Published on: Monday, October 05, 2009, Written by: Property Wire
As an island of property boom in a global sea of downturn, Australia faces a dubious dilemma with Melbourne and Sydney leading another big monthly gain in housing prices. While this boom threatens housing affordability, price increases could also stimulate lending and construction, helping fill the supply side of the equation. For more on this, see the following article from Property Wire.
australia real estate
Residential property prices in Australia are continuing to surge as the Royal Bank of Australia warns that the real estate market is about to explode.
The latest price index from RP Data shows house prices rose 1.9% in August, the largest monthly movement since the group’s indexes began in January 2005.
Melbourne and Sydney recorded the biggest jumps in August, up 2.67% and 2.09% respectively. Australia’s two biggest capital cities have also outpaced the rest of the nation this year, with Melbourne prices rising 11.6% and Sydney up 8.67% in the first eight months of 2009.
Overall, Australian house prices are up 7.9% in the same period.
Darwin was the only capital city to record negative growth in August, with prices falling 0.8% followed by Perth was next lowest, with growth of just 0.65%.
But RBA economist Tony Richards is concerned that strong growth could seriously affect affordability and the bank is expected to become the first central bank in the world to raise interest rates.
‘It is looking increasingly clear that Australia has avoided the large falls in housing prices seen in some other countries over the past two years or so. But looking forward, the risk is that we might move towards undesirable strong growth in housing prices,’ Richards said.
RP Data research director Tim Lawless said there is also a positive outlook as the growth in prices would help ease availability to credit and increase supply.
‘This price growth will also go a long way to comforting risk-averse lenders to start providing credit again to developers, which has been one of the main bottlenecks on the supply side,’ he said.
‘And it will stimulate the reallocation of resources away from other sectors of the economy into much needed housing investment,’ he added.
Finance is much needed according to various experts. New construction will be hampered by financing constraints, according to investment bank JPMorgan’s chief economist, Stephen Walters.
David Devine, managing director of Queensland-based residential developer Devine, said it was nearly impossible to secure funding from the banks for apartment and unit projects, irrespective of pre-sales.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.
Go to www.ipsinvest.com for Australian opportunities.
Facebook Badge
Saturday, October 10, 2009
UK House prices in September rose by 0.6%
House prices in September rose by 0.6%
The average price of all residential property transactions completed in England & Wales in September 2009 was 0.6% higher than in August. This is the fifth month in succession in which we have seen positive, though modest, growth in house prices.
Prices are now 5.6% lower than a year ago
On an annual basis, the average price of all residential property transactions in England & Wales in September is 5.6% lower than a year ago. The trough in the house price decline, on an annual basis, was reached in April 2009 at minus 13.4%.
Housing transactions slow down
Final figures have yet to emerge for sales in August 2009 but the early indications are that the total number of transactions will be lower than the 59,600 recorded in July 2009. Although, for seasonal reasons, August figures have been lower than July in five out of the last nine years, this is the first fall in monthly sales recorded this year and it could suggest continued vulnerability.
Dr Peter Williams Chairman of Acadametrics said
“The average house price has continued to rise and, at £205,338, is back to where it was in August 2006.
“The monthly price rise of 0.6% contrasts markedly with the 1.8% price drop 12 months earlier in October 2008; the data clearly support the view that the sharpest falls are now behind us and that the market has made a modest recovery, even if it is too early to talk of a sustained upturn.”
Here is the full report - http://www.ipsinvest.com/News.aspx?id=180
The average price of all residential property transactions completed in England & Wales in September 2009 was 0.6% higher than in August. This is the fifth month in succession in which we have seen positive, though modest, growth in house prices.
Prices are now 5.6% lower than a year ago
On an annual basis, the average price of all residential property transactions in England & Wales in September is 5.6% lower than a year ago. The trough in the house price decline, on an annual basis, was reached in April 2009 at minus 13.4%.
Housing transactions slow down
Final figures have yet to emerge for sales in August 2009 but the early indications are that the total number of transactions will be lower than the 59,600 recorded in July 2009. Although, for seasonal reasons, August figures have been lower than July in five out of the last nine years, this is the first fall in monthly sales recorded this year and it could suggest continued vulnerability.
Dr Peter Williams Chairman of Acadametrics said
“The average house price has continued to rise and, at £205,338, is back to where it was in August 2006.
“The monthly price rise of 0.6% contrasts markedly with the 1.8% price drop 12 months earlier in October 2008; the data clearly support the view that the sharpest falls are now behind us and that the market has made a modest recovery, even if it is too early to talk of a sustained upturn.”
