Tag Archives: australian
New home building in Australia reaches 20 year high
New home building in Australia has reached a 20 year high, heralding a recovery in the industry, according to the Housing Industry Association (HIA), the voice of Australia’s residential building industry. According to HIA senior economist, Shane Garrett, back in early 2012 when activity was so low, the prospect of breaking through 180,000 starts within a couple of years was beyond almost everybody’s most optimistic expectations. But the latest figures from the Australian Bureau of Statistics are not all good news as the multi-unit dwelling segment saw a sharp fall during the second quarter of this year, with detached house building also nudging down a little. On the renovations side, the volume of work done also fell, with a 3% reduction in activity during the June 2014 quarter. But overall new housing starts totalled 45,527 in seasonally-adjusted terms. Despite representing a 6.9% decline on the previous quarter, these figures mean that total starts during 2013/2014 was 180,833, the highest 12 month total since March 1995. Detached house commencements slipped by 1.1% during the quarter while other dwellings saw a 15% slide in seasonally adjusted terms. The new HIA Economics report Housing Australia’s Future estimates that about 186,000 new homes will be required annually between now and the year 2050. ‘Even in such a strong upturn, we are still short of this requirement today. This is a stark illustration of the serious supply side issues which will need addressing,’ said Garrett. ‘A number of factors continue to plague the capacity of the new home building sector. These include high taxation, stamp duties, planning restrictions, and delays in making residential land available,’ he explained. ‘Failure to tackle these constraints will mean that the ability of the industry to provide for Australia’s long term housing requirements will continue to be seriously undermined,’ he added. A breakdown of the figures show that new home starts in the June quarter fell by 12.3% in New South Wales, by 3.3% in Victoria, by 1.3% in Queensland, by 1.7% in South Australia and by 48% in the ACT. Three states saw building commencements rise during the quarter. They were up 2% in Western Australia, by 28.7% in Tasmania and by 18.3% in the Northern Territory. Continue reading
New home sales pick up in Australia, but peak of growth has passed
Sales of new homes in Australia increased in August following a weak July but an overall downward trend in total seasonally adjusted new home sales is still apparent, the latest data shows. There was an increase of 3.3% in August driven primarily by a strong increase in the usually volatile multi-unit sector, the new home sales report from the Housing Industry Association shows. However the report, which covers Australia’s largest volume builders, says that despite the August bounce, the HIA still believes that new home sales reached their peak for the cycle back in April this year.” ‘The result for August was driven primarily by a strong lift the multi units sector where sales increased by 19.8%, taking this component of sales to its second highest level this cycle,’ said HIA economist Diwa Hopkins. She pointed out that new detached house sales didn’t fare quite so well, up by only 0.5% although this slight rise stopped a decline which stretched to three consecutive months. ‘As leading indicators of new home construction activity, both HIA New Home Sales and ABS Building Approvals are displaying a moderate downward trend. Current levels remain elevated by a historical standard, which is consistent with still healthy levels of new home building throughout 2014/2015,’ she explained. ‘It is important for the new home building sector and the broader domestic economy that we continue to see evidence of historically high levels of building approvals and new home sales throughout 2014 and into next year, even if the peak for these indicators has passed,’ she added. A breakdown of the figures show that detached house sales increased by 11.1% in New South Wales and by 2% in Western Australia but fell by 6.8% in South Australia, by 6% in Victoria and by 0.7% in Queensland. Over the three months to August 2014 detached house sales decreased in each of the surveyed states, albeit to varying degrees, with the exception of New South Wales where sales increased by 0.4%. Sales fell by 9.8% in Victoria, by 4.6% in Western Australia, by 4.4% in South Australia, and by 3.2% in Queensland. Continue reading
UK commercial property set to see strongest returns for 25 years
The UK commercial property market may achieve returns of over 20% for 2014, making it the strongest return the country has seen in the last quarter century, according to new research. With liquidity in the market and increased investor confidence, performance for the year is forecast to be exceptional, says a new report from global real estate fund manager M&G Real Estate. Although in the medium term, M&G Real Estate’s research anticipates the market reverting to the trend level of between 6% and 8%. But the UK Real Estate Market Outlook report for September 2014 highlights that heightened confidence in the UK’s economy, with growth ahead of its closest competitors, the United States and Canada. Confidence is triggering increased occupier demand, particularly in the office and industrial markets. This demand is resulting in lower vacancy rates and accelerating rental growth. At a time of low supply of stock owing to previous constrained levels of construction, the UK property market is now attracting substantial interest from both UK and international investors. Rapid yield compression, aided by rental growth, has pushed average capital values up by 6.7% over the six months to August 2014, according to IPD. Despite declining yields, investors’ risk appetite looks set to grow with property yields continuing to offer a sizeable spread above bond yields as shown in the chart below. Notably, secondary offices in the South East are now outperforming prime assets, proving that prime is not always best. Throughout the rest of the country, secondary stock is catching up with those of prime assets as risk appetite increases but the better end of secondary will likely remain much preferred over the weaker end. ‘The UK economy and property market are experiencing rapid growth, leaving behind a period of difficulty that discouraged risk appetite across the board. It’s a different picture now as the weight of capital targeting the sector is showing no signs of let up,’ said Richard Gwilliam, head of research at M&G Real Estate. ‘Investors, however, should not be blinded by a high short term yield without fully assessing the risks to the long term income stream of an asset. The strongest option for investors looking for mid to long-term rental growth is the office market encircling London, particularly those fringe areas benefiting from infrastructure projects,’ he added. Continue reading
