Overall, it’s been a troubling key selling season in the US. New home sales were down slightly in June and well below expectations after May’s 15% decline, while transactions for previously owned properties dropped for a fourth straight month.

The lone bright spot in the market is luxury, with homes worth over $1 million the only price category to see sales rise in June, according to the National Association of Realtors. It’s not hard to understand why. With the 30-year fixed mortgage rate hovering around 6.8% after sitting around 3% from late 2019 to early 2022, anyone who has to borrow is paying a significantly steeper price for the same house than they would have just a couple of years ago.

But deep-pocketed buyers don’t have that concern because they can use cash.

“I can’t remember the last time I heard a buyer talk about financing,” said Lisa Rooks Morris, a Sarasota, Florida-based luxury real estate agent at Douglas Elliman. “They all come in with cash.”

The result is a high-end real estate boom that’s sending the stock market’s biggest US luxury homebuilder to new heights. Toll Brothers Inc. posted stronger-than-expected orders in its fiscal second quarter earnings report in May and ratcheted up its full-year deliveries guidance. The company’s shares are trading near a record after a roughly 160% rise since the start of 2023, making them the sixth biggest gainers in the S&P Midcap 400 Index over that time and making the company the second-best performing publicly traded US builder in the past six months.

“Historically, higher priced homes are the first to feel the hit when interest rates rise,” said Ali Wolf, chief economist for Zonda. “We aren’t seeing that today. High home equity and the strong stock market have acted as a buffer against interest rates for wealthier Americans.”

As of the end of the first quarter, 45% of US high-end homebuyers used all cash, the largest share in at least a decade, according to data from Redfin. Well-padded stock portfolios, sales of long-term holdings in commercial real estate properties and newly inherited generational wealth are all popular sources of funding.

By contrast, entry level buyers depend on their personal savings and incomes, which haven’t kept up with inflation. And for lower-income borrowers the problem goes beyond rising mortgage rates to simply getting approved for a loan, as delinquencies on credit cards and auto loans climb.

“The bifurcation we’re seeing in the housing market is emblematic of the wider bifurcation we’re seeing in the economy,” Nationwide senior economist Ben Ayers said. Asset values in the US are surging, and “while many folks are cashing in on that, on the other end of the spectrum, people are just getting by.”

Well-heeled buyers are returning to the pandemic boomtown Black Diamond more than 30 miles south of Seattle, Washington. At The Regency at Ten Trails, a Toll Brothers’ active adult community in the former coal mining town, prices start at $600,000, but the most popular models go for more than $1 million and have about 2,000 square feet (186 square meters). More than half of the buyers are paying cash, according to Toll Brothers, and sales agent Kristi Brewer says she’s noticed the uptick in demand in the past few months.

Across the country in Florida, Morris sold a $7.75 million newly-constructed home earlier this year just 72 hours after listing it. The difference between now and the Covid frenzy, she said, is an excess of quality inventory.

“Now you have the time to actually contemplate, shop and negotiate,” Morris said, which many buyers weren’t able to do during the pandemic bidding wars.

The need for lower cost housing isn’t lost on the homebuilding industry. The challenge is how to do it in an environment where the cost of just about everything that goes into constructing a house is higher than it was.

For example, the active-adult segment is growing quickly for Houston-based David Weekley Homes, one of the nation’s largest privately held builders. But the company is having a hard time producing homes it can sell for less than $400,000 due to the rising cost of land, labor and materials, according to president Chris Weekley.

“Every builder is trying their own push into more attainable homes,” Weekley said. “But the risk, as we do that, is that the one way to get cheaper land is to go further out. And that’s a riskier bet.”

Meanwhile, the pool of potential buyers with money in their pockets is deep — 39% of homes in the US didn’t have a mortgage as of 2022.

“Higher-end buyers are doing this with cash,” Zonda’s Wolf said.

Source

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That’s also the bad news, costing them thousands more in real estate taxes and leaving less for discretionary spending.

“To pay the higher property taxes, it just means we’ve got to take more money out of our investments when it comes time to hit those big bills,” Beverly McAdam said.

