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Canadian prices expected to rise 5.9% this year but only 0.7% in 2015
The national average home price in Canada is now projected to rise by 5.9% to $405,000 in 2014 and a further 0.7% in 2015, according to the latest forecast. The Canadian Real Estate Association is also predicting similar price gains in British Columbia, Alberta, and Ontario while increases of just below 3% are forecast for Saskatchewan, Manitoba and Prince Edward Island. Newfoundland and Labrador is forecast to see average home price rise by about 1% this year, while Quebec is forecast to see an increase half that size. Prices are forecast to be flat in New Brunswick and fall by almost 2% in Nova Scotia. Alberta and Manitoba are forecast to post average price gains of almost 2% in 2015, followed closely followed by Ontario at 1.3%. Average prices in other provinces are forecast to remain stable, edging up by less than 1%. The CREA outlook report points out that an extraordinarily bleak winter delayed the start to the spring home buying season earlier this year. This deferral boosted activity in May and June as properties were snapped up after finally hitting the market, particularly in markets with a shortage of listings. Although this boost was and still is expected to be transitory, sales have yet to show signs of cooling as activity strengthened slightly further over the summer. The increase reflects continuing strength in home sales among large urban markets that initially drove the spring rebound together with gains in markets where activity had previously struggled to gain traction. Lowered mortgage interest rates supported this trend. Sales are now forecast to reach 475,000 units in 2014, representing an increase of 3.8% compared to 2013. This is upwardly revised from CREA’s forecast of 463,400 sales published in June, and reflects stronger than expected sales in recent months. Even so, sales activity is expected to peak in the third quarter as the impact of a deferred spring dissipates and continuing home price increases erode housing affordability. This would place activity in 2014 slightly above but still broadly in line with its 10 year average. Despite periods of monthly volatility since the recession of 2008/2009, annual activity has remained stable within a fairly narrow range around its 10 year average. This stability contrasts sharply to the rapid growth in sales in the early 2000s prior to the recession. British Columbia is forecast to post the largest year on year increase in activity at 11.9% followed closely by Alberta at 7.7%. Demand in both of these provinces is currently running at multi-year highs. Activity in Saskatchewan, Manitoba, Ontario, Quebec and New Brunswick is expected to come in roughly in line with 2013 levels, with sales increases ranging between 1% and 2% in the first three provinces and edging lower by about 1% lower sales in the latter two provinces. Continue reading
New report warns only well-off will be able to afford to buy a home in the UK
Only the wealthiest of the next generation will be able to buy a home if current trends continue in the UK, according to a new report from the National Housing Federation. It shows that first time buyers now have to pay, in real terms, 10 times the deposit needed in the early 1980s as well as earn more, borrow more, and rely more on family wealth than even a generation ago. The average first time buyer today needs a £30,000 deposit, and has an average income of £36,500compared to the average salary for first time buyers in the 1980s of £20,000. A first time buyer has to borrow 3.4 times their annual income on average, compared to first time buyers in 1979 who needed to borrow just 1.7 times their income and two thirds of first time buyers receive financial help from parents, a figure that has doubled in five years. As a result home ownership is being pushed out of reach of average earners including nurses, firefighters and plumbers. And with the number of home owners falling and first time buyers not getting considerably older, it indicates that the pool of those buying homes is shrinking to those with the greatest wealth. The struggle younger generations face is being felt across the country. In separate polling by YouGov on behalf of the National Housing Federation almost 80% of people in England think it's harder to own a home now than it was for their parents' generation. Eight out of 10 people polled also didn't believe any of the main political parties would effectively deal with housing. Younger people whose parents can't help financially, can find themselves stuck living in their childhood bedrooms or paying high private rents that make it almost impossible to save. The National Housing Federation also highlights that fewer first time buyers in the future could slow down the wider housing market and make it harder for 'second steppers' to move up the ladder. ‘With the high salary, and huge deposit younger generations now need to buy even a modest home, home ownership is quickly becoming an exclusive members club. Sadly, it will depend on the wealth of the family you were born into as much as your own hard work,’ said David Orr, chief executive of the National Housing Federation. ‘We've found that eight out of 10 people don't believe any of the main political parties will effectively deal with housing, but they still have the chance to put that right. With a bold long term government plan for house building our housing crisis is solvable. We desperately need politicians from all sides to commit to ending the housing crisis within a generation,’ he explained. Continue reading
House sales in Scotland reach six year high but independence could affect growth
House sales reached a six year high in Scotland with monthly growth of 0.2% in July but slowing supply is on the horizon, according to the latest index. Over half of Scotland actually saw prices drop in July and home values are still 0.6% off the 2008 peak while sales remain 30% lower than pre-crisis levels, the LSL/Acadata index also shows. But first time buyer activity fuels new record prices in Aberdeenshire and Edinburgh and the average house price was £164,483 in July, up 5.7% from a year before. According to Richard Sexton, director of e.surv chartered surveyors, part of LSL Property Services, a favourable lending environment boosted demand over the summer. ‘There were 9,285 transactions in July, climbing 5% up from June to reach the highest monthly total since July 2008,’ he said. He believes that this propelled prices to new peaks in July in some of Scotland’s centres of employment with Aberdeenshire and Edinburgh seeing transactions soar 20% and 25% respectively over the past year. But on the other side of the coin, uncertainty is leaving its trace and squeezing supply has seen slower overall transactions growth compared to last year. ‘Higher up the chain any prospective sellers with the luxury of time are hanging on to see which way the tide turns before they put their home on the market,’ he added. However, he warned that depending on the outcome of the referendum on Scottish independence later this week, this could reverse rapidly. ‘There is a chance of a mass take-off and sale of investments, which would disrupt house prices in the short term,’ he said. ‘Scotland’s housing market recovery is still in the delicate stages of rehabilitation, and the number of completed sales in the last 12 months still only represents 70% of the average over the period 2004 to 2007. Ambiguity surrounding Scotland’s future isn’t helping. We are in the throes of the longest period of sustained monthly house price growth since February 2007, but only time will tell whether this recovery will be derailed,’ he explained. ‘A Yes vote would usher in a further 16 months of uncertainty. A Scotland outside the UK would open the floodgates to the real questions of currency, exchange rates, mortgage risk, and property taxation. Many mortgage holders could see their LTV shoot up as the implications of borrowing from a bank in a foreign country are unmasked. A No vote doesn’t guarantee clarity either but the mist of ambiguity would clear sooner,’ Sexton pointed out. ‘Whichever way the chips fall on Friday morning, two million unhappy people will wake up in a divided Scotland, with a rift carved through society. This division will not easily be overcome, and it is the job of businesses to keep calm and carry on as usual. In the aftermath of the biggest decision Scotland will ever have to make, everybody will benefit from swift answers to our questions, regardless of the final word from the ballot boxes,’ he concluded. Continue reading
