Housing affordability improved in three-quarters (75%) of local authorities across England and Wales in 2023, compared with the previous year, according to the Office for National Statistics (ONS).

Affordability worsened in just under a quarter (24%) of local authorities and remained the same in 1%, the ONS said.

Average house prices increased in just over two-thirds (69%) of areas compared with 2022 – but average earnings increased in a bigger proportion of areas, at 88%.

Kensington and Chelsea in London was the least affordable area last year, with an average house price-to-earnings ratio of 34.3.

The most affordable was Burnley in Lancashire, with an average house price-to-earnings ratio of 3.7.

In 2023, 7% of areas typically had homes selling for less than five times the average earnings of workers. This was an improvement compared with 2022; however, in 1997, 88% of areas had this ratio.

The report said: “Therefore, affordability remains considerably worse than at the start of the series.”

Looking at England, in the 12 months to September 2023, the average home sold for £290,000, while average full-time earnings were £35,100.

This means that, in England, full-time employees could expect to spend 8.3 times their earnings on purchasing a home in their local authority area.

This represents an overall improvement in affordability compared with 2022, when the average home in England cost around 8.5 times the average wage.

In Wales, the average home sold for £196,500 in the 12 months to September, while the average workplace-based full-time wage was £32,400.

This gave an affordability ratio of 6.1, down from 6.4 in 2022.

House sales prices have become more affordable since 2021, but remain in line with pre-coronavirus pandemic trends, the ONS said.

The affordability ratio doubled in England from the start of the records in 1997 to 2007.

In 1997, a home in England was worth around three-and-a-half times the average wage, but by 2007 buyers faced paying just over seven times their salary typically to buy a home.

In Wales, affordability ratios doubled from 1997 to 2005 and peaked at 6.6 in 2007. Since then, they have remained between 5.5 and 6.5, with a less pronounced increase and decrease in the past three years than in England, the ONS said.

Mortgage rates have jumped amid increases in the Bank of England base rate, meaning that some existing homeowners could have a payment shock when their deal expires.

Recent signs that inflation is cooling have raised expectations around the potential for the Bank of England to start cutting the base rate in the months ahead.

Source: LBC

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Best rental yield

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US EXISTING home sales dropped to the lowest level in more than 13 years in October as the highest mortgage rates in two decades and a dearth of houses drove buyers from the market.

Existing home sales tumbled 4.1 per cent last month to a seasonally adjusted annual rate of 3.79 million units, the lowest level since August 2010, the National Association of Realtors said on Tuesday (Nov 21). Home resales are counted at the closing of a contract.

October’s sales likely reflected contracts signed in the prior two months, when the average rate on the popular 30-year fixed-rate mortgage jumped to levels last seen in late 2000.

Economists polled by Reuters had forecast home sales would slide to a rate of 3.90 million units. Sales fell in the Northeast, West and the densely populated South, but were unchanged in the Midwest. Home resales, which account for a big chunk of US housing sales, plunged 14.6 per cent on a year-on-year basis in October.

“Prospective home buyers experienced another difficult month due to the persistent lack of housing inventory and the highest mortgage rates in a generation,” said Lawrence Yun, the NAR’s chief economist.

The rate on the popular 30-year fixed-rate mortgage averaged 7.31 per cent in the final week of September, before peaking at 7.79 per cent in late October, the highest level since November 2000, according to data from mortgage finance agency Freddie Mac.

Though it has since retreated following data this month showing the labour market cooling and inflation subsiding, the rate averaged a still-high 7.44 per cent last week.

There were 1.15 million previously owned homes on the market last month, down 5.7 per cent from a year ago. At October’s sales pace, it would take 3.6 months to exhaust the current inventory of existing homes, up from 3.3 months a year ago.

A four-to-seven-month supply is viewed as a healthy balance between supply and demand. With supply still tight, multiple offers were the norm in some areas, keeping house prices on an upward trend. The median existing house price increased 3.4 per cent from a year earlier to US$391,800, the highest for any October.