She backs a Colorado ballot proposal that could cap the growth of property tax revenue. It’s one of several measures in states this year to limit, cut or offset escalating property taxes in response to complaints.

Over the past five years, single-family home prices have risen about 54% nationally, according to S&P Dow Jones Indices.

That means higher tax bills for homeowners when governments don’t offset higher real estate values by reducing tax rates. And with offices seeing higher vacancies as people still work from home after the coronavirus pandemic, some commercial property values are declining, putting even more pressure on residential properties to deliver revenues.

“With assessed values skyrocketing over the past few years,” said Jared Walczak, vice president of state projects at the nonprofit Tax Foundation, “homeowners are clamoring for relief, and state policymakers are increasingly exploring ways to provide it.”

Colorado, like Alabama and Wyoming, also has a new law that will limit the growth in tax-assessed values for homeowners. Property tax relief will be part of a special legislative session beginning June 18 in Kansas, while Nebraska also could hold a special session to cut property taxes.

Georgia voters will decide in November whether to authorize a new law limiting increases in assessed home values for tax purposes to the rate of inflation, unless local governments or school boards opt out.

Five years ago, Lanell Griffith and her husband paid a little less than $2,700 in property taxes on their Topeka, Kansas, home in a historic neighborhood of tree-lined, brick streets. Their bill last year was more than $3,700.

“The government shouldn’t be able to arbitrarily just increase what they say you owe them without any sort of guardrails on that,” Griffith said.

Kansas lawmakers this year passed three measures that would have reduced the state’s property tax levy for public schools. But each was vetoed by Democratic Gov. Laura Kelly because of concerns about other sections to cut income taxes. The special session will mark a fourth attempt at consensus.

In Vermont, Republican Gov. Phil Scott has vowed to veto a bill that would raise property taxes by an average of nearly 14% to provide more money for public schools. Scott said people “simply cannot afford a historic, double digit property tax increase.”

In many states, property taxes are primarily a function of local governments such as counties, cities, school boards and special districts for libraries, fire departments and water systems. Each entity sets its own property tax rate, which is added to the others to come up with an overall tax bill for property owners.

State legislatures can intervene in a variety of ways. They can establish statewide limits on how much assessed property values can rise, create partial tax exemptions for all homeowners or provide income tax credits to help offset property taxes for certain people, such as those 65 and older.

But any relief carries consequences. Limits on the growth of assessed property values may provide a greater benefit to the wealthy. Exemptions for homes used as primary residences can shift a greater tax burden to rental properties and businesses.

“If you do this too much, you can now start tying the hands of your local government and cutting them off from the ability to raise revenue,” said Richard Auxier, a principal policy associate at the nonprofit Tax Policy Center.

While signing several property tax relief laws this year, Republican Wyoming Gov. Mark Gordon vetoed one that would have exempted 25% of a home’s value from property taxes. He said it “jeopardized the financial stability of the state and counties.”

In 1982, voters in Muscogee County, Georgia, approved a local ordinance freezing assessed property values for homes used as primary residences. The result: longtime homeowners pay very little, newcomers pay more and businesses face some of the state’s highest property tax rates, said Suzanne Widenhouse, the county’s chief appraiser.

Last year, two similar homes worth around $330,000 had dramatically different tax bills. One, whose assessed value was frozen in the 1980s, owed less than $8. The other, whose assessed value was frozen when purchased about five years ago, owed $3,236, Widenhouse said.

“Anytime you grant an exemption, you create an inequality,” she said.

A Georgia ballot measure would amend the constitution to allow increases in assessed property values to be capped at the rate of inflation. But it wouldn’t undo past increases.

In the eight years since Rob Romeijn bought a ranch-style house on 10 acres (4 hectares) southeast of Atlanta, Rockdale County has raised the assessed value of his property from $127,000 to $230,000, also bumping up his property tax bill, he said.

