Tag Archives: investment
Rents remained unchanged in capital cities in Australia in May
Overall rental prices in Australian capital cities were unchanged in May but rates fell everywhere apart from Melbourne and Hobart, the latest index shows. Weekly rents were unchanged but year on year they were down 0.3% taking the average rate to $489 a week for houses and $469 a week for units, according to the data from the CoreLogic Rent Review report. The firm’s research analyst Cameron Kusher expects that the weakness in the rental market will persist and on an annual basis rents will fall further over the coming months. The data also shows that over the 12 months to May several capital cities saw a rise in rents. In Sydney they increased by 0.9%, in Melbourne by 2.3%, in Hobart by 3.7% and in Canberra by 0.1%. But falling rents pulled the combined capital average lower with a drop in Perth of 8.8%, a fall of 16.9% in Darwin, and down 0.9% in Brisbane and Adelaide 0.9% year on year. ‘Since we started tracking annual rent changes back in 1996, the May 2016 results represent the lowest annual change on record. The rental market slowdown has been rapid over the past year with rents increasing by 1.5%,’ said Kusher. ‘A number of factors such as the softest wages growth on record have contributed to this slow down. At the same time, we also saw unit construction hit record high levels and a lack of population growth which has contributed to a lesser demand for rentals,’ he explained. He pointed out that with rental rates easing over the year and home values continuing to rise rental yields continue to sit at record lows of 3.3% for houses and 4.2% for units. However, gross rental yields for houses are now at record lows in Sydney, Melbourne and Canberra while unit yields are at historic lows in Sydney. Continue reading
UK house prices fall ahead of EU referendum, latest index shows
More evidence is emerging that the run up to the referendum on the UK’s future in the European Union is affecting residential property prices. Property values in England and Wales fell by 0.4% in May, the steepest fall since November 2011, according to the data from the lastest index from Your Move and Reeds Rains. This takes the average house price to %293,599 and year on year values are still up 6.8% but 5.4% if London and the South East are excluded from the calculation. However, London’s house prices fell by 0.3% or £1,769 month on month and it was the weakest May for home sales in five years, after stamp duty surcharge caused a rush of buy to let sales in March. But house prices in Slough defied the trend, jumping 23.3% year on year, with values lifted by Crossrail and new tech jobs, according to the index report. According to Adrian Gill, director of Your Move and Reeds Rains estate agents, May’s correction in property values also follows on from a surge in activity earlier in the year, when second home buyers and landlords brought forward their purchases to avoid the stamp duty surcharge. ‘That tax hike and the Government’s anti-landlord policies are weighing down the market, but the main factor is short term confidence ahead of the 23rd June referendum,’ he said. The year on year growth in house prices has also slowed, down to 6.8% in May, from 7.7% in April. ‘With the Chancellor predicting that a Brexit from the EU would reduce property values by at least 10%, many buyers are holding off until after the uncertainly surrounding the referendum has been resolved,’ Gill explained. The fall in prices in London has pushed average property values in the capital city back under the £600,000 mark, with the value of a typical home in the city falling to £598,421. However, this decline in property values has not spread across the entire capital. While house prices in the most expensive eleven boroughs have declined by an average of £4,000 or 0.5% from the previous month, values in the cheapest eleven boroughs continue to rise, jumping £3,000 or 0.8% month on month. But despite maintaining property values well above the rest of the UK, the demand for homes in London continues to grow. In the three months between February and April, sales of homes in London increased by 15%, compared to the same period last year. ‘The majority of this upswing in sales came from flats. As landlords often prefer to provide flats to rent, these properties were a popular choice before the stamp duty surcharge came into force in April,’ said Gill. He also pointed out that with so much uncertainty in the UK economy, home sales have been subdued. While the total number of property sales did increase from the previous month, this month has seen the fewest May property sales since 2011,… Continue reading
Outlook for investment in Scottish commercial property market positive
With talk of another referendum in Scotland if the UK votes later this month to leave the European Union new research has found that Scottish independence is not a priority for UK property investment. Investors believe that they will still invest in commercial real estate in Scotland as long as yield outperforms other regions as the issue of Scottish independence ranks lower in importance than rental yield, capital growth and a stable tax environment. Just 21% of property investors said independence was an important factor, less than half the 46% who mentioned rental yield, according to the Morton Fraser survey. Overall one in four property investors is open to investing in Scotland with 11% actively monitoring or currently pursuing opportunities. Proportionately, this is above the nation’s 8.9% share of the UK commercial real estate market. It also shows that 85% believe that leaving the EU would have no impact at all on their likelihood to invest in Scotland and 79% of property investors claimed Scotland separating from the UK would not affect their decision to invest. ‘It is easy to overestimate the potential impact of Scottish independence on the property market. Investors are ready to enter the market if the right opportunity arises, regardless of the political status of the country,’ said David Stewart, commercial real estate partner at Morton Fraser. ‘That gives us optimism for the future of the Scottish real estate industry. If the price is right and the market conditions are at least on a par with other regional areas across the UK, investors will follow the returns. The prospect of a neverendum in Scotland may drag investment, but it’s not the deciding factor for many,’ he added. With rental yield the number one criteria for potential British property investors looking to enter the Scottish market, Morton Fraser has uncovered the ‘tipping point’ at which a yield premium would encourage investment. Of the property investors likely to invest in Scotland if there was a higher yield premium, 70% said a benchmark of more than 3% or higher would encourage them to invest, with 31% saying more that 5%. That figure should be viewed in the broader context of many respondents being initially cold on investing in Scotland, so the true figure for active investors is likely to be sharper. ‘Many investors are prepared to overlook ideological or political issues to run the rule over Scottish property investments. The yield gap between Scotland and other regional cities in the rest of the UK can always be met with a quality opportunity whether you are looking to invest in Edinburgh or Manchester, Glasgow or Bristol, a high quality asset will always stand on its own merits,’ Stewart added. Continue reading
