News
US sales to foreigners down but they are buying higher value real estate
Total property sales in the United States to international home buyers have decreased from last year, but in terms of price the sales dollar volume increased 13%, the latest data from estate agents shows. From April 2014 through March 2015 total international sales were estimated at $104 billion, compared to the previous year's estimate of $92.2 billion, according to the figures from the National Association of Realtors. In 2014 sales transaction to buyers outside of the US dropped 10%, possibly due to the strengthening of the US dollar in relation to international currencies and weakening foreign economies, according to NAR chief economist Lawrence Yun. ‘However, the amount of money spent has increased; this means international purchasers in the US have become an upscale group of buyers, spending more money on fewer homes,’ he explained. In 2014 five countries accounted for 51% of all purchases by international buyers. These were led by China, followed by Canada, Mexico, India and the United Kingdom, the data also shows. For the first time, buyers from China exceeded all other countries in terms of units purchased and dollar volume, purchasing an estimated $28.6 billion worth of property. Buyers from Canada followed with $11.2 billion in purchases, followed by India with $7.9 billion, Mexico with $4.9 billion and the UK with $3.8 billion. International buyers tend to purchase more expensive properties with the average purchase price being $499,600, compared to the overall US average house price of $255,600. Chinese buyers typically purchased the most expensive properties, at an average price of $831,800. Some 35% of real estate agents reported working with an international client in 2014, up from 28% in 2013 and 46% said international buyers were seeking main homes, 20% wanted buy to let and 26% was for investment rentals. Global buyers also purchased properties for commercial rentals and as residences for children studying in US educational institutions. Indian buyers were the most likely to purchase a primary residence with 79% doing so, while Canadian buyers were most likely to purchase property as a vacation home with 47% doing so. While international buyer clients purchased property across the nation, four states accounted for half of all international sales: Florida, California, Texas and Arizona. Florida remains the top destination for international buyers with 21% of all foreign purchases, followed by California at 16%, Texas at 8% and Arizona 5%. Chinese buyers tended to gravitate towards the West Coast, which provides ample education, business and trade opportunities, while Canadians seeking winter vacation opportunities focused on the Southwest and Florida. The majority of international purchases, some 55%, were all-cash, compared to about 25% of all purchases made by domestic buyers. Mortgage financing tends to be an issue for non-resident international clients because of a lack of a US based credit history or Social Security number, difficulties in documenting mortgage requirements, and financial profiles that can be different from those normally submitted to financial institutions by domestic residents. Continue reading
Number of rental properties available for new tenants in UK falls
The number of rental properties available for tenants in the UK decreased in May at a time when demand is increasing and is predicted to keep rising over the next five years. Supply of rental property fell by 7% compared with April with just 179 properties per branch of lettings agents who are members of the Association of Residential Letting Agents (ARLA), the organisation’s latest monthly report shows. The report says it is a worry that London, known for its booming rental culture, has the least amount of rental properties per branch, with only 134 managed in May, compared to 273 properties per branch in Scotland. Whilst overall available rental properties decreased, demand remained the same. ARLA members reported 36 potential tenants registered per branch in May, remaining the same as the previous two months. The report also shows that during May 34% of ARLA agents reported rent increases for tenants. This figure has been slowly creeping up from the start of the year, when just 27% of agents reported hikes for tenants. Those living in the South West were the most affected by monthly rent increases with 49% of agents in the region reporting an increase. The situation is set to get worse with 76% of ARLA member agents nationally predicting that rents will continue to rise over the next five years. ‘It is worrying to see that there such a sharp decrease in supply, when we know there is already a struggle to meet housing needs,’ said David Cox, ARLA managing director. He pointed out that while the months following any major event such as the General Election will always cause uncertainty and shake things up for the property market, the dwindling supply and already high demand is an issue that’s going to continue to plague the property market. ‘We are in desperate need of more housing stock in this country and supply and demand isn’t something that will level out overnight. It’s vital that the new government follows their promise of building more houses, so we can free up rental properties and head on the right path to turning the property market around once and for all,’ he added. Continue reading
UK mortgage approvals rising but still down on a year ago
Mortgage approvals in the UK have been steadily improving over the past five months but are still below where they were a year ago, according to the latest figures to be published. Gross mortgage borrowing in May was £10.4 billion, similar to April but 5% lower than in the same month last year, the data from the British Banking Association shows. Much of this could be to tougher new approval rules that were introduced in April 2014. For house purchase approvals, the annual comparison, adjusted for the effect of the new rules, suggests a year on year fall of 3%. Indeed, Charles Haresnape, chairman of the Intermediary Mortgage Lenders Association (IMLA), pointed out that there has now been a fourth successive monthly rise in mortgage approvals which suggests the high street banks have got to grips with recent changes to mortgage regulations. ‘All the same, there were 5,000 fewer approvals in May than was the norm in the six months before the Mortgage Market Review (MMR) took effect. Clearly there is still some way to go before lending activity on the high street is fully restored,’ he said. ‘Looking ahead, our chief concern is that UK mortgage borrowers face another wave of changes headed their way in the shape of the Mortgage Credit Directive (MCD). The short term threat is that another transitional period will slow the applications process and reduce the industry’s capacity to lend,’ he explained. ‘In the long term, extra layers of regulation threaten to squeeze more consumers out at the margins. When the rules change so often, it is very hard to judge the right time to say enough is enough before we are left with a far more subdued market than anyone intended. Balancing consumer choice and financial safety is a constant challenge, and the Bank of England should stand ready to act if the pendulum swings too far in either direction,’ he added. According to Steve Bolton, chairman of Platinum Property Partners, figures from the BBA show that there is life in the mortgage market, indicating that there has been a 2% jump in general mortgage approvals over the last 12 months. ‘However, the figures also show that lending to homebuyers is down on last year by 3%, meaning that access to the property ladder is becoming more and more difficult for many people. This means that the rental sector is likely to come under increased pressure as growing numbers of people look to it for longer term solutions to their housing needs,’ he said. ‘It is therefore of the upmost importance that the market is able to meet the needs of a growing population of renters, and provide them with high quality and affordable housing. While renting is now a lifestyle choice for many young people, the majority still aspire to own their own home and certain types of rental properties can give would be buyers an advantage in times… Continue reading