As a Dutch immigrant with permanent residency, Romeijn can’t vote in elections in Conyers, but he was so unhappy about the increase that he made a sign urging people to vote out Rockdale’s commissioners and protested outside county offices in April.

Colorado also has been at the center of the property tax debate. The state has experienced decades-long growth in new residents, driving up demand for housing. Meanwhile, it has struggled to find a balance between providing tax relief for homeowners and sufficient funding for local governments.

A 1982 constitutional amendment limited residential properties to 45% of Colorado’s total property tax base while also setting a fixed assessment rate for commercial properties. To keep the ratio in balance as home values rose, residential tax assessments were cut, leaving less revenue for essential services such as fire districts.

Colorado voters repealed that constitutional provision in 2020. Since then, assessed home values have risen rapidly and the General Assembly has responded. The latest law, signed in May, is projected to shave over $1 billion annually off future property tax revenue by reducing tax rates and imposing growth limits.

But that’s not enough to satisfy some residents. The conservative group Advance Colorado backed a citizens initiative asking voters in November to cap all property tax revenue growth at 4% per year and is gathering signatures for still another ballot initiative to lower property taxes.

“People are saying this is too much growth; government doesn’t need this much money,” Advance Colorado President Michael Fields said. “People are genuinely scared of losing their houses.”

Source: AP News

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FINDING THE perfect first family home can be tricky, but a recent addition to the property market in Gwent could be the answer.

Situated on Woodland Place in the community of Gilfach, Bargoed, this three-bedroom mid-terraced house could offer the ideal starter home for any family.

In what the estate agents describe as a “highly desirable location”, the property is within walking distance of popular schools and has plenty of local amenities nearby, including a convenience store and train station.

According to the estate agents New Horizons, the home could also be regarded as a “dream for anyone into cars or motorbikes”.

The property compromises of a entrance porch, open plan lounge/dining room, fitted kitchen, newly fitted ground floor bathroom, three generous sized bedrooms, double glazing, gas central heating, rear garden with paved patio and large garage with power and light.

It has recently been refurbished to a “high standard throughout”, with two double bedrooms and a single offering an ideal space for a family.

There is a feature fireplace in the lounge area, which could either be used for storage or for a wood burner, while the kitchen offers space for plenty of utilities, such as a tumble dryer, washing machine and dishwasher.

The ground floor bathroom has been fitted as part of the recent refurbishment, so is in excellent condition, as are all three good-sized bedrooms.

The house is being marketed by New Horizons Estate Agents, Bargoed, and currently has a guide price of offers more than £155,000.

New Horizons have said that the property is a “must be seen” before purchase, so if you would like to find out more details or book a viewing, you can do so on the website here, or by calling the estate agent on 01443 801564.

Source: Yahoo

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The initiative could be announced in the Spring Budget on March 6 to help those struggling to build up enough savings to buy a home, according to a report in the Independent.

It could see the Government offer banks financial guarantees to encourage them to hand out mortgages covering 99 per cent of a home’s value.

Help: The Government is reportedly considering introducing a scheme that will allow first-time buyers to get on the property ladder with just a 1% deposit

This would be similar to the existing Mortgage Guarantee Scheme, which aims to help those buying homes with 5 per cent deposits.

If it is confirmed, the policy would no doubt be welcomed by some first-time buyers.

However, critics say that it could also push up house prices, and that struggling first-time buyers may not be able to afford the monthly repayments required on such a large mortgage, especially as rates remain relatively high.

How could it help first-time buyers?

There is little detail on the scheme, but in theory it should mean aspiring homeowners will be able to buy their first home with an even smaller deposit.

Someone buying a £300,000 property with a 5 per cent deposit needs to have built up savings of at least £15,000 to get a 95 per cent mortgage.

Under the new scheme, they may need as little as £3,000 – alongside the funds required for a solicitor, surveyor and potentially a mortgage broker.

David Hollingworth, associate director at L&C Mortgages says: ‘This would likely open up an alternative option for first time buyers struggling to build a deposit.

‘Requiring a smaller deposit could help accelerate the ability to buy, for those that can fund the remainder from mortgage borrowing.’

