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Capital city home values in Australia up 3.3% in first four months of 2016
Home values in Australian capital cities continued to rise in the first four months of 2016, up 3.3% compared to the same period in 2015, the latest index shows. In April, the pace of capital gains rebounded from the relatively flat numbers recorded in March, with dwelling values increasing by an average of 1.7%, according to the Corelogic April home value index. Across the country, housing market trends remain mixed, however, and CoreLogic research director Tim Lawless noted that the improvement in the rate of capital gains has been ‘broad based’ during 2016 with every capital city except Perth recording a lift in dwelling values over the calendar year to date. ‘The results show value growth moved at a faster pace compared with the final three months of 2015 when capital city dwelling values slid 1.4% lower off the back of weaker market conditions in Sydney and Melbourne,’ he explained. ‘While we’ve seen capital gains moderate substantially after peaking last year in Sydney and Melbourne, dwelling values continue to trend higher, just not as fast,’ he added. The data shows that the annual rate of growth in Sydney peaked at 18.4% in July last year and has since moderated back to slightly less than half the peak rate of growth, at 8.9% over the most recent 12 month period. Melbourne’s housing market continues to show a level of resilience to a slowing trend, however the annual growth rate has fallen from a recent peak of 14.2% to the current annual growth rate of 10.1% but Melbourne was the only capital city to see double digit growth over the past year. Perth and Darwin remain as the only two capital city markets to experience a decline in home values over the past 12 months, with Perth values down 2.1% and Darwin values 3.7% lower. ‘With recent month on month increases in home values in these two cities, the declining trend rate is now levelling. This may be an early sign that these markets are beginning to find their cyclical trough after more than a year of annual declines,’ said Lawless. Over the current growth cycle, which commenced broadly in June 2012, capital city dwelling values have moved 34.4% higher, led by a 52.7% rise in Sydney home values and a 37.1% lift in Melbourne values. Lawless pointed out that this highlights the two tiered nature of Australia’s housing market at present. Brisbane experienced the third highest rate of dwelling value growth over the growth cycle to date and dwelling values in the city are now up 18% and Lawless explained that Australia’s regional markets also exhibited a lift in house values over the year to date. He added that while house values across the non-capital city markets have generally underperformed compared with the capital city regions, regional house values moved 2.4% higher over the first quarter of the year. Continue reading
Mortgage payments for UK first time buyers have fallen sharply
First time buyers in the UK with small deposits are making savings of more than £790 a year, when comparing monthly mortgage payments to the same time last year, new research suggests. This is in part due to competitive interest rates now available as monthly mortgage costs for first time buyers have fallen sharply, according to the latest Genworth Moneyfacts LTV tracker report. The average house price for a first time buyer is £154,559 and for those with a 10% deposit, lower mortgage interest rates mean they can save £67 a month compared to what they would have paid if they’d taken out the same loan a year ago. This adds up to savings of £800 over the course of a year. For those with 5% deposits, the monthly payment on a 95% LTV mortgage for an average first time buyer home was £66 per month lower in March 2016 compared to 2015, equating to annual savings of £792. The report explains that part of the reason for the attractive rates is increased competition as the number of mortgage products at high LTVs has risen in recent months. The number of mortgages available for those with a 5% deposit jumped sharply from 195 in March 2015 to 267 in March 2016. As a result, rates for 95% LTV mortgages reached a record low of 3.92% in March 2016, 0.80 bps lower than a year before. Rates for 90% LTV loans are also much cheaper, having fallen 0.92 bps to 2.82%. However, the total amount of high LTV lending has stagnated even while overall lending has increased revealing that while lenders may be competing for the best customers in the high LTV bracket, they are more focused on increasing lending to customers with larger deposits. Despite a climate which is ripe for high LTV lending and a rising numbers of available mortgages, lending to those with a 5% deposit, which saw a notable boost following the introduction of the Help to Buy Mortgage Guarantee (HTB2) Scheme, has subsequently flat lined. Lending to those with 5% deposits received a much needed boost following the introduction of HTB2, with the proportion of lending at this level climbing from 1.7% in the fourth quarter of 2013 to 3.1% in the first quarter of 2014. It reached a high of 4.2% of total mortgage lending in the second quarter of 2014 but stagnated at around 3% in 2015. The stagnation in lending to those with small deposits is particularly concerning given that the Help to Buy Mortgage Guarantee scheme is due to end after this year. With nothing scheduled to replace the scheme, the fear is that lending to this part of the market could continue to fall. ‘Competitive rates available for those with just 5% or 10% deposits mean they are able… Continue reading
Chancellor warns property prices will take a big hit if UK leaves EU
Leaving the European Union would hit the UK residential property market with prices likely to be hit significantly and make mortgages more expensive, according to the Chancellor of the Exchequer George Osborne. Speaking on national television, he warned that if there is a Brexit, the term used to describe the country leaving the EU, then the values of homes will fall. He also revealed that the Treasury is about to publish a major piece of research on how Brexit would affect that UK economy and that one major issue that emerges is the effect on real estate, ‘You will see the analysis we will do, but I’m pretty clear that there will be a significant hit to the value of people’s homes and to the costs of mortgages. That is one example of the kind of impact, economic impact, that we get from leaving the EU,’ he said on of ITV’s Peston on Sunday politics programme. He has spoken out as the campaigning ahead of the EU referendum on 23 June hots up. The polls have been neck and neck but at the beginning of May an ICM poll put the leave camp slightly ahead at 45% compared to 44% for remain. The warning from Osborne comes as prices have started to ease slightly. The latest Halifax index, just published, shows prices fell by 0.8% in April. The market has been looking healthy recently with data from HMRC showing that sales have risen dramatically from 116,930 in February to 165,480 in March, the highest monthly total since records began in April 2005. While sales in the first three months of 2016 were 32% higher than in the same period last year, much of both the monthly and annual increases is likely to be attributable to a rush to beat the new stamp duty tax rates for buy to let and second homes in April. On top of this the volume of mortgage approvals for house purchases, a leading indicator of completed house sales fell by 2.5% between February and March. This suggests that the number of new buyers seeking to complete ahead of the stamp-duty surcharge had already begun to ease. Approvals, however, were still 15% higher than in March 2015, according to Bank of England, seasonally adjusted figures. Meanwhile, supply remains historically low. New instructions by home sellers fell marginally in March following three consecutive monthly increases. Market conditions remain very tight with stock levels nearly 20% lower than a year ago, at a near historical low, the most up to date monthly report from the Royal Institution of Chartered Surveyors (RICS) shows. Continue reading
