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Steady property sales and price market forecast for Canada this year
Residential real estate prices in Canada are expected to remain stable this year while sales will vary considerably on a regional basis, according to the latest forecast report from the Canadian Real Estate Association (CREA). National sales are now projected to reach 475,700 units in 2015, representing an annual decline of 1.1% which would place annual activity slightly above but still broadly in line with its 10 year average. British Columbia is projected to post the largest annual increase in activity in 2015 at 4.9% followed closely by Nova Scotia at 3.7% Quebec at 2.5%, New Brunswick also at 2.5%, Ontario at 1% and Prince Edward Island at 1.4%. These numbers represent upward revisions to CREA’s previous forecast. Alberta is expected to post the largest annual decline in sales this year at 19.2% although the trend for activity is expected to begin recovering from a weak start to the year as consumer confidence recovers. Sales are also forecast to decline on an annual basis in Saskatchewan by 11.2% and in Manitoba by 1.3%. The national average home price is now forecast to rise by 2% to $416,200 in 2015. Only British Columbia at 3.4% and Ontario at 2.5% are forecast to see gains in excess of the national increase. Prices are projected to remain largely stable elsewhere, with increases or decreases of around 1% or less this year. The exception is Alberta, where average price is forecast to fall by 3.4%, reflecting a pullback in sales for luxury properties compared to homes in more affordable price segments. In 2016, national sales activity is forecast to reach 482,700 units, representing an annual increase of 1.7%. Much of the annual increase reflects an anticipated recovery for sales activity in Alberta and Saskatchewan in line with expected economic improvement in those provinces. Strengthening economic prospects are expected to result in improving sales activity in other provinces where sales have struggled, keeping prices more affordable amid ample supply. Meanwhile, anticipated mortgage rate increases are expected to keep activity in check in markets where homes are already less affordable and prices have continued rising. The national average price is forecast to rise by a further 1.9% to $424,100 in 2016. Given an ongoing shortage of supply for single family homes in and around the Greater Toronto Area, price growth in 2016 is forecast to be strongest in Ontario at 2.5% and Alberta at 2.4%. Gains of around 2% are forecast for British Columbia and Manitoba, and around 1% for Saskatchewan and Quebec. Average home price in the Atlantic region is forecast to hold steady in 2016. Continue reading
Younger home owners looking towards equity release in UK
A surge in equity release activity in the UK in the second half of 2014 saw younger borrowers turning to lifetime mortgages in the wake of the Mortgage Market Review (MMR) and the 2014 Budget pension announcement. The Spring 2015 edition of the Equity Release Market Report from the Equity Release Council shows that as the market has grown, the proportion of new equity release customers aged 55 to 64 dropped from 24% in 2011 to 21% in 2013, pushing up the average customer's age towards 71. This trend continued in the second half of 2014 when just 17% of new customers fell into the 55 to 64 age bracket. However, following the March 2014 Budget and MMR implementation on 26 April, this age group made up 20% of new equity release customers during the second half of the year. Compared with the first half of 2014, the number of new equity release customers aged 55 to 64 was 32% higher in the second half of the year, which was also the busiest half year since 2008 for total new plans agreed. The average age of customers choosing drawdown products was unchanged at 71.6 from the first half of the year to the second half but the average age of those choosing lump sums fell from 68.8 in the first six months of 2014 to 67.6 in the second. The data suggests that changes in the residential mortgage and pensions markets are having an impact on the profile of equity release customers. Reports have surfaced that people are finding it increasingly difficult to access residential mortgage finance later in life under the MMR rules, particularly if the desired term may stretch beyond their normal retirement age. At the same time, many borrowers with interest mortgages are approaching their final repayment date. For those who have no or limited resources for a repayment vehicle, using equity release to pay off their existing mortgage is a common solution. Some younger borrowers may also have used equity release in the second half of last year to meet an immediate need for extra funds, rather than accessing their pension savings ahead of 6th April 2015 when the new pension flexibilities will take effect. ‘Equity release is helping people respond to a host of financial challenges at various points in later life, or simply enhance their standard of living so they can enjoy a more comfortable retirement. Part of the appeal lies in the option to cover off large one off expenses,’ said Nigel Waterson, chairman of the Equity Release Council. ‘Paying off the last of an existing mortgage is often one of the biggest financial deadlines people have to face beyond the age of 55. The flexibility of equity release enables them to wipe the slate clean while also using their housing wealth to meet a range of other needs,’ he explained. ‘The money they have put into property often proves a good investment over time. Releasing equity… Continue reading
UK property prices increase more than earnings in London and South East
Over the past two years average house prices have increased by more than the average employee’s net earnings in almost one in five local authority districts across the UK, according to new research. The vast majority of these areas are in London, the South East, and East, representing 68 of the 73, the data from lender the Halifax shows, and eight London boroughs appeared in the top 10. The largest difference was in Hammersmith and Fulham, where house prices increased by an average of £199,930 over the last two years, exceeding average take home earnings in the area by £143,232. Cotswold was the best performer outside London, the South East and East with house price gains exceeding earnings by £31,222. The Leicestershire areas of Melton and Harborough also saw average house prices increase by more than earnings in 2013 and 2014 with price gains in excess of earnings by £9,358 and £6,938 respectively. The research also shows that over the past five years some 23 local areas in the UK have seen average house prices increase by more than total average pay. In Islington, average property prices have increased by £258,498, surpassing average take-home pay during the period by £123,041. Again, the top six performers are all in London, but outside the capital, Elmbridge in Surrey has seen the biggest rise in prices in relation to total earnings in the past five years at £51,854. All 23 areas are in London and the South East. House prices nationally increased by 9% in 2014, the biggest annual rise since 2007. Average prices rose particularly sharply in London at 16% and the South East at 11%, and as a result, average prices increased by more than total take home pay in one quarter of districts. The majority of these areas are in London and the south of England. Most of the best performers outside the south are in the West Midlands including Malvern Hills, Wychavon and South Staffordshire. While, over the past decade, house prices have increased by more than total pay in just two areas across the UK; Hackney and Hammersmith and Fulham, all in London. ‘The housing market recovery over the past couple of years has resulted in some substantial prices rises in some areas of the country, particularly in London and the South East. This has resulted in homes increasing in value by more than total take home earnings for the average home owner in some areas of the country,’ said Martin Ellis, housing economist at the Halifax. ‘This is good news for some home owners. At the same time, it is challenging news for those looking to buy their first home in such areas, with prices being pushed out of range for many young people,’ he added. Continue reading