Properties typically remained on the market for 23 days in October, up from 21 days a year ago. Sixty-six per cent of homes sold in October were on the market for less than a month.

First-time buyers accounted for 28 per cent of sales, as they did a year ago. This share is well below the 40 per cent that economists and realtors say is needed for a robust housing market.

All-cash sales accounted for 29 per cent of transactions compared to 26 per cent a year ago. Distressed sales, including foreclosures, represented only 2 per cent of transactions, virtually unchanged from the prior year.

Source : TheBusinessTimes

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Homeowners’ struggles

Risks for Hong Kong property

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But Mr Swan doubled down on property. Cbus is the only super fund so far to sign on to Labor’s $500 million Housing Australia Future Fund and Mr Swan said the fund was looking to beef up its real estate portfolio.

“We’d like to do more [social housing]. The nation demands that we all do more to get social and affordable housing in place,” he said.

‘Discriminatory’ advice laws

As the $3.5 trillion superannuation sector faces criticism from both regulators and the Albanese government for being ill-equipped to support workers transition to retirement, Mr Swan put the onus back on legislators.

He said stringent restrictions on super funds advising members “discriminate very badly” against funds like Cbus whose members have low balances, meaning they will receive a part-pension in retirement.

“We need to have a situation where we can provide financial advice to couples, but you can’t do that at the moment, and the social security system works on couples,” he said.

“So our members who are going to be part-pension and part-superannuated need to get advice from us as early as possible on a couple basis. But you can’t do that under the current rules.”

Michelle Levy’s review into financial advice, finalised in December 2022, recommended super funds be able to offer advice taking into account a member’s “personal circumstances, including their family situation and social security entitlements”.

Assistant Treasurer Stephen Jones has said financial advice capabilities will be extended to superannuation funds, but has not detailed the specifics of what the new system will look like.

Source : FinancialReview

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Mulai tahun 2024, Kota Edmonton akan memiliki kemampuan untuk membebankan tarif pajak yang lebih tinggi kepada pemilik rumah di lingkungan yang sudah matang yang propertinya dianggap terlantar.

Dalam rilis berita yang dikeluarkan Rabu sore, pemerintah kota mengumumkan bahwa dewan kota telah menyetujui subkelas pajak baru untuk menangani properti tempat tinggal yang “menunjukkan tanda-tanda pengabaian yang serius, bobrok, mengalami kerusakan parah atau tidak dapat dihuni.”

“(Ini) adalah alat baru dalam perangkat kota untuk mengatasi dampak berbahaya yang dapat ditimbulkan oleh properti perumahan yang terlantar dan bermasalah,” kata Cate Watt, manajer cabang penilaian dan perpajakan kota tersebut. “Mengelola properti terlantar sering kali menimbulkan biaya tambahan bagi kota dan tarif pajak yang lebih tinggi akan membantu menutupi biaya tersebut sekaligus mendorong pemilik properti untuk membersihkan rumah terlantar.

“Kami berharap hal ini akan berperan dalam meningkatkan semangat lingkungan yang sudah matang dalam jangka panjang.”

Kota tersebut mengatakan studi kasus terhadap 31 “properti bermasalah” yang berakhir pada tahun 2020 menemukan bahwa properti tersebut menghabiskan biaya sekitar $1,3 juta bagi kota tersebut untuk hal-hal seperti inspeksi dan penegakan peraturan, inspeksi kebakaran, kode keselamatan dan inspeksi kepatuhan pembangunan serta inspeksi dan tanggapan polisi.

“Itu kombinasi dari Edmonton Fire Rescue Services, EPS, peraturan daerah, kepatuhan pembangunan, pajak yang belum dibayar,” jelas Coun. Ashley Salvador. “Hal ini benar-benar berdampak buruk tidak hanya pada lingkungan sekitar, namun juga pada dompet kota.”

