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Property sales in Canada set to rise by almost 4% this year
Residential property sales in Canada are forecast to increase by 3.8% this year compared to 2013, according to revised figures from the Canadian Real Estate Association (CREA). The data reflects stronger than expected sales in recent months. Even so, sales activity is expected to peak in the third quarter as the impact of a deferred spring dissipates and continuing home price increases erode housing affordability. This would place activity in 2014 slightly above but still broadly in line with its 10 year average. Despite periods of monthly volatility since the recession of 2008/2009, annual activity has remained stable within a fairly narrow range around its 10 year average. This stability contrasts sharply to the rapid growth in sales in the early 2000s prior to the recession. British Columbia is forecast to post the largest year on year increase in activity at 11.9% followed closely by Alberta at 7.7%. Demand in both of these provinces is currently running at multi year highs. Activity in Saskatchewan, Manitoba, Ontario, Quebec and New Brunswick is expected to come in roughly in line with 2013 levels, with sales increases ranging between 1% and 2% in the first three provinces and edging lower by about 1% lower sales in the latter two provinces. Sales in Nova Scotia and in Newfoundland and Labrador are projected to be down this year by 3.9% and 5.2% respectively. Mortgage interest rates are expected to edge higher as Canadian exports, business investment, job growth, and incomes improve. These opposing factors should benefit housing markets where demand has been softer but prices have remained more affordable. Sales in relatively less affordable housing markets are likely to be more sensitive to higher fixed mortgage rates, the CREA report also says. National activity is now forecast to reach 473,100 units in 2015, representing a decline of four tenths of 1%. Sales activity is forecast to grow fastest in Nova Scotia at 3.3%, followed by Quebec with growth of 1.3% and New Brunswick at 1.3%. Alberta is the only other province forecast to post higher sales next year with growth of 1%. In other provinces, activity is forecast to decline in the range of between 1% and 2%. In British Columbia and Ontario, this trend reflects eroding affordability for single family homes, the report says. The national average price has evolved largely as expected since the spring, resulting in little change to CREA’s previous forecast so it is projected to rise by 5.9% to $405,000 in 2014, with similar price gains in British Columbia, Alberta, and Ontario. Increases of just below 3% are forecast for Saskatchewan, Manitoba and Prince Edward Island. Newfoundland and Labrador is forecast to see average home price rise by about 1% this year, while Quebec is forecast to see an increase half that size. Prices are forecast to be flat in New Brunswick and recede by almost 2% in Nova Scotia. The national average price is forecast to edge up a further 0.7% in 2015 to $407,900. Alberta and Manitoba… Continue reading
Property price growth in UK set to slow to 2% next year
UK house price growth is predicted to slow to 2% in 2015 and 19.3% to the end of 2019, according to the latest five year forecast from Savills. Prices in London are expected to flat line having hugely outperformed the rest of the UK and is likely to end this year at 15%. The South East is set to be the strongest market seeing price growth of 26.4% by 2019 as buyers take advantage of the relative value of the market. In the short term Scotland is expected to see the biggest price growth in 2015 at 3.5% but slowing to annual growth of 2.5% in 2019 and over the five years seeing growth of 17.6%. The east of England is also likely to see strong growth with the forecast predicting 3% in 2015 and 5% in 2016 with a combined five year growth of 25.2%. The forecast also predicts an increase in the private rented sectors. It says some 1.2 million more households in England and Wales will be private renters by 2019 and 24% of all homes will be privately rented with all the opportunities and challenges that brings for investors and policymakers Only one in six under 35s will be home owners compared to 28% in 2014 and in London there will be around 250,000 more private rented homes, rising to 1.24 million or 36% of all homes. ‘Stress testing of borrowers’ ability to service a mortgage and loan to value lending caps will increasingly limit the amount buyers can borrow, making it more difficult to access or trade up within the market,’ said Lucian Cook, UK head of residential research at Savills. ‘Not only will this suppress price rises, particularly in London, it will also reduce the potential for transaction volumes to return to anything close to a pre crunch norm,’ he added. The report says that the London market now looks relatively fully valued and this has already prompted a change of sentiment among buyers. Savills is therefore forecasting that mainstream London house prices will flat line next year, with five year price growth totalling just 10.4%, the lowest of any region. By contrast, the South East and East of England are expected to show the strongest growth, at 26.4 and 25.2% respectively, as buyers priced out of London seek relative value beyond the capital. At the other end of the scale, the North of England has greatest capacity for growth based on affordability measures, but the strong economic drivers are not in place to support it. ‘Mainstream market performance will be limited by buyers’ capacity to borrow and service debt, but we don’t believe rate rises will be severe enough to trigger a wholesale market correction, so are not forecasting price falls,’ explained Cook. ‘We expect wage rises, an improving economy and greater recycling of existing housing wealth between generations to support growth, while mortgage regulation is likely to prompt greater reliance on the bank of mum & dad with more equity released… Continue reading
A property overseas still proving popular among British buyers
Buying property overseas is proving more popular this year than it was in 2013 although there is evidence of growth levelling off during the third quarter, according to new research. Spain, Portugal and France remain the most popular countries for British people to buy an overseas property, with Italy and Turkey the ones to watch, says the latest quarterly report from the Overseas Guides Company. The firm found that between January and September 2014, there was a 17% increase in enquiries compared to the same period last year, rising from 29,299 to 34,287. For the third quarter of 2014, enquiries were up by 4.1% year on year, from 10,518 to 10,957 in the third quarter of 2013. According to Angelos Koutsoudes, head of Overseas Guides Company, after a bullish first half of the year, there was a cooling off of enquiries during the third quarter compared to the previous two years, when the third quarter has always outperformed the first two quarters. The months of April to June continue to be the most popular months for would be homebuyers to view and complete on overseas properties, the firm has also found. Looking ahead, continued growth is expected in the key markets, with mortgage rates in the Eurozone remaining at historic lows and sterling likely to maintain a comparatively strong value against the euro. There is also a sentiment that the bargain prices of homes in popular parts of Spain, France and Portugal won't last forever, with signs that hotspots are already seeing slight price rises. The recent Overseas Guides Company reader’s survey showed that Spain, France and Portugal are the most popular countries for those considering buying property abroad and with those readers who already have a second property. Spain is still by far the most popular country, generating 2,710 enquiries in the third quarter, compared to 2,494 enquiries in the third quarter of 2013. Things are really looking up for Spain, both in terms of the property market and the economy as a whole. The International Monetary Fund recently announced that the southern European countries will lead the rest of the European Union in terms of economic growth over the next year and the economy is expected to grow at 1.3% in 2014 and continue by 1.7% in 2015. France remains a firm favourite in second place with 2,575 enquiries. Not only have house prices across the country remained stable over the last year, with average prices even falling in some areas, but France is also now offering interest-only mortgages to non-French residents. Star performers in the third quarter in terms of growth were Italy up 12.7%, Greece up 52% and Turkey up 8.5% in terms of enquiries compared to the previous quarter. Continue reading
