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House price growth in England and Wales at slowest since 2013
House price growth in England and Wales is at its slowest since 2013 but despite this average property prices set a new record of £275,123, the latest data shows. March saw the smallest annual change in house prices in 16 months at 5.6% or £14,620, according to the LSL England and Wales house price index. The slowdown was more prevalent in the south as London was hit by the threat of higher stamp duty charges and a potential mansion tax after the general election. Month on month prices were up 0.2% and the annual change when London is excluded from the calculation was slightly lower at 4.9% but the difference has narrowed considerably. While sales were up 11.6% in March this was only half of the typical monthly upswing expected to take place at this time of the year and sales in the first quarter of 2015 were down 5% year on year. Adrian Gill, director of Reeds Rains and Your Move estate agents, said that annual house price growth has now been waning for half a year, and hasn’t been this sluggish since November 2013. He also pointed out that this is far from typical as the general election next month means that cautious buyers are holding back to wait and see what happens with whoever forms the next government and property regulation is a hot topic in one of the most uncertain UK elections in a generation. ‘Examining the regional pattern of movement, it becomes apparent that we’re seeing less of a downturn than a convergence. The radical stamp duty overhaul has greatly boosted the prospects of buyers across the country, and injected new life into areas where prices have been stalled and the recovery yet to show its face,’ he explained. ‘But the small minority of those negatively affected by the restructuring of the old slab system are disproportionately concentrated in the more expensive, southern regions of England. Naturally, London has been the hardest hit at the sharp end of this reform, and also most directly threatened by future mansion tax, possessing the lion’s share of high-end property, and the clustering of properties in the million pound price bracket mirrors the locations where price rises have cooled most quickly,’ he added. He also pointed out that between January and February, the South West has seen annual house price rises fall back from 5.5% to 4.4%, the most marked slowdown across England and Wales, and closely followed by London and the South East, which both experienced falls of 0.9%. ‘While values in London and the South West are no longer at their peak, the East and West Midlands and East of England are instead among those setting new price records in February,’ said Gill. ‘For so long, London has been the workhorse dragging up overall measures of UK house price growth, but we’ve reached a new equilibrium. While house price growth is more measured than it was a year… Continue reading
UK landlords seeking more remortgages, buy to let index shows
Some 66% of buy to let loans in the UK in the first quarter of 2015 were for remortgaging compared with just 34% for new purchases, new research shows. This compares with 62% in the final quarter of 2014, according to the latest Mortgages for Business Complex Buy to Let Index. For houses in multiple occupation (HMOs) remortgaging is now an even higher proportion, standing at 73% of HMO mortgages in the first three months of 2015, up from 70% in the fourth quarter of 2014. Moreover, the same trend is even more pronounced for multi-unit freehold blocks (MUFBs) with remortgaging representing 89% of mortgages in the first quarter of 2015 compared to just 42% in the final quarter of 2014. Semi commercial property witnessed the same trend but with a more gradual change, from 86% to 87% of new loans agreed for remortgaging. As landlords have remortgaged in increasing numbers, their average loan to value ratios (LTVs) have crept slightly higher over the course of the last three months. For vanilla buy to let, the average LTV now stands at 66% compared to 63% in the final quarter of 2014. Landlords of HMOs have seen loan to value ratios rise to 70%, up from an average of 64% LTV in the last quarter of 2014. Likewise, MUFB properties are now mortgaged to an average of 67% of the property value, up from 64% LTV in the final quarter of 2014. Semi commercial properties saw a more gradual shift, though for these landlords the average LTV also rose from 64% in the previous quarter to 65% in the first quarter of 2015. ‘Record low mortgage rates are driving wave upon wave of landlords to reassess their finances. A great deal agreed last year may be uncompetitive by today’s standards. So this stampede is completely rational as it represents a charge by landlords to make the most of an unprecedented economic situation,’ said David Whittaker managing director of Mortgages for Business. ‘Remortgaging is often done for the purposes of raising extra capital, and this is clearly reflected in higher loan to value ratios. However, this is by no means an unwelcome trend and could in turn open the door to more new purchases and investment by landlords,’ he explained. ‘Rental yields are healthy and there is a gathering demand from an increasingly prosperous base of tenants. So the fundamentals of the rental market, and of landlords’ finances, are still extremely solid,’ he added. The report also shows that for standard vanilla buy to let property, gross yields have now risen to 6.4% in the first quarter of the year up from 6.3% in the last quarter of 2014. On a similar note, gross rental yields on HMOs have now broken through the ten per cent mark to stand at 10.4%, up from 9.0% in the fourth quarter of 2014. Semi commercial property has also seen yields grow, from 6.4% to 7.5%… Continue reading
Negative equity worse in some parts of US despite home values rising
Home prices are rising in the US but the rate of home owners who owe more on their mortgage than their homes are worth is stalled and even worsening in some places for the first time since the recession, according to a new report. Negative equity is going up in 21 of the largest 50 housing markets, indicating many underwater homes are not rising in value, says the latest review from real estate data firm Zillow. More than a quarter of mortgaged homes are underwater in some markets in Florida and the Midwest. The national negative equity rate is 16.9% yet home values rose 5.9% nationally last year. The report also shows that the at the lower end of the market homes are far more likely to be worth less than the balance of their mortgage and the analysis suggests that is because low end homes are losing value. At the peak of the real estate crisis, more than 15 million home owners owed more on their mortgages than their homes were worth, putting them in negative equity. Foreclosures, short sales and rapidly rising home values freed nearly half of those home owners, but now that trend has reversed in many metros. Indeed, three years into the recovery, home values overall continued to recover while owners of the lowest valued homes, those most likely to be stuck in negative equity, were left behind. ‘Higher negative equity rates have become the new normal. We've long been expecting the negative equity rate to fall more slowly as home value growth also slows, and unfortunately that's exactly what we're seeing,’ said Zillow chief economist Stan Humphries. ‘Compounding the problem is the fact that negative equity is decidedly not an equal opportunity predator, and looms larger over the bottom 10% of homes, where home owners are least prepared to withstand the assault,’ he added. In Atlanta some 49% of homes in the bottom third of home values are in negative equity, compared to 11% of mortgaged homes in the highest valued third. Among large metros, Virginia Beach at 28.3%, Jacksonville at 27%, Las Vegas at 24.4% and Atlanta at 26.1% had the highest rates of negative equity. Continue reading