Path to ownership? Experts say that the rumoured mortgage scheme may be helpful – but only to borrowers who can afford the repayments

Mark Harris, chief executive of mortgage broker SPF Private Clients, adds: ‘The 99 per cent mortgages could be a good idea in the appropriate circumstances.

‘With added stamp duty costs, a 99 per cent mortgage can look identical to a 95 per cent mortgage for previous generations.

‘Add in the fact that saving for a deposit while renting is practically impossible, and this could be a solution.’

Will it make property more affordable?

Buyers are likely to find their ability to get a 1 per cent deposit mortgage is dependent on their earnings.

Many first-time buyers are not only priced out of the property market because of the deposit required, but because of how much they are able to borrow.

All mortgage lenders limit borrowers to a maximum loan-to-income ratio.

This is a cap on the amount banks will lend based on the borrower’s annual income. They are able to offer some loans above this level, but there are tight restrictions on how many.

As a general rule of thumb, most first-time buyers will find themselves limited to a maximum of 4.5 times their annual income.

If a single person was buying a £300,000 property with a 1 per cent deposit, they would typically need an annual income of at least £66,000.

David Hollingworth adds: ‘There will still be reasons why this wouldn’t be an option for many, as they may also be limited by the mortgage amount that they can borrow, as well as the challenge of saving a bigger deposit.

‘Lenders will need to see that the mortgage amount is affordable based on income and outgoings and subject to certain income multiple limits.

‘That can see borrowers requiring an even bigger deposit to bridge the gap between the mortgage and the amount that they have to pay for the property.

‘That issue certainly doesn’t disappear at 99 per cent loan to value mortgage, so could affect the number that can take advantage.’

Would it be popular?

There are some doubts over whether many first-time buyers would actually sign up to a 99 per cent mortgage deal.

The average deposit put down by a first-time buyer last year was around 25 per cent, according to UK Finance.

Meanwhile, the average first-time buyer is borrowing at 3.36 times their annual income, which is significantly under the maximum they would typically be allowed to borrow at.

This suggests buyers are keen not to overstretch themselves when it comes to buying their first home.

Are similar mortgages already available?

Skipton Building Society made headlines last year when it launched a 100% mortgage for renters to enable them to get onto the property ladder without a deposit

Skipton Building Society made headlines last year when it launched a 100 per cent mortgage for renters to enable them to get onto the property ladder without a deposit.

Another product that allows first-time buyers to get on the ladder without a deposit is the Barclays Springboard mortgage, which uses equity in a guarantor’s (usually a family member’s) house as collateral.

However, it is thought that there has been limited uptake for these types of products.

Chris Sykes, technical director at mortgage broker, Private Finance, says: ‘My concern is this latest Government scheme is going to give false hope to many where the real ins and outs of the policy will not make it actually feasible.

‘It is worth mentioning that 100 per cent mortgages exist, from Skipton to other schemes where family members can act as guarantor.

‘My issue with these schemes is, just because you can afford rental payments at say £1,500 per month, doesn’t mean that you can afford a mortgage payment at £1,500 per month.

‘This is because home ownership has a number of other costs to consider: building insurance, the property repairs your landlord would have done, and so on.

‘If you were not able to save for a deposit while paying this rent, then can you afford the associated costs of having a property?’

How expensive will they be?

The other concern shared by some across the mortgage industry is the fact these products will likely come with higher rates, given there is greater risk for the lender.

The average five-year fixed rate mortgage rate for someone buying with a 40 per cent deposit is 4.74 per cent, compared to 5.41 per cent for someone with a 5 per cent deposit, according to Moneyfacts.

With virtually no deposit, the price of these mortgages will be reflected in the risk, i.e they will be very expensive Peter Stimson – MPowered Mortgages

That’s the difference between paying £1,139 a month and £1,217 a month, based on a £200,000 mortgage over 25 years.

The rates would probably be higher for those buying with a 1 per cent deposit.

