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Research reveals chromic shortage of first time buyers in UK housing market
The UK housing market is experiencing a potentially serious shortage of first time buyers, particular in the South East and North West, new research has found. First time buyer activity in the North East and Yorkshire and Humberside is less than half of what it was pre-recession while London is the least affected, according to the report from private mortgage insurer Genworth based on an analysis of government and industry data. The South East averaged 86,733 first time buyers a year from 1974, when records began, up until 2006. But since 2007 when the financial crash hit, this has fallen to just 47,863 a year. As a result, this has created a total shortfall of 310,967, the biggest of any English region. The North West has also seen first time buyer numbers drop from 46,461 a year between 1974 and2006 to 23,875 between 2007 and 2014. This has created a shortfall of 180,685 first-time buyers. The North East’s first time buyer market is less than half of its pre-recession size as the data analysis shows that the average number of first time buyers between 2007 and 2014 at 10,575 is just 46% of the pre-2007 average of 23,191, the lowest percentage of any region. In contrast, London is the least affected in relative terms and has lost just a quarter of its first time buyers in percentage terms. Its average of 39,175 between 2007 and 2014 is equal to 73% of the pre-recession average, despite the continued house price increases London has seen in recent years. The report says that comparing these shortfalls to the regional populations of 18 to 45 year olds who are traditionally first time buyers, suggests a significant percentage are potentially ‘denied home owners’ as a result of the fall in first time buyer numbers. For example, a shortfall of 100,927 first time buyers in the North East compared to an 18 to 45 population of 1.3 million means as many as 21% could be classed as ‘denied home owners’. In the South East a shortfall of 310,967 compared with an 18 to 45 population of 1.6 million means 19% are in the same position. ‘Tougher regulation and higher capital requirements for lenders as a result of the recession have accelerated the fall in homeownership and dramatically reduced the number of people, especially younger households, who are able to buy their first home,’ said Simon Crone, vice president for mortgage insurance Europe at Genworth. ‘A dual crisis has emerged with the shortage of new homes exacerbated by a shortage of loans traditionally used to help first time buyers get on the property ladder with 5% or 10% deposits. Our analysis shows that all regions have felt the impact of the squeeze on first time buyers, regardless of the so-called ‘North/South’ divide,’ he explained. ‘While London and the South East face the biggest pressure of high house prices, a lack of housing… Continue reading
Inventory falls in US housing market, especially for first time buyers
There were fewer homes for sale in the United States in June than there were a year ago, increasing competition for potential buyers, the latest research shows. Most of these declines were among the lowest valued homes sought by first time homebuyers, according to the report from real estate firm Zillow. In the lowest priced third of homes for sale, the number of homes on the market fell year on year in 28 of the nation's 35 largest metro areas. By comparison, among the highest priced homes, inventory fell year on year in only 10 metro areas. The total number of homes listed for sale on Zillow in June was down 6.5% year on year but was up 2.1% on a monthly basis. Large metros where inventory has increased the most annually include Austin, up 30.3%, Atlanta up 22.4% and Washington DC up 18.9%. ‘Historically low mortgage rates continue to keep overall ownership affordability very good by historical standards, making it a great time to buy a home, especially with rent becoming increasingly unaffordable,’ said Zillow chief economist Stan Humphries. ‘Finding a house is the last hurdle for many buyers who have saved a down payment and gotten pre-approved for a mortgage. But low inventory levels like those we're seeing across the country can bring the home buying process to a screeching halt. In many markets, there just isn't a lot to choose from in terms of homes on the market,’ he added. Overall, home values in the United States rose 3.3% from June 2014, and 0.3% from May to a Zillow Home Value Index of $180,100. As home values continue to rise, buyers are faced with more challenges in a tighter market, especially in hot markets like Denver, which saw the highest home value appreciation from last year, surpassing even San Jose and San Francisco. Rents have also continued to rise in the second quarter, up 4.3% from this time last year to a Zillow Rent Index of $1,369 with annual growth led by San Francisco with a rise of 14.5% followed by Denver up 13% and San Jose up 12.5%. Metros that are seeing strong appreciation in rents, as well as home values, are experiencing healthy increases in demand with often thriving job markets and sometimes tight inventory supply, the report also says. Of the 863 metropolitan and micropolitan areas covered by the index, some 645 saw annual growth in rents in the second quarter and 527 metro areas saw rents increase from the first to second quarters. Over the next year, home value growth is expected to slow even further, to 2.4% through to the second quarter of 2016, according to the Zillow Home Value Forecast. The report explains that continued steady growth in the real estate market shows signs that the market is maintaining stability after going through the housing bubble and bust of 2007 through 2012. Continue reading
Private rental growth in UK centred in regional cities, new analysis suggests
The growth of the private rented sector in the UK continues and there is evidence that activity in this market is market is increasingly clustering in cities around the country. New data shows the proportion of those in the private rented sector living in urban areas has risen from 80% to 86% over the last decade, mostly accounted for by regional cities outside London. A new analysis of a range of data, including the most recent English Housing Survey, by real estate firm Knight Frank, suggests that this growth is set to continue. The firm has developed its PRS index, which reflected average yields, into a PRS Yield Guide, produced by Knight Frank consultancy agency and valuation teams which shows a slight tightening in yields for prime PRS deals in the second quarter across the Greater London market, as well as in many of the other key cities except Bristol and Glasgow. Meanwhile, it says that demand for rental property is being underpinned by affordability constraints in many parts of the sales market as well as increased hurdles in the mortgage market. There is also an increasing desire for property with flexible tenure, especially among young professionals, who want to live close to where they work. Tenants are also staying for longer with the English Housing Survey showing that the proportion of those living in rented accommodation reporting that they have lived in their current home for between two and four years rising to 24%, up from 20% a decade ago. Rents are rising across the country, reflecting an increase in wages as well as inflation. They rose by 2.5% in the year to the end of June but there are still wide regional variations in rental growth, just as there is a divergence in entry costs into these markets. The biggest increase in rents has been in Greater London with growth of 3.8% in the 12 months to the end of June, followed by the East of England up 2.6%, the South East up 2.5% and Scotland up 2.1%. In the same period rents have increased by 1.8% in the South West, by 1.7% in the Midlands and by 1.4% in Yorkshire and Humber. Meanwhile the growth over the same period in Wales was 0.8% and the North West and the North East both saw growth of 0.5%. The report also shows how institutional real estate investors are becoming increasingly active in the private rented sector in the regions over the last 12 months. It says they are attracted by the yields achievable and the strong occupier demand in regional centres. Of particular interest to institutions have been private rented sector schemes in Birmingham and Manchester, with a large amount of interest focussed on lot sizes ranging between £20million and £100 million. ‘The increasing entry of institutional investors into the market is a significant positive factor for the PRS, which should lead to an increase in the supply of good… Continue reading