Here is the full report - http://www.ipsinvest.com/News.aspx?id=180
Friday, October 9, 2009
Australian Property Market Surges During June Quarter
A report on the state of the Australian property market suggests that the Federal Government subsidy for first time home buyers has led to mortgage brokers writing more than $18 billion in home loans for the quarter ending June, representing an 18 per cent rise compared to the same period in the previous year.
The report authored by independent consultants Market Intelligence Strategy Centre says that home loans written by mortgage brokers during the June quarter amounted to $18.3 billion.
The amount of home loans written during the June quarter is the largest quarterly level the consultant has recorded since it began collecting data back in the year 2000.
“The results clearly demonstrate that the government first home buyer incentive often, enhanced by further state incentives), has turned the mortgage market, through brokers, around. Many brokers and lenders were run off their feet with surging demand … not just for first home buyers but also investors.” the report said.
The size of the average mortgage written during the June quarter increased by 8.6 per cent, and stood at $267,724, up from $246,626 in the previous year.
A spokesperson for mortgage broker Mortgage Choice said the firm was optimistic about the future and said that approvals for home loans in the June quarter had outpaced growth during the previous three quarters.
“We would expect that the September quarter will be on par with the June quarter, if not an increase on that June quarter in terms of approvals,” The spokesperson said.
Mortgage Choice also added that aside from an increase in first home buyer activity, there had been a “noticeable spike” in interest from those upgrading from their current home and those looking to invest in a second property over the last couple of months.
Last October as part of its fiscal stimulus package in response to the global economic slowdown the Federal Government increased its first time home buyer subsidy to $21,000 for newly built homes and to $14,000 for those buying an existing property.
The Federal Government grant will be reduced to $14,000 and $10,500, respectively, on Thursday, October 1.
The report authored by independent consultants Market Intelligence Strategy Centre says that home loans written by mortgage brokers during the June quarter amounted to $18.3 billion.
The amount of home loans written during the June quarter is the largest quarterly level the consultant has recorded since it began collecting data back in the year 2000.
“The results clearly demonstrate that the government first home buyer incentive often, enhanced by further state incentives), has turned the mortgage market, through brokers, around. Many brokers and lenders were run off their feet with surging demand … not just for first home buyers but also investors.” the report said.
The size of the average mortgage written during the June quarter increased by 8.6 per cent, and stood at $267,724, up from $246,626 in the previous year.
A spokesperson for mortgage broker Mortgage Choice said the firm was optimistic about the future and said that approvals for home loans in the June quarter had outpaced growth during the previous three quarters.
“We would expect that the September quarter will be on par with the June quarter, if not an increase on that June quarter in terms of approvals,” The spokesperson said.
Mortgage Choice also added that aside from an increase in first home buyer activity, there had been a “noticeable spike” in interest from those upgrading from their current home and those looking to invest in a second property over the last couple of months.
Last October as part of its fiscal stimulus package in response to the global economic slowdown the Federal Government increased its first time home buyer subsidy to $21,000 for newly built homes and to $14,000 for those buying an existing property.
The Federal Government grant will be reduced to $14,000 and $10,500, respectively, on Thursday, October 1.
Property in Australia ’set for upward pressure’
Australia’s property market has avoided a major slump but must now see a rise in supply to avoid a surge in prices, one of the country’s most senior economists has said.
Head of economic analysis department at the Reserve Bank of Australia Tony Richards noted: "Over the past five years, housing prices have risen less rapidly than incomes, after a long period when the reverse was true."
However, he suggested, this may be a difficult situation to sustain, due to factors such as future interest rate rises, economic recovery and the effects of Australia’s rapid population growth.
He also noted that as unemployment falls there could be a labour shortage in the construction industry, making it hard to maintain supply levels.
Those keen to buy overseas property in Australia may be interested in purchasing as the average price could soar in such circumstances.
Last week, two economists told a Your Money table forum that prices in the country will continue rising.
AMP Capital Investors chief economist Shane Oliver and CommSec chief economist Craig James said the lack of supply would be the main inflationary factor in the market, news.com.au reported.
Head of economic analysis department at the Reserve Bank of Australia Tony Richards noted: "Over the past five years, housing prices have risen less rapidly than incomes, after a long period when the reverse was true."
However, he suggested, this may be a difficult situation to sustain, due to factors such as future interest rate rises, economic recovery and the effects of Australia’s rapid population growth.
He also noted that as unemployment falls there could be a labour shortage in the construction industry, making it hard to maintain supply levels.
Those keen to buy overseas property in Australia may be interested in purchasing as the average price could soar in such circumstances.
Last week, two economists told a Your Money table forum that prices in the country will continue rising.
AMP Capital Investors chief economist Shane Oliver and CommSec chief economist Craig James said the lack of supply would be the main inflationary factor in the market, news.com.au reported.
UK land values up after 50% drop!
The value of residential development land in the UK has risen for the second quarter in a row but prices are still almost 50% below their peak of 2007, according to the latest research.
