Tag Archives: sales
New home sales down month on month in Australia
New home sales in Australia fell by 4% month on month in September, with the level of activity down from the April peak by 5.2%, the latest new data shows. Detached house sales declined in four out of the five the mainland states with only Victoria seeing growth at 3.1%, according to the New Home Sales report from the Housing Industry Association (HIA). They fell by 19.8% in South Australia, by 8.6% in Western Australia, by 5.9% in Queensland and by 0.5% in New South Wales. In Victoria detached house sales increased by 3.1%. ‘Following the peak level of sales that occurred in April this year, sales activity has trended lower only very modestly. This augers well for actual new home building activity in 2015/2016,’ said HIA economist, Diwa Hopkins. ‘A fresh record level of building activity during this financial year could have been achieved and could have been of strong benefit to the broader domestic economy but increasingly restrictive credit conditions are likely to curtail the boom in new home building,’ she pointed out. ‘The deterioration in credit conditions is likely to weigh more heavily on new home building activity beyond 2015/2016. We have therefore pared back our forecasts for activity over our forecast horizon beyond the end of the current financial year,’ she added. Meanwhile, separate research shows that offshore investment into Australia's commercial property market shows no signs of abating this year. Foreign investors accounted for 28% of transaction volumes by value in 2014 and already in the first half of 2015 the level is 27%. The Australian market is remaining attractive to offshore buyers, as commercial real estate assets continue to provide relatively high income returns in global context, according to the report from real estate firm JLL. It points out that Australian office assets are attractively priced for investors seeking high yielding, stabilised assets in a mature market, comparing well against major cities in Europe, Asia, and America. And even taking into account localised differences such as higher rent free incentive levels in Australia, yield spreads still favour the Australian market. ‘In Australia, yield compression has continued unabated, especially for prime grade assets, across all sectors and many markets. The weight of capital remains significant and the global portfolio tilt toward real estate continues,’ said Simon Storry, JLL's head of International Investments Australia. While 2014 was a record level of foreign investment into Australia, at the half year mark, 2015 levels are close to the record 28% of transaction volumes recorded in 2014. Storry said that the depreciation of the Australian Dollar has allowed offshore investors to be far more competitive and they seem to have a much greater desire to deploy substantial pools of capital in what they see as an undervalued market globally. Continue reading
UK house prices continue to creep upward, latest index shows
House prices in the UK increased by 0.6% in October, taking the average price of a home to £196,807, according to the latest index to be published. The data from the Nationwide, one of the country’s main lenders, prices are now up 3.9% year on year. The report points out that over the past five months annual price growth has remained in a fairly narrow range between 3% and 4%, broadly consistent with earnings growth over the longer term. ‘While this bodes well for a sustainable increase in housing market activity, much will depend on whether building activity can keep pace with increasing demand,’ said Robert Gardner, Nationwide's chief economist. He also pointed out that fixed rate mortgages have remained the most popular because of ongoing uncertainty about when the Bank of England might introduce an interest rate rise. ‘Historically low interest rates have helped to offset the negative impact of rising house prices on affordability. Indeed, even though house prices are at an all-time high, the cost of servicing a typical mortgage is still close to the long term average as a share of take home pay,’ Gardner explained. He said that fewer variable interest rate mortgages should help to insulate many households from the impact of higher interest rates but he warned that the majority of recent fixes are for relatively short time periods with 65% for two years and 30% for five years. ‘Nevertheless, the housing market should be able to cope with higher interest rates in the year ahead, provided the increase is modest and the economy and the labour market remain in good shape,’ he said ‘Guidance from the Bank of England suggests that the increase in interest rates is likely to be gradual, and that they are expected to settle at a level somewhat below the average prevailing before the financial crisis, which should help ensure borrowing costs remain manageable,’ he added. Alex Gosling, chief executive officer of online estate agents HouseSimple believes that as building activity is highly unlikely to keep up with demand, average house prices are likely to continue to rise and rising interest rates could affect many home owners. ‘It's hard to believe but many home owners have never known a conventional interest rate environment, and when it finally comes it could well prove a shock. If the economy holds firm then gradual rate rises will be better accommodated, but the extent of the impact of a rate rise on the market remains a great unknown,’ he explained. ‘What we can say with near certainty is that if rates rise sharply, many borrowers could get caught out. Thankfully people are moving to fixed rate mortgages to protect themselves,’ he added. According to Mark Dyason, director of Edinburgh Mortgage Advice, borrowers know higher rates are coming sooner or later and they are thinking ahead. ‘First time buyers and people with smaller deposits are especially likely to select a fixed rate because that's what most lenders are… Continue reading
Sharp upturn in UK home owners using equity release
Equity release lending in the UK has seen its biggest rise for 11 years with levels up by £68.3 million in the third quarter of 2015 compared with the previous quarter. The Equity Release Council, which issued the figures, says that it is clear that more and more home owners over the age of 55 are making use of their housing wealth to support their finances in later life. The third quarter saw the highest annual growth rates so far in 2015 and the number of new plans exceeded 6,000 for the first time since the fourth quarter of 2008, meaning that people are withdrawing a record £5 million of housing wealth every day. Total lending in the third quarter rose 21% year on year, compared with 18% annual growth in the second quarter and just 3% in the first quarter, to reach £452.6 million. In doing so, it set a new lending record for a second successive quarter. There were 6,049 new plans taken out in Q3 2015, representing a 12% increase on the second quarter and the volume of new plans was up 9% year on year, the strongest figure of 2015 to date, compared with 3% annual growth in the second quarter and 2% in the first quarter. Growing demand for equity release to help boost retirement incomes and meet later life expenses means lending for the first three quarters of 2015 already exceeds the 2013 annual total at £1.16 billion compared to £1.07 billion, and is within £220 million of the record annual total of 2014 which was £1.38 billion. The data also shows that lending via drawdown lifetime mortgages reached a new high in the third quarter, rising 18% year on year from £231.6 million in quarter two of 2015 to £266.8 million. The Equity Release Council said that drawdown products have become increasingly popular since their introduction in the mid-2000s as equity release customers took advantage of the opportunity to boost their income with regular instalments. The value of lending via lump sum lifetime mortgages also increased by 18% year on year in to reach £183.5 million, the largest figure since the fourth quarter of 2006 when it was £204.7 million. Lump sum mortgages can prove popular for customers who have a larger one-off cost to cover, such as clearing an outstanding mortgage or making home improvements. Despite accounting for less than 1% of the total market, lending via home reversions almost tripled from £632,647 in the second quarter of 2015 to £2.37 million in the third quarter. ‘Appetite among over 55 home owners for tapping into their housing wealth continues to grow. There is increasing awareness that equity release can offer many benefits in later life by providing people with extra income or the means to meet other costs and expenses,’ said Nigel Waterson, chairman of the… Continue reading
