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Annual savings of £742 for those getting on the UK housing ladder
First time buyers in the UK are £742 or 9% a year better off with their own home compared to those who rent, according to new research by the Halifax. The average monthly buying cost, including mortgage payments, associated with a first time buyer buying a three bedroom house stood at £658 in December 2014, some £62 lower than the typical monthly rent of £720 paid on the same property type. With the price of a typical first time buyer home rising by 8% in 2014, the difference has narrowed from £80 or 12% to £62 since 2013 as the average monthly buying costs grew by £46 while average monthly rents increased by £28. However, at the same time, the number of first-time buyers increased by an estimated 22% in 2014, with 326,500 first time buyers getting on the ladder, the highest annual total since 2007 when it was 359,900. In 2014, first time buyers in London had, in cash terms, experienced the largest benefit from buying rather than renting a home. The average monthly cost of £1,275 for those who have bought compares to an average monthly rental price of £1,387, a saving of £112 a month or £1,338 over the year. The second largest difference is found in the North West where first time buyers were paying 17% less a month, £109 a month or £1,304 annually, than the typical private tenant in the region. The smallest differences between the monthly cost of buying and renting are in the East Midlands at £6 or 1%, and the South East at £15 or 2%. The research shows that the gap between cost of buying and renting still substantially higher than in 2009. Five years ago the average monthly cost of buying was £15 higher than the typical rent paid at £576 versus £561. Since 2009 the substantial improvement in the affordability of buying relative to renting largely reflects a 28% or £159 rise in average monthly rental costs over the past five years. This increase was twice as fast as the 14% or £83 rise in average monthly buying costs. ‘Average home buying costs are significantly lower than average rental costs, providing first-time buyers with a large financial saving if they can get on the housing ladder,’ said Craig McKinlay, Halifax mortgage director. ‘While the timescales associated with raising a sufficient deposit to buy a home present a hurdle to many potential first time buyers, the significant difference in costs between buying and renting, combined with still low mortgage rates, increased consumer confidence and the Help to Buy scheme, have all been factors driving the substantial rise in first-time buyers over the past two years,’ he added. Continue reading
New home building market in Australia gets boost
Loans to both investors and owner occupiers for house building in Australia increased at the end of 2014, pointing to ongoing strength in new home building in 2015. In December 2014, the number of loans to owner occupiers for the construction of dwellings edged higher by 0.8% and over the December 2014 quarter, these loans increased by 1.1% to a level 9.8% higher than in the December 2013 quarter. The data published by the Australian Bureau of Statistics also show that lending to owner occupiers purchasing newly constructed homes fell by 1.8% during December, and down 4% over the quarter. The value of lending to investors for the construction of new housing jumped by 44.2% during the month of December 2014 and over the quarter the value of lending increased by 16%. ‘Housing construction loans, in both the owner occupier and investor segments of the market, finished 2014 on a strong note. This provides a very positive signal for activity in the residential construction sector in 2015,’ said Housing Industry Association economist, Diwa Hopkins. ‘Investors are likely to continue playing a key role in adding to the stock of new housing in 2015. The owner occupier side of the market, however, appears to be losing some momentum,’ she explained. ‘While overall owner occupier lending levels remain strong, some signs have emerged that the growth typical of 2013 and much of 2014 may now be moderating,’ she added. The housing finance release follows substantial upward revisions by the ABS to the level of activity among first time buyers and shows that their participation in the market is much higher than earlier thought. In 2014, lending to first time buyers accounted for around 15% of the total, higher than a decade ago. ‘The key to housing affordability for first home buyers and trade up buyers alike is a supply of dwellings commensurate to the needs of a growing population. The strong performance of the residential construction sector in 2014 has provided vital assistance in this regard,’ Hopkins pointed out. A regional breakdown of total number owner occupier loans for new housing in December 2014 compared with the same month in 2013 shows the strongest increase occurred in Tasmania with growth of 74.2%. The Northern Territory saw growth of11.8%, Western Australia was up 11.1%, the Australian Capital Territory up 5.9%, New South Wales up 2.9%, Queensland up 2.8% and South Australia up 0.3%. Victoria was the only state to see a fall at 1.9%. Meanwhile, the latest result for the HIA New Home Sales Report, a survey of Australia’s largest volume builders, highlights a second consecutive rise for sales in the month of November 2014. ‘Renewed upward momentum in the multi-unit segment drove growth in overall new home sales in late 2014, a trend unlikely to be reversed when the December result comes through,’ said HIA chief economist Harley Dale. Total seasonally adjusted new home sales increased by 2.2%… Continue reading
Straw houses go onto UK general sales market
Houses made of straw are on sale on the open market for the first time in the UK after becoming eligible for standard mortgages. Until now the eco-homes have been the preserve of bespoke building projects and financed through specialist lenders but now a row of seven straw houses in Bristol have now become the first to secure building certification which makes them eligible for a standard mortgage. The two and three bedroom properties will each use more than seven tonnes of straw and reduce heating costs by 90% compared to the average brick house, according to Professor Pete Walker from the University of Bath who led a project to develop and test the construction method. They homes are due to be completed in April and are on sale priced between £220,000 and £240,000. ‘I think there's a lot of misconception about using straw, especially about fire resistance. As a construction material straw is a low cost and widely available product that offers real potential for ultra low carbon housing throughout the UK,’ said Walker. ‘Building with straw could be a critical point in our trajectory towards a low carbon future. The great thing about the houses is that they are affordable and in addition the energy costs will be extremely low, under £100 a year,’ he explained. The houses are currently undergoing a 10 week construction programme by developers Connolly and Callaghan in Shirehampton, Bristol. Each wall is the same thickness as a normal bale of straw, framed in timber and encased in wooden boards. In addition compressed straw board will line the walls throughout the house as a replacement for plaster board and once built, the terraced houses will be clad in brick so they will be indistinguishable from the other properties in the street. The only hint of their remarkable construction method will be a 'truth window' in each property where a section of straw wall will be visible through a window. Although these are not the first houses in the UK to be built using straw bales, they are the first to be built for any buyer on the open market. The straw design has received BM Trada's Q mark certification, meaning developers and house buyers can now insure and secure mortgages against the homes. ‘First and foremost the work has demonstrated that straw bales create safe, durable and affordable houses. They make contributions to reducing fuel poverty and make significant contributions to reducing energy bills of building occupants,’ Walker pointed out. He added that there are also wider benefits. ‘Buildings contribute around 50% of the carbon emissions in this country. Producing lower… Continue reading