Peter Stimson, head of product at MPowered Mortgages says: ‘We really don’t think 1 per cent deposit mortgages are a good idea. It’s just another gimmick initiative that is doomed to fail.

‘With virtually no deposit, the price of these mortgages will be reflected in the risk, i.e. they will be very expensive.

‘Instead, the Government should be focused on fixing the fundamental issue, which is a lack of housing stock and affordable housing.’

David Hollingworth of L&C Mortgages adds: ‘The guarantee will no doubt carry a cost and that will pull through into the pricing of the mortgage rates.

‘As you’d expect if we do see 99 per cent mortgages we’d expect that interest rates will be higher than for those with bigger deposits.

‘That then makes it a balance of whether the price is worth paying for the increased ability and timeline for buying. With rents so high that higher interest rate could still be worth taking on.’

Threat of negative equity

There are also concerns about the rumoured scheme resulting in more first-time buyers running the risk of falling into negative equity in the future, if house prices fall.

UK house prices recently recorded their fastest annual fall since 2011, according to the Office of National Statistics.

According to the data, the average sold price fell by 2.1 per cent in the 12 months to November 2023.

Negative equity is when a home becomes worth less than the remaining value of the mortgage.

If that happens, the owner may be left unable to remortgage, and in some cases be forced to sell their home to pay the bank.

Rising house prices

Government interventions such as these often appear to add fuel to house prices.

Stamp duty holidays, Help to Buy, Right to Buy and other schemes were also all meant to help more people on to the ladder.

But while many of those initiatives were successful, they also had the effect of pushing up house prices further for those that came after.

Hollingworth adds: ‘The potential downside is that if you boost the demand without improving the supply, you risk pushing prices even higher.

Chris Sykes agrees: ‘I think we’ll have to wait and see where they pitch the scheme, but it is somewhat avoiding the main issue of there not being enough houses.

Source: This Is Money

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Despite the turbulence troubling other parts of the Middle East, the residential housing market in Dubai, the capital of the United Arab Emirates, is continuing to show signs of strong growth. Developers in the UAE are reporting another banner year for Dubai’s housing market, with a surge in sales in 2023 over 2022.

After the pandemic of 2020-2021, a post-pandemic rebound followed, powered initially by Russian buyers seeking to shield their assets from sanctions imposed on Russia after its invasion of Ukraine in February 2022.

Then, in March this year, the UAE introduced a flexible work permit allowing people with demonstrable skills to take freelance jobs in Dubai. An influx of digital nomads from Europe and North America followed, looking to settle in a tax-free, amenity-rich environment.

Migrants living in Dubai

“There’s so much movement here. So many different opportunities take place in whatever domain you are,” Kevin Tabba, a 24-year-old from Irvine, California, told The Media Line.

“I primarily work in tech, and it’s super easy to access east and west, which is excellent for developing my business,” he said.

Tabba said he had been to buy a two-bedroom condominium in the town of Jebel Ali for $400,000. Such a purchase would not have been possible “in either Los Angeles or Miami,” he said.

Perhaps because of the affordable real estate, Dubai tops global Google searches for places to which to move, ahead of New York or Paris.

For Dora Samoodi, a 39-year-old Iranian, moving to Dubai was a choice to prioritize personal freedoms and tax advantages.

“When you buy a property here, you don’t pay tax on it,” Samoodi told The Media Line. “It’s a great place to live. There’s a lot of freedom. Women are empowered here. You can do anything. You can work.”

According to the Dubai Land Department, $26.6 billion worth of property was sold in the third quarter of this year, a 40% increase from the same period in 2022. The number of transactions increased 22% from last year, reaching 31,216.

Emaar Properties, the largest luxury property development company in the UAE, reported $7.9 billion in sales in the first nine months of 2023, marking a 25% increase over the same period last year.

“Despite the challenges caused by the pandemic, we persevered and continued to build,” Waleed Mohammad AlZoubi, chairman of the Tiger Group development company, told The Media Line.

“Although the pandemic caused a decline in growth, profits, and business, the UAE remained a global leader in managing the crisis,” he said.

