Tag Archives: real-estate
Lower end US homes just 10% below 2006 and outperform middle market sector
Lower priced houses in the United States have been outperforming the middle priced market and are now only 10% below their peak values of 2006, a new analysis shows. Middle tier homes, typically selling between $120,000 and $345,000, are the worst performing segment with current price levels 24.8% below 2006 peak levels, according to a new report from real estate firm Clear Capital. It says that this vast difference in market recovery underscores the continued challenges the majority of home owners face, despite a quicker recovery in both the bottom and top segments of the market. Regionally, there was a small uptick in quarterly gains in both the West and Midwest, between 0.3% to 0.1%, while the Northeast and South remained unchanged over the quarter, at 0.2% and 0.8%, respectively. These minimal changes reinforce housing’s continued moderation and suggest the initial thrust of the home buying season is starting to wane, according to Alex Villacorta, vice president of research and analytics at Clear Capital. He pointed out that disparity still exists at the local market level. The Northeast reports the widest gap in price performance between the top and bottom performing areas with Pittsburgh seeing growth of 14.1% year and year and Providence down 14.1%. At the national level, the data through July shows a 0.1% increase in quarterly gains, from 0.6% in June to 0.7% in July. ‘While this minor increase, a carry-over from spring’s performance, is expected as we enter the thick of summer’s peak demand cycle, it reflects the overall contraction from spring’s initial surge,’ said Villacorta. ‘Through the first half of 2015, we observed a housing recovery that is normalising after an impressive price surge from the trough of the market. After more than two years of a pretty remarkable upward swing, the housing market’s correction to the correction has given way to more normal rates of growth,’ he explained. ‘What we now know, however, is that this correctionary period has not treated all markets, nor segments within markets, the same. In the present environment, micro analysis is key. In particular, our latest data exposed a mid-tier lag. This segment is still way behind both the top and bottom of the market in terms of recovery over the last nine years,’ he pointed out. Indeed, the analysis of the change in home prices since the summer of 2006 shows that the middle tier has lagged behind both the upper end and lower ends of the market by a surprisingly wide margin. At 24.8% below its peak level, the middle tier is more than double that of the lower tier. Villacorta said that the lower tier was both hit and buffered by high levels of distressed activity which, in recent years, has sparked investor activity driven in large part by the accelerated demand in the rental sector. And, the top tier has benefited from a segment of the market that is more resilient to the current economic climate. ‘The middle… Continue reading
UK house prices creep up month on month and year on year
UK house prices increased by 0.4% in July and annual property price growth edged up to 3.5%, according to the latest residential index from the Nationwide building society. The monthly rise follows a slight dip of 0.2% that was recorded in June and takes the average price of a home to £195,621. While annual growth has increased from the 3.2% recorded the previous month. According to Robert Gardner, Nationwide's chief economist, after moderating over the past 12 months, there are tentative signs that annual house price growth may be stabilising close to the pace of earnings growth, which has historically been around 4%. ‘This would bode well for a sustainable increase in housing market activity, though whether this will be maintained will depend on whether building activity can keep pace with increasing demand,’ he said. He pointed out that the outlook on the demand side remains encouraging. ‘Employment growth has remained relatively robust in recent quarters, and, after a prolonged period of subdued growth, wage growth is also edging up. With consumer confidence buoyant and mortgage rates still close to all-time lows, demand for housing is likely to firm up in the quarters ahead,’ he explained. But he added that it remains unclear whether activity on the supply side will catch up with demand. ‘The number of new homes under construction has started to pick up, albeit from historically low levels, and further increases are required if a sustainable recovery in the housing market is to be maintained over the longer term,’ said Gardner. The July index report also reveals the effect of significant changes to the stamp duty paid on sales which were introduced six months ago, resulting in bunching relating to the new tax thresholds. Gardener explained that the old slab structure used to result in significant distortions with a clustering of transactions at the tax thresholds. Under that system, paying £1 more would result in significant additional stamp duty being due. For example, paying £1 over the £250,000 or the £500,000 threshold used to trigger an additional £5,000 of tax. ‘Even though the change to SDLT only came into effect six months ago, the impact on the pattern of transactions is already evident, with much less bunching of transactions around the £125,000, £500,000 and in particular the £250,000 price points,’ he said. ‘Moreover, based on the first six months of transactions data from the Land Registry, nearly 235,000 purchasers in England and Wales have paid less tax under the new regime, with an average benefit of around £1,800,’ he added. He pointed out that the benefits are greatest in the South of England where average house prices are higher. ‘We estimate that around 85% of transactions in London, the South West and South East have benefited from the changes, compared with around 55% in the North, Yorkshire and Humberside, and the North West of England,’ said Gardner. ‘However, we estimate that around 5,000 or 2% of purchasers paid more, two thirds of whom… Continue reading
English landlords who don’t follow new immigration checks face jail
Landlords in England who repeatedly fail to check a new tenant’s immigration status before agreeing a lease could face up to five years in jail, it has been confirmed. As part of a wider crackdown on immigration, new rules for landlords mean that they will also be expected to evict tenants who lose the right to live in England. They will be able to end tenancies, sometimes without a court order, when asylum requests fail, according to Communities Secretary Greg Clark as he announced that the government will not tolerate rogue landlords who make money out of illegal immigration. The changes which hare part of the new Immigration Bill and follow a pilot in the West Midlands come as the British and French governments struggle to deal with a migrant crisis in Calais where large numbers of people are making nightly bids to cross the Channel to reach the UK. Clark explained that under the proposals for landlords in England, the Home Office would issue a notice when an asylum application fails that confirms the tenant no longer has the right to rent property. He also said that a blacklist of rogue landlords and letting agents will be created to allow councils to keep track of those who have been convicted of housing offences and ban them from renting out properties if they are repeat offenders. Richard Lambert, chief executive of the National Landlords Association, described the proposals as a welcome step forward, although he said he is ‘slightly concerned’ that the 40 year old principle that it has to be a court that ends a tenancy is changing. He suggests that there is a danger that those being evicted end up doing something desperate such as barricading themselves inside a property. ‘I think that we need to think through the consequences of the kind of systems we are putting into place,’ he added. David Cox, managing director, Association of Residential Letting Agents, welcomed the proposals in principle. ‘The plans will help to weed out the minority of rogue landlords who exploit vulnerable immigrants for their own financial gain and, with the introduction of a new five year imprisonment penalty, will help to deter other such unscrupulous individuals from entering the private rented sector,’ he said. ‘The proposals also build upon the Right to Rent checks as imposed by the Immigration Act 2014, which we expect to be rolled out nationally following a pilot scheme in the West Midlands. We will be organising training sessions for our members to ensure they are fully prepared and understand the new rules and we urge all letting agents to ensure they are ready for the impending roll out,’ he added. Continue reading
