Hong Kong property markets likely to see stability in rest of 2016

Residential property sales in Hong Kong increased by 34.4% in September compared to the previous month to reach a four year high, according to the latest land registry data.

The pick-up in activity over the course of the month was primarily as a result of a strong rise in sales of new build property as more end users and investors entered the market, says an analysis from international real estate firm Knight Frank.

It explains that as a result, a number of new residential developments were oversubscribed in September. For instance, over 95% of the 545 units available in One Kai Tak, in Kowloon City, were sold within a week of launch, while The Papillion, in Tseng Kwan O, sold all its 857 units within a month.

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Prime property rents around London falling

Rents in the prime property markets of London’s commuter belt fell by 1.3% in the third quarter of this year, leaving annual growth down 0.3%, the latest data shows.

Smaller properties continue to outperform larger ones across all locations in the commuter zone with one or two bedroom properties seeing growth of 1.4% over the past year to September.

In comparison, properties with three or more bedrooms have either seen just marginal growth or small falls over the same period, the data from real estate firm Savills shows. For large properties of six or more bedrooms, the falls have been greater with average rents now 1.5% lower than a year ago.

According to Lucian Cook, director of residential research at Savills, this trend reflects a divide in the market between needs based renters who are looking for smaller properties and big budget tenants looking for prized properties, who are relatively scarce in the market.

He explained that the demand comes from professional couples and young families looking for flats and small houses who aren’t yet ready to buy and are working on a ‘try before you buy’ basis. He believes that landlords will have to be competitive with rents to attract tenants.

Also, in 2016 so far, some 42% of tenants renting in the commuter belt are doing so because of employment relocation, meaning they may want to get to know an area before committing to a purchase.

The report also says that being near to good schools continues to be very important to young families renting in the prime commuter belt. This has resulted in stronger rental growth being seen in locations with a good reputation for education such as Cambridge and Winchester.

Properties that are within a city or town centre, close to local amenities such as shops and stations also continue to attract strong demand. City locations in the prime commuter zones of London saw growth of 0.9% over the quarter as a result of this demand. In contrast, both village and rural locations saw falls of 0.4% over the same period.

‘Looking forward, we expect ongoing demand for prime rental properties in the suburbs and key commuter locations of the capital to continue, especially as we see an increase in those following the traditional relocation routes out of London. Professional couples and young families will continue to drive demand as they try before they buy before committing to a purchase,’ said Cook

‘A potential short term risk to rental values is high levels of stock coming onto the market as a result of increases in accidental landlords. Following the stamp duty changes introduced in the autumn statement of 2014, there has been an increase in the number of this type of landlord bringing property to the rental market. The uncertainly resulting from the decision to leave the EU is likely to see this trend continue,’ Cook pointed out.

‘As an attempt to offset this, landlords will need to remain competitive on asking rent and flexible on terms, as well as ensuring the property is presented in good condition to ensure they attract tenants in the long term,’ he added.


Brexit fails to dampen demand for house building in UK

Consumer demand for building work in the UK remained resilient in the three months following the vote to leave the European Union, new figures show.

But developers must not be complacent as while the construction industry is like a weather vane for the property market as there are still challenges, according to a new report from the Federation of Master Builders (FMB).

The biggest challenge is a lack of skilled workers with almost two thirds of smaller builders struggling to find bricklayers and over half, 55%, finding it hard to find enough carpenters and joiners.

Brexit could still have an effect as it is reckoned that 12% of the workforce in the construction industry are not British and come from other EU states with the ability to recruit from abroad likely to be hampered by new immigration policies due to Brexit.

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Landlords and letting agents in UK not up to speed on legal changes in sector

A high number of landlords and letting agents in the UK are failing to get to grips with several legislative changes in the sector, according to an industry trade body.

The Association of Independent Inventory Clerks (AIIC) says that its members are frequently receiving queries about new industry regulations, particularly those regarding carbon monoxide and smoke alarms and window blinds.

Since October 2015, it has been mandatory for a smoke alarm to be installed on every floor of a rental property where someone is living, partially living or is deemed as a habitable area. Bathrooms, for example, are viewed as habitable areas.

Landlords or their agents must also fit carbon monoxide alarms in rooms with a solid fuel burning appliance, including wood burners and open fires.

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House approvals in Australia slowing considerably in some locations

New home approvals in Australia remain at historically high levels but the latest data suggests they are slowing down, especially for houses.

The figures from the Australian Bureau of Statistics shows that approvals to build fell by 1.8% month on month in August but are still 10.1% higher than August 2015.

But more apartments are being approved than houses which highlights a growing shift towards densification with a particular emphasis on high rise unit developments. The number of houses approved for construction fell by 0.9% over the month to its lowest level since March 2014 and year on year they were down 5.8%.

The number of apartment units approved for construction was slightly lower over the month, down 2.5%, however, compared to the number in August 2015 they were 28.3% higher.

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Investment returns to UK buy to let market after stamp duty change

Buy to let landlords and new investors are returning to the UK market after stamp duty change earlier this year with enquiries up 30% since May, the latest data shows.

The tracker report from Rightmove describes it as ‘a substantial’ boost to the buy to let market following a short term dip when the 3% stamp duty surcharge on additional homes was introduced in April 2016.

