Tag Archives: property
New home building set for record year but will decline in next couple of years
This year looks like being a record for new home building in Australia but the outlook for 2017 is not buoyant with predictions that it could be very different as new homes sales are falling. The monthly survey of Australia’s largest volume builders by the Housing Industry Association (HIA) reveals that total seasonally adjusted new home sales fell by 9.7% in July 2016 following an increase of 8.2% the previous month. HIA chief economist Harley Dale said that the overall trend decline in new home sales is accelerating, signalling a relatively sharp drop from a record high in new dwelling commencements from 2017. ‘New home construction has been the kingmaker of the Australia economy, but the cycle has peaked. In all likelihood we will experience sharper falls in new home construction in both 2017 and 2018,’ he explained. ‘The magnitude of decline in new home construction in coming years will of course be exaggerated by where we are coming from and that is record levels of medium/high density construction and historically healthy levels of detached/semi-detached dwelling construction,’ he pointed out. ‘There will no doubt be a tendency to sensationalise any negative results for new housing as the trajectory of the down cycle unfolds. We would do well to remember that this down cycle is following a record high that is some 24% higher than the previous peak in 1994 and that there is an unprecedented degree of uncertainty this time around as to how the next few years of new home building unfold,’ he added. A breakdown of the figures shows that detached house sales fell in all five mainland states in July after rising everywhere in June. Sales dropped by 12.6% in South Australia and were down by 8.7% in Queensland, by 8.2% in Western Australia, by 6.2% in New South Wales, and by 6% in Victoria. Dale also explained that the current new home building boom is unlike any other that has come before it. It is the longest and largest in Australia’s history but he added that it is marked by substantial regional divergences in the levels of activity in various markets around the country and the mix of dwelling types being built has changed dramatically. ‘As the down cycle in new home building unfolds, the record pipeline of medium/high density dwellings in particular creates considerable uncertainty as to the timing and magnitude of the decline in construction,’ he concluded. HIA’s forecasts are for a peak of over 232,500 new dwelling commencements to have been reached in 2015/2016, which will be followed by three consecutive years of decline. New dwelling commencements are forecast to bottom out at a level of around 166,500 in 2018/2019. Continue reading
Third of UK tenants fund energy improvements instead of landlords
A new report reveals that a third of tenants in the UK have paid for energy efficiency improvements despite recent Government legislation that requires landlords to do so. Currently landlords are required to bring their property up to the minimum Energy Performance Certificate (EPC) rating E. Under the legislation, which came into force on 01 April 2016, if a tenant requests a more efficient home and the landlord fails to comply, the landlord could ultimately be forced to pay a penalty notice. However, the study conducted by online letting agent PropertyLetByUs, shows that one in six tenants have paid for roof insulation, 7% have paid for double glazing and 92% have paid for draft excluders for windows and doors. A further 71% have paid for their boiler to be repaired. The research also shows that 88% of tenants want their landlord to install a more fuel efficient boiler, while 78% want their draughty front door replaced, 72% want more loft insurance and 48% want double glazed windows fitted. Properties with EPC ratings of F and G will be progressively banned from the market, starting with rental homes with new tenancies. That will become the legal minimum for private rented properties when new regulations come into force in England and Wales from 2018. The Residential Landlords Association estimates that a total of 330,000 rental homes in England and Wales are likely to be affected. Though Government officials have estimated it could cost landlords between £1,800 and £5,000 to bring energy-inefficient properties up to an E rating, according to PropertyLetByUs it could be tenants that have to fund the improvements. ‘Our research shows that is falling on tenants to pay for energy improvements to their rented properties which is simply unacceptable. Many tenants are finding that their landlords are refusing to make improvements to the property, leaving tenants no choice but to dip into their own pockets,’ said a spokesman. ‘Tenants should not have to pay for roof insulation and repairs to old boilers, when it is the landlord’s responsibility. Landlords should comply with the current legislation that requires them to make energy efficiency improvements and they also should start improving their properties, if they have an EPC rating of F or G, so they are brought up to the required standard by 2018,’ the spokesman added. The Government has recently given guidelines on the costs with a typical package of measures for a small semidetached house. Gas central heating and low energy lighting is estimated at £4,000, loft insulation at £300 and cavity wall insulation at about £500. The firm also pointed out that the Government will need to put measures in place to ensure that landlords are compliant or it fears that the financial burden on tenants could be even greater. Continue reading
Home prices and rents in the US up for over 45 months in a row
National home values in the United States increased to an average of $187,300 in July, the 48th month in row of appreciating values, the latest index data shows. Home values have risen by 5% over the past year and have been consistently climbing since August 2012, but still remain 4.7% below the peak of April 2007 when the median home value was $196,600. The index report from real estate firm Zillow shows that Portland, Dallas and Denver reported the highest year on year home value appreciation among the 35 largest metros across the country. In Portland, home values rose almost 15% to a median value of $334,900 while in Dallas and Denver prices were up 11.9% and 11.3% respectively. In notoriously expensive San Francisco, however, home values have been slowing down since the beginning of the year. In January, home values were up almost 12% year on year and are now appreciating at about half that pace, up 6.6% over the last 12 months. ‘The consistent rise in home values that we've been seeing for the past four years masks a number of region specific trends that have taken place over the past few months,’ said Zillow chief economist Svenja Gudell. ‘In most areas, the market is being driven mainly by a strong labour market and tight supply, especially among entry level homes that first time buyers are after. But some markets, especially the red-hot Pacific Northwest, are adding more jobs and attracting more residents, putting the pressure on home values and rents,’ she explained. ‘The Bay Area and Southern California are still growing at a faster pace than the nation as a whole, but growth rates have come back to earth a bit after several years of rapid growth. And markets in other regions, like the Northeast, keep steadily chugging along. All housing is local, and as the local economies in individual metros ebb and flow, housing will follow suit,’ she added. She also pointed out that more than at any time since the boom and bust, the US housing market is being driven by local fundamentals, and not by national trends. Zillow’s latest figures also shows that rents across the country have increased by 2% over the past year to $1,408 per month and have now increased for 47 months in a row. Of the 35 largest US metros, Seattle, Portland and San Francisco reported the highest year on year rent appreciation. In Seattle rents rose almost 10% to a median of $2,052 per month, while rents in Portland rose just over 8%. In San Francisco, the median rent price rose to $3,407 per month, the second highest of all metros, right after San Jose in California while rents in San Francisco appreciated 6% over the past year. Continue reading
