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Property prices in Australian cities holding steady and up almost 8% year on year
Residential property values across Australia’s capital cities increased by 0.8% in April, down from the 1.4% increase recorded in March, the latest index data shows. Overall values increased over the past month across every capital city except Canberra where values showed a 1.5% drop over the month, according to the CoreLogic RP home value index. CoreLogic RP Data head of research, Tim Lawless, said that despite the slower month on month reading, the annual rate of growth has seen a slight rebound, with dwelling values now 7.9% higher over the past 12 months across the combined capital city index. ‘Annually, the rate of capital gain has slowed since April last year, however, since the February rate cut the Sydney and, to a lesser extent, Melbourne housing markets have caught a second wind which is reflected in the higher rate of capital gain as well as the very strong auction results and rapid rate of sale for properties sold via private treaty,’ he explained. ‘Despite the slight annual rate of growth upswing, capital gains remain lower than their annual peak recorded in April last year when dwelling values were rising at the rate of 11.5% per annum across the combined capitals index,’ he added. According to the April results, capital city dwelling values have been trending higher over the past 35 months, recording a cumulative increase of 25.3% between the end of May 2012 and April 2015. ‘While the combined capitals trend of dwelling value growth has been substantial, the rate of growth across the Sydney housing market stands head and shoulders above the other capital cities over the cycle to date,’ said Lawless. He pointed out that Sydney dwelling values are now 40.2% higher relative to the May 2012 trough. ‘If you factor in the previous 2009/2010 phase of growth, Sydney values are now up 65.4% after the global financial crisis,’ he added. A breakdown of the figures show that Melbourne is the only other capital city that comes close to this measure where dwelling values are 52.3% higher post GFC. The next highest rate of growth is Darwin where values have moved 26.5% higher, followed by Canberra at 19.8%, Perth at 15.2%, Adelaide at 12.2%, Brisbane at 8% and Hobart at 1.2%. ‘While the headline growth figures remain strong it is clear that some markets are winding down. The rate of growth in Perth and Darwin has slowed substantially in line with the wind down of major infrastructure projects associated with the resources sector and the housing market in Canberra has also softened post federal election,’ Lawless said. The performance of houses versus apartments has shown some interesting trends of late. Detached homes are continuing to outperform the multi-unit sector, with capital city house values up 8.3% over the past year while unit values have risen by a lower 5.6%. This trend is more noticeable in the key growth markets of Sydney and Melbourne. Sydney house values are up 15.5% over the past year while… Continue reading
Consultants say anti-London political rhetoric is harming the city’s property markets
The uncertainty fuelled by this week’s general election on the London housing market is unparalleled and has resulted in a near flat lining of performance in both the sales and lettings markets, it is claimed. The situation is having a stifling impact on the ability of vast swathes of the capital to retain any momentum, according to leading international real estate consultant Cluttons. While the behaviour of the residential market mirrors what has been seen in previous election years, the anti-London political rhetoric has and is damaging the capital's real estate landscape, the firm says. ‘We are in the midst of one of the toughest forecasting environments in a long time. The likelihood of a hung parliament is just adding to the widespread election anxiety,’ said Cluttons' international research manager, Faisal Durrani. ‘Furthermore, the emergence of London as a scapegoat to win votes is having a damaging impact on the performance of the market, which could have ramifications for the rest of the country,’ he added. He explained that with nearly a quarter of the UK's GDP activity emanating from London, it is difficult to understand why the commercial nerve centre of the UK is being targeted, adding that proposals for a mansion tax has reignited the debate of whether or not London's property millionaires should be taxed, giving further momentum to the anti-London political rhetoric. ‘The mansion tax really is a tax on London and the South East, where almost 90% of the UK's £2 million plus properties are concentrated. Some 27% of the population resides in London and the South East and hard working families will feel the biggest squeeze from any additional tax on higher value properties,’ said Durrani. ‘The reality is that £2 million no longer buys you a mansion in London and hasn't for some time. Two bedroom properties in Shad Thames, St. John's Wood and Pimlico are all in close range of the £2 million barrier and will be netted by any new London housing tax well before the end of the next parliament. A smarter approach might be to make adjustments to council tax pay bands, which no party has been willing to look at,’ he pointed out. Among the Labour Party's housing policy initiatives is a controversial rental cap. The proposal calls for an effective freeze in rents for a period of three years, with CPI-linked increases allowed during this period. ‘In a deflationary environment, this is an easy promise to make, but what happens when inflation climbs above the level of rental value growth, or when rents decline? Our international experience tells us that rent caps are tough to police and artificially choke growth, creating unnatural cycles that are far removed from economic realities,’ Durrani explained. He pointed out that in Abu Dhabi a decision was taken last year to remove the emirate's 5% rent cap as it was artificially holding back the market and was far too broad-brushed and didn't really accurately… Continue reading
UK help to buy schemes continue to benefit first time buyers, latest data shows
The UK’s flagship housing schemes aimed at boosting the property market continue to flourish with first time buyers benefitting the most, the latest published data shows. In the first two years of the Help to Buy Equity Loan scheme to the end of March 2015, some 47,018 properties were bought with the total value of these equity loans at £1.99 billion and the value of the properties sold under the scheme totalling £10.01 billion. The mean purchase price of a property bought under the scheme was £212,932, compared with a mean equity loan of £42,394 and some 82% of the homes were bought by first time buyers. Figures for the Help to Buy NewBuy scheme saw 17 home purchases were made in the first quarter of the year, bringing the total number of house purchases up to 5,706 since the launch of the scheme in March 2012. The Help to Buy Equity Loan scheme can be used to purchase a new build property up to the value of £600,000, with a maximum equity loan of £120,000. The numbers of homes purchased in the scheme to the end of March were greatest in the £150,001 to £200,000 price bracket, representing 30.9%. The data also shows that of total sales some 22.1% were for properties between £200,001 and £250,000. These two price brackets combined therefore accounted for over half of the total completions in the scheme. The median purchase price for all purchases in the scheme was £191,000 with the majority of sales are bunched in the lower price brackets. The mean equity loan was slightly higher at £42,394, and 19.9% of the mean purchase price. This reflects that the majority of completions in the scheme used the full 20% equity loan available. The most frequent type of property sold under the scheme were terraced houses, representing 29% of total completions, followed closely by semi-detached properties at 28.7%. Detached properties and flats made up 26.4% and 15.9% of completions respectively. The numbers of homes purchased in the scheme to date in terms of total applicant household income were greatest for purchasers with a household income between £30,001 and £40,000 a year, representing 25.2% of total completions. Some 17.8% of completions had applicants with a registered household income of between £20,001 and £30,000 a year, with 3.2% of completions with applicant household incomes lower than this. Some 80.3% of completions had applicant incomes of £60,000 or less, whilst 3% of completions had applicants with a registered household income in excess of £100,000 a year. The quarterly figures for the NewBuy Guarantee scheme are based on legal completion dates for transactions in the scheme as reported by participating mortgage lenders. This covers England only and shows data from the launch of the scheme on 12 March 2012 to 31 March 2015. The total value of the Government Guarantees for these completed sales was £59.5 million. To date, there have been no claims made with respect to the guarantees made… Continue reading
