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Australian housing market weaker outside of larges cities, latest index suggests
Residential property values across Australia’s capital cities increased by 1% over the month of October, according to the latest RP Data CoreLogic index. The data highlights that despite a slowdown in growth in September, values continued to rise, increasing by 2.2% over the past three months. Although combined capital city home values were up by 1% not all cities saw increases. Only Sydney with an increase of 1.3%, Melbourne up 1.9% and Brisbane at 0.6% actually recorded value rises over the month. According to Tim Lawless, head of research, this result highlights weaker housing market conditions outside of Australia’s largest cities. Looking over the past three months Sydney, Melbourne, Brisbane and Adelaide, which happen to be four of the five largest capital cities, were the only capital cities to record an increase in home values. Sydney leads the growth with home values increasing at a rate of more than 1% a month, up 3.9% over the past three months. Lawless said that Perth and Canberra have clearly moved through the peak of their growth cycles. However, the greatest value falls over the last three months were recorded in Hobart with a decline of 2.8% and Canberra where values were down 2.4%. ‘Looking at the increase in home values over the 12 months to October, it is clear that the rate of capital growth is continuing to moderate. Despite the annual rate of value growth slowing, all capital cities have still recorded an increase in home values over the past year,’ said Lawless, He pointed out that home values across the combined capital cities have increased by 8.9% over the 12 months ending October 2014, which has slowed from a peak of 11.5% in April of this year. Sydney, and to a lesser degree Melbourne, continued to be the main drivers of the increase in home values. Over the past year, Sydney home values were 13.1% higher, while Melbourne values were up 8.9%. Brisbane was the third best performing capital city for value growth over the year with values up 5.6% followed by Darwin where values rose by 5%. Elsewhere, value growth was more subdued with increases of 3.4% in Perth, 4.3% in Adelaide, 4.4% in Hobart and 0.9% in Canberra. ‘Despite the fact that the annual increase in home values is slowing, other indicators remain strong,’ added Lawless. Auction clearance rates continued to hover around the 70% mark week to week while volumes across RP Data real estate agent and valuation platforms remained strong which is indicative of heightened levels of industry and mortgage market activity. The number of new properties listed for sale continues to rise as are total listing numbers. However, Lawless said that the fairly rapid rate of sale is resulting in a slower increase in total listings than new listings. Conditions across capital city rental markets remained subdued, with weekly rents rising by only 1.8% over the past 12 months, the lowest annual change in capital city rents since the year ending August 2003. According to Lawless, the consistent… Continue reading
Prime central London rental values up for eighth month in a row
Rental values in prime central London rose for the eighth successive month in October, recovering to a level last seen two years ago, the latest index report shows. Rental values climbed 0.5% in October as the UK economic recovery strengthened and yields saw the strongest improvement in three years, according to the report from Knight Frank. Annual growth was 2.6%, the highest rate since December 2011 and in the third quarter of 2014 tenancies agreed rose by a quarter while tenancies started increased by a third. Rental yields rose to 2.9%, recording the biggest monthly gain in more than three years, the report also reveals. It explains how in October 2012, rental values were at the early stage of a shallow decline that took place against the background of a tepid economy and a strong sales market. Now the International Monetary Fund has forecast that UK economic growth will outpace other developed countries in 2014 and at the same time demand in the sales market shown signs of cooling ahead of next May’s general election and uncertainty surrounding the possibility of a mansion tax. ‘With UK economic data remaining mixed, the prime central London rental market is still not in full-blown recovery mode,’ said Tom Bill, head of London residential research. ‘Though the number of new prospective tenants and viewings rose in October compared to the same month last year, the number of tenancies started is likely to end the month down, which reflects the hesitant nature of the recovery,’ he added. He pointed out that the positive IMF forecast should be balanced against data from accountant Ernst & Young that showed the number of profit warnings issued by UK companies between July and September was the highest in the period for six years. ‘In a further move that may dampen demand in the short term, mortgage lenders have cut rates as the likelihood of an imminent interest rate rise recedes. Lenders are also attempting to bolster their loan books after a slower period that followed the introduction of stricter lending criteria earlier this year,’ said Bill. ‘In positive news for investors, rental yields recorded their biggest monthly increase in more than three years, rising to 2.9% in October. Also, the spread between prime central London yields and the so-called risk free rate of a 10 year government bond has widened notably in recent months,’ he added. Continue reading
Research reveals which home improvements yield best return on investment
The average home improvement in the UK would add a healthy 10% to the value of a home, based on home owner’s estimates, new research shows. This works out at just under £30,000 whilst the average return on investment was estimated to be 80%, based on the total amount spent by home owners, according a new home improvement index from peer to peer lending firm Zopa. The new research, which asks home owners who have recently taken out a home improvement loan across the UK how much value their renovation added to their property, shows that the top improvement is a conservatory costing an average of £5,300 and giving a 108% return on investment. Next is garden improvements costing an average of £4,550 giving an 88% return followed by exterior work costing an average of £6,000 with a return on investment of 75%. An extension is much more costly, averaging £19,750 but only offering a 71% return on investment while a new roof costs £4,150 with just 63% return and a loft costing an average of £24,600 but comes with a return of just 50%. Kitchen and bathrooms are often the rooms home owners want to change the most but they offer the least in terms of returns. A bathroom renovation costing an average of £4,900 is bottom with a return of just 48%, closely followed by a kitchen costing an average of £9,600 with a return of 49%. Some 82% of home owners said that despite improving their homes, they were not planning on selling soon. The firm says this suggests that the current housing market where price growth is slowing could be putting home owners off moving, and instead adapting their current homes to their situations. ‘With the latest housing market reports showing the market to be slowing down, home owners could add significant value by looking at ways to improve their current homes, rather than move,’ said Zopa chief executive officer Giles Andrews. ‘With record low rates on borrowing, home improvements can be a cost effective way to add value to your property for the long term,’ he added. Continue reading
