Tag Archives: australia
High property land prices in Australian capital cities bringing sales down
There is strong evidence of intensifying supply constraints in the residential land market in Australia, especially in the country’s state capital cities. The number of residential lot sales fell by 2.7% in the third quarter of 2015 while median lot prices rose by 4.2%, according to the report from the Housing Industry Association and real estate analytics company CoreLogic RP Data. The index report explains that the tightening of market conditions was concentrated in the capital cities, where prices increased by 5.4% but the number of lots transacted actually fell by 4.5%. According to Shane Garrett, HIA senior economist, with the Australian population now over 24 million for the first time, the report provides a sobering indictment of how land supply policy is not keeping pace with the housing needs of a growing population. ‘The combination of strong land price growth yet declining transaction volumes are hallmarks of a market constrained by supply bottlenecks. Ineffective land supply policy will limit Australia’s long term growth potential and erode competitiveness by forcing costs up,’ he explained. ‘The key supply side issues like planning delays, efficient infrastructure provision and the mammoth taxation burden on new housing need urgent attention. Otherwise, living standards for Australia’s 24 million residents will never reach their full potential,’ he added. According to CoreLogic RP Data research director Tim Lawless, the number of vacant land sales has been trending lower since reaching a recent peak over the June quarter of 2014, with the median land price continuing to push higher despite lower volumes. ‘Buyer demand across the vacant land market has remained strong, which is why prices are rising on lower sales, however, as land prices rise it is likely block sizes will have to reduce in order to maintain an affordable price point for buyers,’ he said. He pointed out that median lot prices have risen across every capital city over the past 12 months except for Adelaide where they fell by 1%. The tight supply of land across Sydney has seen median land prices rise by the most of any capital city over the past year, up 22.8% compared with a weighted average across the capitals of 10.7% growth. ‘Despite having the most expensive housing and vacant land, Sydney is currently showing the second largest median lot size amongst the capital cities at 537 square metres. Somewhat counterintuitively, the median land area has historically been the smallest in Adelaide, with the September quarter data showing a median lot size of just 375 square metres,’ Lawless said. Continue reading
UK’s private rented sector sees evictions rise to record high
A rise in evictions in the private rented sector and the use of Section 21 accelerated possession procedures is a stark insight into the severity of the UK’s housing shortage, it is claimed. It is also a reflection of the impact increased legislation is having on the private rented sector, according to Paul Shamplina, founder of specialist landlord possession services firm Landlord Action. The latest figures from the Ministry of Justice show that total evictions last year reached a record high of 42,728. Whilst overall possession claims fell during the year to 148,043, the number of accelerated possession cases continued their upward trend reaching 37,663 in 2015, up 4.5% on 2014 and up 10.5% on 2013. ‘Rising rents and welfare cuts are undoubtedly to blame for the growing number of evictions. With a shortage of affordable properties, particularly in the capital, the imbalance of supply and demand has pushed rental inflation well beyond the levels at which tenants’ wages have risen,’ said Shamplina. ‘Many simply can’t keep pace and are falling into arrears. We’re seeing more subletting scams and cases of tenants renting out properties on holiday websites in order to cover their rent than ever before,’ he added. According to the figures the proportion of claims made using accelerated procedure has increased from 7% in 1999 to 25% in 2015. Shamplina explained that there are several reasons for this including rising house prices, uncertainty over future buy to let tax implications and concerns over increased legislation such as Right to rent and the Deregulation Act which have been the catalysts for many self-managing landlords to consider selling up. They use Section 21 as a way to gain possession of their property as quickly as possible. In other circumstances, where tenants are in arrears, Landlord Action says many landlords still opt to use a section 21, instead of Section 8. Some landlords feel they won’t be able to collect rent arrears so this allows them automatic right of possession without having to give any grounds (reasons) once the fixed term has expired. Other landlords are being forced down the Section 21 route because local councils are advising tenants to remain in properties until a possession order has been granted by the courts. This means they can apply for re-housing and do not make themselves voluntary homeless. ‘A section 21 usually enables landlords to gain possession much quicker on a no-fault basis, so they can re-let the property, which is often more financially viable than chasing arrears. I believe use of the Section 21 process for landlords will continue to grow year on year because of councils’ pushing the problem back onto private rental sector landlords,’ said Shamplina. Continue reading
UK property prices broadly stable with policy changes and a potential EU vote on horizon
Average UK house prices rose by 0.3% in January, and are up 4.4% year on year, remaining broadly stable, according to the latest analysis report. Prime central London prices rose by 0.1% last month to take annual growth to 1.2% while prime central London rents dipped by 0.3%, says the report from real estate firm Knight Frank. The data also shows that price growth for prime property in some regional hubs continues to outperform the wider prime country house market. The stability in UK property prices is likely to be underpinned by a further period of ultra-low interest rates and a solid, although slowing, economic recovery but the report warns that the political outlook is less clear as an European Union referendum draws closer. Grainne Gilmore, head of UK residential research at Knight Frank, pointed out that interest rates being left unchanged by the Bank of England for the 83rd consecutive month in February was not a surprise. ‘But the data released by the Bank when announcing its decision has led economists and markets to change their expectations about when rates may start to rise. Whereas many had forecast a rise around the middle of the year, the verdict is now that rates are on hold until the final quarter of the year, if not 2018,’ she said. ‘This change was prompted by the Bank’s forecasts, showing muted inflation and wage growth in the coming years as well as a downgrade in forecast GDP growth. The central bank now expects 2.2% GDP growth this year, instead of 2.5%. The slower growth is attributed to global economic conditions, not least the effect lower oil prices are having on many economies around the world,’ she explained. ‘However, senior bank officials were clear that the UK economy was still experiencing a solid recovery and that the fall in oil prices was a net good for UK consumers, helping boost consumption and therefore wage growth,’ she added. Households expect prices to continue rising this year according to the latest House Price Sentiment Index (HPSI) from Knight Frank and Markit Economics. Any reading above 50 on this index, which is a bellwether for house prices, suggests prices are rising, or are set to rise. The future index has now been above 50 for 35 consecutive months. However, Gilmore also said that the outlook for 2016 must take into account the policy changes and political decisions which will be made this year, not least another change to the stamp duty regime in April, the Mayoral Elections in London in May and a possible decision on whether the UK should stay in the European Union. ‘As seen following the stamp duty changes in December 2014, and last year’s General Election, the market can adjust to political and policy changes, but periods of uncertainty can take their own toll on market activity,’ she added. While prime central London property prices edged up by 0.1% in January, taking the annual increase to 1.2%, a breakdown… Continue reading
