Boomerang buyers, cooling the housing boom and a year's transport for €3 a day
Making sense of the latest trends in property and economics from around the globe.
4 minutes to read
Australian house prices
Sydney’s median house price has now soared almost AUD300,000 (about £160,000) during the past 12 months and has surpassed AUD1.3 million (almost £700,000) for the first time. The milestone caps a 17.6% rise in national house prices and prompted Sunday's edition of The Australian to call the housing boom "a symptom of the great Australian disease."
The Reserve Bank of Australia is expected to hold rates at record low 0.1% when the decision is published tomorrow and the RBA has maintained it won't raise rates until at least 2024. That leaves macroprudential tools as the clearest path to cooling the boom. The IMF in late-September suggested limits on debt-to-income and loan-to-value ratios.
New measures may well be on the way. The Council of Financial Regulators has tasked the Australian Prudential Regulation Authority with coming up with a solution. The focus for intervention is likely to be the number of mortgages issued at more than six times annual incomes.
We've seen a version of this before. New Zealand tweaked property taxes to curb speculation and the Reserve Bank of New Zealand has tightened loan-to-value restrictions to little effect. Median house prices climbed 25.5% during the year to August and more curbs are on the way.
Boomerang buyers
London's offices are being repopulated, albeit slowly. For workers who moved outside the M25 during the pandemic, a more regular and lengthy commute lies around the corner.
That has prompted some to begin searching for a London base, according to new data unearthed by Tom Bill. The number of new buyers from outside the capital who are searching for a London flat has spiked to a record high as a proportion of all buyers.
“The vast majority of buyers coming from outside of London are looking for a bolt-hole rather than to up sticks and return to the capital,” according to James Clarke, Knight Frank's head of London sales.
Austrian transport
From November, Austrians will be able to use public transport nationwide for the equivalent of €3 a day as part of the government's efforts to decarbonise the economy. The annual 'Klimaticket' costing €1,095 will cover rail and bus networks and will be subsidised by the Austrian taxpayer by an additional €150m a year.
Several public transport operators across Europe suffered funding shortfalls before the pandemic and those losses have become truly eye watering during the crisis. In Sweden, for example, public transport operators were losing around €100m per month during 2020, according to the International Association of Public Transport (UITP).
Transport for London's financial woes have been well documented. TfL has just requested another half a billion pounds pounds of central government support for the rest of the financial year and for a further £1.2bn next year as part of its quest to be financially stable by 2023. As part of that proposal, TfL will cut spending on enhancements and extensions by £5.7bn.
Spending cuts of that size will quickly be felt by commuters and the degree to which public transport in global cities can be run effectively as commercial entities is going to be severely tested during the recovery from the pandemic.
UK landlords
The Mortgage Works, part of The Nationwide Building society, has launched the first sub-1 per cent buy-to-let mortgage. The two-year 0.99% fixed rate deal is available at 65% LTV and will require a fee of 2% of the loan amount.
With coffers swelled by excess savings, mortgage lenders have been engaged in a price war as they seek to build market share rapidly during the economic recovery. We talked on Friday about the price war moving into a new phase, with lenders loosening criteria, such as reintroducing the use of bonuses and commission when assessing income.
Targeting landlords is an extension of the same tactic. Rates on owner-occupier mortgages at lower LTVs are pretty close to as low as they can go before the banks wipe out profit margins. Landlords, pinched by various tax changes in recent years, continue to exit the sector and the extent to which attractive financing to this degree will coax them back remains unclear.
In other news...
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