Tag Archives: finance
Older home owners in UK underestimate the value of their home by almost £90,000
Older home owners in the UK underestimate what their property is worth with 60% not having it valued since first buying it, new research shows. It leaves many over 55s with far greater housing wealth than they realise, which could be used in later life to help fund a more comfortable retirement, according to the research from the Equity Release Council. The study found that the average UK home owner aged 55 and over paid £100,756 for their existing home. Having lived there for an average of 17 years and 10 months, they now estimate it is worth £257,584. This equates to an overall house price rise of 156%, leaving them with an extra £156,828 of equity even before mortgage repayments are accounted for. However, the analysis suggests even this may underestimate the individual housing wealth as according to the Office for National Statistics (ONS), the average UK house price has risen by 244% over the last 17 years and 10 months. Having originally been bought for £100,756 at the start of this period, the average property among over 55 home owners could therefore have a value of £346,861 today, almost £90,000 more than they estimate. By examining market trends, the research suggests people's tendency to misjudge their housing wealth may be linked to low awareness of how price rises have affected the property market in the region where they live. Even those who have had their property valued since first buying it did so four and a half years ago on average. Asked to consider the role of pension savings and property wealth in funding later life, the research suggests that 80% of home owners aged 55 plus would consider using housing wealth to get the most from their retirement. Some 31% said that they feel the best solution is to use their pension savings before their property wealth, 10% said they would prefer to use their savings and property wealth at the same time and 9% said they would rely solely on property wealth or use it before their savings. This leaves 11% who want guidance or advice on the best option for them, while 19% say they do not care which approach they take so long as it gives them the best outcome. The remaining 20% feel the best outcome for their retirement will rely solely on pension savings. The research also found that 38% think unlocking money from the value of their home is likely to benefit them financially in later life, while another 29% are unsure. Among those who would consider using their housing wealth to help pay for retirement, downsizing is the main preference, cited by 42%. However, 22% would prefer to stay in their current home and use a lifetime mortgage to release some equity. The remaining 36% said they are open to either option based on their circumstances. ‘It is no secret that the property market has been kind to… Continue reading
Aberdeen property market set for declines unless oil price picks up
Aberdeen has seen some of the strongest growth in the residential real estate market in recent years but now it is under a period of adjustment after seven years of phenomenal growth, according to a new analysis. The residential market across the Aberdeen area is being affected by uncertainty within the oil dependent local economy and prices have started falling, data for the third quarter of 2015 shows. According to the report from real estate firm Savills in the 12 months to the end of September 2015 the overall average sale price in Aberdeenshire was the second highest in Scotland, behind Edinburgh. The average price in Aberdeen City was the fourth highest, behind East Renfrewshire, over the same period. Indeed, data for the 10 year average for the overall residential market, values are 24% higher in Aberdeen City and 19% higher in Aberdeenshire, compared to 11% for Scotland as a whole. Furthermore, prime values in the Aberdeen area are 34% higher than they were in 2007, the peak of the Scottish market. This compares to a drop of 22% for Scotland as a whole. Despite the recent turmoil, monthly residential rental prices in Aberdeen remain the highest in Scotland. However, there was a fall of 2% in Aberdeen City and 4% in Aberdeenshire in mainstream prices during the third quarter of 2015, compared to the same period last year. Prime values in the Aberdeen area have dropped by 9% over the same period, with properties in rural locations most affected compared to city locations. Rental values in Aberdeen City dropped by 7% over the same period. The biggest impact has been felt in the volume of sales. During the year ending September 2015, the number of residential sales in Aberdeen City and Aberdeenshire fell by 5% and 11% respectively, compared to the same period last year. However, Faisal Choudhry, director of Savills Scottish research, pointed out that despite these drops, there are some sections of the market that have bucked the trend. These include properties between £300,000 to £400,000, which have seen a slight annual increase in sales of 5%. ‘Our analysis of new build developments shows an increase in the number of properties currently available between £200,000 and £300,000. This includes first time buyers, professionals and young families who are continuing to benefit from the comparatively lower rates of taxation and mortgages,’ he said. He also pointed out that while as a whole the introduction of the new Land and Buildings Transaction Tax (LBBT) in April pushed the number of prime property sales up by 10% but this was not the case in the Aberdeen area, where the number of prime sales fell slightly to 669 during the year ending September 2015, compared to 678 during the previous 12 month period. ‘This suggests the market was further constrained by uncertainty within the oil sector. Prime activity has been further compounded by higher levels of taxation as a result of LBTT, with the… Continue reading
UK house prices set to keep rising in 2016 due to shortage of supply
House prices in the UK are set to continue rising during 2016 due to a lack of available housing stock in the property market, according to the latest index report. There are 47% fewer properties currently for sale than in December 2007 and 16.1% fewer than in December 2014, the data from Home.co.uk’s asking price index shows. The firm says that this is creating ‘a vicious circle’ of price hikes that are set to continue throughout 2016, and follows a rise of 8% in England and Wales' property prices in 2015. Already, regions with the biggest shortages of available housing for sale are experiencing the quickest price rises, with the East of England in particular set for continued rapid price hikes next year. Overall the firm is predicting price growth of 9% in England and Wales with the highest of 13% in the East of England, followed by 12% in the South East, 9% in Greater London and 7% in both Scotland and the West Midlands. The rest of the country is likely to see more moderate growth with just 1% in the North East, 2% in Wales, the North West and Yorkshire and Humber and 6% in the East Midlands and the South West. A breakdown of the data shows that between November 2010 and November 2015, the supply of property in the East slumped by 27%, while prices in the region increased by 10.6% over 2015. Scotland's housing supply fell by 13% between November 2010 and November 2015. Other areas where the supply of properties for sale dried up over the same period include the East Midlands, which saw a fall of 12%, and the West Midlands, where supply dropped by 11%. The South East is another region to experience a drought in the volume of property for sale, with supply falling 10% over the same period while only two areas saw an increase in housing stock for sale between November 2010 and November 2015 with a rise of supply of 10% in Yorkshire and the Humber and 2% in Wales. For 2016, Home.co.uk is predicting a similar range of regional price rises as seen in 2015. However, due to further contractions in supply, the East of England and the South East are expected to outperform Greater London over the next 12 months. Buyers in Scotland, the West and East Midlands and the South West are advised to brace themselves for a year of rapid price growth as the supply crisis ripples out to these regions. Meanwhile, typical time on the market has also fallen due to this imbalance between high demand and low supply. In England and Wales, the typical time on the market in December this year is 104 days, compared to 110 days a year ago. ‘Next year is set to see the vicious circle of spiralling prices and falling supply deepen even further as buyers take advantage of cheap credit to chase ever fewer properties,’ said the firm’s… Continue reading
