Tag Archives: real estate
As US home price growth continues to soften, expert says market is not back to normal
Home price growth across the US has softened for six months in a row with experts warning that the overall health and recovery of the residential real estate market is far from guaranteed. National home prices in April were up 5.1% year on year but while the quarterly rate of growth continued its path to normalisation coming in at 0.5%, according to the latest data from real estate firm Clear Capital. Most of the regions sustained price growth through the winter, but the Midwest is already seeing negative quarterly declines of 0.10% Midwest and the region remains volatile. The report points out that for nearly seven years, it has struggled to get on equal footing with the nation. Within the top performing markets for April, eight are Western markets. While the West’s market by market performance may exceed the other regions, gains have been softening since the beginning of 2014 and this is leading to softening gains at the national level, the firm says. Three Florida markets that rank among the top performers boast high levels of distressed and short sales. All three markets have distressed saturation rates that are at least 10% higher than the national level, at 16.5%, suggesting growth is dependent on a higher propensity of distressed inventory in this area. The report also points out that the stigma once associated with REOs has turned around and today, REOs and short sales signal opportunity to investors and traditional home buyers alike, and an indication that market level gains could be ahead. ‘While spring brings renewed confidence and demand, the numbers through April are mixed. Sales may be up, but subsiding gains imply the recovery is at a critical inflection point,’ said Alex Villacorta, vice president of research and analytics at Clear Capital. ‘As the market normalises, which is a good thing for housing overall, small losses could have greater impact, forcing a standstill or even worse, a return to negative territory in certain areas across the country,’ he explained. ‘Confidence is down in April, suggesting consumers aren’t quite convinced that the economy, much less housing, is as rosy as some early spring metrics suggest. Yet, we continue to see blooms of opportunity as distressed properties continue to provide fertile ground for investors of all sizes to take advantage of a red hot rental market. As we saw back in early 2013, this type of inventory can be the catalyst that revives confidence and re-engagement,’ he added. ‘The early spring numbers are encouraging but rest assured, the overall market is far from being back to normal. There is reason to be hopeful, but arm yourself with accurate data and remember to read headline numbers with the right perspective,’ he concluded. Continue reading
Shortage of property for sale keeping UK prices high, latest index data suggests
House prices in UK in the three months to April were 2.2% higher than in the preceding three months, according to the latest data from the Halifax. This particular measure of the underlying rate of house price growth fell for the first time in 2015 following three successive rises. But house prices increased by 1.6% between March and April. In contrast, annual house price growth increased slightly, from 8.1% in March to 8.5% but, nonetheless, the annual rate remains in the narrow range of 8% to 9% where it has been since the start of 2015 and is below last July’s peak of 10.2%. ‘Housing demand is being supported by a number of factors including economic improvement, rising employment and low mortgage rates. At the same time, supply remains very tight with a general shortage of properties available for sale,’ said Halifax housing economist Martin Ellis. ‘This combination has kept house price inflation steady in recent months with prices increasing by 2.2% to 2.6% on a quarterly basis and at an annual rate of 8% to 9%,’ he added. He pointed out that house prices are continuing to increase more quickly than average earnings despite the return to real earnings growth over the past few months. ‘The resulting rise in the level of house prices in relation to earnings should constrain house price growth and activity over the remainder of the year,’ he said. Ellis is predicting that the annual rate of house price growth is forecast to end the year at somewhere between 3% and 5%. The Halifax report points out that home sales were unchanged in March at 101,000 and were also static between the final three months of 2014 and the first quarter of 2015, but were 6% lower than in the first three months of 2014. Mortgage approvals have risen on a quarterly basis. The volume of mortgage approvals for house purchases, a leading indicator of completed house sales, fell slightly in March following three consecutive rises. Nonetheless, approvals during the first quarter of 2015 were 2.8% higher than in the final quarter of 2014. Supply remains tight. New instructions fell in March continuing the recent downward trend with declines in seven of the past eight months. This fall in instructions has contributed to the supply of homes on the market remaining low. Continue reading
Election result hailed as positive for UK commercial property markets
The UK general election result should be positive for the country’s commercial property markets but the landslide in favour of the SNP in Scotland could result in uncertainty north of the border, according to experts. If the SNP push for another referendum on independence then uncertainty could creep into the markets north of the border, it is suggested. And a referendum on the UK’s position within the European Union could add to that. ‘There is good reason to now suppose the UK economy, that appeared to slow in the run-up to the election, can now resume a strengthening recovery. This will be good news for both the commercial leasing and investment markets,’ said James Roberts, chief economist of real estate firm Knight Frank. He believes there remains a great deal of political uncertainty that will influence but not derail the property market. ‘Firstly, the SNP’s overwhelming victory has put the existence of the Union back on the political agenda. Last year there was a brief slowdown in activity in the Scottish market in the run-up to the referendum, which may be replicated in a future poll. This comes with the caveat that some investors actually saw last year’s referendum as an opportunity to buy,’ he explained. ‘Secondly, a Conservative majority increases the chances of a referendum on European Union membership. If the prospect of Scottish independence caused a market slowdown, the idea of the UK leaving the EU will surely do the same, probably on a greater scale. Either a Tory backbench rebellion against the Bill or a vote sooner rather than later may be the best outcome,’ he pointed out. ‘Thirdly, the UK’s deficit remains large. If the financial markets suspect that not enough is being done to balance the books, sterling could fall in value. This will initially make UK commercial property look attractive to overseas money, but inflationary pressures would increase and bring closer the day that interest rates rise,’ he added. Over the next five years, the firm believes that this climate of political uncertainty will at times cause market confidence to drain away temporarily. ‘Some investors may decide to wait until after an upcoming referendum before buying; some occupiers might shelve expansion plans because a sudden fall or rise in sterling hits profits,’ said Roberts. ‘In short, we should expect the odd air pocket ahead, but overall the election outcome was probably much better for commercial property than one would have expected,’ he concluded. Miles Gibson, head of UK research at CBRE, also pointed out that the overall economic outlook remains favourable for markets. ‘Strong employment, low inflation, low interest rates and high levels of inward investment all bode well for the property sector,’ he said. But he believes that there remains, however, a question mark over EU membership, something ‘which bothers most of our clients immensely as they feel investment would suffer if we were to leave the EU’. The firm believes… Continue reading
