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UK regional prime property markets outperform London
For the first time since the credit crunch, the UK’s prime regional property markets marginally outperformed London in 2014 with growth averaging 3.2%, according to the latest analysis. The new rates of stamp duty introduced by the Chancellor in his Autumn Statement in December 2014 brought mixed blessings for different parts of the market, the analysis report from real estate firm Savills shows. ‘For all buyers below £937,500, stamp duty rates have fallen and this is reflected in levels of annual price growth. Above this margin, the increased rates of stamp duty resulted in an adjustment in values at the top end of the market in the final quarter, most notably in the higher value extended commuter belt of London,’ said Lucian Cook, director residential research Savills. He also pointed out that given a strong performance earlier in the year, these commuter markets showed the highest level of annual growth. Prices rose by 4.6% in the London suburban markets such as Esher, Rickmansworth and Loughton and by 3.7% in the inner commuter zone in the likes of Sevenoaks, Guildford and Beaconsfield. While the markets within the commuter zone, up to an hour from London, are all now at or above their 2007 peak, the regions beyond these areas are some way below this level. Prices remain on average 10% below their 2007 peak across the remainder of the South of England and over 20% below across Scotland as an average. The markets of the Midlands and the North falls between the two with a decline of 14.8%. In the sub £1 million prime market that predominantly benefits from a cut in stamp duty, average prices rose by 4.6% in 2014, fuelled by particularly strong growth in the first six months of the year. ‘These lower value prime markets, particularly those well connected to London, are forecast to see the strongest growth over the next year and into the midterm,’ explained Cook. Higher value homes in the £2 million plus range recorded marginal 0.8% falls over 2014, but values fell by 3.1% in the last three months of the year. The report also says that the other overriding feature of the regional market remains the stronger performance of properties in urban locations. Annual growth in prime cities across the UK, such as Oxford, Cambridge, Bath, York, Chester and Edinburgh, averaged 5.8% price growth over 2014 compared to an average increase of 3.1% in their surrounding villages and 0.9% in rural locations. Meanwhile, prime London house prices rose by an average of 2.6% in 2014. However, 2014 was a year of two halves with prices rising by 4.9% in the first half and falling by a net figure of 2.2% in the second half. Savills said this was predominantly due to the stamp duty changes introduced in the Autumn Statement which particularly impacted the higher value markets. The strongest performers in 2014 were the markets up to £1 million and in the £1 million to £2 million… Continue reading
Most UK home owners expect property prices to rise in 2015
The majority of home owners in the UK are confident about property prices rising in 2015, although the number is down slightly from a year ago. Overall some 88% of home owners believe prices will rise by the summer, down from 92% a year ago, according to the latest Zoopla housing market sentiment survey. Property owners expect values to climb a further 7% on average in the first six months of 2015 and in London they expect property values to climb 9%. The East of England has the highest proportion of optimistic home owners, with 91% anticipating property prices to carry on climbing in the first half of 2015. Confidence is least prevalent in the North East, but 82% still expect house price growth between now and June. Londoners expect the fastest rise in house prices, anticipating a further 9% boost in values by the summer. Home owners in the north are more cautious, with those in Yorkshire and the Humber and the North West predicting a more modest 5% uplift in property prices over the next six months. Recent indications of cooling house price growth have left an increasing proportion of homeowners worried about values dropping. Currently, 7% of property owners expect prices to falling during the first half of this year, an increase from just 3% at the start of 2014. ‘The UK property market appeared to have changed its spots towards the end of 2014 and the more sluggish pace of growth seen in the latter months was a very different beast to the lively price hikes of the spring,’ said Lawrence Hall of Zoopla. ‘But home owners don’t appear to have been seriously spooked, with consumer confidence standing firm. Encouraged by the vast gains they’ve already experienced this year, homeowners still expect to benefit from significant house price growth in the first half of 2015,’ he added. Continue reading
Bottom end of US housing market rebounds
Many home owners in the US at the bottom third of their markets are finally in a position to sell, according to the latest index data. Owners of the country's lowest valued homes emerged from 2014 in a stronger position than previous years, with home values up 6.8% year on year, the latest quarterly report from Zillow shows. Properties in the lower third of home values bottomed out in January 2012 with a median value of $84,100 but by December 2014 they had bounced back to a median value of $101,400. While home owners in the bottom price tier are still 17% below their pre-recession peak values, this is a distinct improvement from the 31% value loss they suffered when home values hit rock bottom in January 2012. Returning value means many with lower valued homes who had been in negative equity are now able to sell or refinance, boosting low end inventory, which has been tight for the past few years. Going into the home buying season in 2015, buyers can expect to find more homes on the market and less competition from all cash bidders, the report also points out. Metros with the biggest jump over last year in low end inventory are Las Vegas, with 66.% more low end homes on the market in December 2014 than December 2013, Riverside, with 47.3% more and Washington D.C. with 45.7% more. Homeowners of lower valued homes are emerging from negative equity and are able to sell just as many in the millennial generation prepare to buy homes, pushed into the housing market by rising rents and abysmal rental affordability. ‘In many ways, for the housing market to fully normalize, it has to start at the bottom. More lower end home sellers will help meet demand from entry level buyers, and these sellers in turn will re-enter the market in search of a slightly pricier home, which will entice more middle and upper tier sellers to list their homes,’ said Zillow chief economist Stan Humphries. ‘As the economy gets stronger, we expect more young adults to strike out on their own, moving out of friends' and parents' homes. This will create strong demand in coming months, especially for less expensive homes,’ he added. Rents continued to rise, and at the end of December the Zillow Rent Index had increased 3.3% year on year, to $1,345. Continue reading
