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US sees fall in overseas buyers due to stronger dollar, analysis suggests
Fewer overseas buyers are purchasing property in the United States with currency exchange playing its part in the drop off, a new analysis report suggests. In general home sales during the first four months of 2015 have been the best in eight years with year on year growth of 9% helped by a drop in fixed mortgage rates of almost 0.5%. But the National Association of Realtors reports that the number of international buyers dropped to 2% during the first four months of 2015 from 2.5% a year earlier, a 19% decline. About three fourths of real estate agents who work with international clients report that changes in foreign exchange rates have a moderate to very significant effect on foreign buying. Indeed, the US dollar has strengthened against currencies used by many foreigners who buy homes in the country. For example, from the beginning of 2014 o April 2015, the US dollar appreciated 10% relative to the UK pound, 13% relative to the Canadian dollar and 26% relative to the euro. Notable exceptions to these large swings in foreign exchange values were the Chinese yuan and Hong Kong dollar, which have closely tracked the value of the US dollar. A new analysis report from real estate firm CoreLogic points out that a stronger US dollar makes property more expensive for foreign buyers whose currencies have weakened. Consequently, purchases by foreign buyers have dropped, especially for those whose currency was most affected by the foreign exchange swing. Between the first four months of 2014 and the same four months of 2015, the number of homes sold to foreign buyers drastically declined. Foreign purchases were down between one quarter to one third during this period for buyers whose currencies depreciated significantly relative to the US dollar, even though domestic purchases rose. ‘In addition to the shock caused by the stronger US dollar, the markets where foreigners tend to buy have had strong home price appreciation in the last few years. For example, many Canadians, Europeans and South Americans prefer to buy along the Southeast coast of the US for the beaches, cultural amenities, warm winter temperatures and accessibility,’ the report says. Canadians made roughly two thirds of their US home purchases during the first four months of both 2014 and 2015 in Florida. Of these purchases in 2015, nearly a half were located in the Miami-Fort Lauderdale-Palm Beach area where home prices rose about 8% from April 2014 to April 2015. ‘Couple that with the effect of a stronger US currency, and the average Canadian considering a home purchase in south Florida saw a jump in purchase cost of 20% to 25% in the past year,’ it explains. The report suggests that foreign buying could continue to decline, level off or increase in 2016 depending on the value of the US dollar relative to most foreign currencies, but the uncertainties surrounding how the Eurozone will resolve the debt crisis in Greece has made it… Continue reading
UK house prices up 5.7% year on year, slight annual rise, ONS data shows
UK house prices increased by 5.7% in the year to May 2015, up from 5.5% in the year to April 2015, the latest official property market data shows. House price annual inflation was 5.8% in England, 2.5% in Wales, 2.9% in Scotland and 10.5% in Northern Ireland, according to the index from the Office of National Statistics (ONS). The pace of annual house price growth increased slightly across the majority of the UK in May 2015 taking he average mix-adjusted house price to £274,000 and was driven by an annual increase of 9.3% in the East of England and 8.2% in the South East. Excluding London and the South East, UK house prices increased by 5.2% in the 12 months to May 2015 and on a seasonally adjusted basis, average house prices increased by 0.9% between April and May 2015. In May 2015, prices paid by first time buyers were 5.1% higher on average than in May 2014 and for existing owners prices increased by 5.9% for the same period. The data shows that the regional disparities of the property market are steadily shrinking as price growth becomes more broad based, according to Jonathan Hopper, managing director of Garrington Property Finders. ‘London and South East England remain strong hotspots, but as the rates of price rises there return to more sober levels, five of the nine English regions saw their rate of price growth rise and the East of England, powered in part by an extraordinary surge in activity in Cambridge, has the fastest growing property values,’ he said. ‘Even North East England, which was hit hardest by the slump, is now seeing price growth of nearly 2% a year. Demand exceeds supply for all but the most expensive prime property, and this is steadily forcing prices up across the board,’ he explained. ‘Despite mortgages being at their cheapest level for years, buyers are still intensely value sensitive and in some regions seller expectations have been outstripping what buyers are willing to pay. Though confidence among both buyers and sellers remains high, as the summer slowdown begins, sellers must be wary of letting their pricing ambitions run away from what the market will tolerate,’ he added. Alex Gosling, chief executive officer of online estate agents HouseSimple, pointed out that despite the rate of price growth slightly decelerating, demand has remained constant. ‘A shortage of stock during the pre-election uncertainty stilted the market, however the flurry of properties which have come on since the election's clear result have coincided with a strong return to confidence,’ he said. ‘Both sellers and buyers are trusting the market more, prompted by steady economic growth, better employment prospects and a boost in earnings. But it is worth noting that vendors may consider it to be a sellers' market, but buyers are not making the same mistakes of the last boom, as they remain sensitive to both price and affordability,’ he added. With house price growth… Continue reading
Asking prices in England and Wales up 0.4% in last month
Residential property asking prices in England and Wales increased by 0.4% overall in the last month and by 5.7% compared with a year ago, the latest index data shows. Monthly asking price growth was led by the East of England, up 0.7% since June, according to the Asking Price Index from Home.co.uk The data also shows that property is selling faster. The average time on the market for England and Wales dropped to 177 days, the lowest figure since November 2008 and the South East remains the fastest regional market, with a typical time on market of 59 days. Overall the supply of property for sale remains low, down by 6% in June 2015 compared to June 2014. However there are signs of oversupply in the North East and as a result asking prices are down by 0.8% The index report says that a resurgence of buyer demand continues to drive prices higher, predominantly in London and the South of England, bolstering confidence amongst vendors. ‘The UK property market is in good shape overall. Property supply remains behind buyer demand in most regions as evidenced by falling time on market figures. In Greater London, where marketing times showed a worrying increase earlier in the year, a post-election buyer resurgence has taken up the slack. Only in the North East region, where the recovery is still in its infancy, do we see a significant rise in supply and this has served to make prices dip this month,’ said the firm’s director Doug Shephard. The index also suggests that the prime central London market is showing signs of renewed momentum. After a prolonged period in the doldrums, prices there have indicated a new upward trend since May and time on market figures are beginning to fall. Time on market data for the regions shows that the northern markets of Yorkshire and the North East are the most improved over the last 12 months, recording decreases in typical time on market of 9% and 6% respectively. However, they remain among the slowest markets when compared to the rest of the UK. It is only London and the southern regions that show marketing times indicating a similar vigour to the property market pre-crisis. ‘With the recent political uncertainty now consigned to history, UK property has a clear path forward. Consequently, buyers are back in force but hampered by a lack of supply in most regions. We expect only minor price rises towards the end of this year,’ explained Shephard. ‘Demand, on the other hand, looks set to remain high, with indications from the Bank of England that interest rates will stay at their record low until at least next year, perhaps later. Hence, we expect that further competition between aspirant homeowners and landlords will continue to drive prices higher in a growing number of areas, especially in the South,’ he pointed out. ‘Contrarily, despite clear improvements in marketing times, prices remain stagnant in the North of England… Continue reading