Pemerintah kota mencatat bahwa “properti bermasalah” didefinisikan secara berbeda dari “properti terlantar,” dan hanya beberapa dari 31 properti yang dianggap terlantar. Properti bermasalah dianggap sebagai properti yang menimbulkan risiko sosial atau keselamatan, seperti terkait dengan aktivitas kriminal atau risiko kebakaran.

“Keadaannya menjadi sangat buruk,” kata Salvador. “Dalam periode enam bulan menjelang pemilu, terdapat 281 kejadian terkait kebakaran di tipe properti tersebut.

“Dengan semua tindakan yang kami ambil sejauh ini, kami telah melihat 89 pembongkaran, 308 pengamanan, 238 perintah dikeluarkan dan penurunan drastis jumlah kebakaran di komunitas ini.

“Tindakan yang kami ambil telah berhasil dan saya pikir penambahan subkelas pajak properti untuk properti terlantar akan mendorong hal tersebut lebih jauh lagi,” kata Salvador.

Christy Morin, direktur eksekutif Arts on the Ave, berpendapat bahwa perubahan perpajakan akan membantu  menindak properti terlantar  di lingkungan Alberta Avenue dan di seluruh Edmonton.

“Mereka benar-benar merupakan bencana bagi lingkungan sekitar,” katanya. “Mereka menarik orang-orang yang salah dan sering kali justru menjadi sarang narkoba.”

Arts on the Ave adalah organisasi nirlaba yang bekerja untuk membantu menjadikan 118 Avenue sebagai distrik seni komunitas.

Morin mengatakan masyarakat telah “secara agresif meminta” dewan kota dan pemerintah selama bertahun-tahun untuk menemukan cara yang lebih efektif untuk mengatasi masalah ini.

“Kami telah melakukan revitalisasi kota selama 18 tahun. Dan 18 tahun yang lalu, kami melihat ada kota-kota – Atlanta – di Philadelphia, dan tempat-tempat lain yang benar-benar berusaha keras mengenakan pajak kepada pemilik properti terlantar ini dan hal ini membuat perbedaan besar dalam komunitas inti di kota-kota tersebut.”

Salvador mengatakan Edmonton adalah negara pertama di Kanada yang mengembangkan sub-kelas pajak untuk properti perumahan terlantar, namun mengakui yurisdiksi lain di AS telah melihat keberhasilan dengan pendekatan tersebut.

Perubahan UU  Pemerintah Kota di tingkat provinsi  beberapa tahun lalu juga membantu, kata Morin. Pada tahun 2017,  Alberta mengubah  undang-undang tersebut untuk memudahkan pemerintah kota mendorong pembangunan kembali properti brownfield – yang terkontaminasi, kosong, terlantar, atau kurang dimanfaatkan.

“Selain itu, terdapat satuan tugas yang dibentuk oleh Kota Edmonton untuk mampu melakukan tindakan tegas terhadap properti-properti terlantar ini dan kami telah melihat kesuksesan besar dengan ditutupnya properti-properti tersebut.

“Tetapi sekarang langkah selanjutnya adalah memberikan pukulan berat kepada mereka dengan pajak, dan memberi tahu mereka bahwa kita adalah komunitas yang hebat. Komunitas-komunitas ini tidak pantas membiarkan properti terlantar berada di lahan mereka selama bertahun-tahun,” katanya.

Setelah itu, Morin ingin melihat pendekatan serupa untuk mengatasi properti komersial yang terlantar.

“Ini hanya akan menjatuhkan bisnis Anda ketika Anda mempunyai tetangga sebelah yang duduk-duduk dan tidak melakukan apa pun.

“Seluruh gugus tugas ini dimulai pada tahun 2021, ketika komunitas kami di distrik Alberta Avenue mengalami lebih dari 200 kebakaran dan banyak di antaranya terjadi di properti terlantar ini.”

