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Value of US housing stock in 2015 down from overall growth the previous year
The value of all homes nationwide in the United States grew $1.1 trillion in 2015 and is expected to end the year at $28.5 trillion total. However, the value of the entire housing stock grew 4.1% in 2015, slower than the 6% growth in 2014, according to the data from real estate firm Zillow. The total value of all homes has regained $5.3 trillion since hitting its lowest point during the housing bust in December 2011, but is still $782 billion below the bubble peak value of $29.2 trillion, reached in October 2006. The dollar amount itself underscores the significance of housing to the US economy. In the third quarter of 2015, the US gross domestic product was $18.1 trillion, $10 trillion less than the total value of the housing stock. ‘This reminds us of the large role housing plays in the overall economy. Total home value growth slowed this year, but there was still a significant increase in overall value, and many markets are more valuable than they've ever been,’ said Zillow chief economist Svenja Gudell. ‘At the same time, more renter households and rising rents combined to set new records in rental spending in 2015. Americans are spending a lot of money on housing, and that will make affordability an important issue next year,’ she added. The research data shows that housing value isn't distributed equally across the country. California is home to about 12% of the population but the state accounts for nearly a quarter of the country's total home value, driven by highly valued markets like Los Angeles and San Francisco. Zillow data also shows that Americans shelled out nearly $20 billion more in rent in 2015 than in 2014 as people around the country set up 1.8 million new renter households and median monthly rents rose at a record pace. In all, renters spent $535 billion on rent in 2015, nearly as much as the total budget of the Department of Defence ($575 billion), according to a new Zillow rentals analysis. In 2014, they spent $516 billion. Renters of single family homes and apartments spent about the same amount on rent this year, with apartment renters paying $239 billion and single family home renters paying $245 billion. Renters in the New York/Northern New Jersey metro area spent the most on rent in 2015 at about $56 billion. Los Angeles area renters spent nearly $35 billion, and San Francisco renters spent $17 billion. About two thirds of the total rent paid in 2015 was spent in the 50 largest metros. Home values rose 3.9% annually in November to a Zillow Home Value Index of $183,000, according to Zillow's November Real Estate Market Reports. Denver home values grew fastest for the tenth consecutive month at 15.5% annual appreciation. Miami joined Dallas, San Francisco, San Jose, and Portland as other metros seeing double digit growth. Rents also continued their steady climb, growing 3.8% annually to a Zillow Rent Index of $1,382. The pace of rental… Continue reading
A year of above average leasing predicted for central London office market
The central London office market is set to experience another year of above average leasing and investment activity in 2016, according to a new report. However, some 22 million square feet of space could be needed in the next five years, says the analysis from international real estate advisor Savills. Low vacancy rates will help prime rents to climb, although a lack of new buildings capable of demanding the highest rents is likely to lead to topmost rents stabilising over the course of the year, the report explains. Whilst the gap between average prime City and West End rents continues to widen at £74.15 per square feet and £106.98 per square feet respectively, elsewhere there has been a marked convergence of rents on average Grade A/B office accommodation across Central London. This is likely to mean less movement of occupiers from West to East London or from core to fringe locations. Longer term, Savills predicts that population and economic growth, combined with lease expiries and building obsolescence, could lead to 22 million square feet of additional space being required in London over the next five years. Part of this demand will be serviced by four consecutive years of above average levels of completions in both the City and West End markets, although 21% of space in the City has been pre-let, and 15% in the West End. In the investment market, non-domestic investors attracted by London office’s relative stability and strong comparative returns will continue to drive demand, with 2016 set to be above average in terms of investment volumes. Despite stock market volatility and concerns over a slowdown in the Chinese economy those international investors who have been canvassed continue to identity London as a core focus for their future direct investment activity, with Savills predicting further capital flows from the Middle East, China and North America. Notwithstanding the continued appetite from overseas, Savills expects the market to consolidate around an appetite for core plus and value-add opportunities and therefore a continued sharpening of prime yields, currently at 3% in the City and 4% in the West End, is unlikely to continue. Volumes may well fall as the market becomes more hesitant in the lead up to the outcome of a Brexit referendum. ‘We predict that the Central London office markets will see above average take-up, rental growth and investment volumes in 2016, but these increases will not be as notable as they have been in recent years,’ said Mat Oakley, head of commercial research at Savills. ‘We don’t foresee that an increase in the Bank of England’s base rate will have an impact on yields whilst rents continue to rise. As with the investment market, the leasing market may slow due to external factors such as further ripples from China’s slowdown and a drop in business confidence in anticipation of a Brexit referendum,’ he added. Continue reading
London properties under £2 million done better than prime sector, analysis shows
Properties in London under £2 million outperformed the rest of the prime London property market in the second half of 2015, continuing a trend of recent years, the latest analysis shows. In particular, properties worth less than £1 million have grown by more than any other price bracket, according to the latest London residential review from real estate firm Knight Frank. The analysis says that this is because it is a market that is less exposed to regulatory change. The series of tax changes in recent years that affect the prime London market adds £30,000 to the current stamp duty rate for a second home buyer of a £1 million property, though this sum would be matched by house price inflation in less than a year at current growth rates. It is also a market that is less exposed to global economic volatility and more closely aligned with the performance of the mainstream market, where demand continues to outstrip supply on the back of a London population forecast to grow by more than 100,000 every year for the next decade. Indeed, the highest growth has largely been outside the higher price brackets of prime areas of central London over the last 20 years. The analysis report explains that changes to stamp duty rates in December 2014 raised questions around the viability of a system that has dampened transaction levels and lowered the tax take in London. The new rules mean that buyers will pay £153,750 in stamp duty for a property worth £2 million versus to £100,000 before the change. The result is that £1 million plus transactions in London in the first seven months of this year fell 25% compared to the same period in 2014. A Knight Frank analysis of sales volumes across London local authorities shows the biggest impact has been felt in prime central London. Between January and July this year, the volume of transactions fell 28.6% in the borough of Westminster compared to 2014. The drop was 27.5% in Kensington and Chelsea and 27.9% in Tower Hamlets, which includes the Canary Wharf district. Accordingly, the total value of transactions in central London has fallen disproportionately. The report also explains that while a progressively structured tax means more first time buyers and home movers will pay less when they buy a home and there is every indication policymakers are now turning their attention to supply, making sure there are enough new homes to meet demand across London and the rest of the country, the volume of sales only rose in three out of London’s 32 boroughs between January and July 2105 and the value of transactions only rose in 11 boroughs. As a result, the stamp duty tax take was down 8.7% across London, which included a decrease of 17.5% in Westminster, -33.8% in Tower Hamlets and -19.1% in Wandsworth. The stamp duty take only fell 1% in Kensington and Chelsea due to the impact of the higher… Continue reading
