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US housing market set to see strong demand from first time buyers in 2015
The growing gap between housing's low and top tiers in the United States is expected to restore healthy demand for first time buyers and those moving up the housing ladder. 2015 has the promise of a transitional year where full buyer momentum in the low and mid tiers reinforce a strong housing recovery, according to the latest analysis report from Clear Capital. It says that sustained national price growth in the low tier segment, once driven by investor activity, is good news for first time buyers and also encouraging is the number of potential buyers locked into underwater mortgages has been steadily decreasing. The recent rise in home prices continue to bring more home owners out of negative equity and with more equity to play with, mid-tier home owners could move up, creating more opportunity and driving healthy demand in the low and mid tiers of the market. ‘While we are expecting price growth to moderate across all tiers in 2015, the top tier’s quarterly growth rate fell to 0.3% in the fourth quarter, where it had been holding steady at around 1% through the first three quarters of 2014,’ said Alex Villacorta, vice president of research and analytics at Clear Capital.. The report shows that year on year this tier experienced the lowest price growth rate of 3.6% among the three national tiers. At its current pace, continued moderation in the top tier could push quarterly price growth into negative territory in 2015. January data also reveals the low tier holding on to double digit gains year on year at 10.2% and healthy quarter on quarter gains of 1.5%. The firm believes that this divide between a healthy low tier and stalling top tier could kick off a domino effect. Stalling prices in the top tier of the market could create the perception of a good deal. This instils confidence in mid-tier home owners, motivating them to move up to the top tier. In turn, this opens up more opportunity for low tier home owners to move up to the mid-tier. Creating new opportunity in the low tier could entice potential first time buyers to enter the market. This domino effect could be the catalyst for balanced demand across all sectors of the market. Regionally, the Midwest continues to lead the growth and year on year held on to double digit gains in the low tier segment at 13.6%, while the top tier fell to 3.3%. This gap between growth in the low and top tiers was also recorded on a quarterly basis, with the low tier growing at 1.7% and relatively flat growth in the top tier at 0.5%. The Midwest led the nation in the all tier segment, with quarter on quarter growth at 0.9%, narrowly edging the West at 0.7%. The Midwest is the only region currently seeing price appreciation in the low and mid tiers, growing concurrently above 1%. The firm explained that a moderating top tier could incentivize… Continue reading
Residential property prices in Dubai likely to remain steady or fall in 2015
Dubai's residential property bubble is deflating and average prices will remain the same or fall by up to 10% during 2015, a new study suggests. According to international real estate firm JLL, prices and rental rates have grown to an unsustainable rate over the last two years. JLL head of research for the Middle East and North Africa (MENA), Craig Plumb, said that a period of stability will be good for the market. There have been concerns voiced that lower oil prices could have an impact on the emirate’s property markets but JLL points out that Dubai is less vulnerable to lower oil revenue than other Gulf Cooperation Council (GCC) oil exporters, due to its diverse economy and growth in non-oil sectors. Overall, the second half of 2014 saw Dubai’s residential market stabilise as average rents and sale prices remained relatively flat, with marginal declines over the last quarter. On an annual basis, the REIDIN rental index shows growth levels dropping from 18% in 2013 to 15% in 2014. Similarly, the sales market saw some cooling down as the REIDIN sales index points to a decline in growth levels from 23% in 2013 to 20% in 2014. This comes as the number and value of transactions dropped 30% & 14% respectively in 2014, according to data from the Land Department. JLL predicts that the residential sector is likely to remain subdued over the next 12 months as the market is expected to absorb 25,000 additional units in 2015. ‘In reality, we remain cautious of the delivery of some of these projects within the timeframe,’ the firm says. It also points out that as Dubai’s economy continues to expand and job creation grows, demand for affordable housing is expected to increase over the next 12 months. This comes as a proposal to ensure the availability of affordable housing for the middle-income segment of the market is currently under review. ‘These efforts aim to create a balance between the supply of luxury and affordable housing units that cater to all residents in the Emirate, as many were previously priced out of the market during the 2013/2014 price rally,’ the JLL market overview report says. It also shows that in 2014 the supply of units in Dubai increased to 377,000, up from 342,000 in 2011 and the firm predicts that 25,000 residential units will be added in 2015, some 13,000 in 2016 and 12,000 in 2017. ‘While lower oil prices are likely to dampen investment sentiment in the short term, Dubai’s success at diversifying its economy and expanding its global reach makes it less vulnerable to oil price fluctuations,’ the report explains. ‘The next 12 months are expected to see a boost in business activity, highlighted by the government’s 2015 budget announcement which saw planned spending and revenues increase 9% and 11% respectively. However as government charges increase further in 2015, we remain wary of pressures on the cost of living as inflation registered 4% at the… Continue reading
Farmland values in England expected to be steady in 2015
Farmland values in England increased by 2.5% over the last six months of 2014 and are expected to rise by 3% in 2015, a new report shows. But there is considerable regional price variations. Farmland in the South and East of England achieved values of around £14,000 per care whilst in the South West it was £9,000 per acre, according to the data from Carter Jonas. Location, type and quality remained key factors in achieving prime values together with the strength of the local market, the firm points out. The report also shows that the supply of land remained increasingly restricted, with a total of almost 120,000 acres being openly marketed across the UK in 2014, a 15% decrease from its previous year's level. As a result of the tightening supply of openly marketed land, the volume of off market sales increased significantly during 2014, accounting for a third of all Carter Jonas transactions in 2014 as clients increasingly considered seeking out private deals in order to gain exposure within the sector. This trend is expected to continue and will help to sustain the continued capital value growth forecast during 2015. Overall, demand became increasingly localised across the farmland market during 2014, with lot sizes over 1,000 acres proving most attractive. The diversity of demand is shown by the fact that farmers accounted for the highest proportion of transactions completed by Carter Jonas during 2014 at 28%, closely followed by lifestyle at 24% and investors at 20%. ‘The halo effect surrounding London remained significant and is expected to build momentum during 2015 as the Capital continues to thrive in performance and remuneration levels are set to outpace inflation. The halo effect is particularly prevalent in the country house market with a maximum of 50 acres, although holdings with larger parcels of land continue to benefit, albeit to a lesser extent,’ said Andrew Fallows, partner in Carter Jonas' national farms and estates team. ‘The inevitability of increasing interest rates, currently predicted to occur in the second half of 2015, is also expected to impact the general tone of the land market and our forecasts predict that average land values will increase 3% during 2015,’ he added. Continue reading