In 2020, annual Tiger Group sales were about $500 million. In the first nine months of 2023 alone, the company, which recently built 19 new towers, sold $1 billion in apartments.

“The massive growth in Dubai is beyond words,” AlZoubi said. “The population has multiplied by three times in the past 20 years, when this area was all sand. Nothing was here before, and very quickly, we developed it.”

AlZoubi said that many wealthy immigrants from the developing world were attracted to the UAE because of its strong pandemic response and digital infrastructure.

“Soon after, we saw more Americans come to Dubai for the same reasons they moved to places like Miami,” he said.

While Russians drove the post-pandemic sales surge that pushed Dubai home prices up about 30% in the past two years, the ruble’s decline since then has seen a slowing in demand from Russian buyers.

Tatjana Lescova, Dubai-based associate director of corporate ratings at S&P Global, told The Media Line that she expects the market to cool in the near future.

“Price increases will slow down or decline slightly during the next 12 to 18 months, but I don’t expect significant turmoil in the real estate market,” she said.

Akmal Abdelfatah, a professor of civil engineering at the American University of Sharjah, said that new groups of buyers will likely lead to a continued expansion of Dubai’s real estate market.

“I have lived in the city for long enough to see declines quickly reverse,” Abdelfatah told The Media Line. “We’re seeing buyers from India step in now, the way Russians did during the Ukraine war.”

He said the lack of income tax and property tax in Dubai has made the city attractive to people of many nationalities.

Source : TheJerusalemPost

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UK house prices suffered their first annual decline in more than a decade in September as rental costs rose at a record pace, according to official data.

The average price for a property decreased by 0.1 per cent in September compared with the same month last year, down from a 0.8 per cent expansion in August, figures from the Office for National Statistics showed on Wednesday. This marked the first year-on-year drop since April 2012.

The fall reflects the effect of high mortgage rates on the market as the Bank of England keeps interest rates high in an attempt to weaken demand and lower inflation to its 2 per cent target.

The contraction was “primarily due to the effects of monetary policy tightening on mortgage rates and economic activity more broadly”, said Jake Finney, economist at the consultancy PwC UK.

“While we do not anticipate any [interest] rate rises soon, the impact has not fully been felt yet by homeowners,” he added.

Private rental prices rose by 6.1 per cent year-on-year in October, up from 5.7 per cent in September, the ONS reported, marking the fastest rate since the data series began in January 2016.

High borrowing costs have weakened demand for new homes as more households struggle to afford mortgage payments. At the same time, appetite for rental properties has risen pushing up rents.

Rising rental costs also reflect landlords passing on higher borrowing costs to tenants and a shortage of rental stock.

Karen Noye, mortgage expert at the wealth management company Quilter, said that interest rates “will stay higher for longer causing the slump in buyer demand to be prolonged”.

The sharp fall in inflation to 4.6 per cent has boosted expectations that the BoE will trim interest rates from June 2024. The market expects rates to remain at a 15-year high of 5.25 per cent until then.

The ONS house price index refers to deals finalised in September that may have been agreed several months before. It has a longer time lag than data sets from mortgage providers such as Halifax and Nationwide.

Unlike the other indices, the ONS includes cash purchases, providing a more comprehensive measure of house prices.

Gabriella Dickens, economist at Pantheon Macroeconomics, said the ONS house price index would come down in 2024 “with the nadir coming early next year”.

House prices decreased by an annual rate of 2.7 per cent in Wales and 0.5 per cent in England, but rose in Scotland in September, according to the ONS. London reported a 1.1 per cent fall year-on-year driven by contractions in cash and detached house purchases.

London registered the fastest rental price growth in England at 6.8 per cent, setting a new record since the data series began in January 2006.

Anna Clare Harper, chief executive of sustainable investment adviser GreenResi, said: “The only way to reverse the trend of rising rents is for policy to encourage more and better supply, and for professional investors to step into the void that is emerging, as traditional private landlords exit in droves.”

