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UK house prices dipped in February but longer trend is still upward
House prices in the UK in the three months to February were 3% higher than in the previous three months whilst the annual rate remained unchanged at 9.7%, the latest index shows. But month on month prices fell by 1.4%, according to the data from the Halifax, taking the average price of a home to £209,495. Martin Ellis, Halifax housing economist pointed out that overall prices continue to rise at a robust pace driven by a significant imbalance between supply and demand. ‘Whilst this position is likely to continue over the coming months, there are some tentative signs that the supply situation may be beginning to improve,’ he explained. He also pointed out that instructions for second hand properties coming up for sale have increased in the past two months and the level of house building increased significantly in 2015. ‘Further ahead, increasing affordability issues, as house price increases continue to exceed wage growth, are likely to curb housing demand and cause price growth to ease,’ he added. An analysis of the Halifax figures shows that the quarterly rate of change was the highest since June 2015 when it was 3.3% and the annual rate remains within the 8% to 10% range where it has been for nearly the entire period since the start of 2015. The fall in values in February offset much of January’s 1.7% rise but Ellis explained that monthly house price changes can be volatile and the quarter on quarter change is a more reliable indicator of the underlying trend. The increase in average house prices has exceeded total average employee’s net earnings in 28% of local authority districts across the UK, some 108 out of 380, over the past two years, according to recent Halifax research. According to Russell Quirk, chief executive officer of eMoov, the monthly figures could be seen as a sign that the UK market is cooling but the longer term trend is still upward. ‘Demand is always an influential factor where an increase in house prices is concerned, so the impending stamp duty changes due in April have no doubt helped to keep the UK market buoyant,’ he said. ‘There has been a flurry of buyers keen to secure that second home or buy to let investment before the April deadline, as well as an increase in the stock available, due to savvy buyers looking to cash in and obtain a higher price than usual during this period of high demand,’ he pointed out. ‘We expect once the stamp duty dust has settled the market will cool slightly, but whilst UK and foreign buyers are still fuelling this increase, the issue of affordability will continue to take a back seat, rather than helping to restrain a continually inflating market,’ he added. Continue reading
US pending homes sales fall month on month after record breaking 2015
Pending home sales in the United States fell by 2.5% in the first month of 2016 following the highest average year in nearly a decade, the latest index shows. On the South saw sales rise, but sales are still 1.4% higher than they were a year ago, according to the forward looking index from the National Association of Realtors. Although the index has increased year on year for 17 consecutive months, last month’s annual gain was the second smallest and NAR chief economist Lawrence Yun said that a myriad of reasons have contributed to the drop in January. ‘While January’s blizzard possibly caused some of the pullback in the Northeast, the recent acceleration in home prices and minimal inventory throughout the country appears to be the primary obstacle holding back would be buyers. Additionally, some buyers could be waiting for a hike in listings come spring time,’ he explained. Existing home sales increased last month and were considerably higher than the start of 2015, but price growth quickened to 8.2%, the largest annual gain since April 2015 when it was 8.5%. While the hope is that appreciating home values will start to entice more homeowners to sell, Yun said that supply and affordability conditions won’t meaningfully improve until home builders start ramping up production, especially of homes at lower price points. ‘First time buyers in high demand areas continue to encounter instances where their offer is trumped by cash buyers and investors. Without a much needed boost in new and existing homes for sale in their price range, their path to home ownership will remain an uphill climb,’ Yun pointed out. Existing homes sales this year are forecast to be around 5.38 million, an increase of 2.5% from 2015. The national median existing home price for all of this year is expected to increase between 4% and 5%. In 2015 existing home sales increased 6.3% and prices rose 6.8%. A breakdown of the figures show that the index in the Northeast declined 3.2% but is still 10.9% above a year ago. In the Midwest the index fell 4.9% but is still 1.4% above January 2015. Pending home sales in the South inched up 0.3% but remain 1.3% lower than last January. The index in the West decreased 4.5% but is still 0.4% above a year ago. Continue reading
Need for affordable housing not likely to be met by Starter Homes scheme
The vast majority of councils in England do not think that Starter Homes should be classified as affordable housing and only 7% of councils think they will address the need for affordable housing in their local authority areas. Indeed, new research shows that local councils, of all political parties, believe that the Government's Starter Homes policy will hinder rather than help to tackle the growing need for genuinely affordable housing in England. They have also raised concerns about the impacts of the Government's plans to reduce social rents by 1% a year for the next four years and the extension of the Right to Buy to housing association tenants, according to a survey commissioned by the Town and Country Planning Association (TCPA) and the Association for Public Sector Excellence (APSE). It found that over two thirds of councils, 69%, anticipate that they will be building less social and affordable housing as a result of the Government's plans to reduce social rents by 1% a year for the next four years. Only 3% say they plan to build more social and affordable homes as a result. ‘Low cost home ownership, such as starter homes, may help some people get a first step on the housing ladder, but as the survey of council's highlights this will not address the need for genuinely affordable homes,’ said Kate Henderson, chief executive of the TCPA. ‘We need a housing strategy for the nation that provides decent homes for everyone in society, including those most in need in the current housing crisis. Our survey has revealed that four out of five councils do not think starter homes should be classified as affordable housing because they are simply not affordable for essential low paid workers or for many people on average incomes,’ she added. Almost three fifths of councils described their need for more affordable housing as severe and 37% as moderate, and 89% of respondents think that the extension of Right to Buy will lead to less housing available for social rent, with only one council thinking that it would be beneficial. ‘What is clear from these survey results is that the headlong rush to extend Right to Buy to housing associations is an ill-thought out measure which enjoys little support, and this is reflected across the different political parties at a local level,’ said Paul O'Brien, chief executive of APSE. ‘With Nine out of 10 councils genuinely concerned that the extension of the Right to Buy to housing association tenants will further diminish the already short supply of socially rented homes, available in their local communities, we say to Government now is the right time to listen on Right to Buy,’ he added. Continue reading
