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First time buyers in UK not impacted by Brexit vote
Buyers in the UK seemed largely unperturbed in the run up to the European Union referendum in June with sales to first time buyers increasing. According to the latest monthly report from the National Association of Estate Agents (NAEA) demand for housing increased as well while supply of available properties and the number of sales going through were stable. However, immediately following the result to leave the EU, agents witnessed uncertainty from sellers, and supply fell momentarily. Overall in June, estate agents saw an increase in demand which the NAEA says suggests that buyers weren’t fazed by the risk of Brexit in the lead up to the vote. There were an average 330 house hunters registered per member branch last month, up 9% from May when 304 buyers were registered, the lowest number recorded since November 2013. However, although June saw growth in the number of prospective buyers, demand still remains low in comparison to June last year. Meanwhile, some 57% of agents reported a drop in demand from prospective buyers and 58% saw supply fall in the week immediately following the vote. However, it is expected this will level out in July. First time buyers in particular were not impacted by the Brexit result. Immediately following the result only 28% of NAEA agents witnessed uncertainty from this group of buyers, while 30% of total house sales in June were made to first time buyers, the highest number of sales since October last year. The Brexit vote did not affect the number sales that completed in June either, with a total of eight sales completing per branch last month, a figure which has not shifted from May. Further to this, the supply of available housing also remained the same with an average of 37 properties registered per member branch in June. ‘In periods of extreme political and economic uncertainty, the housing market will always respond. However, it’s a relief to see that looking at the whole month overall, buyers were still keen to buy, sellers were still keen to sell and sales were still going through at the same level as we’d expect,’ said Mark Hayward, NAEA managing director. ‘It’s only natural that immediately following the vote supply fell but our figures show that the lead up to the vote wasn’t all doom and gloom, which should be a good indication of the months to come,’ he explained. ‘We remain upbeat and need others in the industry to do so as well. The new Housing Minister confirming his commitment to building £1 million new homes will be encouraging for many buyers, especially those looking to buy their first home. Hopefully we should soon see housing market confidence bouncing back to the levels seen pre-Brexit,’ he added. Continue reading
Latest house price index shows no Brexit effect on UK property prices
House prices in the UK increased by 0.5% month on month in July, defying the vote to leave the European Union which many commentators though would have an adverse effect on the nation’s property market. It means that the annual rate of house price growth edged up from 5.1% in June to 5.2% in July, taking the average price of a home to £205,715, according to the data from the Nationwide House Price Index. It is the first index from a major lender to be published since the historic vote on 23 June and overall the index report says that the UK housing market is still seeing steady growth. However Nationwide chief economist Robert Gardner said it is important to note that the index is based on data at the mortgage offer stage so there still might be an impact in future data. ‘It means any impact from the vote may not be fully evident in July’s figures, as there is a short lag between a buyer making the decision to purchase a property and applying for a mortgage,’ he explained. He also believe that the outlook can only be described as uncertain. ‘It will be tempting for commentators to assign any trends in the coming months to the impact of the referendum. Housing market transactions were always likely to soften over the summer after the surge in activity in March, as buyers brought forward purchases of second homes to avoid the stamp duty levy, which took effect in April,’ he pointed out. ‘Determining how much of any fall-back in activity is the result of the tax changes and how much is due to the referendum will be difficult. In the near term, increased economic uncertainty may lead to weaker demand for homes. Leading indicators are consistent with softening ahead. Household confidence fell sharply in the wake of the referendum result, especially attitudes towards making major purchases, which in the past has correlated with mortgage activity, though less closely in recent years,’ he added. He also pointed out that in the run up to the vote the Royal Institute of Chartered Surveyors (RICS) reported declines in new buyer enquiries and expectations of weaker price growth amongst surveyors. ‘Although these trends predate the vote and are likely to have been impacted by the recent tax changes as well as the referendum. How the labour market evolves will be crucial in determining the demand for homes in the quarters ahead. It is encouraging that conditions were robust in the run up to the vote, with the unemployment rate falling to a ten-year low in the three months to May,’ Gardner said. ‘The decline in long term interest rates to new all-time lows in recent weeks should also help to keep borrowing costs low and provide some support for demand. Even if there is a fall back in demand as a result of economic uncertainty, the impact on house prices is not certain, as potential… Continue reading
More first time buyers boost existing home sales in the US
Boosted by a greater share of sales to first time buyers not seen in nearly four years, existing home sales in the United States maintained their upward trend in June and increased for the fourth month in a row. Only the Northeast of the nation saw a decline in sales in June and sales to investors fell to their lowest overall share since July 2009, according to the latest monthly index from the National Association of Realtors (NAR). Existing home sales were up 1.1% to a seasonally adjusted annual rate of 5.57 million in June from a downwardly revised 5.51 million in May. After last month's gain, sales are now up 3% from June 2015 and remain at their highest annual pace since February 2007. According to Lawrence Yun, NAR chief economist, the four month streak of sales gains through June caps off a solid first half of 2016 for the housing market. ‘Existing sales rose again last month as more traditional buyers and fewer investors were able to close on a home despite many competitive areas with unrelenting supply and demand imbalances,’ he said. ‘Sustained job growth as well as this year's descent in mortgage rates is undoubtedly driving the appetite for home purchases but looking ahead, it's unclear if this current sales pace can further accelerate as record high stock prices, near record low mortgage rates and solid job gains face off against a dearth of homes available for sale and lofty home prices that keep advancing,’ he pointed out. The index data also shows that median existing home prices for all housing types in June was $247,700, up 4.8% year on year and it means that prices have now increased for 52 months in a row and surpass May's peak median sales price of $238,900. Total housing inventory at the end of June dipped 0.9% to 2.12 million existing homes available for sale and is now 5.8% lower than a year ago while unsold inventory is at a 4.6 month supply at the current sales pace, which is down from 4.7 months in May. The share of first time buyers was 33% in June, up from 30% in May and a year ago and is the highest since July 2012 when it was 34%. Through the first six months of the year, first time buyers have represented an average of 31% of buyers compared to 30% in all of 2015. ‘The modest bump in June sales to first time buyers can be attributed to mortgage rates near all-time lows and perhaps a hopeful indication that more affordable, lower priced homes are beginning to make their way onto the market,’ said Yun. ‘The odds of closing on a home are definitely higher right now for first time buyers living in metro areas with tamer price growth and greater entry level supply, particularly areas in the Midwest and parts of the South,’ he added. The data also shows that all cash sales… Continue reading
