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Prices in Australian cities up 0.5% in February, but growth is moderating
Property prices in Australia’s capital cities increased by 0.5% in February and by 1.4% over the last three months, according to the latest index figures. However the trend in annual growth has slowed over the last seven months from 11.1% to 7.6%, the CoreLogic RP Data home value index also shows. Prices increased in all capital cities apart from Perth and Canberra were prices fell by 1.1% and 0.2% respectively and over the past three months they increased across all capitals except Sydney where they fell by 0.2%. An examination of the data shows that the largest monthly increases in home values were recorded in the cities that have been underperforming over the growth cycle to date. In Hobart values were 2.9% higher, Adelaide up 1.9% and Brisbane up 1.8%. The cities to record the greatest value rises over the past three months have been Hobart with growth of 8.5%, Melbourne up 3.8% and Brisbane up 2%. According to CoreLogic RP Data head of research Tim Lawless, even though home values have trended lower over the year in Perth and Darwin, they have recorded value rises of 0.2% and 0.3% respectively over the past three months. He also pointed out that while values are still increasing across most capital cities however, the results remain diverse. Sydney and Melbourne remain the strongest markets in trend terms, however, the gap is widening between the performances of Melbourne relative to Sydney. Over the past 12 months, combined capital city home values have increased by 7.6%, with the annual rate of growth down from a recent peak of 11.1% recorded in July last year. Melbourne has maintained its number one growth position, with annual capital gains of 11.1%. ‘Melbourne values appear to be holding reasonably firm since December last year with the annual rate of capital gain virtually level over the past three months,’ Lawless explained. Sydney’s annual rate of growth has continued to moderate, having almost halved from its cyclical peak of 18.4% recorded in July last year to reach 9.5% growth over the past 12 months. Lawless said that despite the slowing trend, Sydney remains the second best performing capital city over the past year but he pointed out that a few of the smaller cities where growth rates have recently accelerated may start to rival Sydney’s position over the coming months. ‘The trend in home value growth is showing signs of increasing in those markets that have previously underperformed. These include Brisbane, Adelaide, Hobart and Canberra. Affordability constraints aren’t as apparent in these cities and rental yields haven’t been compressed to the same extent as what they have in Melbourne or Sydney,’ Lawless said. ‘Home values increased in Brisbane by 5.5% over the past year, which is the fastest annual rate of value growth in a year. In Hobart, home values are 6.2% higher over the year, which is its fastest annual rate of home value growth since July 2010,’ he added. Continue reading
Prime property country locations set to outperform London, new analysis suggests
Country locations are set to outperform London as the prime property markets enter the next stage of the housing cycle, according to a new analysis report. Stamp duty changes introduced in the 2014 autumn Statement have had a bigger impact than many forecast, the effect initially being masked by the uncertainty in the run up to the General Election, according to the report from property firm Savills. However, it points out that both the prime housing markets of London and the country have reacted relatively rationally to the changes. Indeed, small price falls were recorded in the higher value markets where the stamp duty liability has increased but by contrast, in the lower value prime markets where there is now a tax saving, values have continued to rise, albeit at a slower rate than in 2014. The challenges faced by the prime markets of late are reflected by the fact that the total value of housing stock in Kensington and Chelsea fell in 2015, though the loss of £693 million is dwarfed by the gains of £68 billion over the preceding 10 years, the report explains. Transaction levels, though undoubtedly lower than in 2014, have not collapsed as some would argue. Figures from the Land Registry indicate a 5 to 10% fall above £1 million across England and Wales. ‘While this suggests there is still a market for appropriately priced stock, it also means we are unlikely to see cuts to rates of stamp duty at the top end,’ said Sophie chick of Savills research team. ‘Indeed, in the 2015 autumn Statement, more stamp duty changes were announced for buyers of additional homes (second homes and buy to let) causing further small price falls in markets with high concentrations of such buyers in the last quarter of last year,’ she explained. Chick pointed out that to understand what lies ahead it is helpful to look back and identify what happened between 2002 and 2005 when the market was at a similar stage in the housing cycle. ‘In prime London, over the three and a half year period from June 2002, prices increased by just 5%. Currently, average values have seen no net growth since the first quarter of 2014, so if the market follows a similar trend we would expect prime London values to remain broadly flat through 2016 and most of 2017,’ she said. ‘Over the same period, prices in the prime country markets outperformed London with an average increase of 17%. We expect a similar trend this time round as the ripple effect took hold and more equity flows to the housing markets beyond London,’ she explained. The analysis shows that in terms of how residential value is concentrated, Kensington and Chelsea sits far ahead of any other borough or local authority across the UK, not just by virtue of high property prices but also the relative density of housing in the borough. The combination of the two means that on average in… Continue reading
January saw highest total approvals for home buying in UK for a year
The number of loan approvals for house purchase in the UK increased by 22% in January with the month seeing the highest number of total approvals since the beginning of 2014. The data from the Bank of England also shows that the number of remortgage approvals increased by 33% year on year. A breakdown of the data shows that purchase approvals reached 74,581 in January compared to the average of 70,221 over the previous six months while those for remortgaging was 42,228, compared to the average of 40,306 over the previous six months. According Peter Williams, executive director of the Intermediary Mortgage Lenders Association, the threat of a rate rise is no longer driving the remortgaging uplift and instead it is being supported by home owners looking to improve their financial situation through cheaper monthly repayments. ‘In particular, landlords are preparing for fewer tax reliefs like the loss of the wear and tear allowance and restriction of mortgage interest deductability. Accessing cheaper deals through remortgaging will help offset these when they come into place,’ he said. ‘With rising home owner equity and a range of competitive deals in the market, home owners have also been determined to capitalise on currently low rates and intense market competition amongst lenders,’ he explained. He also pointed out that the stability in lenders’ mortgage funding continues to improve. ‘While the government and the Bank of England have supported funding the market, an increase in retail deposits over mortgage balances is underpinning improved mortgage lending, with the savings inflow exceeding that lending by £215 billion or 17% in the last quarter of 2015,’ he added. Adrian Gill, director of Reeds Rains and Your Move estate agents, believes it signals a strong spring buying season ahead. ‘Interest rates aren’t going anywhere fast and while cheaper mortgage deals stick around, buyer demand is chomping at the bit. With all the various government initiatives now in place, many first time buyers consider this their best shot at making the finishing line and purchasing their own home and they are upping the ante to make sure they don’t miss out,’ he said. But in reality, he pointed out that the market currently favours sellers. ‘Those looking to put their home on the market haven’t been in such a strong position since before the recession. House price growth is gaining strength on both an annual and monthly basis, and with an army of eager first time buyers it’s a brilliant time for existing home owners to be advancing up the property ladder. Ultimately, activity levels won’t be able to keep up the pace unless there’s a steady stream of homes for sale entering the ring,’ he added. But Martin Stewart, managing director of the independent mortgage broker, said that the forthcoming referendum on the UK as a member of the European Union could slow the market. ‘The beginning of 2016 has been far busier than usual in the… Continue reading
