Tag Archives: british
Economy slowing and lower oil prices affecting Abu Dhabi’s rental markets
Average housing rents in Abu Dhabi have fallen for the first time in three years, driven by thousands of job cuts and an increase in the cost of living. The first signs of long expected falls in housing rents in Abu Dhabi started to appear in the second quarter, according to new reports from property brokers JLL and CBRE. Residential property rents in Abu Dhabi have fallen for the first time in three years at a time when jobs are being cut and the cost of living is increasing. The average rental price of a prime two bedroom apartment fell by 2% in the second quarter of 2016 compared with the first quarter, according to the latest report from real estate services firm JLL. The latest report from property firm CBRE also shows that there was a 2% fall in apartment rents in the second quarter of the year while it adds that villa rents fell by an average of 1%. ‘While supply remains stable, the reduction in demand has now started to cause vacancy rates to nudge upwards, indicating we have now reached a tipping point with rents declining for the first time in three years,’ said David Dudley, head of JLL’s Abu Dhabi office. The firm believes that plans by the state owned oil company Adnoc to cut 5,000 jobs by the end of the year, and staff cuts at other government companies, means fewer people are attracted to the emirate and apartments are left empty. JLL is forecasting that rents will fall further this year as more expats and their families are expected to leave as their tenancies expire at the end of the academic year. ‘We expect the impact of these job cuts and reduced incomes to become more pronounced over the summer, as some people look to either leave or downsize. This will push vacancy rates up further and cause rents to decline,’ explained Dudley. The CBRE report also points to a drop in incomes as being behind demand falling for rental apartments with tenants looking for cheaper lets due to a combination of falling wages, a reduction in allowances and benefits, the removal of fuel and water subsidies and a new 3% municipality fee on Abu Dhabi expat rentals. ‘With economic challenges expected to continue in the short term, we anticipate further deflation of high end luxury rates as reduced corporate demand creates a more tenant led market,’ said Matthew Green, head of research in CBRE’s office. He believes that with just 14,500 new homes expected to come to the market over the next two and a half years, around 5% of the current housing stock most of which will be aimed at the upper end of the market, rents for more afford¬able homes are likely to remain fairly flat. ‘With limited stock against current requirements, rental rates for affordable units have remained steady with minimal fluctuation recorded against the general slowdown observed in the upper segments,’ he added. But… Continue reading
Home sales down by 0.9% in Canada in June but prices up over 11% year on year
Nationally home sales fell 0.9% from May to June in Canada while prices were up 11.2% year on year, according to the latest index data. It means that monthly falls in sales activity has left transactions down 2.6% below the record set in April 2016, the home index from the Canadian Real Estate Association of Canada (CREA) also shows. There is also considerable price differences depending on location. For example if Greater Toronto and Greater Vancouver are left out of the equation prices are up 8.4% year on year. Sales activity was down from the previous month in about half of all markets in June, with declines in Greater Vancouver, the Fraser Valley and Greater Toronto having eclipsed gains in comparatively less active housing markets. ‘While national sales activity remains strong, there are still significant differences in housing market trends across Canada,’ said CREA President Cliff Iverson. ‘While home sales activity and price growth are running strong in B.C. and Ontario, they remain subdued in other markets where home buyers are cautious and uncertain about the outlook for their local economy,’ he added. A breakdown of the figures show that two storey single family home prices continued to post the biggest year on year gain at 15.5%, followed by one storey single family homes up 14%, townhouse/row units up 13.6% and apartments up 9.8%. While prices in nine of the 11 markets tracked by the index posted year on year gains in June, price growth continues to vary widely among housing markets. Greater Vancouver with price growth of 32.1% and the Fraser Valley up 35.5% posted the largest annual gains. Greater Toronto recorded price growth of 16%, Victoria was up 15.7%, up 10.6% in Vancouver Island, up 7.9% in Greater Moncton, up 4.1% in Calgary, up 3.6% in Regina, up 1.9% in Greater Montreal and up 1% in Ottawa but prices fell by 4.1% in Calgary year on year and by 1.4% Saskatoon. The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which remain two of Canada’s tightest, most active and expensive housing markets. The actual, not seasonally adjusted, national average price for homes sold in June 2016 was $503,301, up 11.2% year on year. However, if these two housing markets are excluded from calculations, the average price is a more modest $374,760 and the gain is trimmed to 8.4% year on year. June sales extended trends observed the previous month, according to Gregory Klump, CREA’s chief economist. ‘As was the case in May, the monthly decline in national sales activity was led by the Lower Mainland of British Columbia and markets in or around the GTA,’ he said. ‘In keeping with the law of supply and demand, exceptionally low inventory combined with high demand continues to translate into strong price growth in these housing markets, where year on year price gains have been running in double digit territory since late last year,’ he pointed out. Actual,… Continue reading
UK first time buyers with small deposits save £1,300 in mortgage interest repayments
Falling mortgage rates in recent months mean that the average mortgage interest payments for a UK first time buyer mortgage over two years has fallen. It is down from £11,327 in the first quarter of 2015 to £10,019 in the first quarter of 2016, a saving of £1,308, according to research from AmTrust International, Mortgage and Special Risks. Record low interest rates in the first three months of 2016 mean it hasn’t been this cheap to service the interest on a 95% loan to value (LTV) mortgage since lending at this level was reinvigorated in 2013 following the financial crisis and recession. Some 95% LTV mortgages are commonly used by first time buyers who are unable to save a substantial deposit, enabling them to step onto the property ladder. The savings of more than £1,300 in interest payments over two years when compared to the first quarter 2015 is good news for a group of buyers who have been caught by rising house prices and expensive rents. As the interest costs of paying off a mortgage have fallen, this means the amount spent by high LTV borrowers, those with a 5% deposit, on capital repayments has increased, the research also shows. The amount first time buyers spend on capital repayments that help them build the equity in their home has risen 18% year on year from £5,407 in the first quarter of 2015 to £6,391 in the same period in 2016. This means first time buyers can pay off the capital of their mortgage faster, reducing the total amount of interest paid over the lifetime of their mortgage. While the costs of servicing the interest on a high LTV mortgage have decreased sharply, the cost of renting has risen in a further blow to hopeful buyers who will find it hard to save for a deposit while covering the cost of rent. Over the last year, the cost of a year’s rent has increased by £300 or 3% from an average of £9,188 in the first quarter of 2015 to £9,488 in the first quarter of 2016. When you compare the cost of renting to the interest cost of a mortgage, which is the part of the mortgage payment that does not go towards the owner building up their equity share in the property, akin to a form of saving, renting is £4,415, or 87%, more expensive. The current difference is £111 more than the £4,305 extra it cost to rent compared to paying mortgage interest in the fourth quarter of 2015, and £1,900 more than in the third quarter of 2014 when the gap was at its smallest at £2,515. The total cost of servicing a 95% LTV mortgage, interest and capital repayments, is also cheaper than it has been at any point since the Help to Buy mortgage guarantee was… Continue reading
