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Would be home owners in UK save for over four years for home deposit
Aspiring home owners in the UK believe they will need to save for more than four years in order to afford a deposit for their first home, new research has found. While most will safe for four years and four months some 27% believe that they will never be in a position to buy their own property, according to the report from insurance firm Aviva. Official figures show that the typical first time buyer home in Britain now costs £180,677. In order to save a 10% deposit, aspiring home owners starting from scratch would need to save £347 a month to build this deposit in four years and four months, assuming no interest growth. Despite property ownership becoming more difficult as UK house prices rise, under 45s believe home ownership will only become more important in the next 20 years, the report found. However, a clear distinction emerges between different age groups, with 73% of 16 to 24 year old and 60% of 25 to 34 year olds saying home ownership will grow in importance, compared to just 40% of over 55s. As younger age groups are the next generation of potential homeowners, it is clear that the desire to be a homeowner will continue to be very significant. Younger age groups are prepared to wait to get on the property ladder. Some 81% say that home ownership is perceived as a more important milestone in the UK than other parts of the world. On a personal level, 79% of people in the UK agree becoming a home owner is important to them or was, if they already are home owners. However, younger generations appear to accept that the path to home ownership might require some patience. Some 53% of over 55s say they want or wanted to become a homeowner as quickly as possible compared to 43% of 25 to 34 year olds, a key first time buyer age group. While 24% of over 55s say they don’t or didn’t mind waiting a while to become a home owner, this rises to 40% for 25 to 34 year olds. Despite the importance of getting on the property ladder, many people are failing to protect their possessions as 19% or 10 million UK adults do not have contents insurance if they own a home and 33% of those renting. The research also found that 40% of people don’t know the value of their contents insurance, leaving them at risk of being inadequately covered. In addition, 62% do not know how much their possessions and valuables are worth, potentially resulting in being under or over insured. ‘The UK’s households are changing, not just as the population grows, but as society evolves to include more family types. However, one thing remains constant and that is our desire to get on the property ladder. The next generation of home owners are certain this will… Continue reading
Cost of land to build prime homes in Asia still rising
Prices of residential sites in Asia increased by 1.9% in the first half of 2016, down from 2.8% in the preceding six months, put office land increased from 1.9% to 2.2%. Overall development land investment volumes in Asia matched the level registered in the corresponding period last year, according to the Prime Asia Development Land Index from international real estate firm Knight Frank. As compared to the preceding six months, however, they were 40.4% lower and the index report explains that land markets tend to be more active in the second half of the year, which accounts for 60% of the transactions historically. With state owned enterprises purchasing land aggressively, China, which accounts for more than 90% of the deals in Asia, saw a 6% year on year increase in volumes while in Thailand some major deals boosted volumes by 190.4%. However, cross border land investment volumes fell by 11.5% year on year. ‘Part of the reason is that while Chinese developers have previously snatched up land in Hong Kong and Singapore, they now appeared to have joined their local counterparts to become more cautious amid the ongoing correction in housing prices in these markets,’ the report explains. As a result, China bought 88.8% less land year on year in the rest of Asia. In China, among the cities tracked, Shanghai experienced the strongest growth in prime residential land prices. ‘While the government raised the down payment requirement on second and subsequent properties as well as tightened non-locals’ purchase eligibility, shadow banking and peer to peer financing helped home buyers circumvent these rules, although authorities are closing the loopholes,’ it adds. According to the National Bureau of Statistics, residential prices in Beijing, Guangzhou and Shanghai surged by 15.3%, 12.8% and 19.5% respectively in the first half of 2016 and the report says this emboldened developers to bid for land aggressively. In particular, Shanghai saw the average premium over reserve price in residential land auctions soar to 154% in the first six months of the year from 60% in the corresponding period last year. As a result of an overhang of unsold prime housing inventory in Mumbai and New Delhi that requires an estimated four and seven years to clear respectively, the Knight Frank indices registered a decline in prime residential land prices. It adds that strong office leasing demand boosted the prices of prime office development sites in Bengaluru, which grew the fastest in the region. Similarly, prices of commercial land in Mumbai and New Delhi outperformed those of residential sites. Tokyo registered the largest increase and the report says that the negative interest rate introduced by the Bank of Japan has brought mortgage rates down, supporting housing demand. Indeed, recent condominium launches with hefty price tags were met with much enthusiasm from home buyers, with one development in Minato ward even fetching a record high average price of US$33,800 per square meter. Sites for office development in Asia also… Continue reading
Annual price growth slowing in key cities in UK, index data shows
The annual rate of house growth in key cities in the UK has started to slow after 12 successive months of rising prices, according to the latest index figures to be published. But there is some regional variation and house prices in large regional cities outside southern England continue to grow while those in London have seen a market slowdown, the Hometrack cities index shows. Outside the south house price growth continues to hold steady at 7% to 8% per annum with no sign of an imminent slowdown. Aberdeen is also registering a slower rate of price falls compared to recent months with a decline of 8% compared to 10% the previous month. Overall city house prices increased by 9.5% year on year in July, down from 9.9% in June with Bristol in the south west seeing the strongest growth at 14% followed by London at 11.7%. While quarter on quarter the highest growth was in lower value, higher yielding cities where prices are rising off a lower base such as Glasgow, up 5.2%, Liverpool up 4.4% and Manchester and Nottingham both up 3.4%. Even although it has the second largest annual price growth, London has registered a marked slowdown in house price growth over the last three months. Average growth in the last quarter was 2.1%, the lowest rate for 17 months. The index report suggests this is due to weaker investor demand, affordability pressures and Brexit uncertainty impact demand at the same time as supply has risen. It points out that prices are still well up year on year but the signs are growth will slow further over the coming months. Cambridge saw prices fall by 1% over the last quarter and the report says that prices in the city are more sensitive to weaker demand although the annual rate of growth is still running at 7.1%. The report says that in the absence of adverse economic trends impacting employment and mortgage rates, the near term outlook is for a continued slowdown in London and stable growth rates in regional cities as households’ price record low mortgage rates into city house price where affordability remains attractive. ‘We continue to believe that turnover will register the brunt of the slowdown in London. In the face of lower sales volumes agents will look to re-price stock in line with what buyers are prepared, and can afford, to pay,’ the report explains. ‘Past experience shows that this process can run for as long as six months and relies, in part, in how quickly sellers are willing to adjust to what buyers are prepared to pay,’ it concludes. Continue reading
