Tag Archives: housing
US home owners more confident than those who rent, new analysis suggests
Home owners in the United States are generally more confident than renters in their local housing market’s performance, according to the latest research from Zillow. But this confidence gap is widening in areas with rapid home value growth and narrowing in areas with more restrained growth, the firm says. Overall home owners have become more confident about their decision to invest in a home where home values in their area have increased more rapidly. By contrast, renters feel that they cannot escape renting and have lowered their aspirations for homeownership in areas where home values have increased more rapidly. Rapidly rising home values have powerful psychological effects on both home owners and renters and research has shown peoples’ expectations about the future are strongly anchored in recent experience. Rapid asset price growth can contribute to what has sometimes been labelled ‘irrational exuberance’, or overly optimistic and self-perpetuating positive feedback in price trends. Zillow’s Housing Confidence Index (ZHCI) is designed to be a forward looking measure of housing market health by gauging the beliefs and aspirations of home owners and renters towards the future state of the housing market. There are two groups, those that have experienced rapid recent home value growth in excess of 9% annually between July 2013 and July 2014, when the survey was last conducted, and those that have experienced more restrained growth of less than 9% over the same period. By this classification, nine metro areas have experienced rapid home value growth and in general, the ZHCI is higher for home owners than for renters. The firm says this is not surprising since, relative to renters, home owners typically have higher incomes and a more optimistic perspective about the economy and housing market. But as the economy has improved, the gap between home owners’ and renters’ confidence index levels has widened in metros where home value growth has been rapid, and narrowed in metros where home value growth has been more restrained. Home owners and renters have very similar perspectives on the overall housing market and the ZHCIs for both groups tend to move together. A larger improvement in outlook among renters is the primary driver of converging optimism levels in slow home value growth markets. But the opposite is true in markets where home values are growing more rapidly. In these markets, optimism levels are diverging. Because home owners’ wealth is largely tied to the value of their home, slower home value growth results in a smaller change in home owners’ housing market outlook. In markets where home values are appreciating at a slower pace, renters have become increasingly optimistic about their potential for future home ownership. The Home ownership Aspirations Index, which measures how optimistic owners and renters are about their future home ownership prospects, increased more for renters in slow growth markets than for home owners. But in markets where home values are rising rapidly, renters are becoming increasingly disillusioned, as they likely see the possibility for future… Continue reading
UK residential market set to see widening gap in demand and supply in 2015
Next year is set to see a widening gap between demand and supply as not enough new homes are being built, according to members of the National Association of Estate Agents (NAEA). Almost half of NAEA members predict a rise in demand for housing in 2015, however demand was down by 4% in November, the association’s latest report shows. It also says that interest rate rises, changes to stamp duty, and the general election, will cause the biggest impact to the residential property market in 2015. Despite recent government announcements to build more new homes, some 46% of NAEA agents think that demand for property will increase next year, while members were split on whether the same could be said for housing supply. The association said it is worrying that 21% think levels of stock will decrease next year and 33% expect them to stay the same, which, combined with a rise in demand, will mean a heightened housing shortage. However, 33% of agents were much more optimistic, stating that housing supply would increase next year, albeit still not enough to meet the rising level of demand. When asked what events in 2015 will have the biggest impact on the housing market, the top three greatest influences were base rate rise at 34%, changes to stamp duty at 32% and the general election at 32%. ‘With agents predicting the housing shortage crisis to potentially worsen in 2015, the general election will be a pivotal event for the housing market next year, with all three main parties pledging to build more homes should they be elected,’ said Mark Hayward, NAEA managing director. ‘We have already seen the current government put policies in place in an attempt to tackle the problem, with the announcement of new garden city developments, as well as the reforms to stamp duty, another change our members believe will influence the market next year,’ he explained. ‘While we do see these changes as a step in the right direction and believe that stamp duty reform will allow for greater supply in the market by encouraging more people to buy and sell, these changes are still not enough. The lack of capacity within the current market means that the gap between supply and demand probably won’t close for some time. We currently don’t have the resources to respond to the problem, and this is another issue that needs addressing,’ he added. The report shows that demand in November 2014 was down 4% on October, from 380 house hunters registered per branch to 364 in November, the lowest levels recorded since March this year. A similar lull in supply also occurred, with the average number of properties available per branch down to 50 compared with 53 in October. Following suit, the number of sales agreed per branch was also down, with agents reporting an average of eight sales per branch, compared to nine in… Continue reading
UK stamp duty changes set to boost house building
A leading UK builder has announced that the recent reforms to the Stamp Duty property tax has given it the confidence to bring forward the next phase of a major development. While the stamp duty reform has been widely hailed as a boost for first time buyers trying to get on the housing market the announcement from Crest Nicholson shows it is also going to boost house building. The house builder said it will bring forward the next phase of development at Centenary Quay in Southampton and build 280 new homes, some 128 of them in the next year. New analysis by the company revealed that the reforms will save buyers in Southampton over £1,660 per transaction and increase demand for new homes. In addition, since 2013 some 44% of sales at Centenary Quay were made through the government’s Help to Buy scheme and a further 101 apartments were sold for Build to Rent. Chancellor of the Exchequer George Osborne, who announced the stamp duty changes in his autumn statement earlier this month, described it as great news. ‘Not only are Crest Nicholson building more homes quicker but buyers will also see real cash saving when they purchase a house,’ he explained. ‘Stamp duty was one of the worst designed taxes and acted as a real brake on aspiration for those who wanted to get on or move up the housing ladder. As part of our long term economic plan we have made the system fairer so people only pay tax on the part of the property that falls within each band. The average property will pay £4,500 less stamp duty, with 98% of people who buy a home benefiting from the reform,’ he added. Debbie Aplin, managing director of Crest Nicholson Regeneration, said the reforms will undoubtedly boost activity in the housing market, re-stimulating building rates and enable the firm to drive the rate of sales back to pre-recessionary levels. ‘Last year alone we were able to facilitate 571 new home purchases through government backed incentive schemes such as Help to Buy, and now with the addition of stamp duty reform we remain committed to our target of building in excess of 3,000 new homes in the UK in 2015,’ she pointed out. ‘This will in turn support further job creation and have a positive overall impact on the entire economy. Most importantly though, the impact of changes to stamp duty will remove a lot of uncertainty for consumers over the coming months, helping to solve the affordability challenge so many purchasers are facing,’ she explained. ‘This is particularly true for first time buyers struggling to get on the housing ladder. A massive 72% of our purchasers benefiting from Help to Buy were first time buyers, and we hope to see a similar impact from stamp duty reforms,’ she added. The Home Builders Federation has campaigned for the abolition of the stamp duty slab system that caused distortions in the market, penalised buyers… Continue reading