March and April saw a temporary lull in buy to let activity on Rightmove, following the rush in the first three months of the year to complete before the new rules kicked in. However, the brief pause in activity didn’t lead to a reduction in new rental supply that some were predicting, with newly marketed rental properties up 6% in the third quarter of 2016 compared to 2015.

The data also shows that London continues to lead the way for new supply, with a year on year increase of 15% over the same period while the top total returns were in East Croydon at 13.8% and Greenford at 13.4%.

‘Investor activity has bounced back following the stamp duty changes, though some agents report that many investors are looking to knock sellers down on their asking prices to make up for the additional stamp duty they now need to pay,’ said Rightmove’s head of lettings Sam Mitchell.

‘New rental supply has held up despite concerns that the stamp duty changes would lead to less fresh stock,’ he added.

The figures reveal that asking rents are up slightly this quarter with a rise of 0.5% to £779 per month. But asking rents are continuing to fall in London with a 0.7% decline quarter on quarter and down 1.5% year on year.

Whilst the East of England still leads the way for the highest increase annually, it’s the North West that has risen most this quarter, up 2%, followed by Scotland, up 1.5%.

The report also identifies the locations where buy to let investors have seen the highest overall return on their investment. The top 10 outside London suggest seaside towns are proving to be a good investment. These include Southend-on-Sea with growth of 14.7%, St Leonards-on-Sea up 13.7%, Clacton-on-Sea up 12.4% and Westcliff-on-Sea up 11.8%.

Corby and Wellingborough, both in Northamptonshire, also make the top 10 with total returns of 12.8% and 11.8% respectively. Although yields are often lower in London, the increase in capital has led to total returns as high as 13.8% in East Croydon, and 13.4% in Greenford.

‘Essex and other commuter spots are offering investors the best total returns, and those looking at long term investments are seeking out areas with upcoming improved transport links,’ Mitchell explained.

‘The changes starting in 2017 to lessen mortgage interest tax relief may see some seriously review their businesses and could scale back, though there appear to be no signs yet of landlords exiting the market,’ he pointed out.

‘If supply of property to rent does scale back those that will win in the long term will be less highly-mortgaged landlords that chose not to sell off their property, and the big winners could be those that are investing in the right areas now,’ he added.

‘We expect some of the supply gap to be filled by Build to Rent but it could take some years for this to seriously increase rental stock levels. With this in mind 2017 could be another year of increasing rents,’ he concluded.


Average property in UK is eight times the average wage, new research shows

The average UK house price is eight times the average wage with the majority of least affordable areas in London, new research has found.

Indeed, in London the average price of a home is 14 times the average wage, according to research from eMoov with data compiled from all London boroughs and each area across England, Scotland and Wales to calculate the most expensive versus economical areas for property when compared to the wage earned.

The borough of Kensington and Chelsea tops the list with the average property price at £1,212,375, despite suffering London’s biggest property value decrease in the past year at 6%. The price of property in the borough is now 46 times the average wage of £26,624 and the nation’s biggest gap in wage to property ratio by a long way.

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Chartered surveyors call on Irish Government to do more to encourage new home building

The Irish Government should focus on measures to increase housing supply for all housing sectors, rather than handing out grants to first time buyers for new homes, it is claimed.

Initiatives like reducing VAT on affordable housing, making public land available for home building and providing financial help for builders should be considers, according to the Society of Chartered Surveyors Ireland (SCSI).

Claire Solon, SCSI president, pointed out that the cause of the current house crisis was on the supply side due to the extremely low levels of housing construction.

‘Grants to first time buyers will have very little impact on the housing crisis because supply is the problem, not demand. Reducing or even eliminating VAT on affordable housing and establishing a Development Finance Agency with expertise in construction lending would have a much greater impact and offer a much better return for the taxpayer,’ she explained.

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House prices in key global cities up 5.5% on average year on year

House prices across 150 key cities around the world increased by 5.5% on average in the year to June 2016, the strongest annual rate of growth for two years.

Of the 150 cities tracked by the Knight Frank global residential cities index some 114 recorded positive annual price growth in the year to June and, of these, 31 cities saw price growth exceed double digits.

Chinese cities occupy six of the top 10 rankings for annual price growth with Shenzhen leading the growth although year on year price growth has slowed from 63% to 47% in the last three months.

The ascension of Chinese cities has been rapid. According to data from China’s National Bureau of Statistics the average annual rate of growth for the top 10 performing Chinese cities equates to 22% in the year to June, a year earlier the comparable figure was -1.1% for the same cities.

The report points out that a number of the municipal governments in China are introducing a new raft of stringent cooling measures at a local level to dampen sales, these range from limiting non-locals to single home purchases and tightening rules for local residents in relation to second home purchases.

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Property prices in UK up 0.1% in September, latest index shows

Residential property prices in the UK increased by 0.1% in September, taking the average price of a home to £214,024, according to the latest index to be published.

But there was a slight quarter on quarter fall of 0.1% although prices are still up 5.8% compared to a year ago, down from 6.9% in August, the data from the Halifax also shows.

However, it is the lowest yearly growth since August 2013 when it was 5.4% and the lowest quarterly rate since November 2012 when it fell by 0.3%. Martin Ellis, the Halifax’s housing economist pointed out that the quarterly rate of change has been on a downward trend since reaching 3% in February.

‘The quarter on quarter change is a more reliable indicator of the underlying trend. The housing market has followed a steady downward trend over the past six months with clear evidence of both a softening in activity levels and an easing in house price inflation,’ he said.

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