Source : FinancialTimes

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Australia’s property prices have soared to record levels in several capital cities as limited sales volumes and rising populations more than made up for the dampening effect of higher interest rates, two data groups say.

The new figures show significant growth in Brisbane, Adelaide, and in Perth, where five areas have recorded annual gains of more than 15%, while prices in Sydney are 7.51% higher than a year ago.

Overall, national home prices crept 0.36% higher in October, bringing the rise to just under 5% for 2023, according to PropTrack. Sydney, Perth, Adelaide and Brisbane values are all at record peaks.

Graph of Australia’s annual change in state capitals’ property values.

“We’ve seen national prices have now risen for 10 consecutive months,” PropTrack’s senior economist, Eleanor Creagh, said. “It’s certainly a daunting increase for someone [who’s] yet to enter the market.”

Rival data provider CoreLogic said its national home value index rose 0.9% in October alone, accelerating from September’s revised 0.7%. The 7.6% increase from a trough in January left the index just 0.5% below the peak recorded in April 2022, the group said, citing slightly different tracking methods.

“There’s an increasing diversity of capital growth performance,” the head of residential research at CoreLogic, Eliza Owen, said.

“Sydney and Melbourne are loosening up a little bit. Hobart, Darwin and Canberra have been flat or falling in recent months and remain down quite substantially year-on-year,” Owen said. “But then when you look at Brisbane, Adelaide and Perth – those cities are performing quite differently with [price] growth trending at over 1% a month, inventory levels very low, values at peak, and showing little sign of slowing down.”

The rise in property values during 2023 has caught many analysts by surprise, given the Reserve Bank has been lifting interest rates at the fastest pace in three decades including four rate rises in 2023 before a pause in past four months.

For many people housing is their biggest asset. When home prices fall, it tends to dim households’ sense of wealth, cooling their spending, a trend the RBA had been factoring into their economic models.

With most economists now predicting another interest rate rise next Tuesday, CoreLogic and PropTrack expect some of the real estate fizz to diminish.

“I think the re-acceleration in housing [price] growth might be short-lived, given the increasing prospects for a rate rise next week,” Owen said.

A revival in new listings – including a 10.7% rise in Melbourne and 9.3% in Sydney since the start of spring – will also put a brake on the pace of price gains in some markets, she said. A renewed drop in prices can’t be ruled out.

“New listings added to the market across Sydney in the past three months is about 23,000 properties as opposed to 21,000 sales,” Owen said. “The supply/demand position is shifting.”

Creagh said other cities such as Perth, Brisbane and Adelaide may take a lot more to slow them down.

Home prices in the Western Australian capital rose 0.52% alone in October, a 16th month in a row of gains, and are now 10.9% higher than a year earlier. Rental vacancies are less than 1% and landlords average just 16 days to rent out a property.

“The Perth market remains incredibly competitive and the total number of properties listed for sale in Perth continues to hit record low levels,” Creagh said. “It’s a similar story in Brisbane and Adelaide, whereby the number of properties listed for sale remains well below previous decade averages.”

According to PropTrack, the median home value in Sydney was $1.07m last month, 7.51% higher than a year ago and 31.7% more than in March 2020 when Covid first hit the economy. Melbourne’s median, at $815,000, was 3.9% lower than a year ago, and a relatively modest 16.6% above the pre-Covid level.

Adelaide’s median price at $697,000 was 8.77% higher than a year ago, and a nation-leading 55.1% more than in March 2020.

CoreLogic’s median prices for those three cities at the end of October were just over $1.121m for Sydney, about $778,500 for Melbourne and a touch above $700,000 for Adelaide.

Perth led annual price gains by local area, with five areas clocking up gains of more than 15%, according to CoreLogic. Armadale in the city’s south-east jumped 21.5% in median prices to a tad more than $550,000.

The next largest increase was in the Marrickville-Sydenham-Petersham region of Sydney’s inner south-west, where the median price has risen 14.8% in the past year to almost $1.695m, CoreLogic said.

Source : TheGuardian

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A push to build cities for the world’s most populous nation is attracting private credit investors to India just as troubles in China’s property sector weakens the appeal of investments there.

