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Capital city rents edging lower in Australia
Rents in capital cities in Australia increased slightly by 0.1% in April, but overall rental rates edged lower and have now fallen by 0.2% over the past 12 months. This takes the average rental rate to $490 a week for houses and $467 a week for units across combined capital cities, according to the data from the latest CoreLogic monthly rental review report. Five of the eight capital cities saw a modest rise in rents over the past 12 months, including Sydney up 1.4%, Melbourne up 1.7%, Adelaide up 0.5%, Hobart up 1.1% and Canberra up 2.5%. Perth with a fall of 8.9% and Darwin with a decline of 12.6% both experienced large drops in rent rates and have collectively pulled the combined capital average lower while in Brisbane rents dropped by 0.6%. ‘We anticipate that the weakness in the rental market will persist over the year and rents will continue to fall over the coming months. The annual change in rental rates continues to be at its slowest pace since before 1996,’ said Research analyst Cameron Kusher. ‘At the same time last year, rental rates increased by 1.7% which indicates a sharp slowdown in rental growth over the past year,’ he pointed out, adding that factors contributing to a slowing in rental growth include falling real wages, excess rental supply in certain areas and lower rates of population growth, all of which have impacted on demand for rental accommodation. ‘With dwelling approvals at recent record highs and construction activity set to peak over the next 24 months, accompanied by many new properties still to settle, we anticipate that the weak rental market conditions will persist with rental growth continuing to slow and, or, fall in most capital cities,’ Kusher explained. He also pointed out that based on current market conditions, landlords won’t be in a position to lift rental rates and may actually need to reduce rents in order to keep their tenants. ‘We see renters as holding a stronger negotiation position and where they now have the potential to upgrade into higher grades of accommodation for a similar, or lower rents,’ Kusher said. Canberra is the only capital city where the annual rental change is currently stronger than it was a year ago. Kusher said this highlights the weakness in rental market conditions is being felt across all other capital city markets. With rental rates increasing in some cities in April, rates in Sydney, Adelaide and Hobart are at record highs. In all remaining cities, rental rates are now below their highs with the declines recorded respectively down 0.1% in Melbourne, 0.8% in Brisbane, 13.7% in Perth, 17.3% in Darwin and 5.4% in Canberra. The results show that as rental changes outpace home value changes, gross rental yields have trended lower and have hit record lows of 3.3% for houses and 4.2% for units. ‘In our two largest capital cities, we’ve seen rental yields move to record lows of 3.1% for houses and… Continue reading
Planning reform Bill welcomed by UK building industry
Planning in the UK is to be reformed with local communities getting more power and control to shape where new homes will be built under the new Neighbourhood Planning and Infrastructure Bill. Announced in the annual Queen’s speech, which sets out what will happen in Parliament, the Bill also includes measures to reform and speed up the planning process by minimising delays caused by pre-commencement planning conditions. It has been widely welcomed by the industry. The British Property Federation said that strengthening neighbourhood planning is likely to be extremely effective for ensuring that development is brought about in a way that is supported by local communities and meets their needs. ‘The planning system is often cited as one of the main barriers to development, and pre-commencement planning conditions are an extra burden placed on developers which ultimately slows down the whole process,’ said Melanie Leech, BPF chief executive. However she said that it will depend on the detail yet to come, particularly how it is going to be enforced and how already stretched local authorities will cope. ‘Conditions for development should be agreed as part of the pre-application process, and we would hope that the planning process is not made over-complicated to compensate,’ she added. The compulsory purchase order (CPO) process is set to become clearer, fairer and faster for all those involved and the Bill will see the establishment of and independent National Infrastructure Commission on a statutory basis. On a more controversial points it includes the privatisation of Land Registry. Some believe this will support the delivery of a modern, digitally based land registration service that will benefit the Land Registry’s customers, such as people buying or selling their home. The Government is still consulting on the privatisation of the Land Registry, but its inclusion in the Bill implies that it is going ahead. Leech pointed out that the privatisation of the Land Registry could hold important consequences for the commercial property industry, as security of title is critical to the real estate market. ‘It is hugely important that any changes to the way that the Land Registry is run do not affect this security so that investors can be confident that they own their assets and that if for whatever reason there has been an error in registering their title then they will receive adequate compensation,’ she said. However, the Conveyancing Association (CA), the leading trade body for the conveyancing industry, is against the privatisation. It believes the move would not be in the best interests of clients, the conveyancing profession or the Land Registry itself, based on a number of reasons including its experience of previous privatisations. The Government has argued that privatisation would maximise capital return while maintaining high levels of quality and service, and reducing the burden of control but the CA suggests that such ambitions would not require privatisation. Instead it argues for a potential increase in fees, plus a reversal of the recent halving of… Continue reading
Prime properties in UK towns and cities outperforming the countryside
Prime properties in the UK in urban locations are outperforming their rural counterparts across the country, according to new research. A growing trend of living in thriving town and cities other than London since the economic downturn of 2007 is behind the increase, says the new analysis from real estate firm Knight Frank. Across all the prime regional markets, urban properties are now on average 4.1% above their 2007 peak. This has been particularly evident in prime towns and cities including Bath, Oxford, Winchester and Cheltenham. The report also explains that demand is strong in these locations, in part due to the high concentration of prime housing stock and good schools which make them attractive to families looking to upsize, but also thanks to a growing number of equity rich downsizers looking to move to areas where they can have access to a range of good restaurants, shops and amenities. ‘An important consideration for such buyers, however, is just how much extra it costs to move to a property with more bedrooms, or how much equity can be released by downsizing, especially given the fact that in some regional cities the price per square foot can be similar to some London boroughs,’ said senior analysis Oliver Knight. Looking at the latest average house price trends across the country, the firm’s research team has calculated that the cost of adding or removing a bedroom is around £52,000 on average across England and Wales. This figure does not take into account the added costs associated with buying a property, including stamp duty. The regional nature of the market means that in terms of costs and savings there are large variations depending on where households are based and where they are moving to, as well as the type of properties involved. ‘We also acknowledge that the size and amenities of homes with more bedrooms will generally differ from those with fewer bedrooms, and this too will be reflected in the price. For example, downsizing from a five bed detached house to a three bed terrace in the South East could release around £263,000 in equity, based on average property prices, while downsizing from a four bed to a three bed property in the West Midlands could release £45,000 in equity,’ Knight explained. ‘There are also notable differences in terms of property type. Moving from a three bed terraced house to a four bed terraced property in Yorkshire costs, on average, £38,000. Making that same move from a detached property to another detached property costs closer to £50,000,’ he added. The research also found that costs are greatest in markets on the outskirts of London such as Elmbridge, St Albans and Guildford, perhaps unsurprisingly given average property prices tend to be higher in such locations. ‘These markets have also been among the first to reap the benefits of the ripple effect of demand coming out of London. As regional economies continue to recover, more London buyers are expected… Continue reading
