Tag Archives: news
Pending home sales in US reach highest level for over a decade
Pending home sales in the US rose for the third consecutive month in April and reached their highest level in over a decade, according to the latest index data to be published. All major regions saw gains in contract activity last month except for the Midwest, which saw a meagre decline, the pending homes index from the National Association of Realtors shows. The index, a forward looking indicator based on contract signings, increased by 5.1% to 116.3 in April from an upwardly revised 110.7 in March and is now 4.6% above April 2015 when it was 111.2. After last month's gain, the index has now increased year on year for 20 consecutive months and Lawrence Yun, NAR chief economist, said that vast gains in the South and West propelled pending sales in April to their highest level since February 2006. ‘The ability to sign a contract on a home is slightly exceeding expectations this spring even with the affordability stresses and inventory squeezes affecting buyers in a number of markets,’ he explained. ‘The building momentum from the over 14 million jobs created since 2010 and the prospect of facing higher rents and mortgage rates down the road appear to be bringing more interested buyers into the market,’ he added. On the topic of mortgage rates, which have remained below 4% in 16 of the past 17 months. Yun pointed out that it remains to be seen how long they will stay this low. Along with rent growth, rising gas price and the fading effects of last year's cheap oil on consumer prices could edge up inflation and push rates higher. For now, he foresees mortgage rates continuing to hover around 4% in coming months, but inflation could potentially surprise the market and cause rates to increase suddenly. ‘Even if rates rise soon, sales have legs for further expansion this summer if housing supply increases enough to give buyers an adequate number of affordable choices during their search,’ he added. Following the housing market's best first quarter of existing sales since 2007, Yun expects sales this year to climb above earlier estimates and be around 5.41 million, a 3% boost from 2015. After accelerating to 6.8% a year ago, national median existing home price growth is forecast to slightly moderate to between 4% and 5%. A breakdown of the figures show that in the Northeast it climbed 1.2% to 98.2 in April, and is now 10.1% above a year ago. In the Midwest the index declined slightly by 0.6% to 112.9 in April, but is still 2% above April 2015. Pending home sales in the South jumped 6.8% to an index of 133.9 in April and are 5.1% higher than last April. The index in the West rose 11.4% in April to 106.2 and is now 2.8% above a year ago. Continue reading
Latest mortgage research shows shift in investors’ choice of property type in UK
Real estate investors in the UK looking to expand their property portfolios are looking to do so with the purchase of more complex property types, new research has found. In particular 28% of those looking to expand said they were considering purchasing HMOs, up from just 10% six months ago, according to the latest report from Mortgages for Business. Commercial and semi-commercial property are also interesting of investors but those looking to purchase vanilla property has fallen slightly to 79% from 83% in November. David Whittaker, managing director at Mortgages for Business, pointed out that with higher yields it is no surprise that there has been a sizeable shift towards the more complex property types. ‘The interest in commercial and semi-commercial property may have also grown as these asset classes do not incur the Stamp Duty Surcharge imposed on residential property,’ he explained. The report also shows that the number of investors looking to expand their portfolio has dipped slightly to 41% from 46% in November 2015, probably due to the tax change announcement and the introduction of the 3% stamp duty surcharge. However, the good news is that an even smaller proportion, some 14%, plan to shrink their portfolios, down from 18% in November 2015. Despite an increase in investors keeping their portfolio size as it is now, 39% still plan to remortgage some of their properties in the next six months. ‘It is positive to see that fewer landlords are looking to sell property and shrink their portfolios and that a large proportion are still seeing the benefits of remortgaging,’ said Whittaker. ‘After the government’s tax crackdown on private landlords I can understand why investors are being more cautious about expansion. It will be interesting to see how long this cautious approach will last,’ he added. The research also shows that 30% of respondents said they owned a property in a limited company vehicle up from just 22% a year before. ‘We expect this figure to continue to rise in light of the pending tax changes which will peg relief on finance costs, including mortgage interest, to the basic rate of 20% to individual tax payers. Since the tax relief announcement we have seen a notable rise in limited company applications, which doesn’t show any sign of slowing down,’ Whittaker said. The survey found that 59% of those looking to expand their portfolios will need to refinance to raise the necessary funds, up marginally from 58% in November 2015. There was also a fall in the number of respondents who felt that lenders were not doing enough to support investors. The most common gripes felt by landlords were extremely similar to the responses given in November’s survey including wanting more lending options for limited companies, wanting the removal of upper age restrictions and wanting more of a human/common sense approach to underwriting. Continue reading
Total investment volume in European commercial real estate down in Q1
Total investment volume into European commercial real estate in the first quarter of 2016 reached €36.8 billion, some 30% lower than the same period last year, the latest research shows. However, several European countries analysed in the report from international real estate firm Savills are seeing increasing investment activity this year. Italy with growth of 54%, Sweden up 33%, Poland up 15%, the Benelux countries up 12% and Finland up 479%, have all performed well. The report says that the data shows that investor appetite is healthy for quality assets in markets with strong fundamentals. In terms of sectors, industrial has gained ground, increasing by around 19% year on year. This was driven mainly by transactions in the logistics and distribution sector in the UK, Germany, Sweden, Spain and the Netherlands, which accounted for more than 80% of the total activity. Over half of the markets across the continent did record a decrease in transaction volumes in the first three months of the year. Lower volumes were observed in the markets which are ahead in the investment cycle such as the UK with a decline of 48%, France down 47% and Germany down 12%. It is believed that the stagnating European economy, the unpredictable outcome of geopolitical tensions in Europe, and the volatility of the stock markets could all be factors influencing investor sentiment and delaying decision making. Savills however insists that these lower volumes are not a reflection of investor demand for real estate in Europe, but of the lack of stock currently available in the marketplace. ‘Demand for commercial real estate in Europe remains strong amongst domestic and cross border investors and deals are still closing at record prices. The predominant threat to an increasing turnover is the lack of good quality assets on offer,’ said Eri Mitsosterigiou, director of European research at Savills On the other hand, Denmark with a fall of 62%), Norway down 47%, Spain down 24% and Ireland down 33%, all experienced dynamic investment activity in 2015, therefore it is unlikely for them to rival these strong performances in 2016. According to Marcus Lemli, head of European investment at Savills, the markets that are likely to continue to be high on investors’ agendas this year are the core markets of Germany and France, which, despite competitive pricing and unbalanced levels of supply and demand, remain attractive due to their solid fundamentals and high liquidity. ‘Strong occupier markets and low development activity is also expected to boost rental growth in these markets over 2016,’ he added. Savills predicts that in 2016 prime CBD rents will grow by 3% to 4% pa in London, by 3.5% in Paris and by 2% in the big four German big cities. From a pricing perspective there is also still some space for further gains in the shopping centre and logistics sectors in Paris, if the yield… Continue reading
