Tag Archives: australian
Annual residential rents up 1.3% in Australia, but cities show differing rates
Annual rental rate for houses and apartments in Australia increased by 1.3% in the third quarter of 2014, according to the latest data to be published. In the capital cities, house rents remained flat at 0% growth while rental rates for units increased by 2.4%, the RP Data quarterly rental review also shows. According to RP Data national research director Tim Lawless, investors entering the rental market need to be aware that rents aren't rising anywhere near the pace of capital gains which is pushing rental yields lower, particularly in Sydney and Melbourne where values have increased the most at a time when rents aren't doing comparatively much at all. For houses, Darwin currently holds the highest weekly median rental rate at $660 followed by Sydney $525, Canberra $480, Perth $462, Brisbane $400, Adelaide $350, Melbourne $390 and Hobart at $330. For units, Darwin once again emerged as the most expensive market on the rental rate front by recording the highest weekly median rental rate for the quarter at $550 followed by Sydney $500, Perth $450, Brisbane $390, Canberra $383, Melbourne $370, Adelaide $300 and Hobart $275. Lawless noted that while detached house rents remained unchanged across the combined capital cities over the quarter, this cannot be said for each individual city. Brisbane is only city where rents remained unchanged. A breakdown of the data shows that Melbourne saw 2.6% rise, Darwin and Hobart both saw growth of 1.5%, Adelaide was up 1.4% and Sydney by 1%. Perth saw rents fall by 2.7% and Canberra a fall of 2%. RP Data analysts reported that over the third quarter of 2014 capital city rental rates for both houses and units remained unchanged. Across the combined capital cities, rental rates for houses were recorded at $430 per week, while median weekly rental rates remained at $420 for units. On a national level house rents also remained steady over the three months to September at $400 per week, while for units, rents fell by 1.3%, down $5 over the quarter to $390 per week. Across the unit market, none of the capital cities recorded a rise in rents over the September quarter and the majority of cities saw rents remain steady over the three months. Canberra rents fell by 3.2% to $383 per week and Hobart rents fell by 1.8% to $275. ‘The performance of rental markets are diverse, however the common theme is that generally the rate of capital gain is outpacing the change in weekly rents which is driving rental yields lower,’ said Lawless. ‘This is happening at a time when investment demand is at record levels and trending higher, which highlights that most investors are focussing on capital gains and ignoring the low yield scenario. The softer rental conditions are likely the result of the surge in investor related activity which is seeing more rental supply hit the market,’ he added. Continue reading
Property price growth in UK set to slow to 2% next year
UK house price growth is predicted to slow to 2% in 2015 and 19.3% to the end of 2019, according to the latest five year forecast from Savills. Prices in London are expected to flat line having hugely outperformed the rest of the UK and is likely to end this year at 15%. The South East is set to be the strongest market seeing price growth of 26.4% by 2019 as buyers take advantage of the relative value of the market. In the short term Scotland is expected to see the biggest price growth in 2015 at 3.5% but slowing to annual growth of 2.5% in 2019 and over the five years seeing growth of 17.6%. The east of England is also likely to see strong growth with the forecast predicting 3% in 2015 and 5% in 2016 with a combined five year growth of 25.2%. The forecast also predicts an increase in the private rented sectors. It says some 1.2 million more households in England and Wales will be private renters by 2019 and 24% of all homes will be privately rented with all the opportunities and challenges that brings for investors and policymakers Only one in six under 35s will be home owners compared to 28% in 2014 and in London there will be around 250,000 more private rented homes, rising to 1.24 million or 36% of all homes. ‘Stress testing of borrowers’ ability to service a mortgage and loan to value lending caps will increasingly limit the amount buyers can borrow, making it more difficult to access or trade up within the market,’ said Lucian Cook, UK head of residential research at Savills. ‘Not only will this suppress price rises, particularly in London, it will also reduce the potential for transaction volumes to return to anything close to a pre crunch norm,’ he added. The report says that the London market now looks relatively fully valued and this has already prompted a change of sentiment among buyers. Savills is therefore forecasting that mainstream London house prices will flat line next year, with five year price growth totalling just 10.4%, the lowest of any region. By contrast, the South East and East of England are expected to show the strongest growth, at 26.4 and 25.2% respectively, as buyers priced out of London seek relative value beyond the capital. At the other end of the scale, the North of England has greatest capacity for growth based on affordability measures, but the strong economic drivers are not in place to support it. ‘Mainstream market performance will be limited by buyers’ capacity to borrow and service debt, but we don’t believe rate rises will be severe enough to trigger a wholesale market correction, so are not forecasting price falls,’ explained Cook. ‘We expect wage rises, an improving economy and greater recycling of existing housing wealth between generations to support growth, while mortgage regulation is likely to prompt greater reliance on the bank of mum & dad with more equity released… Continue reading
Industrial building driving UK construction growth, latest RICS survey shows
Industrial building is driving construction growth in the UK and the country’s office and industrial sector rents are expected to rise as their fastest rate since 1998 in the last quarter of 2014. Indeed, the UK has seen a sixth consecutive quarterly fall in office space availability nationwide with the decline at its fastest pace since the late 1990s according to the latest Commercial Market Survey from the Royal Institution of Chartered Surveyors (RICS). It also shows that the rise in transactions of commercial properties being sold with Permitted Development Rights (PDR) appears to be compounding the lack of availability, with two thirds of respondents to the survey suggesting that if PDR exemptions are not extended then availability of commercial properties will be impacted further. In London, 20% of respondents said PDR transactions had led to more than 10% of available commercial properties being earmarked for conversion into residential use and a net balance of 51% of surveyors reported a rise in demand for office, industrial and retail space. Across the whole of the UK, 32% more surveyors said availability across office, retail and industrial properties had fallen, while demand had risen to a net balance of 44%. RICS says it is significant that demand for industrial property grew on the previous quarter from a net balance of 49% in the second quarter to 56% in the third quarter and surveyors in London also saw a large rise in prospective overseas investors in the industrial sector of 73%. The picture across the UK appears increasingly upbeat, with the firmer tone spreading beyond the capital as the economic expansion gains greater traction. This is being reflected in rental expectations which are now in positive territory in all parts of the country in the office and industrial sectors. Retail remains something of a laggard with a flatter rental trend away from the more dynamic parts of the market. For the next 12 months a net balance of 71% surveyors are forecasting an increase in rent levels in London across all segments of the market, compared to 36% in the North of England. ‘The third quarter results provide further evidence that the economic expansion is becoming more broadly based with tenant demand for space picking up in all parts of the country and the need for landlords to provide inducements diminishing,’ said Simon Rubinsohn, RICS chief economist . ‘There are also now clear signs that investors are casting their nets wider in a bid to find better value in the market following the steep drop in yields on prime property in the capital,’ he added. He also pointed out that while permitted development rights is helping in a small way to boost much needed housing supply, the latest survey suggests that it is also having the unintended consequence of contributing towards a shortfall of office space in some parts of the country. ‘Feedback from members suggests that this is particularly marked in London and adding to the upward pressure on rents. Moreover, there is… Continue reading
