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Equity release value in Britain up, but in London hit by Brexit uncertainty
The potential wealth available to over 55s in England, Scotland and Wales through equity release increased to £381 billion in the second quarter of 2016, a 0.7% quarterly increase, the latest research shows. However, values failed to increase across Greater London for the first time in almost four years due to uncertainty surrounding the European Union referendum while equity release potential elsewhere in the country continues to grow apace, according to the Equity Release Property Value Tracker report from Retirement Advantage. The report says that house prices are rising fastest in regions outside of Greater London, with the capital suffering its first quarterly drop in property values since the fourth quarter of 2012. The North of England with growth of 7.2% saw the greatest quarterly increase in wealth available, followed by Yorkshire and the Humber up 6.6% and the West Midlands up 5.6%. Meanwhile in Greater London growth stagnated with a drop of 0.04% and was also comparatively slow across the South East, up 2.8%. The two regions top the table for annual growth, however, up 14.6% and 13.9% respectively, with East Anglia next with growth of 8.2%. According to Alice Watson, product and communications manager at Retirement Advantage Equity Release, it is too early to tell what impact the Brexit vote will have on housing wealth but she pointed out that if mortgage lending conditions tighten as the result of a post-referendum economic slowdown, it could enhance the appeal of equity release. ‘A substantial proportion of this demographic is now accessing the wealth stored in their homes to facilitate a more enjoyable and fulfilling retirement. They are increasingly using equity release for home improvements, gifting to family members and holidays,’ she said. ‘Over the past three months we’ve seen new entrants to the market, innovative partnerships and welcome changes to the Financial Conduct Authority’s affordability assessments. These developments are great news for the consumer and have no doubt helped to further boost equity release’s already surging popularity,’ she added. However, she pointed out that despite rapid growth in its popularity, less than 1% of equity release’s potential is being realised. ‘Over the coming years, this popularity will increase further as over 55s take an increasingly holistic approach to retirement finance which places equity release alongside pensions and investments,’ she concluded. Continue reading
Number of first time buyers in UK up by 10% in first half of 2016
The number of first time buyers in the UK increased by an estimated 10% in the first six months of 2016 compared with the same period in 2015, according to new research. Overall there were an estimated 154,200 first time buyers in the first half of 2016 compared with 140,500 in the same period last year, the data from the Halifax first time buyer review shows, more than double the market low in the first half of 2009. For the same six month period since 2012, the number entering the housing market has exceeded 100,000. However the number of first time buyer in the first half of 2016 was nearly a fifth lower, 36,700, than at the peak of the last boom in 2006. The report also shows that the number of first time buyers has increased more rapidly than the number of home movers over the past few years as a whole. As a result first time buyers have increased as a proportion of all mortgage financed house purchasers from 38% in 2011 to an estimated 47% in 2016. However, the percentage has been stable over the past three years as the numbers of first time buyers and home movers have risen at a similar pace since 2014. The average first time buyer deposit in May 2016 was £33,960, more than double that in 2007 when it was £16,400 and the report points out that there has been a 14% rise in the deposit over the past year largely reflecting the increase in house prices over that period. The 10 least affordable Local Authority Districts (LADs) for first time buyers are all in London. The least affordable is Brent where the average first time buyer property price of £457,014 is 12.5 times gross average annual earnings in the area. East Dunbartonshire in Scotland is the most affordable LAD in the UK with an average property price of £97,089, some 2.6 times local annual average gross earnings. Copeland in the North West is the next most affordable and five of the 10 most affordable LADs for first time buyers are in Scotland. ‘There was a further increase in the number of first time buyers in the first half of the year with the total exceeding 100,000 in the first six months of each year since 2012. This rise has been broadly in line with a general improvement in market activity and is likely to have been helped by government measures including the Help to Buy scheme,’ said Chris Gowland, mortgages director at the Halifax. ‘Although numbers remain below their previous peaks and many potential first time buyers are facing escalating house prices and deposit sizes, record low mortgage rates continue to make buying seem a more attractive option than renting,’ he added. The research also shows that the average price paid by first time buyers increased by 12% over the past year from £178,399 to £199,414. Regionally, the average price paid by first time… Continue reading
Affordability for home buyers in Australia eases in second quarter of 2016
Affordability for home buyers in Australia eased back in second quarter of 2016 as price growth returned to the residential real estate market. Overall affordability fell by 3.7% and was 2.1% less than the same quarter of 2015, according to the latest report from the Housing Industry Association, the voice of Australia’s residential building industry. The capital city housing affordability index fell by 4.3% during the quarter, while the regional market index experienced a 1.9% improvement. ‘Home price growth moderated in the early part of the year and the index showed an improvement in affordability during the March 2016 quarter. However, in the June quarter dwelling price growth returned and the index reverted to the level we saw at the end of 2015,’ said Geordan Murray, HIA economist. ‘While there was a decline in the headline index tracking the national picture, there was substantial variation around the country with substantial differences between states, and also differences between capital city markets and regional markets,’ he pointed out. He explained that the geographic variation in affordability is most evident in the comparison between Melbourne and Perth. Over the last year, the median dwelling price in Perth has fallen by 4.7% while Melbourne’s has grown by 11.5%. This has seen the affordability index for Perth increase by 6.2% over the last year, while the index for Melbourne has fallen by 6.2%. ‘These differences in affordability align with the relative economic performance of these two states. The Western Australian economy is navigating the tail end of the mining boom which has seen conditions in the local labour market deteriorate and consequently the rate of population growth has fallen quite sharply,’ Murray said. ‘In contrast, Victoria has experienced a healthy level of growth in the labour force and continues to record the strongest rate of population growth in the country,’ he added. A breakdown of the figures show that during the June 2016 quarter, improvements in affordability were observed in three capital cities with the largest improvement in Perth with growth of 3.2%, Darwin up 2.9% and Hobart up 2.2%. Affordability worsened in the remaining five capital cities with the largest decline recorded in Melbourne with a decline of 7.4%, followed by Canberra down 5.7%, Sydney down 1.6%, Adelaide down 1.3% and Brisbane down 1%. Continue reading
