Demand for multifamily units in the U.S. remains robust, pushing the national vacancy rate down to 4.2%, a new low for the current cycle. With the vacancy rate compressing, effective rental growth in Q2 stayed above 4% on a year-on-year basis, well above inflation. Low housing affordability is driving demand – for-sale housing markets continue to be under supplied for entry-level housing, particularly in markets along the coasts. In addition, millennials, the prime rental cohort, continue to delay important life events such as marriage and children which consequently delay first-time home purchases. The robust market fundamentals continue to incentivise new development, swelling the new construction pipeline. Increasing supply coupled with slowing demand as the economy cools should cause fundamentals to moderate but remain strong.
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U.S.: Multifamily Residential
Refers to rents for en-bloc rental apartment communities Source: JLL, July 2019
EMEA: Central City
Refers to rents for residential units in the central areas of each city Source: JLL, REAS, July 2019
AP: Prime Residential
Refers to rents for prime residential units in each city Source: JLL, July 2019
Source: JLL, July 2019
Investment activity in the institutional residential market in Europe was lower in several markets – including Germany, France, the Netherlands and Sweden – during the first half of the year following an exceptionally active 2018. Rent control regulation introduced in several markets so far in 2019 has contributed to investor caution in some locations, though it remains too early to assess the impact of these policies. While the broader UK residential market continues to be affected by Brexit uncertainty as purchasers and investors wait for clarity on a future relationship between the UK and EU, the institutional rental sector saw H1 activity double from the same period last year.
In Asia Pacific, buyers were cautious in many markets during the second quarter given broader macroeconomic uncertainty, while mixed leasing demand kept rental growth on a relatively flat trajectory across the region. Beijing saw high-end sales volumes rebound in Q2 largely due to a release in pent-up demand brought about by a decline in the first-home mortgage interest rate and a reduction in tax deductions for second-home purchases. Shanghai however, where housing policy remains tight, saw a contraction in sales in the high-end market. Similarly, the private home sales market in Singapore remained sluggish mainly due to cooling measures imposed last year.
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