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UK house hunters holding off until general election result, agents believe
House hunters in the UK seem to be holding off making a decision with the country’s general election just a week away, according to the latest monthly report from estate agents. Some 63% of members of the National Association of Estate Agents (NAEA) believe that demand for homes is at its lowest since last year with just 343 house hunters registered per branch compared with 406 last September when demand was at its highest. The report also shows that just 22% of total house sales in March were made to first time buyers, the lowest since July 2014 and down 30% from February. NAEA member agents are concerned about supply and demand for first time buyers as housing policy remains one of the big election issues. The report also shows that almost half, 48%, of agents favoured the Conservatives’ pledge to build 200,000 new starter homes, arguing that this initiative will be the most beneficial for the first time buyer housing market. However, only 6% back Labour’s promises to boost house building rates to 200,000 a year by 2020 and 31% do not believe that any of the proposed policies will be enough to straighten the market out. ‘We would always expect to see an event as monumental as a general election having an impact on the property market. But what makes this election so interesting is that no one knows what the result will be,’ said Mark Hayward, NAEA managing director. ‘And with housing featuring so prominently in all three main parties’ manifestos, buyers in particular are holding off to see what will happen. The outcome of the election will impact first, second, third and last time buyers,’ he added. The NAEA report also shows that while demand is down to 343 house hunters registered per branch in March, supply is up 12% from 43 to 48 houses available per NAEA member branch, as houses stay on the market for longer with nervous buyers. Demand still hugely outstrips supply, so a fall in demand does not affect the number of sales. March saw an increase in the amount of sales agreed per branch, with 10 sales going through, compared to eight in February. ‘We may have seen a slight increase in supply this month, but it is not an ongoing trend or a big enough jump to fill the gap for demand. It’s encouraging to see all parties actively proposing plans to regulate supply and demand,’ said Hayward. ‘However, the policies in place are unlikely to be enough to rectify the crippling situation we’re in. It’s all very well proposing to build 200,000 houses, but planning law, lack of infrastructure and available labour can make this process so lengthy that it may be ten or twenty years until we see this, by which time demand will be greater,’ he explained. ‘Although our agents have seen the market cooling off ahead of the General Election, it will inevitably bounce back again at a rapid… Continue reading
UK house prices up 1% in April, according to latest index
Annual house price growth in the UK edged up to 5.2% in April from 5.1% in March, according to the latest index from the Nationwide building society. The data from the leading lender also shows that house prices rose by 1% in April, taking the average price of a home to £193,048. This is the largest monthly increase since June 2014 and as a result the annual pace of house price growth increased for the first time in seven months, Nationwide chief economist Robert Gardner pointed out. He explained that the pick-up in price growth has occurred even though the pace of activity in the housing market has remained fairly subdued in recent months. ‘Indeed, the number of mortgage approvals is still well below its long run average and 20% below the levels recorded in early 2014. The strength of the economy and relatively subdued pace of activity in the housing market remains something of an anomaly,’ said Gardner. ‘It is possible that heightened uncertainty ahead of the election is weighing on activity, though there is no compelling evidence from previous UK elections to suggest a strong impact. Healthy labour market conditions and continued low mortgage rates should help underpin housing demand in the quarters ahead,’ he added. The Nationwide has also been looking at how the UK housing market compares to the rest of the European Union. ‘The UK is often characterised as a nation of home owners, though compared with our European neighbours, the proportion of the population owning their own home is not particularly high. In fact, it is actually towards the lower end of the range,’ Gardner said. He pointed out that although some other European nations have seen declines in their home ownership rates in recent years, the movement in the UK has been more pronounced. ‘That said, even at its all-time high of 73% in 2007, the UK home ownership rate was not particularly high by EU standards,’ he explained. ‘Since then, there has been significant growth in the private rental sector. Interestingly, while the UK home ownership rate may not be particularly high, the propensity for young adults aged 18 to 34) to live with their parents is relatively low, a trend which has become more pronounced over the past five years,’ he added. Continue reading
US rents starting to outpace house price growth, new analysis shows
Residential rents in the United States are continuing to rise, up 3.7% year on year to $1,362 a month and keeping pace with house price growth of 3.9% over the same period. The latest data from real estate firm Zillow shows that in 17 of the nation’s 35 largest metro areas, annual rental growth exceeded annual house price growth in March. This is in line with expectations as the firm predicted at the end of 2014 that annual rent growth would outpace house price growth by the end of 2015. It now says this will happen well before the end of the year. But while overall home values in the nation as a whole may still be growing more quickly than rents, in many large metro areas, rental growth has surged ahead over the past year. Of the 17 metro areas where rents are growing more quickly than home values, the biggest differences are in San Francisco with rents up 14.8% year on year and home values up 9.6%. While in Kansas City rents are up 8.6% and price up 4%, and Pittsburgh it is 6.3% and 4.3% respectively. March represents the first month in two years in which annual home value growth was less than 4%. For 24 months, home owners have watched their homes appreciate at a pace well above historic norms at around 3% annually. According to Zillow rising rents themselves are a double edged sword for the purchase market. As current tenants see more and more of their income going to landlords that keep raising the rent, many are likely to opt for the relative stability of homeownership. And home ownership, in addition to offering stable payments over many years, is also an incredible bargain right now. Current US renters making the median national income can expect to pay about 30% of their income to afford the median US rental property, up from about 25% historically. Buyers, on the other hand, thanks to very low mortgage interest rates and home values that, for most local markets, remain below their pre-recession peaks and should expect to pay only 15% of their income on a mortgage, down from about 22% historically. The Zillow analysis also points out that homes to buy remain scarce, and those homes being built are often focused at the high end, and not at current renters that are likely looking to buy more entry level homes. Continue reading
