Tag Archives: finance
Property tax changes in England and Scotland weigh on prime country house market
Prime country house prices in the UK rose by 0.7% between July and September, continuing the modest upward trend of growth that started in early 2013, the latest research report shows. Prices have shifted upwards now for 11 consecutive quarters with annual growth also up slightly to 2.7% on average, up from 2.3% in the second quarter but down from a recent high of 5.2% in 2014. The market continues to feel the impact of the increased cost of stamp duty, following the Autumn Statement in December 2014, according to the report from real estate firm Knight Frank. It says that this continues to weigh on both price growth and activity at the top end of the market. In fact, the latest figures from the Land Registry show that between January and July there have been 35% fewer sales with a value above £1.5m outside of London compared to the same period last year. The prime market below £1.5 million has been less affected by these tax changes and prices for homes in this sector have risen by nearly 4% annually over the year to September. In comparison, over the same time properties priced above £1.5 million, the point at which the 12% rate of stamp duty kicks in, have risen by 2%. Under £1.5 million, price growth has generally been underpinned by demand for homes in urban centres. Price growth in town and city markets including Bristol, Bath and Oxford for example, where buyers continue to be attracted by good schooling, amenities and transport links, has outperformed the wider prime market. ‘There remains a significant price differential between property prices in the prime country market and in London, while anecdotal evidence from agents suggests that there is pent up demand from buyers in the Home Counties and the South West. This could help underpin prices and an increase in activity levels across the market as the year progresses,’ the report says. However, the average prime country house price is still 14% below its 2007 peak. In contrast, prime prices in London are, on average, 34% higher than their previous peak values. ‘The rise in London prices in the last few years means that buyers looking to swap the city for the country are able to get a lot more property for their money, with such buyers able to take advantage of the relative discount which currently exists,’ the report adds. In Scotland the country house market has also been affected by tax changes with the new Land and Buildings Transaction Tax (LBTT) being introduced in April 2015. The report shows that as a result prices fell by 0.7% between July and September, the first time that prime prices have fallen on a quarterly basis in over two years. The report points out that the levy, which replaced Stamp Duty Land Tax, has resulted in a significant increase in purchase costs for buyers in the prime market and adds that negotiations between buyer and… Continue reading
Average home price in London set to reach £1 million by 2020
If the current annual rate of price growth in London continues, the average price of a home would be £1 million by the end of 2020, new research has found. The prediction is made as the price of property coming to market in London has rebounded from its holiday season lull to jump by 2.2% or £13,177, according to online property portal Rightmove. Indeed, the average price of a newly marketed home in the capital is at a new all-time high of £620,003, up by 0.8% or £4,888 on the previous record set in July of this year. ‘This month’s 2.2% rise more than reverses the seasonal slowdown over the last two months when the average price of property coming to market fell by 0.6%,’ said Miles Shipside, Rightmove director and housing market analyst. ‘It’s a volatile time of year for average prices however, as potential sellers of higher priced properties tend to refrain from coming to market in the holiday period, but then get on with their home moving plans again in September partly influenced by children going back to school. The back to normal service has resulted in new seller asking prices reaching another milestone, with a new record high,’ he explained. The annual rate of increase is now up to 9.5% as London’s long term supply/demand imbalance and international allure result in underlying upwards price pressure, enabling the capital’s property market to maintain its upward trajectory through temporary upheavals such as the recent election. Rightmove calculates that if the current annual rate of price growth was maintained for the next five years the average price tag of a London home would be £1 million by the end of 2020. ‘The average price tag on a newly-marketed property is £53,923 higher in September this year than last and if this trend were to continue it would hit £1 million in just over five years. While we are not suggesting that this level of growth can or will be maintained, this extrapolation illustrates the desperate need for more building and more affordable housing in and around the capital,’ Shipside added. Lee James Pendleton, director of James Pendleton Estate Agents, confirmed that the summer has been good for London property. The firm has experienced a huge upturn in the market around Wandsworth, Lambeth and Hammersmith and Fulham. ‘While there have been less buyers overall, there are more quality buyers. One example of a place that’s booming is Nine Elms in Battersea, where studios that had been selling for £450,000 are now selling for over £600,000. These new developments have had a ripple effect on Wandsworth in general, with prices up around 15% in some places,’ he pointed out. Continue reading
Cooling house market growth in California affects US market as a whole
A California cooling effect could put a freeze on US property market growth with affordability in many of the state’s markets out of reach, says the latest analysis report. Since 2012 price growth in California has buoyed the West of the nation and helped support nationwide prices appreciation, according to the report from Clear Capital, but now there is evidence of cooling price appreciation across the state. It explains that typically, price increases are driven by increases in demand, however, a look at the San Francisco housing cycle shows that between 2011 and 2015 the spike in prices has not been the result of increases in overall transactions. Rather, the tight supply is pushing prices on an upward trajectory placing the market even further out of reach for new buyers. It also shows that in slower growth markets like Los Angeles, a mortgage payment requires upwards of 70% of a potential first time buyer’s income, certainly quelling demand. Even the San Jose MSA’s appreciation, which began experiencing dramatic bubble like growth in 2013, is beginning to slow down with quarterly growth of 2.5%, less than half of the 5.8% quarterly growth seen two years ago. While the West continues to lead in sustained gains, markets outside of California will need to work harder to defend the region’s top position, according to the report. Las Vegas and Portland have both seen boosts of 0.2% in quarterly growth since last month. Denver, Seattle and Sacramento continue to hold steady at 1.7%, 1.6% and 1.5% quarterly growth, the data also shows. The Midwest and South continue to ride the wave of the peak summer real estate season with quarterly growth rates at or above the national benchmark of 0.8%. The South ends the quarter at 0.8% growth, and the Midwest ahead at 0.9%. Subsiding losses in the Southern region is a good sign for a region that has exhibited volatility in price trends, the report points out. The Northeast continues to lag behind the rest of the nation in both quarterly and yearly growth at 0.2% and 2.1% respectively. While most of the MSAs in the region are still experiencing positive quarterly growth, with the exception of Providence with a fall of 0.8%, the rate of growth in markets like Boston and New York are over double that for the rest of the region, driving down affordability. ‘The strong continued growth in the Midwest, South and West, in particular the California Bay Area, suggests strong consumer and investor confidence has been seemingly unaffected by talk of looming interest rate hikes,’ said Alex Villacorta, vice president of research and analytics at Clear Capital. ‘However, if and when interest rates do rise, likely occurring by the end of 2015, it will be timed with a decrease in real estate market activity typical through the fall and winter seasons,’ he explained. ‘Unfortunate pairing will most likely cause a slowdown in price growth for most markets,… Continue reading
