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Residential property price growth in Australian capital cities slowing
The pace of growth in residential property prices across Australia’s eight capital cities is slowing amid signs that sales momentum is waning, the latest data shows. In the March quarter of 2016 prices were 6.8% than 12 months previously, according to the figures from the Australian Bureau of Statistics (ABS). But this was slower than throughout 2015 when growth averaged 9% per annum. ‘This deceleration is largely being driven by developments in the Sydney residential property market, where annual price growth eased back into single figure territory in March this year. Sydney prices grew at an annual rate of 9.7%, beating the national average, but are also the city’s slowest pace of growth in almost three years,’ said Diwa Hopkins, Housing Industry Association economist. ‘This deceleration in price growth has occurred against a backdrop of waning momentum in property transfers, particularly amongst non-detached housing. The volume of attached dwelling transfers across Australia grew strongly in 2013 and 2014. The volume of transfers was virtually unchanged in 2015 and signs of a pullback in 2016 are now emerging,’ she explained. A breakdown of the figures shows that price growth remained strongest in Melbourne with an increase of 9.8%, followed by Sydney up 9.7%, then Canberra up 4.6, Hobart up 4.2%, Brisbane up 4.1% and Adelaide up 3.1%. In other capital cities prices growth has fallen, led by Darwin with a fall of 4.9% and in Perth prices fell by 4.5% in the year to the March 2016 quarter. Meanwhile, the HIA’s latest bi-annual Housing Scorecard shows that there were over 220,000 dwellings commenced in Australia during 2015, a new annual record. However, there were significant divergences in conditions for residential building around the country. The eastern seaboard states have been the strongest performers, the mining states are sliding down the order, while South Australia and Tasmania are facing the most challenging conditions, according to said HIA economist Geordan Murray. The report shows that there is little to separate the top two ranked states, but it is Victoria that has edged out New South Wales to take the top spot. With nearly 70,000 dwellings commenced in 2015, it is not all that surprising that Victoria was number one, but Victoria also ranked as the strongest market for renovations. Western Australia is off the pace of the top two states, but still ranks third. But Murray pointed out that the high ranking for Western Australia belies the challenging conditions emerging for residential building, as evidenced by nearly 18 months of falling home prices. ‘The state’s overall ranking is propped up by strong performances in indicators of residential building that is already underway. The leading indicators highlight the recent deterioration in conditions and the prospect of weaker conditions ahead, which the HIA has been warning of for a considerable time,’ he explained. He also explained that Queensland is not performing as strongly as Victoria and New South Wales, but the housing recovery is being tempered by the… Continue reading
UK sees highest gross home lending for May since 2008
Gross mortgage lending in the UK reached £18.2 billion in May, some 4% higher than April’s £17.6 billion and 14% higher than May 2015, the latest data shows. The figure from the Council of Mortgage Lenders, which represents the vast majority of home lenders in the UK, was the highest May figure since 2008 when gross lending reached £23.7 billion. CML senior economist Mohammad Jamei pointed out that, as expected, lending continued to be somewhat dampened in May, reflecting the earlier rush in the first quarter to beat the stamp duty change on second properties. ‘Looking ahead, there is likely to be considerable uncertainty as a result of the European Union referendum decision. We expect this to affect sentiment and reduce activity below levels that would otherwise be expected in the near term, as both buyers and sellers adopt a wait and see attitude until the dust begins to settle,’ he explained. ‘Market fundamentals underpinning house prices still look sound, and we do not expect significant house price falls, especially given the current supply demand imbalance,’ he added. According to Adam Tyler, chief executive officer of the National Association of Commercial Finance Brokers (NACFB), a wait and see attitude and increased caution is likely among buyers and sellers alike due to the referendum result. ‘Our own view mirrors that of the Council of Mortgage Lenders in that market fundamentals still look sound and the sharp imbalance between supply and demand will prevent a material decline in prices,’ he said. ‘Sentiment may have shifted dramatically over the past few days but the structural imbalance between supply and demand is as strong as ever. Demand naturally tapered off in the buy to let sector following the stamp duty surcharge but it may experience a bounce after Friday's referendum result,’ he explained. He also pointed out that current market, political and economic volatility could benefit buy to let as investors once again look to bricks and mortar as a safe investment and the fact that Bank Rate is now more likely to go down than up in the near term will provide further support to the property market. ‘Understandably, there's a lot of hysteria surrounding the trajectory of the property market but our own view is that the reality will prove to be relatively benign,’ he added. Continue reading
Should be business as usual for Brits buying property in the EU
British people seeking to buy a property in the European Union should not be downhearted by the referendum decision that the UK should leave, according to overseas real estate experts. Those who are looking to purchase a holiday home overseas, for example, are likely to see that owning a property in the EU will only be marginally more complex than it is currently, according to Andy Bridge, managing director of A Place in the Sun. He pointed out that citizens of the United States, Canada, Russia and many other nationalities own properties throughout Europe, so while it may become slightly more complex for British buyers than currently, they are not going to be prevented from owning property in Europe. Erna Low Property, French Alpine property specialists located in London and in the French ski resort of Les Arcs 1950, say that buyers must resist the urge to panic as there will be no change to buyers conditions and they state that right now buyers should focus on risk assessment and limitation of potential future damage. ‘We are sure that there will be no change in buying costs for those looking to buy property in France, and there are no planned changes in taxations for the income made from property rentals, as well as no difference in capital gain tax as since January 2015 a single rate was applied for EU and Non-EU members,’ said director Francois Marchand. ‘In time, UK residents might be limited regarding the amount of GBP investments and the amount of wealth that can be sent abroad when a new government is in. A safe investment risk strategy has always been to diversify your portfolio. It will make no difference for our clients investing in a French property whether they have bought, are planning to buy, or are currently in the process of buying a property in France. The mountains were there before EU existed, and will be there tomorrow to welcome any international property investors, part of the EU or not,’ he added. However, Alejandra Vanoli, managing director of Mallorca Sotheby's International Realty, believes that the real impact Brexit will have on European property markets will be hard to determine until the negotiations between the UK and the EU are finalised. ‘This of course will be most prevalent in the Spanish market due to the high concentration of British expats. However, these changes will undoubtedly need some time to take effect. Despite this, the Balearics are still a very attractive second home destination to British buyers due to our short flight time from the UK, secure lifestyle, warm climate and favourable legal framework for expats looking to invest in the property market,’ he said. One possible effect is that prices could rise in popular locations if real estate investors move away from the UK to other EU countries to buy property. Camille Letuve Partner of Athena Advisers said that some foreign investors might turn away from London… Continue reading
