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Lower end US housing market set to be the best performer in 2015
The lower end of the residential real estate market in the United States is set to outperform other property sectors in 2015. Most housing markets will see declining gains at a national and regional level, but the low tier segment of the market nationally is forecasted to grow at around 3%, according to the latest property report from Clear Capital. The index report shows that in December the low tier segment, that is homes selling for under $95,000, saw double digit gains of 10.4% nationally. But that too is set to slow. The report says the low tier of the Midwest could see growth of 7%, which is more than double that of the national forecast for this segment, and more than 5% ahead of the West at 1.7%. Price growth in the Midwest is expected to outpace the nation on all tiers by 1.6%, nearly double that of the country as a whole in 2015. A cluster of metro areas that are projected to see some of the highest price growth over the next year are also located in the Midwest. Ohio leads the pack with the highest number of metros at the top of the firm’s forecast with predicted price growth in Columbus, Dayton, Cleveland and Cincinnati ranging from 2.2% to 4.5% in 2015. Dayton ended 2014 with gains in median home prices of 16.5% over the year. This is a drastic increase for a metro market that saw a price decrease of 2.3% just a year ago. Cincinnati also showed strong signs of growth at the end of 2014, with median sales price increasing by 9.1% in December, and an increase of 17.2% from 2013. Double digit gains are set to cease. While the West continued to outshine the other three regions with 8.7% growth at the end of 2014, this is more than a 10% drop from where the region ended 2013 with 18.9% growth. T The Midwest followed close behind with 7.7% price growth over the year in December 2014, down just 2.3% from 10.1% a year ago. The South and Northeast finished 2014 with 6% and 2.9% price growth, respectively, with these regions also seeing moderation to price gains from 2013. At the national level, December home price growth ends 2014 at 6.4%, down from 10.9% a year ago, with continued moderation in quarter over quarter gains throughout 2014, ending 2014 at 0.9%. The firm is predicting another wait and see year and expects continued moderation for 2015. ‘A year ago, we forecasted the start of a more mature recovery with year-end gains between 3% to 5% for the nation, and with price appreciation moderation one of the only consistent trends in 2014,’ said Alex Villacorta, vice president of research and analytics at Clear Capital. ‘In 2015, we will see the natural progression of the housing market regressing back to normal rates of growth. Current price trajectories suggest that price growth at the national level will continue to moderate… Continue reading
Auckland property market sees record sales, record prices and low listings
December’s residential property sales in Auckland were the strongest they have been for the final month of the year for the past decade, the latest data shows. Sales numbers were up significantly, prices reached all-time highs, and the number of available listings reaching an all-time low, according to independent agency Barfoot & Thompson. ‘It was our busiest December in the last 10 years with demand never being higher, or choice lower. Even though December was the shortest selling month of the year we sold 1,050 properties, our fourth busiest month of the year,’ said managing director Peter Thompson. He pointed out that sales in December were 28.5% higher than in December 2013 and the average sales price in December 2014 was $758,891, some $1,982 higher than November’s average price. The median price increased to $720,000 in December, which was $28,500 or 4.1% higher than November’s, and it is the first time the median price has moved above $700,000. ‘At the same time the number of properties on our books at the end of December was 2,500, our lowest number for any month end in the past 10 years. For us, this represents less than two months’ stock, and indicates that in the first quarter of this year, buyer choice will remain severely limited,’ explained Thompson. He believes that in part, December’s strong activity was a flow over from October and November, which were catch up months following a relatively low period of activity during September caused by the General Election. Although the year ended with record prices and sales activity, overall prices in 2014 rose slower than they did in 2013. The average price increased by 10.3 % in 2014, compared to 11.1% in 2013 while the median price increased by 11.1% compared to 12.7%. ‘The past two years of strong price growth is reflected in the significant change in sales volumes in both the higher and lower price segments of the market. In 2014 some 29.5% of all homes sold for under $500,000,’ said Thompson. ‘A year earlier, 38.6% of all sales were in this price category. The same trend is found at the top end of the market, with sales of homes in the $1 million and above category in 2014 representing 17.2% of all sales. A year earlier it was 12.4%,’ he added. Continue reading
Research reveals widespread confusion over interest rates among UK home owners
Whilst January is traditionally the time to get finances in order and plan for the year ahead, new research reveals that there is widespread confusion around UK interest rates and when they might rise. Some 46% don’t know that the current Bank of England base rate and 88% are unaware of its interest rate forecast for a rise in October 2015, according to research from Barclays Mortgages produced in partnership with the Centre of Economic Business Research (Cebr). Some 61% of home owners are uncertain when interest rates might rise and half with variable rate mortgages aren’t aware their repayments could rise, the research also shows. And overall 76% are not putting money aside to be able to cope with interest rate increases despite the Cebr predicting a minimum total mortgage payment rise of £723.8 million across the UK. The research reveals that home owners cite different political and regulatory statements, conflicting family views and changing market commentary as the main reasons behind this widespread uncertainty. The lack of awareness may contribute to UK mortgage holders experiencing financial difficulties in 2015, according to the research. Just under half, 49.5%, of those with a variable rate mortgage don't expect or aren't sure that their mortgage repayments will rise in 2015, despite the Cebr predicting that home owners across the UK could face a potential £1.1 billion total increase in mortgage repayments by the end of 2015. This is based on the Cebr's 'sharp but potential' model suggesting three rate rises in 201 (taking the base rate from its historic low of 0.5% to 1.25% by December 2015, something which is not considered unfeasible by economic experts and which would increase average mortgage repayments for individuals by £118.974. The second 'medium' model focused on a single interest rate rise of 0.25% in May 2015 and would see home owners across the UK paying an additional total of £904.2 million in their mortgage repayments by the end of 2015 averaging at £101.33 per home owner. At a very minimum the Cebr predicts an average annual £81.12 increase in mortgage payments for individuals by the end of 2015. When looking at the UK as a whole, this 'gentle model' would result in a total £723.8 million annual increase in repayments. The research report says that whatever the increase in repayments, it is clear that people are underprepared for any interest rate rise. The survey also found 45% felt they may have missed out on better mortgage rates and therefore paid out more because they weren't sure whether or not to fix or change their mortgage. ‘Our report shows there is widespread confusion over interest rates and we encourage home owners to review their current situation and get advice on what their next mortgage step should be,’ said Andy Gray, Barclays managing director of mortgages. ‘We want our customers to remain financially fit in the face of potential interest rate rises in 2015, and believe the impending rise that… Continue reading
