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Existing sales fall in October in the United States
Existing home sales in the United States fell by 3.4% in October to a seasonally adjusted annual rate of 5.36 million from 5.55 million in September, the latest data shows. All four major regions of the country saw no gains in sales. However, despite the decline sales are still 3.9% above a year ago at 5.16 million, the figures from the National Association of Realtors also show. According to Lawrence Yun, NAR chief economist, the sales cooldown in October was likely given the pullback in contract signings in the previous couple of months. ‘New and existing home supply has struggled to improve so far this fall, leading to few choices for buyers and no easement of the ongoing affordability concerns still prevalent in some markets,’ he said. ‘Furthermore, the mixed signals of slowing economic growth and volatility in the financial markets slightly tempered demand and contributed to the decreasing pace of sales,’ he pointed out. ‘As long as solid job creation continues, a gradual easing of credit standards even with moderately higher mortgage rates should support steady demand and sales continuing to rise above a year ago,’ he added. The median existing home price for all housing types in October was $219,600, which is 5.8% above October 2014 when it was $207,500). October's price increase marks the 44th consecutive month of year on year gains. The data also shows that total housing inventory at the end of October decreased 2.3% to 2.14 million existing homes available for sale, and is now 4.5% lower than a year ago. Unsold inventory is at a 4.8 month supply at the current sales pace, up from 4.7 months in September. The share of first time buyers increased to 31% in October, up from 29% both in September and a year ago. NAR's annual Profile of Home Buyers and Sellers, released earlier this month, show that the annual share of first time buyers fell to its second lowest level since the survey began in 1981. All-cash sales were 24% of transactions in October which was unchanged from September and down from 27% a year ago. Individual investors, who account for many cash sales, purchased 13% of homes in October, unchanged from September but down from 15% a year ago. Some 62% of investors paid cash in October. Distressed sales, foreclosures and short sales, declined to 6% in October, which is the lowest since NAR began tracking them in October 2008 and own from 9% a year ago. Some 5% of October sales were foreclosures and 1% were short sales. Foreclosures sold for an average discount of 18% below market value in October, up from 17% in September, while short sales were discounted 8% compared to 19% in September. ‘All-cash and investor sales are still somewhat elevated historically despite the diminishing number of distressed properties. With supply already meagre at the lower end of the price range, competition from these buyers only adds to the list of obstacles in the… Continue reading
New generation of skilled builders needed to fulfil UK’s new housing plans
A new generation of skilled builders will be needed to fulfil the UK government’s latest pledge to build hundreds of thousands of new homes, according to industry experts. The house building industry has welcomed the announcement of a £7 billion fund to prioritise home building with 200,000 starter home with 20% discount for those aged under 40, 135,000 shared ownership home, 10,000 rent to buy homes and 8,000 specialist properties for the elderly and disabled. But the Federation of Master Builders (FMB) pointed out that already developments are being stalled or held up due to the cost of hiring skilled tradesmen and with a shortage of apprenticeships the skills problem is not about to go away. ‘Unless we see a massive uplift in apprenticeship training in our industry, there won’t be enough pairs of hands to deliver more housing on this scale. The Chancellor clearly recognises that the crisis of home ownership is inextricably linked to a crisis in house building. We therefore hope that in order to address both, the Government will do everything it can to increase house building capacity,’ said Brian Berry chief executive of the FMB. ‘SME developers will have an important role to play in delivering the smaller scale sites across the country. The last time we built in excess of 200,000 homes in one year was in the late 1980s when two thirds of all homes were built by small developers,’ he pointed out. ‘SME house builders now only build little over one quarter of all new homes which points to another serious capacity issue as we need more small house builders to enter the market and also for SME house builders to crank up their delivery of new homes in order to build the Chancellors 400,000 new affordable homes,’ he added. There was much in the Autumn Statement for the construction industry to be excited about but some of the fundamental barriers to house building and, in fact, construction of any kind, remain in place, according to Simon Craven, director at Tower8. ‘If we are to see spades in the ground, then we need to see more of skilled workers to deliver these grand schemes. Further funding for a skilled workforce is required if the construction industry is to match the potential projects that the Chancellor is so keen to encourage,’ he explained. ‘Pressure on the construction industry comes from project costs such as staffing, materials inflation and other key factors that affect delivery. The Chancellor has left many of the problems of supply side and skills to the private sector to resolve which is a potentially exciting move. But the grey area occurs where the private sector works with local authorities, planners, education and divergent goals between these parties mean that the progress required is simply not made,’ he added. 'Furthermore, we have been interested to speak with many of the firms that are looking to deliver PRS schemes in the… Continue reading
Sau Paulo has the highest property taxes for real estate investors
As the rate of price growth slows in many global city markets, transaction costs and taxation are becoming increasingly important considerations for investors, a new analysis suggests. With slower price growth forecast in a number of prime city markets, investors are looking more closely at the cost side of the investment equation, according to the report from international real estate firm Knight Frank. While there may be a number of factors behind the choice of location, the research shows that the tax burden across the cities in this report varies considerably both in amount and extent. The tax costs range from as low as 3.5% or 3.6% of the property price in year five in Monaco and Dubai respectively, to over 30% in Sao Paulo. Despite encompassing a wide variety of cities and policies, a number of common themes and trends have arisen throughout the research. For example, in some cities, most notably in Geneva and in Mumbai, there are significant legal restrictions for non-residents who wish to purchase property so it is important to consider these before an investment decision is made. In some jurisdictions, the tax costs are represented primarily by acquisition taxes, notably in Monaco and Dubai, while in most other jurisdictions, tax costs usually comprise acquisition duties payable when purchasing the property; wealth or yearly taxes when holding the property; taxes on rental income, and taxes on disposal of the property, including tax on gains and/or duties at the point of the sale of the property. While in some countries the relative/percentage tax costs are almost equal for both US$1 million and US$10 million properties, in others the tax costs of holding the US$10 million property are almost double those for US$1 million property, the report points out. ‘Finally, it is important to note that some taxes, such as inheritance/gift taxes have not been taken into account in this analysis. Nor were home country taxes. Moreover, we have assumed that investors purchase in their personal name but that might not necessarily be the most efficient from a host or investment country’s tax perspective,’ the report says. However, overall property costs remain largely the same for both a $1 million and $10 million property in many cities such as Sao Paulo, Mumbai and Geneva whilst others see a significant reduction in percentage terms at the $10 million level such as New York and Paris. Reviewing the tax costs across the 15 main cities shows that taxation is highest in Sao Paulo, at both the US$1 million and US$10 million levels, where investors are taxed at 31.5% of the sale value at year five. Hong Kong and Sydney also rank highly. An investor purchasing a US$1 million property in Hong Kong is taxed 22.4%, whilst at the US$10 million level investors in Sydney are taxed 26.0%, in both cases as a percentage of year five price. Monaco offers non-resident investors the lowest rate of tax at 3.5% as a percentage of… Continue reading
