Tag Archives: asia
UK house prices continue to creep upward, latest index shows
House prices in the UK increased by 0.6% in October, taking the average price of a home to £196,807, according to the latest index to be published. The data from the Nationwide, one of the country’s main lenders, prices are now up 3.9% year on year. The report points out that over the past five months annual price growth has remained in a fairly narrow range between 3% and 4%, broadly consistent with earnings growth over the longer term. ‘While this bodes well for a sustainable increase in housing market activity, much will depend on whether building activity can keep pace with increasing demand,’ said Robert Gardner, Nationwide's chief economist. He also pointed out that fixed rate mortgages have remained the most popular because of ongoing uncertainty about when the Bank of England might introduce an interest rate rise. ‘Historically low interest rates have helped to offset the negative impact of rising house prices on affordability. Indeed, even though house prices are at an all-time high, the cost of servicing a typical mortgage is still close to the long term average as a share of take home pay,’ Gardner explained. He said that fewer variable interest rate mortgages should help to insulate many households from the impact of higher interest rates but he warned that the majority of recent fixes are for relatively short time periods with 65% for two years and 30% for five years. ‘Nevertheless, the housing market should be able to cope with higher interest rates in the year ahead, provided the increase is modest and the economy and the labour market remain in good shape,’ he said ‘Guidance from the Bank of England suggests that the increase in interest rates is likely to be gradual, and that they are expected to settle at a level somewhat below the average prevailing before the financial crisis, which should help ensure borrowing costs remain manageable,’ he added. Alex Gosling, chief executive officer of online estate agents HouseSimple believes that as building activity is highly unlikely to keep up with demand, average house prices are likely to continue to rise and rising interest rates could affect many home owners. ‘It's hard to believe but many home owners have never known a conventional interest rate environment, and when it finally comes it could well prove a shock. If the economy holds firm then gradual rate rises will be better accommodated, but the extent of the impact of a rate rise on the market remains a great unknown,’ he explained. ‘What we can say with near certainty is that if rates rise sharply, many borrowers could get caught out. Thankfully people are moving to fixed rate mortgages to protect themselves,’ he added. According to Mark Dyason, director of Edinburgh Mortgage Advice, borrowers know higher rates are coming sooner or later and they are thinking ahead. ‘First time buyers and people with smaller deposits are especially likely to select a fixed rate because that's what most lenders are… Continue reading
Sales rise in Hong Kong residential market
Residential property sales in Hong Kong have increased, up 9.4% from August to September but officials are keeping tax policies in place to try to keep price growth under control. First hand transactions jumped 110%, while secondary sales declined 15%, month on month, according to the latest data from the Land Registry. Both demand and supply remained robust in the primary market, with around 360 units launched during the mid-autumn festival holiday, says the latest monthly Hong Kong property market report from international real estate firm Knight Frank. For example, 110 units in Century Link in Tung Chung and over 200 flats in Upper East in Hung Hom were snapped up within just a few hours. In contrast, the secondary market remained subdued last month, amid the recent stock market volatility, a potential interest rate rise in the United States and fierce competition from primary developments, the report points out. It also points out that the Chief Executive has announced that the stamp duty policies will remain in place in the near term. ‘We do not expect home prices to drop significantly,’ the report adds. Calculations by Knight Frank indicate that a 100-bps increase in mortgage rates will only result in a HK$500 increment in monthly instalment for every HK$1 million of mortgage loan, based on a 20 year repayment period. ‘Therefore, a minor interest rate hike is not expected to lead to a significant default risk. On the other hand, market views do not expect a drastic interest rate hike this year,’ it adds. Despite strong leasing demand, the Grade-A office market was stable last month amid limited available space, particularly in core business areas, the report also says. Most firms opted for renewing their leases rather than relocation due to a lack of alternatives. The key demand drivers remained Mainland Chinese firms, which continued to favour Central for setting up offices. As a result, Central’s vacancy rate dropped a further 0.2% point to an extremely low level of 1.4% in September, close to the historical low in 2008. An increasing trend of operation split was witnessed in the office market due to a lack of vacant space. Many firms have to split their operations into smaller offices located in different buildings. Previously, only major firms requiring large premises needed to split their offices, but now even firms requiring units of below 10,000 square feet are going for such arrangement. ‘With the tight supply and many offices under multiple offers, landlords have become more aggressive in asking rents. If the trend continues, it could be possible to see a reversed premium situation next year, firms requiring large office space have to pay an even higher per square foot rental,’ the report explains. ‘Looking ahead, given sustained demand and low vacancy rates, we remain positive towards the long term outlook for Grade-A offices in Hong Kong. We expect rents in Central to increase 10% this year and another 5% in 2016. In Kowloon… Continue reading
UK property prices set to rise by almost 20% or average of £60,000 in next five years
Property prices in the UK are predicted to continue their upward trend, rising by nearly £60,000 over the next five years, according to new research. Prices are expected to rise by 3.5% in 2016 with further annual increases of around 4% in the four years that follow, says the latest analysis from the Centre for Economics and Business Research (Cebr). Indeed, the forecaster says that 2015 annual house price growth has been revised up from 4.7% in June to 5.6% this month and the average price of a UK property is set to stand at a record high of £263,000 this year. The research also shows that the price gap between a terraced house and a purpose built flat in London nearly quadrupled from £46,000 in 2000 to £176,000 in 2014. It points out that a lack of properties coming onto the market is one of the reasons behind the upward revision to the forecast. Households expect property values to keep rising so as such individuals want to sell at the top of the market, but at the moment few anticipate a downturn in prices. Yet overall home ownership has risen dramatically among older households since 1981, but has collapsed among younger households. With retired individuals less likely to move home, this is curbing the number of individuals putting property up for sale, the report explains. It also reveals a substantial increase in the cost of moving up the property ladder, especially in London. Moving up the property ladder has historically been a key reason to sell a home but for many this has become infeasible. The high cost of moving home, with stamp duty costs curbing house moves and the report says this is particularly the case at the prime end of the property market which saw a substantial increase in stamp duty rates in last December’s Autumn Statement. Low levels of housebuilding are also reducing the number of new builds being put up for sale in the UK. The Cebr suggests that the new Housing and Planning Bill will not go far enough in controlling rising home prices. It claims that reconsidering various other housing market features is also necessary. For example, the UK’s population is getting older and with retired individuals less likely to move home, added incentives are necessary to encourage ‘rightsizing’. For example, a stamp duty exemption or reduction for those looking to ‘rightsize’ would encourage pensioners to put larger properties on the market. ‘A reduction in the number of properties being put on the market has placed further upward pressure on house prices in some parts of the UK. This is a result of low levels of house building, but also other factors such as an ageing population and the rising cost of moving up the property ladder,’ said Nina Skero, Cebr economist and main author of the report,. ‘The price gap between a first time home and a larger family home has skyrocketed… Continue reading
