, particularly Perth were the annual rate fell from 3.6% to 2.5% in just 12 months in the year to June 2014. It also points out that the drop in population growth in Perth is now beginning to filter through to its property market, where over the six months to March 2015, house prices and sales volumes have dropped 2.6% and 2.8% respectively. On the other hand, population growth in Sydney and Melbourne increased over the 12 months to June 2014, supported by stronger economic prospects, underpinned by residential construction. The stronger economic environment within these cities led to an improvement in Net Interstate Migration, particularly to Melbourne and the state of Victoria, as people sought employment opportunities outside of their home state. The pick-up in population growth has been met with solid house price gains in these cities, where over the six months to March 2015, house prices in Sydney and Melbourne are up 8.2% and 2.8% respectively. Nationally, the recent easing of population growth can be partly attributed to the improving New Zealand economy. Australia has enjoyed strong population growth from New Zealand citizens for subclass 444 visa holders over the past five years as weak economic conditions in New Zealand provided the impetus to move to Australia. However over the past 12 months, the New Zealand economy has shown solid signs of improvement, with the unemployment rate now lower than Australia… Continue reading