Salvador mengatakan dia ingin melihat hal ini diperluas melampaui lingkungan yang sudah mapan – di seluruh kota hingga ke semua properti perumahan dan komersial yang terlantar.

“Tidak dapat dipertahankan jika properti-properti ini terus berdiri di lingkungan kita dan menimbulkan risiko yang signifikan bagi masyarakat dan terus merugikan kota sebesar jutaan dolar.

“Tujuannya di sini adalah untuk memastikan bahwa properti tersebut mematuhi peraturan, dipertahankan, atau dijual kepada seseorang yang mau melakukan sesuatu dengannya,” kata anggota dewan kota.

Pemerintah kota mengatakan pada hari Rabu bahwa mereka memperkirakan akan memberi tahu sekitar 300 pemilik pada musim gugur ini bahwa properti mereka berisiko dianggap terlantar.

“Semua penilaian properti akan dikonfirmasi pada Januari 2024 ketika pemberitahuan penilaian dikirimkan melalui pos ke lebih dari 400,000 pemilik properti di Edmonton,” kata kota itu.

“Agar suatu properti dianggap terlantar untuk tujuan perpajakan, pemerintah kota harus menilai kondisi fisik rumah di properti tersebut, mencari bangunan yang kosong, ditutup papan, dianggap tidak layak huni atau ditinggalkan di tengah proses konstruksi atau pembongkaran. .”

Sumber: Berita Global

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Sydney’s most pricey rentals are set to get even more expensive, with the city’s luxury rental growth having shot up from 11.7% to 13.1% when compared to the last quarter, deviating from the worldwide slump in rental growth, according to Knight Frank’s latest report.

Prime rents down, but still elevated

Average prime rents in major world cities were increasing rapidly, with an annual growth of 7.5% in the 12 months to June, according to Knight Frank’s Prime Global Rental Index (PGRI) for the second quarter of 2023.

The PGRI provides quarterly reports of luxury lettings market patterns across 10 major city markets globally.

While the Q2 rate was below the 8.2% seen in Q1 this year and the 12.2% peak in Q1 2022, the present growth is still significantly higher than the norm. To illustrate, the pre-pandemic average annual growth of the 10 years to 2020 was 2.2%.

However, from the beginning of 2021, the market’s recovery from the early shock of COVID-19 has brought about an average growth of 6.6%, thrice the pre-pandemic average.

Knight Frank head of residential research, Michelle Ciesielski, said that the main factors behind the rental growth trend are a high demand from residents returning to cities post-lockdown, buyers being priced out of sales markets due to price rises driven by interest rate increases, and a scarcity of new supply caused by problems in construction throughout the pandemic.

The second runner-up in luxury rental growth

Sydney’s annual luxury rental growth of 13.1% was the third highest, according to the PGRI, behind London’s 14.4%, and Singapore’s 24.5%.

Knight Frank Prime Global Rental Index (Changes to Q2 2023)

Luxury rents in the capital city experienced the most substantial growth over the past six months, at 8.7%, and the second highest growth over the past three months, at 3.2%.

“The overall index has risen by 23% from Q1 2021 to date,” Ciesielski said.

“Growth in specific cities has been even stronger, with New York, Singapore, and London seeing rental growth of 56%, 53%, and 51% respectively over the same period.

“While some of the PGRI growth hubs have seen a moderation in the pace of rent rises, including Singapore, London and New York, and the index overall shows a fall in the pace of rental growth, Sydney is seeing the opposite trend with annual growth increasing compared to the previous quarter.”

Ciesielski remarked that while rental growth will eventually stagnate, the dearth of new stock being delivered means that high rents will remain the norm.

Little hope on the horizon

“A chronic undersupply of rental homes currently extends to most parts of Sydney at every price point, and this continues to be reflected in the double-digit rental growth for luxury property being recorded,” said Knight Frank head of residential, Erin van Tuil.

