Tag Archives: real estate
UK rents not showing signs of seasonal slowdown, says latest monthly index
UK rents increased by 0.7% month on month in October to £1,294, showing no signs of the seasonal slowdown that normally hits the UK rental market in the autumn, according to the latest index. Rents increased across most of the county with the only exception being Scotland which saw a marginal monthly fall of 0.1% to £696, the data from the Landbay Rental Index shows. The report suggest that the latest rises indicate that the UK’s housing shortage combined with growing pay for many and unemployment levels hitting their lowest level since 2008 have put an end, at least for the time being, to the usual seasonal fall in rents that starts in the autumn. In fact the last time there was a sustained period of falling rents was in the winter of 2012/2013, when rents saw monthly falls from August 2012 to April 2013. Rents increased every month in 2014 and have been strong this year, seeing only small month on month decreases between June and August before increasing again in September and October. Typically an autumn seasonal slowdown in the rental market is caused by lower tenant demand after heightened demand in the summer from students, first jobbers moving for work, and the expiry of annual contracts that originated in previous summer rental rushes. The fact that it did not happen last year and shows no signs of arriving this year demonstrates that the UK private rental sector is seeing a period of consistently high demand and insufficient supply of properties. October’s rent increases were fastest for three bed properties, which are often rented by families moving for work, up 4.7% year on year and one beds that are most popular with first jobbers and young professionals, up 4.4%. Increases in the UK are being driven by London and the southeast. In October London rents increased by 4.1% to an average of £2,063, whilst rents in the southeast rose by 3.4% to £1,033. The impact of London on the national private rental sector is becoming increasingly evident by the surge in rents among commuter hotspots. Southend on Sea, historically not well known for its commuter town status, has seen consistently faster growth in rents than the national average. The seaside town’s one hour direct train into London and recent gentrification have played their parts in an annual rental increase of 9.7%, to an average of £759 per calendar month. Out of the top 20 areas of the UK outside of London to see the fastest rent increases, just Aberdeen, Edinburgh and Bath were outside of the southeast. ‘Seasonality has always been a strong feature of the UK’s rental market so the fact that it appears to be declining in influence is a powerful sign of the increasing strain the private rental sector is under to house the UK population,’ said John Goodall, chief… Continue reading
Number of first time buyers in the US falls for third year in a row
The share of first time buyers in the United States fell for the third year in a row and remained at its lowest point in nearly three decades, according to a new survey. The overall strengthening pace of home sales over the past year was driven more by repeat buyers with dual incomes, according to the annual survey released by the National Association of Realtors. The survey also found that nearly 90% of all respondents worked with a real estate agent to buy or sell a home which pushed for sale by owner transactions to their lowest share ever. The number of first time buyers was down to 32% from 33% a year ago, which is the second lowest share since the survey began in 1981 and the lowest since 1987 when it was 30%. Historically, the long term average shows that nearly 40% of primary purchases are from first time buyers. According to Lawrence Yun, NAR chief economist, the housing recovery's missing link continues to be the absence of first time buyers. ‘There are several reasons why there should be more first–time buyers reaching the market, including persistently low mortgage rates, healthy job prospects for those college educated, and the fact that renting is becoming more unaffordable in many areas,’ he said. ‘Unfortunately, there are just as many high hurdles slowing first time buyers down. Increasing rents and home prices are impeding their ability to save for a down payment, there's scarce inventory for new and existing homes in their price range, and it's still too difficult for some to get a mortgage,’ he explained. Yun pointed out that this year's survey perhaps offers additional clues to why fewer first time buyers are reaching the market. ‘First time buyers reported that debt in all forms delayed saving for a down payment for a median of three years, and among the 25% who said saving was the most difficult task, 58% said student loans delayed saving,’ he said. ‘With a median amount of student loan debt for all buyers at $25,000, it's likely some younger households with even higher levels of debt can't save for an adequate down payment or have decided to delay buying until their debt is at more comfortable levels,’ he added. With strong price growth in many markets and fewer first time buyers, the results in this year's survey reveal a market with a higher share of married couples at 67% percent, up from 65% last year, who have higher household income than previous years. Married repeat buyers have the highest income among all buyers at $108,600, while the share of single female buyers decreased from 16% to 15% and male buyers remained flat at 9%. ‘Similar to some of the obstacles facing first time buyers, tighter credit conditions and having less purchasing power than households with dual incomes likely led to the share of single female buyers declining to its… Continue reading
UK property prices set to rise by over 4% next year
Overall UK house prices are expected to tie by 4.1% in 2016 and by 20.3% cumulatively in the five years to the end of 2020, according to new research. However, as always national average performance disguises large regional variations that still characterise the UK market, the analysis report from international real estate firm Knight Frank shows. In the prime London and prime country markets higher transaction costs will continue to weigh on activity and price growth in 2016 as the market absorbs stamp duty, it points out and prime central London prices are forecast to rise by 2% in 2016 and by 20.5% cumulatively by 2020. Overall, values are growing more strongly in the South of England, particularly London and the South East, compared to slower growth in the North of England, Scotland and Wales. ‘These regional differences are unlikely to unwind significantly in 2016, although the improving economic and employment picture, especially in the regions, will underpin pricing,’ the report says. It also explains that interest rates continue to play a key role in the market. ‘While capital values will continue to be supported by ultra-low interest rates, the discussion has now turned to when, not if, the Bank of England will start to raise rates and markets are pricing in a rise in the second half of 2016,’ it adds. The report also points out that current ultra-low base rate, alongside an increased appetite for lending among banks, has led to record low mortgage rates, and mortgage lending has risen during 2015. The flip-side of this trend however, is that the best mortgage rates are generally only available to those who have access to sizeable deposits or equity. ‘While there are now more mortgage deals available to those with only a 5% deposit, a trend which will continue into 2016, the MMR mortgage rules mean that clinching a mortgage deal will continue to be challenging for some, especially for first time buyers,’ the report says. ‘Activity in the market has stabilised at around 100,000 transactions a month, although it is interesting to note that the cut in stamp duty for homes worth less than £1.1 million in December last year and the definitive general election result failed to produce an increase in activity. This was closely linked to a lack of stock on the market, particularly second hand stock,’ it adds. The analysis also looks at supply and demand and says that a lack of available homes to buy will likely continue to put a floor under pricing in 2016. ‘There is now even more emphasis on the delivery of new homes, and while levels of house building have picked up in recent years, the supply of new build dwellings is still far below Government targets,’ it points out. It also points out that the prime London property market faced a number of headwinds in 2015, led by the increase in stamp duty and higher transaction costs will continue to… Continue reading
