Tag Archives: australian
Majority of home owners in Australia concerned about property values
More than two thirds of Australians are concerned that Australia’s housing is vulnerable to a significant correction in values, according to the latest housing sentiment survey. Some 68% of respondents to the September CoreLogic RP Data TEG survey said they believe the housing market is vulnerable to a significant correction in values. However, the findings are a reduction from the previous quarter results where 75% of respondents indicated they were concerned about a significant downturn, but despite the apparent improvement in consumer perceptions, a significant proportion of the community are wary of substantial value falls across the nation’s largest and most important asset class, which according to CoreLogic RP Data is worth an estimated $6.2 trillion. ‘While we don’t envisage dwelling values will fall substantially, the probability of declines in Sydney, and to a lesser extent in Melbourne, after such a strong run of capital gains isn’t unlikely,’ said CoreLogic RP Data head of research Tim Lawless. ‘Home values are already trending lower in Darwin and Perth. It was less than three and a half years ago that capital city dwelling values fell by 7.4% between October 2010 and May 2012,’ he pointed out. Additionally, 95% of survey respondents believe that foreign demand is pushing property values higher, with 19% indicating that foreign buyers were responsible for placing ‘extreme’ upwards pressure on home values. Only 5% of survey respondents thought foreign buying activity wasn’t pushing home values higher. According to Lawless, the results are a stark reminder that the true extent of foreign buying of residential properties across Australia continues to lack transparency, despite the House Economics Committee Report on Foreign Investment in Residential Real Estate being handed down almost a year ago. He added that the latest statistics haven’t been updated since the 2013/14 financial year. Some 55% of survey respondents thought that the current housing market conditions represented a good time to buy a property, down from 60% in June. Respondents based in Sydney, where housing market conditions have been running the hottest, were the most pessimistic about buying conditions, however 29.7% of respondents still thought that now was a good time to be getting into the market. Alternatively, more than 70% of survey respondents thought buying conditions were ripe in the Australian Capital Territory, Adelaide, regional Queensland and Perth. The proportion of survey respondents who thought property values will rise over the coming six months has been trending lower, with respondents who thought home values will rise over the next six months dropping from 49% in March and 48% in June to just 40% of all respondents in September. Continue reading
New home sales down month on month in Australia
New home sales in Australia fell by 4% month on month in September, with the level of activity down from the April peak by 5.2%, the latest new data shows. Detached house sales declined in four out of the five the mainland states with only Victoria seeing growth at 3.1%, according to the New Home Sales report from the Housing Industry Association (HIA). They fell by 19.8% in South Australia, by 8.6% in Western Australia, by 5.9% in Queensland and by 0.5% in New South Wales. In Victoria detached house sales increased by 3.1%. ‘Following the peak level of sales that occurred in April this year, sales activity has trended lower only very modestly. This augers well for actual new home building activity in 2015/2016,’ said HIA economist, Diwa Hopkins. ‘A fresh record level of building activity during this financial year could have been achieved and could have been of strong benefit to the broader domestic economy but increasingly restrictive credit conditions are likely to curtail the boom in new home building,’ she pointed out. ‘The deterioration in credit conditions is likely to weigh more heavily on new home building activity beyond 2015/2016. We have therefore pared back our forecasts for activity over our forecast horizon beyond the end of the current financial year,’ she added. Meanwhile, separate research shows that offshore investment into Australia's commercial property market shows no signs of abating this year. Foreign investors accounted for 28% of transaction volumes by value in 2014 and already in the first half of 2015 the level is 27%. The Australian market is remaining attractive to offshore buyers, as commercial real estate assets continue to provide relatively high income returns in global context, according to the report from real estate firm JLL. It points out that Australian office assets are attractively priced for investors seeking high yielding, stabilised assets in a mature market, comparing well against major cities in Europe, Asia, and America. And even taking into account localised differences such as higher rent free incentive levels in Australia, yield spreads still favour the Australian market. ‘In Australia, yield compression has continued unabated, especially for prime grade assets, across all sectors and many markets. The weight of capital remains significant and the global portfolio tilt toward real estate continues,’ said Simon Storry, JLL's head of International Investments Australia. While 2014 was a record level of foreign investment into Australia, at the half year mark, 2015 levels are close to the record 28% of transaction volumes recorded in 2014. Storry said that the depreciation of the Australian Dollar has allowed offshore investors to be far more competitive and they seem to have a much greater desire to deploy substantial pools of capital in what they see as an undervalued market globally. Continue reading
Tighter buy to let regulation could push up rents in UK
Measures which discourage investment in the private rented sector in the UK in the face of population growth and low housing supply can only push up rents and harm tenants more than landlords, a new report suggests. The report from the Intermediary Mortgage Lenders Association (IMLA) which examines the key issues facing the main segments that make up today’s mortgage market, warns that tighter buy to let regulation could restrain supply. Assessing the possible impacts of July’s buy to let tax changes, the IMLA argues that a higher tax burden for landlords, which will push some into losses after tax and raise the effective tax rate on their buy to let above 100%, may slightly skew the market in favour of owner occupied house hunters, by reducing the price that landlords are prepared to pay for any given property. The risk, however, is that these changes and the threat of tighter buy to let mortgage regulation will constrain the supply of available rental properties at a time when the fundamentals of population growth and low housing supply are driving an increase in demand, and that institutional investment will fail to make up the gap. The IMLA report shows total lending across the mortgage market this year was running below its 2014 level from January to May. Since then, there has been a sharp recovery and 2015 may be shaping up to be a mirror image of 2014. Subdued lending in the first half of the year may have reflected uncertainty in the run up to the general election but a clear cut election result has removed this level of doubt. The bedding down of the Mortgage Market Review (MMR), which disrupted some lending with its introduction in 2014, has also contributed to the recovery, it explains. By far the most robust recovery has come in buy to let, but this must be placed in context of an 81% decline after the recession between 2007 and 2009, the report points out. This compares with a 60% drop in remortgaging volumes, 56% among home movers and 53% among first time buyers over the same period. Buy to let lending volumes remained 40% below their 2007 peak in 2014, and the IMLA argues that it is responding to rather than driving growth in tenant demand in the private rental sector. While buy to let has rebounded, the remortgage market has been slow to respond, but conditions are ripe for a resurgence. IMLA’s analysis shows that in the second quarter of 2015 remortgage volumes were up 11% on the previous quarter to record the best performance since 2009. At just under 3%, the price differential between standard variable rates (SVRs) and discounted variable rate deals is greater this year than ever before. Interest rates are also expected to rise, and for the first time in the second quarter households’ aggregate housing equity surpassed the £5 trillion mark. Only 20% of gross UK housing wealth is now… Continue reading
