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Research reveals how student debt is affecting the US housing market
New research suggests that the vast majority of would be first time buyers in the United States believe they can’t afford to buy because of student debt. Some 71% of non-homeowners repaying their student loans on time believe their debt is stymieing their ability to purchase a home, and slightly over half of all borrowers say they expect to be delayed from buying by more than five years. The survey from the National Association of Realtors (NAR) and SALT, a consumer literacy programme provided by American Student Assistant, also revealed that student debt postponed four in 10 borrowers from moving out of a family member's household after graduating college. Nearly three-quarters of non-homeowners polled in the survey believe their student loan debt is delaying them from buying a home. Broken down by each generation and debt amount, the percent share is the highest among older millennials approximately aged 26 to 35 at 79% and those with $70,000 to $100,000 in total debt. Regardless of the outright amount of student debt, more than half of non-homeowners in each generation report that it's postponing their ability to buy. The survey, which only polled student debt holders current in their repayment, yielded responses from borrowers with varying amounts of debt from mostly a four year public or private college. Some 43% of those polled had between $10,001 and $40,000 in student debt, while 38% had $50,000 or more. The most common debt amount was $20,000 to $30,000. Lawrence Yun, NAR chief economist, said that the survey findings bring to light the magnitude student debt is having on the housing market and the budget of even those financially able to make on-time payments. He pointed out that while obtaining a college degree increases the likelihood of stable employment and earning enough to buy a home, many graduating with this debt are putting home ownership on the backburner in part because of the multiple years it takes to pay off their student loans at an interest rate that's oftentimes nearly double current mortgage rates. ‘A majority of non-home owners in the survey earning over $50,000 a year, which is above the median US qualifying income needed to buy a single family home, reported that student debt is hurting their ability to save for a down payment,’ he said. ‘Along with rent, a car payment and other large monthly expenses that can squeeze a household's budget, paying a few hundred dollars every month on a student loan equates to thousands of dollars over several years that could otherwise go towards saving for a home purchase,’ he added. Among non-homeowners who believe student debt is delaying their ability to buy, over three quarters, including over 80% of millennials, said their delay is because they can't save for a down payment. Additionally, 69% don't feel financially secure enough to buy, and 63% can't qualify for a mortgage because of high debt to income ratios. Some 52% of those polled expect to be… Continue reading
Fewer affordable homes being built in England, latest data shows
There were over 33,300 new homes started in England in the 12 months to March 2016, excluding parts of London, of which the majority were affordable properties but fewer than the year before. Overall there were 33,332 housing starts on site and 25,315 housing completions delivered through programmes managed by the Homes and Communities Agency (HCA) in England, excluding London for all programmes except those administered by the HCA on behalf of the Greater London Authority between 01 April 2015 and 31 March 2016. The data shows that while the majority, 21,304 or 64%, of the housing starts on site in 2015/2016 were for affordable homes, this is a fall of 19% on the 26,458 affordable homes reported in 2014/2015. The data also shows that of the 16,544 affordable homes started in 2015/2016 were for affordable rent, a decrease of 24% on the 21,879 started in 2014/2015 but the number for shared ownership sand other affordable schemes at 4,158 rose by 25%. The remaining 602 were for social rent, a decrease of 52%. Some 17,394 or 69% of housing completions in 2015/2016 were for affordable homes, a fall of 57% on the 40,864 affordable homes completed in 2014/2015 but the report says that this reflects the normal peaks and troughs in delivery between programme periods, as the AHP 2011/2015 drew to a close in March 2015. And 13,100 affordable homes completed in 2015/2016 were for affordable rent, a decrease of 58% on the 30,834 completed in 2014/2015 while 2,801 were for intermediate affordable housing schemes, including shared ownership, a decrease of 60% and the remaining 1,493 were for social rent, a decrease of 50%. Of the affordable homes completed in 2015/2016, the AHP 2015/2018 accounted for 37%, the Affordable Homes Guarantees programme for 30% and the Affordable Homes Programme for 19%. Richard Connolly, chief executive officer of Rentplus, described the figures as disappointing. ‘Given investment from the Homes and Communities Agency helps to build around half of new homes in England each year, today’s data makes for a disappointing read,’ he said. ‘Affordable housing starts have been on a steady decline over the last three years and in view of population growth and the endemic housing affordability crisis in the UK, this is the wrong track to be heading down. Our belief is that mixed tenure communities, offering a range of housing options to suit different needs, including rent-to-buy, are crucial to building a strong and sustainable UK property market,’ he explained. ‘Completions of homes for affordable rent also fell 58% annually which will put more pressure on an increasingly diminishing resource for people in housing need. Affordable rent to buy homes provide a viable and complementary alternative to traditional rented homes, helping the many people struggling to save for a deposit to buy due to rent now consuming around half of young people’s salaries,’ he added. He also pointed out that the recent vote for the UK to leave the European Union… Continue reading
Spanish property expert says Brexit will affect demand from British buyers
A weak pound, plus the uncertainty about what comes next following the UK's decision to leave the European Union, will undermine British demand for property in Spain, especially in the short term, it is suggested. This should be a concern as British demand has been growing strongly since 2013 and according to Mark Stucklin of Spanish Property Insight there could now be a reversal in that trend. He believes that this will have a negative impact on the markets where British demand is dominant, namely Alicante and Malaga, and to a lesser extent the Balearics, the Canaries, and Murcia. ‘Thanks to this Brexit vote, there will just be fewer British buyers about,’ he said. One reason is that British demand in Spain is driven by the strength of the pound. When the pound goes up against the euro, British acquisitions inscribed in the property registry rise with a delay of around two quarters. ‘Now we have a weak pound plus the dramatic situation of a Brexit, so falling sales in coming quarters are almost a given,’ Stucklin explained. He pointed out that it won’t be good for British vendors either. ‘They now have a smaller pool in which to find a buyer. Price expectations may have to adjust even further down,’ he added. He also expects fewer British people to move to Spain until the deal for exit is struck and that will take a minimum of two years. ‘British expats in Spain will now be in limbo until the new order is established. That could take years, and in that period I expect to see more British expats leaving than arriving,’ he pointed out. British owners of holiday homes in Spain with no plans to sell won’t be affected much for now. A much bigger worry for them is what will happen to the UK, or whatever is left of it when the dust settles. Figures from the registrar of Notaires confirm that British demand for property in Spain grew strongly last year on the back of a strong pound and attractive Spanish property prices. Buyers from the UK were the biggest group by a wide margin, making up 21% of the foreign market and increased the most by up by 42% last year. Indeed, in some regions like Alicante on the Costa Blanca and Malaga on the Costa del Sol, the British dominate the overseas buyer market. On the other hand for those who want to buy in Spain properties will be cheaper due to the Pound falling making currency exchange more favourable for changing into euros. However, those wishing to move permanently to Spain who are reliant on a British pension will get fewer euros for their money. Continue reading
