Smashing Estate

It is shocking news for Australian real estate industry as an industry survey of 100 residential builders has found that new home sales dropped by around 1.1% in November 2008. This survey result is released today (7, January) by the Housing Industry Association (HIA). According to HIA it is a big turnaround from October 2008 when sales boost up by 3%. The November turn down compares to an increase in overall new house sales of 4.5% registered in last October.

Chris Lamont, the association’s chief executive, said it is a disappointing result but given hopes that the raised first home owners grant and lower interest rates would increase activity. He added multi-unit sales followed up an 8.6% drop in October 2008 with even more falls in last November. He said fears of recession and tighter credit overcame declining interest rates. On the other hand, the survey got sales of private detached houses dropped 0.4%, whereas sales of multi-unit housing dropped 5.3%. According to his opinion, “Particularly the news was bad for the multi-unit sector, which recorded a drop of just under 5.3 per cent.” “So that’s bad news for investment in the sector and it’s also bad news for those seeking rental accommodation in 2009 and into 2010.” Lamont said sales activity in the second half of the previous year reflected the general economic slowdown and finally, difficulties faced in finding financing for new home construction.

According to, the Commerce Department report, new home sales in the USA rose by 2.7% surprisingly in September as median home prices slumped to the lowest level in four years. Report say, sales of new one-family houses, have increased to an annualized pace of 464,000 units, above property market expectations of 458,000 units. Even though the statistics showed a monthly gain, it was still below 33.1% from the previous year, reflecting the record meltdown in the US real estate sector after a years-long boom.

The average sales value of new houses was $218,400, compared to $221,900 just a month earlier. Therefore, September rise in new property sales followed a 12.6% dropped in the last month. Moreover, the median home sales price of $218,400 was 9.1% lesser than the year-ago point. Besides, the figure is the lowest since the $211,600 level reached in the month of September 2004, when the property market was on the upswing. As a result, analysts who had been expecting a decline for previous month become surprised. On the other hand, the inventory of unsold property fell, at the end of September, slightly to 394,000 units, a supply of 10.4 months at the recent sales rate, below from 11.4 months for August 2008.

Regionally, new property sales decreased by 21.4% in the Northeast last month and were down 5.8 % in the Midwest. However, in the West home sales shot up by 22.7%. Sales in the South edged up 0.7% as well. While a report by the National Association Realtors last week showed that U.S. current home sales rate increased by 5.5 % previous month and that is the biggest gain in more than five years period because the lower home prices of September seem to have attracted many buyers since the housing inventory of 394,000 units was the lowest since the 383,000 homes for sale in the month of June 2004. Though analysts and experts said high inventories would continue to create pressure on prices. One of the rates strategists at RBC Barclays Capital Markets in New York, T.J. Marta said, “The tremendous overbuild suggests that prices will remain under year on year pressure out at least through mid-2009,” so wait to see what happen in futurer.

Homes and apartments constructions cut down in the month of July to the lowest point in around previous 17 years, although a number of economists said that this crash may assist the slumping housing segment by helping decrease a lot of unsold homes.

The Commerce Department of U.S.A informed on Tuesday, 19 August that house builders broke ground on 965,000 units on a yearly basis but it was down from a pace of 1.08 million in the month of June which is the weakest level performance since March 1991 though, the performance of July was healthier than the 950,000 rate according to analysts expectation. The department also ensured that in the month of July construction of single-family dwellings drop by 2.9 % from the last month to a pace of 641,000 units and this figure was the lowest level since January 1991, at what time the economy of the country was in distress as well.

Apartments and other multifamily home constructions also slumped sharply and it was shown after a fat jump in the month of June through a change of building codes in New York City’s. This change made an effect on 1st July and gave an unusual lift to on the whole housing construction in the month of June. Many Economists hoped this go down could aid reduce a good number of unsold properties and it would be an effective step toward turning around the falling real estate business. On the other hand, home builders are opposing with foreclosed homes and apartments selling at steep cost discounts.

But in the previous month, the Department ensured that unsold new dwelling declined to a 10-month period supply in the month of June and downward from a peak supply of 11.2 months in the month of March. On the other hand, the National Association of Realtors report said in the mean time inventories of existing homes are equaled an 11.1-month supply in the month of June and this figure is the second highest level in the last 24 years history.

Moreover, housing sanctions fell sharply on Tuesday’s report. Economists thought, it is a sign that housing begins likely will go on to decline. Home permits in July dropped to a rate of 937,000; it is a 17.7% slump from June, although still more than analysts’ prospects of 925,000. Housing permits are thought about a steadfast sign of upcoming activity. In addition to say, new residence construction previous month was downward sharply 39.2% compared with the month of July 2007 and it demonstrate how much ground the housing sector has lost in the last year.

Now home builders are hopeful the housing release package approved by Congress previous month will boost the gloomy real estate segment. The new law contains a provisional $7,500 tax credit for first-time home-purchasers that fundamentally works out to an interest-free loan for 15 year.

On the other hand last Monday The National Association of Home Builders/Wells Fargo housing market index, revealed remained at a record low down of 16 in August for the second successive month which readings underneath 50 signify negative sentiment about the housing market although one determine of longer-term reaction improved a little such as a measure of builders’ transactions potentials in six months rose two points to 25.But Toll Brothers Inc., one of the homebuilders, said dismal quarterly results previous week and its profits fell 34% and its order backlog fell 52%. Additionally shares of some homebuilders such as D.R. Horton Inc. Toll Brothers, and Pulte Homes Inc., plunged in Tuesday trading at the middle of the day.

The recent statistics show, house costs in three university towns such as Guildford Dundee, and Belfast have around doubled during the last five years. The group, which observed home values in 64 university towns without London, informed in nine of these universities towns properties sold at a premium of minimum £20,000 relative to homes in the UK all together, with Winchester imposing the leading such as £114,489 or 50 percent.

In the figures the average home price in Belfast rose by 105% between the month of June 2003 and June 2008, though the recent home price of Halifax drops. Similarly, Dundee saw harshly house price increases of 101 percent during that period; though in Bangor, Gwynedd, and the average homes’ price soared by 100 percent. In the same way other 20 university towns saw average value increases of minimum 50 percent during the last five years, with Aberdeen and Bradford leading the way with boosting of 95 percent and 94 percent respectively. On the other hand among the university town Guildford is the UK’s most expensive in which to get a home, with the average property price £363,503. That price is strictly followed by Winchester cost at £343,332 and likewise Bath price at £326,403, with all of those 10 most expensive university towns being in the South East in the UK. Among universities towns, Hull has the most reasonable accommodation with average house values of just around £124,108, despite the fact that Stoke on Trent price at £130,336 and Bradford cost at £131,464 are just a little more expensive.

One of the economists at Halifax, Nitesh Patel, said:

Over a third of these university towns in this review experienced average house price growth of more than 50% in the previous five years.

He also added:

While it can be an excellent investment, the decision to purchase a home for a son or daughter at university towns ultimately depends on the parents’ personal circumstances and property values around the university in question.