Tag Archives: australia
Home repossession in UK down 26% in 2014, year on year
The number of home repossessions in the UK fell 26% in 2014 compared to the previous year, the lowest since 2006, according to the latest data from the Council of Mortgage Lenders (CML). Out of the 21,000 total number of repossessions, 16,100 were on owner occupied properties, and 4,900 were on buy to let properties, the data also shows. At 0.3%, the repossession rate on buy to let mortgages was higher than the 0.17% on owner occupier loans, despite the fact that the underlying arrears rate was lower on buy to let lending than on home owner lending. The CML said that this is unsurprising, as lenders offer extended forbearance to owner occupiers to help them get through periods of financial difficulty without losing their home. Some 1.05% of all mortgages were in arrears equivalent to 2.5% or more of the mortgage balance, down from 1.29% at the end of 2013 and 1.12% at the end of the third quarter of 2014. In numerical terms, this equates to 116,800 loans, down from 124,400 at the end of the third quarter, and 144,600 at the end of 2013. Within the total number of mortgages in arrears, there was also a decline in all of the individual arrears bands. Even among the heaviest arrears band, more than 10%, there was a 14% decline year on year to 24,700 cases at the end of 2014, some 5% lower than at the end of the third quarter. The two main traditional drivers of mortgage difficulty are income shocks such as unemployment and interest rates. The CML report points out that both factors are relatively benign at present, assisting the decline in both arrears and repossessions, supported by effective lender practices. Looking ahead, the CML and lenders are very aware that, at some future point, interest rates will rise, and that this will put increased pressure on some household finances. The CML and lenders urge customers to plan ahead for this, to reduce the risk of shocks whenever interest rates do eventually rise. ‘The relatively low rate of repossession among owner occupiers at around one in 600 mortgages last year, should help to reassure borrowers that, if they do face payment difficulties, lenders will work with them to try to resolve their problems. Repossession is only ever a last resort,’ said CML director general Paul Smee. No one should be lulled into a false sense of security that the current low interest rates we are experiencing will last forever, though. Rules are in place to ensure lenders assess future affordability, but these are not a substitute for careful borrowing,’ he explained. ‘It's essential for borrowers themselves to have one eye on the future. Think through any borrowing taken on now to ensure it will still be affordable if and when rates rise,’ he added. Continue reading
Sydney and Melbourne continue to see strong home price growth at start of year
The Australian housing market has started the year on a strong footing with strong gains recorded across Sydney and Melbourne, pushing capital city dwelling values 1.3% higher. But the latest home value index from Core Logic RP Data shows that a two tier housing market persisted over the first month of 2015 as performance varied substantially between capital cities. The largest cities, which have more influence over the combined capital city index due to the high number of dwellings, continued to push the aggregate index higher. Melbourne values were up 2.7% compared with December and Sydney values increased by 1.4%. Hobart also recorded a strong monthly result with values up 1.6%. Three capital cities recorded a decline in values over the month, with Darwin down 1.3%, Adelaide down 1.2% and Perth values down 0.6%. The quarterly data shows a clearer picture for housing market conditions, with the combined capitals index recording a 1.9% over the three months ending January 2015. While Sydney continued to be the standout for capital gains, the most significant increase in values over the past three months was recorded in Hobart with a rise of 4.4%, eclipsing the 2.4% capital gain in Sydney, which was the second highest quarterly reading across the capitals. According to the firm’s head of research, Tim Lawless, having Hobart produce the strongest results over the past quarter is certainly a unique occurrence. ‘Generally, Hobart has recorded the lowest rate of capital gain since the onset of the global financial crisis, however housing market conditions have been improving,’ he said. ‘Local economic conditions have been improving and Hobart homes are the most affordable of any capital city. Additionally the market is benefitting from the return of lifestyle buyers. After Darwin, the southernmost capital is also showing the second highest gross rental yields of any other capital city,’ he added. Despite Hobart’s strong quarterly capital gain, Sydney still holds as the city with the highest rate of capital gain over the past 12 months where property values are currently 13% higher. The annual gain in property prices across the combined capitals index was 8% at the end of January, ranging from a 13% gain in Sydney to a 0.3% reduction in Canberra. Sydney has also shown the highest aggregated capital growth of any capital city in the years since the global downturn. Lawless pointed out that since the beginning of 2009, Sydney has been a stand out housing market. From January 2009 through to January 2015 Sydney home values have increased by 57%. The second highest rate of growth over the same period has been in Melbourne where values are 50% higher. There is a significant gap between the next best performers over the same six year period. Darwin has seen less than half the level of growth at 24%, followed by Canberra at 18% and Perth at 17%. At the other end of the spectrum is Hobart where homes values are unmoved over the… Continue reading
Australian office markets see trend away from mining industries
Just over one million square metres was leased across Australia’s office markets in 2014 and the year saw a trend away from mining and its associated industries to the services sector. Non-mining sectors took at least 80% of the stock, while 35% of the space leased occurred in the Melbourne market, according to Savills Australia’s latest research. The report found of the 1,050,425 square metres of office space reported leased in CBD and suburban markets nationally, property and business services was the dominant sector leasing 29% of the stock. Other non-mining sectors including finance, government and IT, accounted for a further 50%, while the mining and utilities industry accounted for just 17% of the total. In the CBD markets, which accounted for just under 700,000 square metres, the property and business services sector leased 33% of the stock. The Melbourne market, which is dominated by the service sector, took the majority of space with 35% of the national total. Savills national head of research, Tony Crabb, said the figures underscored the trending shift away from mining and associated industries to the service sector. ‘These are the sort of figures that we expected given the end of the mining investment boom with Melbourne and Sydney leading the way and Perth and Brisbane struggling to adjust to the new status quo,’ he explained. ‘It’s a good news story for Sydney and Melbourne and not so good for Perth and Brisbane, but it’s important to note that this is a cyclical rather than a structural phenomenon and one which the mining states will recover from just as Sydney and Melbourne are now doing,’ he added. Crabb expects vacancy rates to reflect the fluctuating fortunes of the markets with the non-mining states recording minimal change on last year’s figures while Perth and Brisbane struggled with vacancy rates of around 12% and 14%. He pointed out that given the stronger leasing trend, incentives in the Sydney and Melbourne markets were likely to come off post global financial crisis highs, but would remain high in Perth and Brisbane. He also expects some tightening in vacancy rates would also come from withdrawal of stock. ‘We forecast an increase in the amount of occupied space with up to 700,000 square metres of space is expected to be withdrawn, leading to a tightening in the vacancy rate in some CBD’s, especially for prime buildings as upgrade activity accelerates,’ said Crabb. ‘As for incentives, they are mostly paid for by higher face rents. In Sydney, where the incentive has risen from 20% to over 30%, face rents have grown by more than the value of the incentive, this is also the case in Melbourne, Perth and Adelaide with Brisbane the exception,’ he commented. Continue reading
