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Capital city home values up 3.3% in first four months of 2016
Home values in Australian capital cities continued to rise in the first four months of 2016, up 3.3% compared to the same period in 2015, the latest index shows. In April, the pace of capital gains rebounded from the relatively flat numbers recorded in March, with dwelling values increasing by an average of 1.7%, according to the Corelogic April home value index. Across the country, housing market trends remain mixed, however, and CoreLogic research director Tim Lawless noted that the improvement in the rate of capital gains has been ‘broad based’ during 2016 with every capital city except Perth recording a lift in dwelling values over the calendar year to date. ‘The results show value growth moved at a faster pace compared with the final three months of 2015 when capital city dwelling values slid 1.4% lower off the back of weaker market conditions in Sydney and Melbourne,’ he explained. ‘While we’ve seen capital gains moderate substantially after peaking last year in Sydney and Melbourne, dwelling values continue to trend higher, just not as fast,’ he added. The data shows that the annual rate of growth in Sydney peaked at 18.4% in July last year and has since moderated back to slightly less than half the peak rate of growth, at 8.9% over the most recent 12 month period. Melbourne’s housing market continues to show a level of resilience to a slowing trend, however the annual growth rate has fallen from a recent peak of 14.2% to the current annual growth rate of 10.1% but Melbourne was the only capital city to see double digit growth over the past year. Perth and Darwin remain as the only two capital city markets to experience a decline in home values over the past 12 months, with Perth values down 2.1% and Darwin values 3.7% lower. ‘With recent month on month increases in home values in these two cities, the declining trend rate is now levelling. This may be an early sign that these markets are beginning to find their cyclical trough after more than a year of annual declines,’ said Lawless. Over the current growth cycle, which commenced broadly in June 2012, capital city dwelling values have moved 34.4% higher, led by a 52.7% rise in Sydney home values and a 37.1% lift in Melbourne values. Lawless pointed out that this highlights the two tiered nature of Australia’s housing market at present. Brisbane experienced the third highest rate of dwelling value growth over the growth cycle to date and dwelling values in the city are now up 18% and Lawless explained that Australia’s regional markets also exhibited a lift in house values over the year to date. He added that while house values across the non-capital city markets have generally underperformed compared with the capital city regions, regional house values moved 2.4% higher over the first quarter of the year. Continue reading
Uncertainty over UK referendum on EU already affecting property markets
The forthcoming UK referendum on the future of the country in the European Union is already affecting property markets with uncertainty creeping into decision making, according to a new analysis. The Royal Institution of Chartered Surveyors (RICS) has looked at what the impact is currently and also assesses what the outcome of a leave and a stay vote might be. It points out that its recent residential market surveys indicate a chronic shortage of housing across the UK. Residential investment transactions in the residential sector have slowed and limited house buying transactions across the house price spectrum. ‘This is not unexpected as there's usually a slowing of residential transactions before any national poll. After an election vote we typically see the residential sector recover and bounce back as stability and confidence returns,’ the report says. ‘Should the UK opt for a Brexit, we could assume that uncertainty could linger while the UK Government negotiates new trade deals and relationships with the EU and third countries,’ it adds. The analysis report explains that the lower to middle priced property market is, in the main, directed by domestic participants so the uncertainty has had less impact on demand and house prices at this end of the market when compared to the higher end. However, a significant number of higher end properties, particularly those in London and the south east, are purchased by EU and non-EU individuals and the report suggests that a Brexit could see less demand for higher end properties from these individuals, thus relieving pressure in demand for higher end residential areas. ‘We can, therefore, suggest house prices could decrease in the immediate to short term,’ the report states. It also suggests that there could be an effect on student accommodation. There was over $6.5 billion of investment in the UK student accommodation sector in the first three quarters of 2015. ‘Changing higher education enrolment rules could deter international students thus affecting demand for student and PRS accommodation,’ it adds. It also points out that the concern is generated by a series of unknowns for decision makers. There is risk generated by the debate in the lead up to the June referendum, uncertainty over the referendum outcome, uncertainty over the process for exit if it comes to that. There would also be uncertainty over the renegotiated package if the UK remain in the EU and uncertainty over the exit negotiation period and potential trade deals. ‘Anecdotally, this uncertainty has already had an impact on decisions in property markets and heightened the perception of risk attached to the UK. Investors are hesitating, occupiers re-planning their footprints, and building pipelines are slowing,’ the report says. It explains that the impact of the referendum has been likened to the uncertainty and risk created in domestic and FDI investments markets by General Elections, and the nearest comparator is the Scottish Independence referendum in September 2014. But RICS believes that the impact of the EU referendum is greater than those,… Continue reading
Number of home loans in UK in March stable, bank figures show
The number of loan approvals for house purchases in the UK reached 71,357 in March, broadly in line with the average over the previous six months, according to the latest figures from the Bank of England. A breakdown of the figures show that the number of approvals for remortgaging was 41,347, compared to the average of 40,755 over the previous six months while the number of approvals for other purposes was 12,875, compared to the average of 12,267 over the previous six months. According to Kevin Purvey, chairman of the Independent Mortgage Lenders Association (IMLA), approvals dipped just slightly from February as the short term effect of the buy to let stamp duty surcharge fades away. He pointed out that remortgaging rose slightly over the average established over the previous six months. ‘Having seen the remortgage market bounce back during summer and autumn of 2015, it’s a positive sign to see it remaining in rude health in the first quarter of 2016. This is likely to be influenced by intense competition among mortgage lenders, which has driven mortgage rates down to record lows,’ he said. ‘Following house price rises, it means now could be a sensible time to consider remortgaging whether simply to refinance or release equity. We expect remortgaging to be one of the strongest growth areas within the mortgage market this year, with home owners looking to remortgage benefitting very much from lender competition and the plethora of products available,’ he added. David Brown, chief executive officer of Marsh & Parsons, said that the first three months of 2016 was by no means a typical quarter. ‘Activity in the opening three months of this year has been exceptionally skewed by the additional layer of stamp duty for both buy to let and second home purchases,’ he pointed out. ‘Naturally, the knee jerk reaction among these groups has been to hurry through property purchases before the deadline, and make savings while they can. Second home owners really jumped to it this spring, and were much more prominent in the market than we would typically expect,’ he explained. ‘Now that the ruckus has passed, we’ll see much more orderly transactions over the summer months, as the market rebalances towards first time buyers and other owner occupiers for whom it will just be business as usual,’ he added. Meanwhile, separate research shows that just a third of remortgagors consulted a mortgage broker in March and at 35% this was the lowest amount since September, leading to concerns borrowers may be missing out on best available rates. Overall the number of remortgagors consulting brokers has declined since the start of the year, according to the latest research from LMS. It fell to just 35% in March, the lowest amount since September last year and down from 39% in February. It is also 11% lower than the 46% who consulted a broker at the start of the year. This leads to… Continue reading
