Tag Archives: shows
Pending home sales static in US in June, latest index shows
Pending home sales in the United States were mostly static in June but the latest index from the National Association of Realtors is now at its second highest reading over the last year. However, supply and affordability constraints prevented a bigger boost in activity from mortgage rates that lingered near all-time lows through most of the month and increases in the Northeast and Midwest were offset by declines in the South and West. Overall the NAR’s pending home sales index, a forward looking indicator based on contract signings, was up 0.2% month on month and is 1% higher than June 2015. But it is noticeably down from this year's peak level in April. According to Lawrence Yun, NAR chief economist, a solid bump in activity in the Northeast pulled up pending sales modestly in June. ‘With only the Northeast region having an adequate supply of homes for sale, the reoccurring dilemma of strained supply causing a run-up in home prices continues to play out in several markets, leading to the last two months reflecting a slight, early summer cooldown after a very active spring,’ he said. ‘Unfortunately for prospective buyers trying to take advantage of exceptionally low mortgage rates, housing inventory at the end of last month was down almost 6% from a year ago and home prices are showing little evidence of slowing to a healthier pace that more closely mirrors wage and income growth,’ he pointed out. ‘Until inventory conditions markedly improve, far too many prospective buyers are likely to run into situations of either being priced out of the market or outbid on the very few properties available for sale,’ he added. One noteworthy and positive development occurring in the housing market during the first half of the year, according to Yun, is that sales to investors have subsided from a high of 18% in February to a low of 11% in June, which is the smallest share since July 2009. Yun attributes this retreat to the diminished number of distressed properties coming onto the market at any given time and the ascent in home prices, which have now risen year on year for 52 consecutive months. ‘Limited selection of homes at bargain prices is reducing the number of individual investors willing or able to buy. This will hopefully open the door for first-time buyers, who made some progress last month but are still buying homes at a subpar level even as rents increase at rates not seen since before the downturn,’ Yun explained. In spite of the slight slowdown in contract signings from April's peak high, existing home sales this year are still expected to be around 5.44 million, 3.6% higher from 2015 and the highest annual pace since 2006 when it was 6.48 million. After accelerating to 6.8% a year ago, national median existing home price growth is forecast to slightly moderate to around 4%. A breakdown of the figures show that in the Northeast the index was up 3.2%… Continue reading
Foreign owners of property in Australia face new 10% selling tax
New laws introduced at the beginning of July mean that foreign owners of property in Australia worth £2 million or more face paying an extra 10% in tax. Sellers must have proof that they are Australian citizens to avoid the tax which has been introduced in a bid to deter wealthy forging buyers from pushing up property prices. The change came at a time when prices in Australian state capitals were soaring and much of this was blamed on so called wealthy investors, especially from China. The Real Estate Institute of Australia (REIA) supports the legislation, but is concerned that there has not been enough publicity and stressed the importance of real estate and legal professionals understanding their obligations under the new laws. ‘Essentially this is the Goods and Services Tax (GST) process coming into effect in the housing market, which is long overdue in Australia,’ said REIA president Neville Sanders. ‘Failure to get a clearance certificate stating their Australian residency will mean vendors fall under the same conditions as foreign investors and will be required to pay this immediate 10% tax,’ he explained. ‘ ‘It is of the utmost importance that legal professionals ensure the timely receipt of clearance certificates for their clients, to ensure settlements proceed without delay,’ he added. According to Peter Malone, chief executive of GlobalX Legal Solutions, it means that legal professionals are required to ensure their clients are taking the right steps in the selling or buying of property. ‘These changes will affect the growing number of high value homes of Australian buyers and sellers, so it is imperative legal professionals and conveyancers are prepared,’ he added. The new legislation is expected to generate $330 million in revenue over the next four years, with a $770 million compliance cost over the next decade and has been introduced to deter wealthy investors pushing up property prices and making them less affordable for Australians. Maloney said while the imposed tax on foreign investors would help boost the Australian economy and recoup investor funds sent offshore, it was crucial for legal and conveyancing professionals to understand the intricacies of the changes. ‘The onus of proof will now fall on Australian vendors to prove their residency status to exempt them from the new 10% non-final withholding tax but, provided property lawyers and conveyancers are prepared to ensure the necessary documents are readied in advance, this shouldn’t be a timely and complicated process or cause unnecessary delays in the settlement process,’ he explained. ‘We are currently offering our clients a range of informational webinars and sessions to equip them with the knowledge and technical understanding of these changes to ensure the buying and selling process remains a seamless and smooth process for their clients,’ he added. Continue reading
Foreign buyers face new 15% extra property tax in certain parts of Vancouver
A new tax for foreign property buyers is being introduced in British Columbia in Canada in an attempt to cool escalating house prices. The 15% foreign buyer tax will come into effect on 02 August 2016 at a time when prices in the province’s capital city Vancouver are escalating. Indeed, the latest global cities index from international real estate firm Knight Frank shows that prices in the city have increased by 17.3% in the mainstream market and by 26.3% in the prime market in the year to March 2016. Policymakers have been looking at ways to cool price inflation in recent months and the new tax will relate to residential purchases in Metro Vancouver, an area that extends from Bowen Island to Maple Ridge/Langley Township. According to Knight Frank, in real terms the new tax will result in an extra $300,000 in property transfer tax based on a property bought for $2 million by a foreign citizen. This figure will rise to $1.5 million for a $10 million home. The latest government data shows foreign buyers, mainly from China, purchased more than $1 billion worth of property in British Colombia between 10 June 2016 and 14 July 2016 of which around 86% was located in the Lower Mainland. The foreign buyer tax will also apply to corporations that purchase residential real estate and the British Columbia Government has the power to examine the citizenship status of directors and the beneficiaries of corporate profits in deciding whether to add taxes. According to the Finance Minister, the resulting revenue from the new tax will be spent on housing affordability projects. However, Knight Frank points out that some loopholes exist and details as to how it will be policed remain unclear. For example, the tax itself relies on buyers self reporting their nationality and providing a social insurance number, backed up by new auditing procedures and penalties. However, as yet it is unclear whether a resident with citizenship could buy a property by proxy for a family member living abroad. ‘There is no doubt that the new law will cool sales volumes and prices as foreign buyers absorb the additional cost implications. It is worth noting that the planned legislation also allows the BC cabinet to alter the foreign tax rate by between 10% and 20% at a later date and expand it to outside the Lower Mainland,’ the firm explains. ‘The legislature was originally recalled to discuss the merits of a tax on vacant homes, whilst the legislation provides an enabling power for such a measure, it is unclear at this stage whether the Government will go ahead with such a move,’ it adds. Vancouver isn’t the only city where policy makers are trying to stem the flow of speculative capital into their local housing market. Hong Kong, Singapore, Australia, Switzerland and Mexico have all taken steps either by imposing additional taxes or stamp duties, introducing a one off fee or restricting where or what type of property… Continue reading
