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Population growth is adding to hot property markets in Australian cities
A pick-up in population growth in Australia has added fuel to the already hot housing markets of Sydney and Melbourne, where house prices continue to surge, a new report suggests. Population growth is not only the key to Australia’s economic growth and output, but it also plays a central role in housing demand and price growth, according to the analysis from international real estate firm Knight Frank. In Sydney population trends have been a lead indicator towards house price growth. Despite easing over the past 12 months, overseas migrants have underpinned Australia’s recent population growth, accounting for approximately 58% of population gains over the past five years. The importance of overseas migration has become more apparent over the past decade as Australia’s immigration policies have been geared to meet the needs of the Australian labour market, with temporary visa programmes, predominately working holiday and temporary 457 visas, accounting for over half of all overseas visas issued in recent years. The report also points out that subsequently, population growth over the past decade has been a reflection of a pick-up in temporary migration as opposed to permanent migration. While recent population statistics published by the Australian Bureau of Statistics shows that population growth nationally has eased from its recent peak in 2009, to average 1.5% over the 12 months to September 2014, the report says that what is more of note is the rate of population growth by city. Indeed, despite remaining high by historical standards, population growth in the dominant resource capital cities of Brisbane and Perth has fallen sharply, particularly Perth were the annual rate fell from 3.6% to 2.5% in just 12 months in the year to June 2014. It also points out that the drop in population growth in Perth is now beginning to filter through to its property market, where over the six months to March 2015, house prices and sales volumes have dropped 2.6% and 2.8% respectively. On the other hand, population growth in Sydney and Melbourne increased over the 12 months to June 2014, supported by stronger economic prospects, underpinned by residential construction. The stronger economic environment within these cities led to an improvement in Net Interstate Migration, particularly to Melbourne and the state of Victoria, as people sought employment opportunities outside of their home state. The pick-up in population growth has been met with solid house price gains in these cities, where over the six months to March 2015, house prices in Sydney and Melbourne are up 8.2% and 2.8% respectively. Nationally, the recent easing of population growth can be partly attributed to the improving New Zealand economy. Australia has enjoyed strong population growth from New Zealand citizens for subclass 444 visa holders over the past five years as weak economic conditions in New Zealand provided the impetus to move to Australia. However over the past 12 months, the New Zealand economy has shown solid signs of improvement, with the unemployment rate now lower than Australia… Continue reading
Birmingham named as UK buy to let hospot
Birmingham has come top in the best postcodes for buy to let, with landlords in the Midlands benefiting from the UK’s best rental yields, new research shows. The highest rental yield postcodes from the first quarter of this year can now be found in Birmingham, Ipswich, Liverpool and Glasgow, according to the data from property peer to peer lending platform LendInvest Though Birmingham has beaten London, postcodes around north and central London are still delivering the best overall returns on investment, thanks to capital gains delivered by rising house prices. The rental yield is worked out by taking the annual rental income your get from the property and calculating it as a percentage of the property cost. Using around 1,000,000 sales and 500,000 rental listings from Zoopla, LendInvest has taken the average asking rental price per year and divided it by the average asking property purchase price and then broken it down by the first part of a postcode, known as the outcode. Four of the 10 highest rental yielding areas are in Birmingham, with 13.6% in B44, 11.9% in B42, 10.5% in B98 and 9.1% in B23. In Ipswich and Liverpool landlords can get 10.8% in IP4 and 9 per cent in L28 respectively, while Glasgow areas such as G34, G21 and G22 are yielding 11.9%, 10.1% and 9.2% respectively. ‘Many landlords tend to invest near to where they live, but if they look further afield, they could easily increase their yields and capital growth,’ said Jane Morris, managing director of Property Let By Us. ‘The Midlands provides a great investment opportunity as the property is much more affordable than the South East and the yields are high. For example, in Coventry a three bed semi will cost around £125,000 and will provide rental yields of around 6.57%,’ she explained. ‘Many of the landlords that we work with are netting between 6.57% and 9.1% from their properties in Birmingham, Coventry and Nuneaton. My advice to any landlord looking to invest outside there area is carry out thorough research on property prices; rent prices; and yields to ensure they make the right investment,’ she added. Continue reading
Average rents rising across the UK as regions catch up with London growth
The average rent on a tenancy signed in the UK during the three months to April 2015 was £916, some 10% higher than a year ago, according to the latest index to be published. The data from the HomeLet rental index also shows that excluding London the rise is 7.4% taking average rents to £730 and rents are rising across the country apart from Wales. In Scotland average rents increased annually by 6.2% to £635, in Northern Ireland they were up 5.2% to £594, but in Wales they fell by 0.7% to £573. It also reveals that after a year of rents in London rising at over twice the rate of the UK average, growth rates have now converged with the annual increase in Greater London at 7.5%. On a regional basis the South West has seen the highest annual growth at 15.5% followed by East Anglia at 8.4%, taking the average in these regions to £877 and £778 respectively. Rents are up annually by 7.9% in the West Midlands, by 7.4% in the South East and by 4.3% in Yorkshire and Humber, taking average rents to £645, £916 and £598 respectively. In the North East they are up 3.9% to £526, in the North West 3.8% to £668 and in the East Midlands 3.4% to £588. The monthly figures show more variation with Yorkshire and Humber seeing a fall of 2.1%, a decline of 1.1% in the East Midlands and a fall of 0.5% in the North West. ‘For the first time we are seeing rent price growth rates in Greater London converge with those across the rest of the UK. During 2014, London rent price growth far outpaced other regions but in 2015 we are seeing the emergence of a different pattern,’ said Martin Totty, chief executive officer of Barbon Insurance Group, parent company of HomeLet. ‘What this tells us is that the private rental market is experiencing demand nationwide and that it is not simply a London phenomenon that increasing numbers of people are requiring privately rented property,’ he explained. ‘While there have been periods in recent years where London’s rent price growth has moved more in line with other parts of the UK, most notably during the period following the financial crisis, the capital has always remained significantly ahead,’ he pointed out. ‘The convergence suggests that after a lengthy period of substantial outperformance in terms of rental increases, the pace of growth in London has slowed while the rest of the UK is catching up,’ he added. Continue reading
