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Affordability for home buyers in Australia eases in second quarter of 2016
Affordability for home buyers in Australia eased back in second quarter of 2016 as price growth returned to the residential real estate market. Overall affordability fell by 3.7% and was 2.1% less than the same quarter of 2015, according to the latest report from the Housing Industry Association, the voice of Australia’s residential building industry. The capital city housing affordability index fell by 4.3% during the quarter, while the regional market index experienced a 1.9% improvement. ‘Home price growth moderated in the early part of the year and the index showed an improvement in affordability during the March 2016 quarter. However, in the June quarter dwelling price growth returned and the index reverted to the level we saw at the end of 2015,’ said Geordan Murray, HIA economist. ‘While there was a decline in the headline index tracking the national picture, there was substantial variation around the country with substantial differences between states, and also differences between capital city markets and regional markets,’ he pointed out. He explained that the geographic variation in affordability is most evident in the comparison between Melbourne and Perth. Over the last year, the median dwelling price in Perth has fallen by 4.7% while Melbourne’s has grown by 11.5%. This has seen the affordability index for Perth increase by 6.2% over the last year, while the index for Melbourne has fallen by 6.2%. ‘These differences in affordability align with the relative economic performance of these two states. The Western Australian economy is navigating the tail end of the mining boom which has seen conditions in the local labour market deteriorate and consequently the rate of population growth has fallen quite sharply,’ Murray said. ‘In contrast, Victoria has experienced a healthy level of growth in the labour force and continues to record the strongest rate of population growth in the country,’ he added. A breakdown of the figures show that during the June 2016 quarter, improvements in affordability were observed in three capital cities with the largest improvement in Perth with growth of 3.2%, Darwin up 2.9% and Hobart up 2.2%. Affordability worsened in the remaining five capital cities with the largest decline recorded in Melbourne with a decline of 7.4%, followed by Canberra down 5.7%, Sydney down 1.6%, Adelaide down 1.3% and Brisbane down 1%. Continue reading
Lack of suitable homes prevents over 55s in UK from moving
More than 500,000 home owners aged 55 and over in the UK want to move but do not because of lack of suitable housing, new research has found. Some 19% in this age group considered moving in the past two years but have not done so while 23% who considered moving said that a lack of suitable housing was the main reason they did not do so. The stress and upheaval of moving as well as not wanting to be away from friends, neighbours and community are also obstacles to moving, according to the annual home owner survey conducted by YouGov for the Home Owners Alliance and BLP Insurance. The survey report says that with the recent Brexit decision, it is uncertain what the impact on new housing is likely to be but this does not take away from the fact that tackling the UK housing shortage remains a pressing concern. So called last time buyers, we have been told, could help ease the housing crisis in the UK, it suggests. If older home owners living in homes that are under occupied moved to smaller properties it would free up more housing stock. There are an estimated 11.4 million homeowners age 55 and over. Overall some 30% of home owners aged 55 and over said stress and upheaval are reasons for not moving compared to 21% of all home owners while 23% did not want to move away from friends compared with 17%. Prices are not as much of a barrier at 22% compared to 31%. When thinking about a future move, top priorities are similar regardless of age. Good build quality is important to 71%, spacious rooms 72% and parking 69%. However, compared with UK home owners generally, a greater proportion of home owners age 55 or older identify availability of parking at 77% to 69%, low running costs at 70% compared to 59%, proximity to shops at 66% to 55%, good transport links 56% to 47%. ‘The recent Brexit decision means we are now in the midst of uncertain times and new housing is likely to be a victim. Government needs to focus efforts on negotiating a European exit but they must not drop the ball in delivering new housing that meets the needs of last time buyers,’ said Paula Higgins, chief executive officer of the Home Owners Alliance. ‘House builders can't be allowed to sit on their hands and land bank. The government needs to keep them building and building houses that meet the needs of last time buyers as well as first time buyers,’ she added. According to Kim Vernau, chief executive officer of, BLP Insurance, the issues highlighted in the survey that face last time buyers are as acute as those issues encountered by first time buyers. ‘If we wish to provide the required quality of housing that addresses these concerns we desperately need an appropriate mix of well-designed homes alongside adequate local infrastructure… Continue reading
PwC forecasts marked slowdown in UK housing market but no major crash
The UK should avoid a house price crash or a severe recession despite growth downgrades following the decision to leave the European Union, new research shows. UK growth had already eased from around 3% in 2014 to around 2% before the EU referendum due primarily to slower global growth, but the vote to leave the EU is likely to lead to a significant further slowdown. UK GDP growth is forecast to decelerate to around 1.6% in 2016 and 0.6% in 2017 according to PwC’s main scenario in its latest UK Economic Outlook report. Quarter on quarter GDP growth could fall to close to zero in late 2016 and early 2017 in this main scenario, but is then projected to recover gradually later in 2017 as the immediate post referendum shock starts to fade. The UK would avoid recession in this scenario, although the report notes that uncertainties around this central view are significant, with alternative scenarios showing GDP growth in 2017 of anywhere between growth of 1.5% and a fall of 1%. But even this latter relatively pessimistic scenario would not be a severe recession of the kind seen in the early 1980s or in 2008/2009. The main reason for the slowdown is projected to be a decline in business investment, particularly from overseas in areas such as commercial property. Construction companies and capital goods manufacturers could also be relatively exposed to this kind of short term cyclical slowdown, the report says. PwC anticipates a marked slowdown in house price growth, but no major crash. In PwC’s main scenario, UK house price growth is expected to decelerate to around 3% in 2016 and around 1% in 2017. After this initial dip, however, projected house price growth picks up again to around 4% in 2018 and an average of around 5% to 6% per annum in the longer term as persistent supply shortages keep house prices rising faster on average than earnings. PwC estimates that average UK house prices in 2018 could be 8% lower than if the UK had voted to stay in the EU, although this would still leave them 8% higher on average than in 2015. The estimated impact of Brexit varies by region. The report says that average house prices in London could be around £60,000 lower due to Brexit than they would otherwise have been by 2018, in contrast to a reduction of £10,000 in Scotland and just £8,000 in the North East. ‘We think there are four main reasons why the Brexit vote will lead to a slowdown in the housing market in the short term: the deterrence of foreign investment, uncertainty regarding the future of EU nationals living in the UK, a reduction in consumer confidence and turbulence in the banking sector,’ said Richard Snook, senior economist at PwC. ‘While these factors will weigh heavily on the market in the short term, we expect a gradual recovery from 2018 onwards as market… Continue reading
