Tag Archives: real estate
Third of UK home owners can’t afford to move up the housing ladder
Some 34% of UK home owners looking to step up the housing ladder think it’s going to be difficult to move, new research has found. On average, current mortgage holders believe they need to save £10,549 before they can move and high house prices and the expense of moving are cited as the two main reasons people haven’t yet moved up the property ladder. The research from comparison website MoneySuperMarket found that 26% think it will be difficult to move up and a further 9% think it will be very difficult. This rises to 41% among those aged between 35 and 54 years who would find it tough to upscale their current property, while 28% of 18 to 34 year olds think the same. ‘There was a time when those in the 35 to 54 age group would have been looking to downsize, but now this is the age group where people are starting a family in some cases or still housing grown up children who are struggling to find their own way,’ said Kevin Mountford, head of banking at MoneySuperMarket. ‘Although they might have the earning potential to make that next step there is the constraint of mortgage term that comes with their age. Lenders will tend to fix the term of repayment to retirement age, so for those movers aged over 34 the repayments on increased value mortgages will be much higher as they’re paying it back over a shorter time,’ he explained. ‘For example a £250,000 mortgage on the leading two year fixed at 1.05% could be taken out by a 30 year old with a 30 year term and the monthly repayments would be £810. However for someone aged 45, the same mortgage over a 20 year term would have monthly repayments of £1,155, that’s £345 extra to find each month to make that next move,’ he added. Overall money is the main reason property owners would find it hard to move on up with 47% saying that house prices are so high they can’t afford to take the next step yet, while 43% simply can’t afford the cost of moving. Indeed, current homeowners think they’d need to save up £10,549 on average before they’d be able to move home while those in London estimate they’d need £12,946 on average to move, compared with £6,772 in the North East of the country. ‘Getting a foot on the property ladder in the first place can be hard work, but for many homeowners it’s just as difficult to take the next step. House prices have rocketed in recent years and tougher borrowing rules have made the search for a mortgage slightly harder,’ said Mountford. ‘It is vital for a healthy housing market that people are able to move up the property ladder otherwise the whole system can come to a grinding halt, leading to a shortage of property. As a result, second steppers can’t afford to be complacent when it comes to deciding… Continue reading
Prime property sales in Edinburgh hit by new land and buildings tax in Scotland
Prime property prices in Edinburgh rose by just 0.4% between April and June, the lowest quarterly price growth in two years, according to the latest market report. Prices are up by 3.4% on an annual basis which is down from the recent 5.7% high in June last year, the data from real estate firm Knight Frank shows. The firm pointed out that this slowdown in price growth can be attributed to the introduction of the new Land and Building Transaction Tax (LBTT) in April. The levy, which replaced stamp duty on all residential property transactions, means that those purchasing property with a value above £333,000 now pay more in purchase taxes. As a result, there was a spike in prime transactions in Edinburgh ahead of the introduction of LBTT. Since then however, there has been a fall in prime transaction levels in the city, with Knight Frank figures showing a drop in sales in the second quarter compared to the same period of 2014. The Scottish government originally forecast the tax would raise £235 million in 2015/2016. However, figures released by Revenue Scotland, the government body which administers and collects LBTT, showed that receipts from the new levy between April and June have so far totalled just £18.4 million. The Knight Frank report says it will be telling to see what impact the introduction of LBTT has on overall revenues at the end of this tax year but for now, the prime market in Edinburgh is still absorbing the change. Indeed, anecdotal evidence suggests that home buyers facing more tax under the new LBTT regime are negotiating with vendors over the additional burden, with the two parties often splitting the price difference between them. The market is expected to return to more normal trading conditions by the end of the summer however, and prices in Edinburgh are still being underpinned by low interest rates and continued economic growth. ‘We saw an enormous push pre-LBTT, with remarkably high sales in March followed by a very subdued April and May,’ said Edward Douglas-Home, head of Edinburgh City sales at Knight Frank. ‘Our experience is that buyers, particularly those looking for family homes valued at between £500,000 and £1 million, are having to eat further into their deposits when purchasing a property,’ he added. Continue reading
US home prices up 0.3% nationally in May
The median US home value increased 0.3% in May compared to the previous month but overall prices are still 8.8% below the peak of the market in April 2007. This takes the median price to $179,200, according to the latest Zillow Real Estate market report which tracks 514 areas around the country. The data shows that 64% or metropolitan areas saw prices rise month on month and 67.3% saw annual price rises. In May the four fastest growing markets among the nation’s 35 largest all experienced double digit annual home value appreciation; Denver, San Jose, Dallas-Fort Worth and San Francisco. In all four of these markets, home values have already surpassed their bubble-era peaks. The most sluggish large markets in May were Boston were prices increased by just 0.2% annually, New York where prices were down 0.1% and Baltimore down 0.3%. All three are in the north east of the country. According to Stan Humphries, Zillow chief economist, the market isn’t back to normal. ‘Low inventory, persistent negative equity and still low mortgage interest rates continue to distort the market in various ways,’ he said. ‘But the fact that local markets are once again largely rising and falling on their own merits and continuing to find some kind of equilibrium based on real market fundamentals like household formation rates and job and wage growth is encouraging. A truly normal national housing market is one in which local conditions rule,’ he added. Over the next year home value growth is expected to slow even further to 2.2%, according to the Zillow Home Value Forecast. This will be some way below 2014 when home values rose 4.9%. ‘The country by and large rode the same big roller coaster through the housing bubble, bust, and recovery. May’s report shows local markets diverging, with some chugging along, some stalled out and some continuing to accelerate amid rising prices and competition. This is a positive sign that the market is returning to full health,’ Humphries pointed out. ‘In general, as mortgage rates begin to rise and incomes and household formation rates slowly increase, the baton is being passed in housing from a stimulus driven market to one driven by fundamentals. This transition from housing recovery to a more normal market is a good thing long term, but we can expect some bumps along the way. In the end, increasing household formation and stronger income growth should overcome the headwind of rising mortgage rates,’ he concluded. Continue reading
