Tag Archives: real-estate
Research reveals chromic shortage of first time buyers in UK housing market
The UK housing market is experiencing a potentially serious shortage of first time buyers, particular in the South East and North West, new research has found. First time buyer activity in the North East and Yorkshire and Humberside is less than half of what it was pre-recession while London is the least affected, according to the report from private mortgage insurer Genworth based on an analysis of government and industry data. The South East averaged 86,733 first time buyers a year from 1974, when records began, up until 2006. But since 2007 when the financial crash hit, this has fallen to just 47,863 a year. As a result, this has created a total shortfall of 310,967, the biggest of any English region. The North West has also seen first time buyer numbers drop from 46,461 a year between 1974 and2006 to 23,875 between 2007 and 2014. This has created a shortfall of 180,685 first-time buyers. The North East’s first time buyer market is less than half of its pre-recession size as the data analysis shows that the average number of first time buyers between 2007 and 2014 at 10,575 is just 46% of the pre-2007 average of 23,191, the lowest percentage of any region. In contrast, London is the least affected in relative terms and has lost just a quarter of its first time buyers in percentage terms. Its average of 39,175 between 2007 and 2014 is equal to 73% of the pre-recession average, despite the continued house price increases London has seen in recent years. The report says that comparing these shortfalls to the regional populations of 18 to 45 year olds who are traditionally first time buyers, suggests a significant percentage are potentially ‘denied home owners’ as a result of the fall in first time buyer numbers. For example, a shortfall of 100,927 first time buyers in the North East compared to an 18 to 45 population of 1.3 million means as many as 21% could be classed as ‘denied home owners’. In the South East a shortfall of 310,967 compared with an 18 to 45 population of 1.6 million means 19% are in the same position. ‘Tougher regulation and higher capital requirements for lenders as a result of the recession have accelerated the fall in homeownership and dramatically reduced the number of people, especially younger households, who are able to buy their first home,’ said Simon Crone, vice president for mortgage insurance Europe at Genworth. ‘A dual crisis has emerged with the shortage of new homes exacerbated by a shortage of loans traditionally used to help first time buyers get on the property ladder with 5% or 10% deposits. Our analysis shows that all regions have felt the impact of the squeeze on first time buyers, regardless of the so-called ‘North/South’ divide,’ he explained. ‘While London and the South East face the biggest pressure of high house prices, a lack of housing… Continue reading
Average UK rents up 11.8% year on year, led by the South West and Scotland
The South West of England and Scotland saw rents increase faster than anywhere else in the UK over the three months to July 2015, according to the latest index. The average rent in the UK for new tenancies over the three months to July 2015 was £977 per month or £761 excluding Greater London, the data from the HomeLet index shows. Indeed, the average rent on a new tenancy in London now stands at £1,538 per month, 9.5% higher than a year ago and overall rent price increases are running ahead of inflation and house price growth. The index, which claims to provide the most up to date figures on UK rent prices, shows that rent price growth in the private rental sector is now extremely broad based with average rental values up in every region of the UK except the North West and are 11.8% higher when compared to the same period in 2014. Three regions of the UK have seen rent prices rise at a rate exceeding that of London in the three months to July 2015. In the South West of England rent prices on new tenancy agreements signed in the three months to July were 11.4% higher than in the same period of last year, in Scotland they increased 11.2% and in the South East of England there was growth of 10.3%. In London where, in cash terms, the average rent on new tenancies is more than twice as high as in the rest of the country, prices continue to rise. New tenancies signed over the three months to July came with rents that were 9.5% higher than in the same period of last year. ‘The index demonstrates just how broad based the rise in rent prices has now become, confirming that this is a UK wide trend. Regions which have long been associated with a buoyant rentals sector, such as London, continue to experience rising prices, but rents are also rising in many other parts of the country at similar rates,’ said Martin Totty, chief executive officer of Barbon Insurance Group, parent company of HomeLet. ‘The South West of England, for example, is benefitting from its popularity with those attracted to the area for lifestyle reasons, as well as the strong local economy in many of the towns and cities of the region,’ he pointed out. He explained that over the past few years, price trends in the rental market and house purchase market have been very similar. ‘However, across the first half of this year, house price growth has slowed whilst rental values have continued to increase, perhaps reflecting a change in the relative attractiveness of renting versus buying over this recent period,’ he said. With early signs of the cost of mortgage finance starting to edge up, it will be interesting to see if this recent trend continues or if the change in buy to let mortgage interest tax relief announced in the Summer… Continue reading
Homes in Australia are less affordable, particularly in Sydney and Melbourne
Homes in Australia are less affordable but there are wide variations across the country with price growth having an effect in some locations. The latest affordability index from the Housing Industry Association (HIA) fell by 2.9% in the June quarter to 79.7 as an interest rate cut was negated by house prices rising and sluggish earnings growth. HIA chief economist Harley Dale said that during the second quarter of 2015 affordability deteriorated by 3.6% in capital city markets, driven by Sydney and Melbourne and described this as ‘a stark contrast’ to a 2.7% improvement for regional Australia. Compared to the second quarter last year, capital city affordability worsened by 0.6% while in regional Australia affordability saw a 5.2% improvement. ‘The large differences in the results for the capital city Affordability Index and its regional counterpart, together with the variation in outcomes between capital cities, exposes the folly of sweeping generalisations which refer to an Australian housing boom,’ said Dale. ‘That is simply not what is occurring. ‘In many parts of Australia the extremely low interest rate environment is delivering historically favourable affordability conditions. It is against this backdrop that authorities have escalated their requirements for the rationing of credit to residential investors. The risk is that this will obstruct new housing supply, aggravating affordability conditions in markets around Australia,’ he added. Meanwhile the latest HIA new home sales report, a survey of Australia’s largest volume builders, recorded its fifth rise in six months in June 2015. Total seasonally adjusted new home sales increased by 0.5%. Dale said that detached houses drove the modest increase in new home sales in June this year, with a 1.7% rise offsetting a 2.9% decline in the sale of multi-units and New South Wales and Victoria continue to display upward momentum in detached house sales, but the other three mainland states are heading in the opposite direction. A breakdown of the figures shows that detached house sales increased by 3.5% in New South Wales, by 1.5% in Victoria, and by 4.2% in Queensland. Detached house sales fell by 2% in South Australia while in Western Australia sales eased by 0.9%. Detached house sales increased by 7.9% in New South Wales and 0.6% in Victoria while quarterly sales fell by 7% in Queensland, 10.2% in South Australia and 3.1% in Western Australia. Continue reading
