Tag Archives: business
Sydney soars ahead with strong price growth compared to other Australian cities
Home values in Australia’s capital cities increased by 1.4% in March with Sydney leading the way with strong growth of 3% while prices elsewhere were relatively flat, the latest index shows. On a quarterly basis prices increased by 3% in the first three months of 2015, the CoreLogic RP Data Home Value Index also shows. However, although value growth has started 2015 on a strong note, the annual rate of growth has moderated back to 7.4% which is the slowest annual growth rate since September 2013. On top of the 3% monthly price rise, values in Sydney are up 5.8% on a quarterly basis and 13.9% on an annual basis. With stronger housing market conditions over the first three months of the year, annual home value growth across the Sydney market has rebounded after slowing to 12.4%, according to head of research Tim Lawless. He pointed out that Sydney is the only housing market where dwelling value growth remains in double digits, with the next strongest performer, Melbourne, showing a much lower rate of annual capital gain at just 5.6%. Each of the remaining capital cities have recorded an annual rate of growth which is less than 3% with values having declined across Perth, Darwin and Hobart over the year. The index data also shows that since home values began their current growth phase in June 2012, prices across the combined capital cities have increased by 24.3%. ‘Most of this growth is emanating from Sydney. Over the current growth phase, Sydney dwelling values have increased by 38.8% with Melbourne second strongest at 23.6%. On the other hand, total dwelling value growth over the current cycle has been less than 10% in Adelaide, Hobart and Canberra,’ said Lawless. He also explained that while the overall quarterly rate of growth is strong it is important to note that it is lower than the 3.5% increase in home values over the first quarter of 2014. While dwelling values continue to rise across most cities, weekly rents are failing to keep pace. Across the combined capital cities dwelling rents have risen by just 1.7% over the past year which is a stark contrast to the 7.4% capital gain in dwelling values over the same period. Sydney is showing the highest increase in weekly rents over the year at 3.3% while Perth has shown the most substantial correction, with weekly rents down 4.1% over the past 12 months. The fact that dwelling values are moving higher at a much faster pace than rents is causing gross rental yields to consistently compress across each of the capital cities, the index report says. Since the middle of 2013 the average gross rental yield across Australia’s combined capital cities has reduced from 4.3% to 3.6%. Gross rental yields are now approaching record lows in both Melbourne and Sydney at 3.3% and 3.6% respectively. ‘Despite the headwinds of softer labour markets, very low rental yields, increased oversight on lending conditions and heightened economic uncertainty,… Continue reading
Prime central London rental values up for third month in a row
Rental values in the prime central London rose by 0.2% for the third consecutive month in March, pushing annual growth to 4%, the highest rate in more than three years. The rental value index is now at the same level it was during the summer of 2012, when London hosted the Olympic Games, according to the latest report from real estate firm Knight Frank. Rental values subsequently dipped as the sales market strengthened but growth returned at the start of 2014 but the lettings market benefited as the UK economic recovery took hold and companies began hiring more staff. Annual growth was 4%, the highest rate in more than three years but the report says that some landlords are hesitant to agree deals because they believe the sales market could strengthen. The number of tenancies, viewings and new prospective tenants are up markedly on 2014 rental yields at 2.92%, an increase on March 2014, the report also points out. The report points out that jobs in London’s financial services sector rose 17% in February compared to 2014 and according to recruiters this is due to oil price stability and subsiding concerns over a Greek exit from the euro zone. However, it is not a clear cut picture, the report says, and activity and stock levels have been dampened by the kind of indecision that has affected the sales market. ‘While some vendors have become landlords in order to wait out the general election to obtain more clarity around the future political landscape, the overwhelming mood of uncertainty has led to hesitancy as the election draws closer and campaigning steps up,’ said Tom Bill, head of London residential research at Knight Frank. He pointed out that some property owners who had considered the rental option have been reluctant to sign two year tenancy agreements while there is a possibility the sales market could strengthen in the second half of the year, depending on the outcome of the election. ‘Either way, demand in the lettings market remains strong. In the year to February 2015, the number of tenancies increased by 37% compared with the preceding 12 month period,’ Bill said. Meanwhile, the number of viewings rose 16%, property inspections increased 14% and the total number of new prospective tenants registering grew by 18%. A stronger lettings market and slower price growth in the sales market resulted in rental yields of 2.92% in March, higher than a figure of 2.83% recorded in the same month last year. Continue reading
UK buy to let lenders adopt new practice statement
Buy to let lenders in the UK who are members of the Council of Mortgage Lenders are adopting a new statement of practice, designed to provide clarity about how responsible lenders operate. The statement reflects existing good practice and aims to ensure that there is a clear explanation of the obligations of buy to let borrowers on their mortgages and is a sign that buy to let lending is growing. It signposts additional information from other organisations about the responsibilities of being a landlord, and is endorsed by the Residential Landlords Association, the Association of Residential Letting Agents (ARLA), the Association of Mortgage Intermediaries, the Intermediary Mortgage Lenders Association, and the British Bankers Association (BBA). Some 31 lenders representing an estimated 90% of the buy to let market have already adopted the statement of practice. All CML members who offer buy to let mortgages are expected to adopt it over the course of 2015. The statement sets out the overarching principles that individual lenders use in determining their own lending strategy and practice in relation to lending principles, information given to customers, customer responsibilities, lender responsibilities on affordability, handling financial difficulties, fraud prevention and complaint handling. Next year when the consumer buy to let lending framework is established under the Financial Conduct Authority, the UK’s financial watchdog, to comply with the Mortgage Credit Directive, buy to let lending will fall into one of three types. These are mortgages regulated by the FCA like residential mortgages when the property is either partly occupied by the borrower or let to an immediate family member; mortgages regulated by the FCA under the Mortgage Credit Directive Order 2015 defined as ‘consumer’; and mortgages not regulated by the FCA which are those predominantly for a business purpose. The statement of practice will cover any residential buy to let lending not otherwise covered by FCA regulation. ‘Lenders know how important it is to have a transparent mortgage market, in which borrowers can have confidence, and where lending policy is both responsible and clearly understood,’ said CML director general Paul Smee. ‘The new buy to let statement of practice reflects what responsible lenders already do and offers a clear explanation of how buy to let lenders operate. We hope it will make a valuable contribution to understanding the buy to let lending environment,’ he added. Continue reading