“In affluent areas, there tends to be at least one home in the street having some type of renovation work done, and many take up a rental home while these works are being carried out. Construction delays over the past few years have meant these prime rental homes are required for double or triple the time than first expected while they wait for tradespeople and prime cost items from around the world to be delivered to finish the job.

“We continue to experience a skills shortage in Sydney, and this extends to the executive level who are most likely going to need a prime residential home provided when lured to work here. Elevated rents are being paid to secure a prime rental home until they settle into the city.

“In the past few months, there has been an increasing number of box office movies being filmed in Australia with actors and production crew using Sydney as their base, placing further pressure on the top end of our rental market.”

Source : ThePropertyTribune

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LONDON/SYDNEY – Commercial real estate investors and lenders are slowly confronting an ugly question – if people never again shop in malls or work in offices the way they did before the pandemic, how safe are the fortunes they piled into bricks and mortar?

Rising interest rates, stubborn inflation and squally economic conditions are familiar foes to seasoned commercial property buyers, who typically ride out storms waiting for rental demand to rally and the cost of borrowing to fall.

Cyclical downturns rarely prompt fire sales, so long as lenders are confident the investor can repay their loan and the value of the asset remains above the debt lent against it.

This time though, analysts, academics and investors interviewed by Reuters warn things could be different.

With remote working now routine for many office-based firms and consumers habitually shopping online, cities like London, Los Angeles and New York are bloated with buildings local populations no longer want or need.

That means values of city-centre skyscrapers and sprawling malls may take much longer to rebound. And if tenants can’t be found, landlords and lenders risk losses more painful than in previous cycles.

“Employers are beginning to appreciate that building giant facilities to warehouse their people is no longer necessary,” Richard Murphy, political economist and professor of accounting practice at the UK’s Sheffield University, told Reuters.

“Commercial landlords should be worried. Investors in them would be wise to quit now,” he added.

WALL OF DEBT

Global banks hold about half of the $6 trillion outstanding commercial real estate debt, Moody’s Investors Service said in June, with the largest share maturing in 2023-2026.

U.S. banks revealed spiralling losses from property in their first half figures and warned of more to come.

Global lenders to U.S. industrial and office real estate investment trusts (REITs), who supplied credit risk assessments to data provider Credit Benchmark in July, said firms in the sector were now 17.9% more likely to default on debt than they estimated six months ago. Borrowers in the UK real estate holding & development category were 4% more likely to default.

Jeffrey Sherman, deputy chief investment officer at $92 billion U.S. investment house DoubleLine, said some U.S. banks were wary of tying up precious liquidity in commercial property refinancings due in the next two years.

“Deposit flight can happen any day,” he said, pointing to the migration of customer deposits from banks to higher-yielding ‘risk-free’ money market funds and Treasury bonds.

“As long as the Fed keeps rates high, it’s a ticking time bomb,” he said.

Some global policymakers, however, remain confident that the post-pandemic shift in the notion of what it means ‘to go to work’ will not herald a 2008-9 style credit crisis.

Demand for loans from euro zone companies tumbled to the lowest on record last quarter, while annual U.S. Federal Reserve ‘stress tests’ found banks on average would suffer a lower projected loan loss rate in 2023 than 2022 under an ‘extreme’ scenario of a 40% drop in commercial real estate values.

Average UK commercial property values have already fallen by around 20% from their peak without triggering major loan impairments, with one senior regulatory source noting that UK banks have far smaller property exposure as a proportion of overall lending than 15 years ago.

But Charles-Henry Monchau, Chief Investment Officer at Bank Syz likened the impact of aggressive rate tightening to dynamite fishing.

“Usually the small fishes come to the surface first, then the big ones – the whales – come last,” he said.

“Was Credit Suisse the whale? Was SVB the whale? We’ll only know afterwards. But the whale could be commercial real estate in the U.S.”.