Apollo Global Management Inc. is exploring where it can put more cash after spending $1 billion on property investments, while Ares Management Corp. says more money will flow into Indian real estate. Rules restrict bank lending to the sector and India’s rapid urbanization has caused an affordable housing shortage.

The reasons to be bullish are stacking up, and Prime Minister Narendra Modi has pledged to spend more money on roads, trains and airports. Along with manufacturing, fund managers expect real estate to record the strongest deal flow in the next 12 to 24 months relative to other sectors, according to consultancy EY.

With China’s property market mired in a years-long crisis, some debt investors are favoring India. At $5.9 billion in March, India-focused capital yet to be deployed was more than twice as large as the amount of money allotted to China, the most recently available data from research firm Preqin show.

“Some of our global peers who used to operate in a big way in China are increasingly looking at India as a large market to deploy capital,” Manish Jain, partner and head of India at Ares, said in an interview.

India has become a particular hot spot in the $1.6 trillion global market for private credit, thanks to a rapidly growing economy and a ban on banks funding transactions such as the acquisition of land. A 2016 Indian real estate law to protect home buyers raised capital requirements for developers but again disallowed bank funding, opening the door for private credit.

Ares, which invested next to nothing in real estate from 2014 to 2019, has deployed nearly $1 billion of private credit in the sector since 2020, Jain said.

HDFC Capital Advisors Ltd., which has already invested the $2.1 billion it raised across two funds last year, is back in the market pitching its latest $2 billion private credit real estate fund, Bloomberg reported earlier this year. TVS Emerald Haven Realty Ltd., House of Abhinandan Lodha, Signature Global and Eldeco Infrastructure and Properties Ltd. are among the developers who’ve already won investments from the private credit arm of India’s biggest bank.

Much of the optimism stems from the official push to improve infrastructure. Modi’s government said it would lift investment by about 33% to around $120 billion in the financial year ending in March 2024. Better transport links are boosting demand for housing, especially in smaller cities and their surroundings.

Vipul Roongta, managing director and chief executive officer at HDFC Capital, said his firm is now committing capital for cities such as Lucknow, Pune and Nasik after previously focusing on six large metropolitan regions including New Delhi and Mumbai.

“A lot of developers are beginning to understand the value of a tier 2 in the 200 kilometer radius of a tier-1 city,” he said. “Ideally a homeowner will want to buy some land in an emerging area and then construct later when the highways ensure better connectivity.”

Real estate is expected to contribute 13% to India’s gross domestic product by 2025, roughly double the current level, Grant Thornton Bharat LLP estimated in an April report. Developers have turned to private lenders to provide bespoke loans to fund the increased construction activity following a surge in demand for bigger and spacious homes as a result of the pandemic.

“We are a 3 trillion dollar economy that needs significant amount of capital to grow,” Kanchan Jain, head of BPEA Credit Group, said at a Bloomberg New Voices event in Mumbai last month. “Private credit is plugging the hole of capital needed in the Indian economy. Private credit loans in India look like bank loans and generate phenomenal returns.”

But the run up in land prices, as India’s economic growth outstrips China’s, is also a source of risk. It could depress companies’ profit margins, and impact their ability to pay off debt.

“Real estate is a cyclical industry,” said Vikas Chimakurthy, chief executive officer at Kotak India Realty Fund. “With those kind of prices, what kind of returns developers will make” remains to be seen.

Back at Apollo, which has put about $1 billion into 10 transactions involving about 40 developers in India in the past two and half years, there are more gains to be made, according to Nipun Sahni, a partner.

“We will probably repeat what we have deployed,” Sahni said. The strong returns recorded so far, augur “well for Indian real estate as an asset class in Asia.”

–With assistance from Harry Suhartono.

(Updates to add to BPEA’s Jain quote in 13th paragraph. A previous version of this story was corrected to clarify in the seventh paragraph that Ares deployed nearly $1 billion in the sector, not country, since 2020.)

Source : Bloomberg

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