Tag Archives: crisis
UK property prices set to rise by 3% to 8% in 2016, even with a rate rise
Residential property prices in some locations in the UK could increase by as much as 8% in 2016 as the recovery that has taken hold in London ripples out across the country. But overall price growth is expected to be around 6% across the country during the year, according to the forecast from the Royal Institution of Chartered Surveyors. One location tipped to see strong growth is Cambridge because of its buoyant jobs market and good commuter links to London. However, the RICS report also suggests that the current shortages of supply in the market is set to continue and this will push up prices with this growth likely to outstrip any rises in household income. According to RICS surveyors the average number of properties for sale have fallen to a record low of 46 and 40% of chartered surveyors believe that it is this lack of stock which is the main reason sellers are not entering the market, leading to a vicious circle. After East Anglia, the strongest growth is expected to be in the South East and the West Midlands, where 7% rises are forecast. The lowest level of increase is forecast for the North East of England where prices are forecast to rise by a much lower 3%. Areas with the highest number of transactions are likely to be the North East, Wales, Scotland and Northern Ireland, where prices remain low relative to the rest of the UK. RICS chief economist, Simon Rubinsohn, explained that an interest rate rise of 0.25% has been taken into account when making the forecast but he does not expect there to be a big rise in mortgage rates. ‘Housing has clearly leapt up the government’s agenda, but despite the raft of initiatives announced over the past year the lags involved in development mean that prices, and for that matter rents, are likely to rise further over the next 12 months,’ said Rubinsohn. ‘Lack of stock will continue to be the principal driver of this trend but the likely persistence of cheap money will compound it for the time being. Critically our principal concern with the measures announced by the government is that they are overly focused on promoting home ownership at the expense of other tenures,’ he pointed out. ‘Discouraging buy to let could see private rents take even more of the strain if institutional investment doesn’t increase significantly, particularly given the likely reduced flows of social rent property going forward,’ he added. Continue reading
Owning a home is still part of the American Dream, new research shows
The majority of young people renting their home still believe in the American Dream of owning their own home, according to new research from the National Association of Realtors (NAR). Although only half of surveyed households believe the economy is currently improving, nearly all young renters eventually want to buy a home and compared to earlier this year an increasing share believes their personal financial situation will improve in the months ahead. The survey data reveals that an overwhelming majority, some 94%, of current renters who are 34 years of age or younger want to own a home in the future. Overall, 83% of polled renters have a desire to own and 77% believe homeownership is part of their American Dream. Lawrence Yun, NAR chief economist, said that the survey's findings debunk the notion that young adults aren't interested in buying a home. ‘Despite entering the workforce during or immediately after the worst of the financial and housing crisis, the desire to become a homeowner appears to be a personal goal for a convincing majority of young renters,’ he pointed out. ‘Furthermore, there appears to be sizeable, pent-up demand for buying that currently remains untapped because of a variety of economic and personal reasons impacting many households,’ he added. The top two reasons given by renters for not currently owning was the inability to afford to buy and needing the flexibility of renting rather than owning at 53% and 19% respectively. When asked what would likely be the main reason for buying in the future, renters cited lifestyle considerations such as getting married, starting a family or retiring and an improvement in their financial situation at 33% and 26%. ‘A combination of factors such as rising rents and home prices, limited supply, repaying student debt, and getting married and having children later in life has more to do with the currently underperforming share of first time buyers than the idea that buying a home is not as desirable as it used to be,’ Yun explained. Despite uncertainty about the economy's current performance, at least 84% of all households within all surveyed age groups and education levels believe owning a home is a good financial decision. When asked if they believe this strongly or moderately some 76% who believe it's a good decision feel strongly about it. Additionally, at least 85% of surveyed households in each age category as well as across all education levels believe home ownership is part of their personal American Dream. The most appealing aspects of homeownership cited by those with this feeling include a place to raise a family, owning their own place and a nest egg for retirement at 36%, 26% and 14% respectively. NAR's survey found that more home owners than renters during the polling period believe that it's a good time to buy a home at 82% compared to 68%. Furthermore, of those who thought it was a good time to buy, 645 felt strongly about buying. Among… Continue reading
Home owners in London most confident about house price growth
Households across the UK perceived that the value of their home rose in December, led by those in London while households in the North East reported no change in prices. Some 11.1% of individuals said they plan to buy a house within the next two years, but this was down from a 12 month average of 12.8% according to the House Price Sentiment Index (HPSI) from Knight Frank and Markit Economics. December’s reading was a slight increase from the 58.7 recorded in November and was higher than the average reading of 58.5 recorded across 2015. However, it remained below the peak of 63.2 achieved in May last year, reflecting the more modest house price growth seen across the country over the last 12 months. The future HPSI, which measures what households think will happen to the value of their property over the next year, was unchanged in December compared to the previous month. An index reading of 70.3 was the joint second highest of the year. Households in 10 of the eleven regions covered by the index reported that prices rose in December, led by households in London at 68.7. In the North East a reading of 50 and households perceived no change in prices over the course of the month. This is only the third time that a region within Great Britain has reported no change or a fall in prices since August 2013. There are a number of regional differences in expectations for price growth with households in London at 77.9, the South East at 76.7 and the East of England at 74.5 the most confident that prices will rise over the next 12 months. Mortgage borrowers were the most confident that prices will rise over the next year at 76.1, followed by those who own their home outright at 74.9. ‘The localised nature of the housing market is highlighted in the index, with the regional difference between households’ perceptions of house price changes in December at its greatest for nearly 18 months. This regionalised picture is expected to continue next year, with households’ in London expecting the strongest growth in prices in 2016,’ said Gráinne Gilmore, head of UK residential research at Knight Frank. ‘The supply of housing coming onto the market has dipped to record lows in recent months – affecting the ability of families to move up and down the housing ladder. The survey suggests this trend is also set to continue, with a lack of available housing also likely to continue to underpin pricing in many areas,’ she added. According to Tim Moore, a senior economist at Markit, UK households seem to anticipate little fundamental change in prevailing supply and demand dynamics over the course of 2016. He pointed out that buoyant forecasts were reported for property values over the next 12 months, with expectations at a remarkably similar level to those seen at the end of 2013 and 2014. ‘At the same time, the proportion of UK… Continue reading