Urban land values rose by 1.1% and greenfield sites by 1.6% over the three months to the end of September, the Knight Frank Residential Development Land Index for the third quarter of 2009 shows.
But despite the recent growth, on an annual basis land values were down by 26.4% for urban sites and 16.8% for greenfield sites.
The increases are being driven by house builders who are obtaining finance for developments but private equity groups are still significant players, the index also shows.
‘The market is still very thin in volume terms, with a stand-off between land owners, who expect values to rise still further over the next 12 months as builders try to acquire land and to rebuild stocks, and purchasers who are finding development financing still in short supply,’ said Liam Bailey, head of residential research at Knight Frank.
He said that there has been a slight rise in the level of receivership stock coming to the market in recent months, however the lack of distressed sellers means the current market is very different to that experienced in the early 1990s.
‘Purchasers tend to be buying in cash or are only moderately debt fuelled.
Many of the builders and developers entering the market are looking to defer payment, either through option or overage agreements or staged payments.
Private equity buyers are still a strong force in the market,’ he explained.
The builders and developers coming into the market have been driven by concerns over weak stock pipelines for 2010 and 2011.
Some of these new buyers have not bought land since early 2007. So low future stocks is encouraging new purchases.
‘For a sector that has been beset by bad news from the onset of the credit crunch, the change in sentiment in the new-homes market in recent months has been dramatic.
With discounted properties selling well, and with some very useful help from shared equity products and government support, existing stocks are running low,’ added Bailey.
‘Unbelievable as it would have seemed a year ago, agents and builders are increasingly concerned regarding the lack of stock to sell especially when they look forward to next year’s spring market.
Looking ahead he said he expects that maintaining growth in the rate of new-build starts will not be straightforward.
The development sector has lost staff and skills and will take time to rebuild capacity.
But the biggest issue is how to access cut-price development land.
With the banks in no hurry to force distressed sales of the portfolios they lent against, there is precious little good land, namely land with workable planning consents, available to buy.
‘The growth of new development volumes will be a slow process suggesting that very tight new-build supply will remain a feature through 2010,’ he concluded.
Urban land values rose by 1.1% and greenfield sites by 1.6% over the three months to the end of September, the Knight Frank Residential Development Land Index for the third quarter of 2009 shows.
But despite the recent growth, on an annual basis land values were down by 26.4% for urban sites and 16.8% for greenfield sites.
The increases are being driven by house builders who are obtaining finance for developments but private equity groups are still significant players, the index also shows.
‘The market is still very thin in volume terms, with a stand-off between land owners, who expect values to rise still further over the next 12 months as builders try to acquire land and to rebuild stocks, and purchasers who are finding development financing still in short supply,’ said Liam Bailey, head of residential research at Knight Frank.
He said that there has been a slight rise in the level of receivership stock coming to the market in recent months, however the lack of distressed sellers means the current market is very different to that experienced in the early 1990s.
‘Purchasers tend to be buying in cash or are only moderately debt fuelled.
Many of the builders and developers entering the market are looking to defer payment, either through option or overage agreements or staged payments.
Private equity buyers are still a strong force in the market,’ he explained.
The builders and developers coming into the market have been driven by concerns over weak stock pipelines for 2010 and 2011.
Some of these new buyers have not bought land since early 2007. So low future stocks is encouraging new purchases.
‘For a sector that has been beset by bad news from the onset of the credit crunch, the change in sentiment in the new-homes market in recent months has been dramatic.
With discounted properties selling well, and with some very useful help from shared equity products and government support, existing stocks are running low,’ added Bailey.
‘Unbelievable as it would have seemed a year ago, agents and builders are increasingly concerned regarding the lack of stock to sell especially when they look forward to next year’s spring market.
Looking ahead he said he expects that maintaining growth in the rate of new-build starts will not be straightforward.
The development sector has lost staff and skills and will take time to rebuild capacity.
But the biggest issue is how to access cut-price development land.
With the banks in no hurry to force distressed sales of the portfolios they lent against, there is precious little good land, namely land with workable planning consents, available to buy.
‘The growth of new development volumes will be a slow process suggesting that very tight new-build supply will remain a feature through 2010,’ he concluded.
What is happening in the UK market
One thing we've kind of assumed is that the next bubble won't be in housing. It never seems to happen that the next bubble is the same as the last one -- it's always something else that comes out of nowhere, while we had our eyes turned bakcwards.
But, if you print enough money, and the banks are flush, and the one thing the banks now how to do is lend to homebuyers, well then you might get a double-bubble.
Here we're not seeing much of a rebound -- everyone expects home prices to show a dip come August -- but something's happening in the UK, and regulators are freaked out.
