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The value of housing stock in the UK reaches over five trillion
The value of UK's private housing stock in August 2015 reached an estimated at £5.1 trillion, a rise of 53% over the last decade, with London doubling since 2005. The increase of £1.8 trillion since 2005 is equivalent to £76,316 per household in the owner occupied and private rented sectors and means that the value of the UK private residential housing stock has grown at a faster rate than consumer prices, with the retail price index up by 35% in the past decade. In the past year, the value of private housing stock grew by £262 billion, mainly reflecting average house price growth of 4% in the year to August, according to the research from the Halifax. The research also shows that the value of mortgage debt has also grown, up by 35% since 2005 from £942 billion to £1.28 trillion. Nonetheless, the value of the private housing stock has grown by over five times as much as outstanding mortgage debt at £1.8 trillion compared with £334 billion. As a result, housing equity has increased by £1.4 trillion or 60% over the decade from £2.4 trillion in 2005 to £3.8 trillion. Regionally, there is a wide variation in the level of housing equity, with a higher balance in the south compared to northern areas. The highest is in London where housing equity is estimated at £798 billion, which is equivalent to £305,749 per household. The next largest is South East at £722 billion or £223,197 per household, and the East at £461 billion or £212,263 per household. Outside southern England, the highest equity levels are in the North West at £283 billion or £109,043 per household, the West Midlands at £251 billion or £128,703 per household and Scotland at £241 billion or £124,679 per household. ‘The combined value of all privately owned houses in the UK is estimated at close to £5.1 trillion in 2015. The increase in total housing value over the past decade is equivalent to over £76,000 per privately owned property,’ said Martin Ellis, housing economist at the Halifax. ‘Aggregate net housing equity held by UK households is in a healthy state with total housing assets worth nearly £4 trillion more than the total value of mortgage debt. Despite the rapid rise in mortgage debt over the past 10 years, net housing equity has grown by £1.4 trillion since 2005,’ he added. The research shows that there has be a strong rise in the value of the private housing stock across all regions, with values more than doubling in London at 105% from £552 billion to £1.1 trillion over the decade. The next largest increases were in Scotland at 72% or £136 billion, the South East at 55%, the East at 54% and the South West at 36%. The value of housing in the north increased by 36% compared to 66% in the south during the last ten years. As a result, the South's share of total UK housing assets rose… Continue reading
Property prices down in Cyprus, but decline is slowing
The residential property market in Cyprus is still struggling despite the island’s economy showing signs of stability in the third quarter of 2015, with sales volumes low. Across Cyprus house prices fell by 0.5% and apartment prices by 0.4%, according to the latest index from the Royal Institution of Chartered Surveyors (RICS). The biggest drop was in Famagusta where apartment prices fell by 1.2% and in Limassol where house prices fell by 3.2% while house prices were down 0.3% in Nicosia. However, the RICS index report points out that the rate at which prices are falling has slowed in most cities across Cyprus and there were few sales overall due to the prevailing economic conditions although the volume was higher year on year. In addition certain locations such as Paphos, Larnaca and Famagusta are showing signs of stability where the housing markets are progressively bottoming out. The RICS index also shows that on a quarterly basis rental values increased by 0.3% for apartments, 1.5% for houses and 2.6% for offices while retail units saw a fall of 1.1% and warehouses a fall of 0.1%. Compared to the third quarter of 2014, rents dropped by 1.5% for flats, 0.5% for houses, 4% for retail, 2.5% for warehouses, and 0.2% for offices. Areas that had dropped the most early on in the property cycle now nearing or at the trough and Paphos and Famagusta are showing some signs of price stability. Paphos is the only place with positive returns in all asset classes when compared to the third quarter of 2014. At the end of the third quarter of 2015 average gross yields stood at 3.9% for apartments, 2% for houses, 5.2% for retail, 4.3% for warehouses, and 4.5% for offices. The parallel reduction in capital values and rents is keeping investment yields relatively stable and at low levels compared to yields overseas, the RICS report says, adding that it suggests that there is still room for some re-pricing of capital values to take place, especially for properties in secondary locations. Meanwhile, the latest monthly data from the Department of Lands and Surveys, shows that sales increased across Cyprus apart from Larnaca where they fell by 1%. Sales in Nicosia were up 64%, in Paphos up 30%, in Limassol up 28% and in Famagusta up 4%. But it must be remembered that sales volumes are low. There was a total of 463 sales contracts recorded covering residential, commercial and building plots. However the Land Registry data also shows that during the first 10 months of the year sales are up 8% compared with the same period in 2014 with 3,993 transactions completed. Continue reading
High loan to value lending declining in overall UK mortgage market
The UK government’s Help to Buy scheme is boosting lending to first time buyers but high loan to value lending activity has fallen year on year, new data shows. Overall 95% LTV mortgage almost doubled under Help to Buy in the first 18 months of the scheme from January 2014 to June 2015 making up £3.43 of every £100 worth of mortgage lending, according to research from private mortgage insurer Genworth. This was up from £1.77 in the previous 18 months as more options have appeared for home owners with smaller deposits. However first time buyer and 95% LTV lending activity fell year on year in the second quarter of the year, marking the second quarterly decline in a row, the first time this has happened since 2010/2011 Total mortgage lending across the whole market grew by £48.2 billion which means that as the mortgage market has grown during this period, £12.24 of every extra £100 lent has been via 95% LTV mortgages. Genworth’s analysis shows that first time buyers account for almost £21 in every £100 lent during the first half of the Help to Buy 2 (HTB2) scheme compared with £19.33 in the previous 18 months. This compares with just £11.41 per £100 in 2007/2008 and highlights how the scheme has played an important role in encouraging first time buyer lending. The growth in 95% LTV is an encouraging sign for a sector that was hit hard by tightening credit conditions during the recession, exacerbating the challenges of raising a big enough deposit to buy a home. But the report suggests that concerns linger for long term health of the 95% LTV market. Both 95% LTV lending and first time buyer lending declined by value year on year during the second quarter of 2015 for a second successive quarter. This is the first time this has happened for two consecutive quarters since the lending drought from the fourth quarter of 2010 to the third quarter of 2011. It contrasts with the substantial growth achieved when Help to Buy was first introduced, and raises doubts about how well activity will fare when it is withdrawn at the end of 2016, particularly with expectations that historically low interest rates will finally start to rise next year, raising costs for borrowers. ‘There is no denying that Help to Buy has played an important part in revitalising the first time buyer and high LTV mortgage market following a significant lending drought. Some participating lenders are now moving towards launching non-HTB2 products, but it remains to be seen whether this will be enough to sustain the benefits of the scheme once it expires,’ said Simon Crone, vice president for mortgage insurance Europe at Genworth. ‘We are potentially facing a situation where the high LTV market could easily fall back into decline with the end of Help to Buy now just over a year away. Even… Continue reading
