Tag Archives: economy
Scottish rent rises outpace rest of UK
Scotland is seeing stronger annual rent growth than England and Wales, with average residential rents up 2.2% compared to a year ago, the latest index shows. In England and Wales monthly rents increased just 1.5% on average in the past year, according to data from lettings agent network Your Move. The average rent in Scotland now stands at £537 per month, back in line with the record set in August this year. Rents climbed a moderate 0.3% in the month to October, recovering from a dip during September. But taking a longer term view, the rate of growth has cooled. Annual rent rises have eased from a 3.2% increase over the year to October 2013. ‘Snags in supply and concerns over potential rent caps are setting the stride in Scotland, but in the longer term, the march of private sector rents is easing back on an annual basis. After years of consistency and incremental adjustments, rent rises quickened rapidly after the changes to lettings legislation made tenancy fees illegal. Instead of facing a one-off payment, tenants saw their monthly rents rise at a much accelerated pace. This market is only just starting to self correct and steady,’ said Christine Campbell, regional managing director of Your Move. ‘The introduction of any further lettings controls or restrictions by the Scottish government could further disrupt what was a healthy and extremely gradual rhythm of rent growth, to the detriment of thousands of renters. Complicating legislation would ostracise existing landlords and discourage new investment in the private rented sector, squeezing the supply of homes to let and simply adding to the bottleneck of the current housing shortage,’ she explained. ‘The private rented sector is the lifeblood of the economy, allowing workers flexibility and accessibility to the jobs market. Tenant demand needs to be balanced by greater availability of homes to let, to protect against unnaturally bloated rent increases,’ she added. A breakdown of the figures shows that on a monthly basis, rents are higher than September across all but one region of Scotland. The biggest month on month increase was recorded in the East, with rents climbing 1.1% between September and October. The data also shows that average rents in Edinburgh and the Lothians set a new peak of £615 per month, following 0.6% growth since September. The only region to experience a price fall on a monthly basis was Glasgow and Clyde where, the average monthly rent dropped £5 or 0.7% in the month to October, to £565. Rents have risen on an annual basis in three out of five regions of Scotland in October. Edinburgh and the Lothians have seen the strongest annual uplift in average monthly rents, rising 5.7% in the 12 months to October. This is followed by a 3.2% annual increase in Glasgow and Clyde, while rents in the East rose 2.2% over the last year. Rental prices dropped across two regions over the year to October. The average monthly rent in the South has fallen 0.5% since October 2013,… Continue reading
Home building reaches a new high in Australia
This year has seen a record number of new homes being built in Australia, according to the latest outlook report from the Housing Industry Association. However, the growth in new residential construction has been slower to gather momentum and breadth in terms of both geographical location and dwelling type, it says. According to HIA chief economist, Dr Harley Dale, this means that the ‘look and feel’ of this building cycle is different to historical experience. ‘In aggregate, we will commence nearly 190,000 new dwellings in 2014, surpassing the previous record of 187,000 back in 1994,’ said Dale. ‘The momentum culminating in this milestone has provided a substantial boost to Australia’s economy at a crucial juncture in the cycle. Below trend economic growth and weak labour market outcomes would be considerably worse without the reach a new home building recovery is exerting into the broader economy,’ he explained. He pointed out that against this backdrop the HIA believes it is unfortunate that policy makers have failed to grasp the reform initiative required to compliment record low borrowing costs and send new home building levels higher still in 2015 and 2016. ‘Australia’s economic growth and labour market performance will be weaker than otherwise as a consequence of this lack of policy action. Record low borrowing costs have combined with other factors such as high net overseas migration to unleash substantial pent-up demand for new housing,’ said Dale. ‘These factors will keep the level of new homes commenced at historically elevated levels. However, what the economy needs is further growth in new home building over the next couple of years, but that will only occur as a consequence of taxation and regulatory reform,’ he pointed out. ‘It is still an impressive achievement to build a record number of new homes, at a level that approaches what the average build rate will have to be if we are to adequately house our growing and ageing population in coming decades,’ he said. He explained that renovations investment has not joined the new housing ride this cycle, increasing by only 0.3% in 2013/2014 from a decade low. ‘Unemployment concerns, a lack of available credit, and an elevated household savings rate are but three elements in the current environment which mean there has not been room for a renovations recovery alongside new home building activity and existing property price growth,’ said Dale. But he pointed out that that situation looks to be slowly changing as growth of 0.9% in renovations investment in 2014/2015 is forecast to accelerate to 2% growth in the subsequent three years. ‘That would be a great outcome, but it is a long road back for this important sector of Australia’s domestic economy,’ Dale concluded. Continue reading
House price recovery spreads out in UK, but growth is slowing, says Hometrack index
The top 20 cities in the UK are all registering annual house price growth of 5% or more for the first time in a decade, according to a new index. It is a sign that the housing recovery is spreading, however upward price momentum is slowing, Hometrack’s UK Cities House Price Index shows. It also points out that the annual house price growth is more than three times the current growth in average UK earnings which is 1.3% and explains that pent up demand has fed back into the market supported by low mortgage rates and a pick up in the economy. However, there is clear evidence that the upward pressure on house price is starting to slow on weaker demand for housing. In the last three months, average UK house prices have grown by 0.6% per month compared to 1.1% in the three months to May 2014. The majority of cities are now starting to show signs of a deceleration in the underlying rate of growth but cities with the lowest growth in Spring 2014 such as Glasgow, Edinburgh and Newcastle, have recorded an acceleration as house prices rise off a low base. This latest analysis shows that 11 cities have an average house price below that of the UK with Liverpool and Glasgow house prices 41% lower than the UK average. However, London bucks the trend with an average house price of more than double that of the UK at 117%, illustrating how the capital dominates the rest of the country and is distorting the national picture. The Cities Index also showed a post-referendum bounce in house prices in Edinburgh and Glasgow as confidence improves with average prices up 4.1% and 2.2% respectively in the last quarter. However the market in Aberdeen was down 2% in last quarter and the report says it is being impacted by a weak oil price with house prices declining off a high base. Oxford and Cambridge have seen average prices come off the boil quite sharply in the last three months with a fall of 1.2% and 2.3% respectively, with house prices starting to fall back after very strong gains of 42% and 52% in the last four years. The firm says that these smaller cities are seeing pricing levels respond more quickly to weaker demand. ‘The pick-up in house prices that started two years ago has spread across all UK cities with growth ranging from 5.5% in Liverpool and Glasgow to 18% in London. This latest analysis shows that momentum in house price increases is starting to slow with less pent up demand for housing than two years ago,’ said Richard Donnell, research director at Hometrack. ‘Whilst mortgage rates remain low, new mortgage affordability tests and loan to income caps are impacting on the ability of marginal buyers to access the market, especially in the higher value markets such as London. On top of this, concerns over… Continue reading
