Tag Archives: crisis
Quarterly prime country house price growth slows
Concerns over the introduction of a mansion tax, an impending interest rate rise and tighter mortgage lending in the UK has meant that quarterly price growth in the country house market slowed to its lowest level in almost two years. Between June and September prime property values increased by just 0.3% in the third quarter of 2014 while annual growth also slowed, to 4.7%, according to the latest data from Knight Frank. Despite these concerns, there hasn’t been a noticeable impact on sales volumes and the total number of exchanges completed so far this year was 8.4% higher than the corresponding period last year. The rising number of exchanges suggests that underlying demand has remained strong, says the report. However, there are signs that this momentum is easing. While the number of property viewings was fairly steady during the three months to the end of September compared to the same period last year, the number of prospective buyers registering their interest in buying a prime country home fell by 9%. The report points out that anecdotal evidence would suggest that concerns surrounding the possible introduction of a mansion tax on properties worth more than £2 million after next May’s general election are becoming more widespread among both prospective buyers and vendors. ‘Any further property tax would come on top of the large contribution purchasers of high value property already make in the form of stamp duty. Data for the 2013/2014 tax year shows that across England and Wales over £1 billion of stamp duty revenue, of the total £6.4 billion annual tax take, was collected from the £2 million plus price bracket alone,’ says the report. Price growth over the last quarter was strongest in the South West, at 1%, followed by Yorkshire and the Humber. On an annual basis, prime homes in these areas have risen by 7.7% and 5.1% respectively. ‘Prime town and city markets across the UK have benefited from rising demand from those relocating from London and downsizers and price changes in urban locations have reflected this. Growth of 1.3% was seen in the three months to the end of September, while annual growth totalled 8.9%,’ the report adds. Continue reading
US residential property price growth moderates for eleventh month in a row
Residential real estate prices saw moderating price growth for an eleventh month in a row, according to the latest figures from property data provider Clear Capital. Nationally, yearly gains decreased from a high of 11.7% in October 2013 to just 7.8% through September 2014. This trend is amplified in the West, where annual gains are cut nearly in half, from highs of 19.5% in October 2013 to 10.9% in September 2014. The firm said that if the ongoing moderation in the West, still the recovery leader, continues at its current pace it will be a foreboding sign of future declines but added that metro market trends will continue to keep buyers on their toes, as national and regional recoveries wane at varying velocities. For example, in Detroit discounted opportunities helped push prices up 21.9% year on year in September. Meanwhile the Hartford MSA saw declines of 1.1% over the quarter and 0.4% over the year, highlighting the type of market performance disparity that characterises the present market. The data also shows that each of the lowest performing 15 markets posted less than a 1% gain over the last quarter. This group remains subject to short term declines which could eventually turn into yearly losses. The report also shows that discounted distressed deals continue to dry up, down from a national high of 38.4% in 2011 to just 16.5% in September 2014. While this is generally a positive sign, Clear Capital points out that distressed sales helped drive the investor demand that kick started the recovery. ‘Historically, we’ve observed rising prices as distressed saturation declined. While reduction of distressed saturation is a healthy move for markets long term, over the short term it removes a key demand segment at a time when full buyer momentum has yet to be established,’ the report explains. It adds that the correlation between drastic declines in price gains and declines in distressed saturation is most visible in the West. Distressed saturation was at an all-time high of 50.5% in 2009 falling to just 12.6% in September 2014. As distressed saturation fell, so did price gains. Yearly price gains in the West have fallen to 10.9%. This nearly 50% drop in price gains since October 2013 is in sync with declines in distressed saturation. Clear Capital also says that future home price gains are more dependent on owner occupied purchases as the rising price floor and dwindling discounted deals leave investors with fewer opportunities and owner occupied demand is in part driven by consumer sentiment, among other key drivers, like jobs. While consumer sentiment levels reached a 14 month high in September, according to the University of Michigan's Consumer Sentiment index, momentum has tempered like home prices. Consumer sentiment yearly growth rates have softened 7% over the last seven months. Each of the last two times consumer sentiment rates have seen negative yearly changes, prices have declined. As housing seeks stability, moderating rates of consumer confidence and price gains foreshadow a third potential dip. ‘Heading into… Continue reading
New property tax rates for Scotland announced
A new Land and Buildings Transaction Tax (LBTT) is set to replace Stamp Duty (SDLT) for Scottish residential and non-residential property sales in April of next year. LBTT, which received Royal Assent in the summer of 2013, is part of the Scottish Government’s devolved tax raising powers and was not dependent on the outcome of the referendum and applies to Scotland only. The rates announced by the Cabinet Secretary for Finance, John Swinney, mean that many home owners at the lower end of the property market in Scotland will be better off when the progressive tax replaces the much criticised Stamp Duty which is a slab tax. In a move designed to help first time buyers, the threshold for LBTT is set at £135,000, up from the stamp duty threshold of £125,000. A marginal tax of 2% would apply to the proportion of a transaction between £135,000 and £250,000, while a 10% rate will apply to those between £250,000 and £1 million. There will be a new 12% tax on properties costing more than £1 million. ‘As a result of the rates I have announced today, nobody will pay tax on the first £135,000 of their house purchase. Some 5,000 more transactions will be taken out of tax, supporting first-time buyers and those buying properties in the affordable market,’ said Swinney. But others will pay more. According to Savills Research, buyers in Edinburgh, where an average family house costs around £363,000, will be paying £13,600 in tax under the new system, which is 25% more than they would have paid in Stamp Duty. Buyers of properties of £450,000, will now pay 65% more at £22,300. Taking all properties into consideration across Scotland from above £125,000, the new LBTT payments on residential property transactions will be on average 56% more than the existing stamp duty. ‘We welcome a progressive new system and the fact that the majority of home owners will be better off. When compared with other parts of the UK house prices in Scotland remain comparatively low. However for some sections of the market the new rates are not good news, and it comes at a time when the Prime Scottish market is only just beginning to recover,’ said Savills head of residential in Scotland Andrew Perratt. ‘Young families who need to live in the prime hubs of Edinburgh, Aberdeenshire and Glasgow’s west end, where average house prices are considerably higher, the proposed increases are so punitive they may discourage many buyers from moving. In view of this, we anticipate increased market activity between now and the spring, whereby buyers are likely to make quick and committed decisions before the new tax comes into force in April,’ he explained. ‘With the referendum now behind us, the Scottish market has been poised for a healthy recovery. However this relies on activity at both ends of the market, not just from first time buyers, and the new tax will… Continue reading