CUTTING SPACE

Global property services firm Jones Lang LaSalle – which in May pointed to a 18% annual drop in first quarter global leasing volumes – published data this month showing prime office rental growth in New York, Beijing, San Francisco, Tokyo and Washington D.C. turned negative over the same period.

In Shanghai, China’s leading financial hub, office vacancy rates rose 1.2 percentage points year-on-year in Q2 to 16%, rival Savills said, suggesting a recovery would depend on nationwide stimulus policies succeeding.

Businesses are also under pressure to slash their carbon footprint, with HSBC among those cutting the amount of space they rent and terminating leases at offices no longer considered ‘green’ enough.

More than 1 billion square meters of office space globally will need to be retrofitted by 2050, with a tripling of current rates to at least 3%-3.5% of stock annually to meet net-zero targets, JLL said.

Australia’s largest pension fund, the A$300 billion AustralianSuper, is among those on the sidelines, saying in May it would suspend new investment in unlisted office and retail assets due to poor returns.

Meanwhile, short-sellers continue to circle listed property landlords the world over, betting that their stock prices will sink.

The volume of real estate stocks lent by institutional investors to support shorting activity has grown by 30% in EMEA and 93% in North America over the 15 months to July, according to data provider Hazeltree.

According to Capital Economics, global property returns of around 4% a year are forecast this decade, compared with a pre-pandemic average of 8%, with only a slight improvement expected in the 2030s.

“Investors must be willing to accept a lower property risk premium,” Capital Economics said. “Property will look overvalued by the standards of the past.”

Source : Zawya

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The Financial Stability Board and International Organization of Securities Commissions on Wednesday published guidance for asset managers, saying that investors who withdraw their money from an open-ended fund — a portfolio that allows investors to inject or withdraw cash on a regular basis — should not disadvantage clients choosing to remain in the fund.

The guidelines come as global authorities comb over the fallout from the coronavirus-led panic that swept across markets in March 2020, which forced investors to sell assets in a “dash for cash” and exacerbated market instability.

Property funds in particular, whose assets can take time to sell, have come under pressure in recent years as investors rush to withdraw their cash, spooked by rising global interest rates and depressed commercial real estate valuations. Regulators are concerned redemptions can spiral out of control if they force the fund to sell illiquid assets at knockdown prices, further spooking investors.

“There’s a substantial portion of the funds industry with significant illiquid assets,” said Martin Moloney, Iosco secretary-general. “There’s certain obvious candidates,” he added. “If you think about the turnround time to get rid of the property asset, that is very long, that is months, and if you’re offering somebody daily redemption with an asset on the other side that takes months to release, there clearly is a timing problem.”

Blackstone limited withdrawals from its Real Estate Income Trust in December and BlackRock this year started paying back investors stuck in its UK Property fund since early last year. UK fund managers including M&G, Schroders and Columbia Threadneedle have also previously limited withdrawals in their UK real estate funds after experiencing surging redemption requests.

Regulators have taken note. The European Central Bank warned of “declining market liquidity and price corrections” earlier this year, and said open-ended real estate funds were vulnerable to a “structural liquidity mismatch between their assets and liabilities”.

The FSB and Iosco are recommending a range of ways for managers of open-ended funds to manage liquidity. These include swing pricing, a mechanism whereby the net asset value of a fund is adjusted up or down when investors buy or sell into a fund to reflect the costs incurred.

Another recommendation is for subscription or redemption fees, where a fixed fee is charged to redeeming investors “for the benefit of the fund to cover the cost of liquidity”. “

These tools can be used to . . . prevent redemptions from having negative effects on remaining investors,” said John Schindler, FSB secretary-general.

“In effect it works like a fee,” said Moloney about the proposed measures. “It’s about imposing on the redeeming investor a cost which we have long since recognised arises when somebody redeems from the fund.”

He added that the two authorities were seeking to provide “a more coherent and systematic approach around the world to ensure that those investors that are leaving pay the full cost”.

Source : FinancialTimes

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