Daily Mail: The Bank of England has been taken aback by the recent rebound in house prices and is watching the market carefully for any signs of excessive 'exuberance'.
The comments to economists at a meeting at the Bank came amid signs of a recovery in household confidence and a firmer set of lending figures.
Property values have staged a marked rebound in recent months, with the Halifax reporting the average price now stands at £160,973, almost the same level as in December 2008.
The Bank called the meeting to discuss its quantitative easing scheme to City analysts. Coupled with rates of just 0.5 per cent, the £175billion scheme amounts to an unprecedented effort to refloat the economy.
Governor Mervyn King has previously suggested he might take the additional step of cutting the rate paid to banks on their BoE reserves, in order to discourage them from hoarding cash. Officials yesterday suggested any such move is a long way off.
A spokesman for the Bank refused to comment on the meeting, which was confidential.
But, if you print enough money, and the banks are flush, and the one thing the banks now how to do is lend to homebuyers, well then you might get a double-bubble.
Here we're not seeing much of a rebound -- everyone expects home prices to show a dip come August -- but something's happening in the UK, and regulators are freaked out.
Daily Mail: The Bank of England has been taken aback by the recent rebound in house prices and is watching the market carefully for any signs of excessive 'exuberance'.
The comments to economists at a meeting at the Bank came amid signs of a recovery in household confidence and a firmer set of lending figures.
Property values have staged a marked rebound in recent months, with the Halifax reporting the average price now stands at £160,973, almost the same level as in December 2008.
The Bank called the meeting to discuss its quantitative easing scheme to City analysts. Coupled with rates of just 0.5 per cent, the £175billion scheme amounts to an unprecedented effort to refloat the economy.
Governor Mervyn King has previously suggested he might take the additional step of cutting the rate paid to banks on their BoE reserves, in order to discourage them from hoarding cash. Officials yesterday suggested any such move is a long way off.
A spokesman for the Bank refused to comment on the meeting, which was confidential.
Thursday, October 8, 2009
Demand for South African property up as rate cuts kick in
Oct 5, 2009 11:25 PM | By Zweli Mokgata, Sunday Times
There has been a rapid increase in demand for residential property in the third quarter of 2009, according to FNB's Property Barometer.
The indicator, which measures feedback from estate agents on a scale from 1 to 10, revealed that the positive impact of interest rate cuts since December has fed through to consumer demand for property.
After a slow rise from a historic low of 4.1 in the third quarter of 2008 to 4.79 by the second quarter of 2009, the third quarter of this year moved into positive territory at 5.65.
John Loos, FNB property strategist, said: "Year-on-year activity levels rose for the second successive quarter in the second quarter of 2009. One needs to be cautious when viewing the data, as seasonal factors can play a role.
"But after seeing negative growth rate on a year-on-year basis for eight consecutive quarters up until the first quarter of 2009, the second quarter saw the rate of change turning positive to the tune of 8.4%," he said.
He said the household sector debt-service ratio (cost of interest plus capital payments on household debt as a percentage of household income) had declined significantly in the first two quarters of 2009.
In Absa's third-quarter housing review released earlier this month, Jacques du Toit said the South African economy was still in a recession after contracting by 1.8% in the fourth quarter of last year and by 6.4% in the first quarter of this year.
He forecast that real GDP is expected to shrink by 1.9% by the end of the year and job losses will lead to a 2.6% this year.
Go to www.ipsinvest.com for South African opportunities.
There has been a rapid increase in demand for residential property in the third quarter of 2009, according to FNB's Property Barometer.
The indicator, which measures feedback from estate agents on a scale from 1 to 10, revealed that the positive impact of interest rate cuts since December has fed through to consumer demand for property.
After a slow rise from a historic low of 4.1 in the third quarter of 2008 to 4.79 by the second quarter of 2009, the third quarter of this year moved into positive territory at 5.65.
John Loos, FNB property strategist, said: "Year-on-year activity levels rose for the second successive quarter in the second quarter of 2009. One needs to be cautious when viewing the data, as seasonal factors can play a role.
"But after seeing negative growth rate on a year-on-year basis for eight consecutive quarters up until the first quarter of 2009, the second quarter saw the rate of change turning positive to the tune of 8.4%," he said.
He said the household sector debt-service ratio (cost of interest plus capital payments on household debt as a percentage of household income) had declined significantly in the first two quarters of 2009.
In Absa's third-quarter housing review released earlier this month, Jacques du Toit said the South African economy was still in a recession after contracting by 1.8% in the fourth quarter of last year and by 6.4% in the first quarter of this year.
He forecast that real GDP is expected to shrink by 1.9% by the end of the year and job losses will lead to a 2.6% this year.
Go to www.ipsinvest.com for South African opportunities.
Subscribe to:
Posts (Atom)
Posts
