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Home owner confidence in UK housing market up 4% year on year
UK home owners’ confidence home owners in the property market has risen 4% year on year with expectations that prices will rise by more than 7% in the coming six months, new research shows. Some 92% are anticipating prices in their area to rise within the next six months, a steady increase from a year ago when only 88% were confident, according to the latest Zoopla Housing Market Sentiment Survey. The research also found that almost half of home owners, 41%, were planning to improve their property. In addition, 9% of respondents said they plan to refinance their house, a 3% increase from the end of 2014, as mortgage rates remain at historical lows. The proportion of respondents planning to sell property has risen to 19% having bottomed out at 15% last year as more home owners look to capitalise on rising prices. The East of England has the highest percentage of optimistic home owners, with 97% expecting the price of property in their area to rise over the next six months. Home owners in London and the South East are almost as confident, with 96% of respondents across those regions expecting price appreciation. Despite home owner confidence around house prices, sentiment around the accessibility of funding is more volatile. While the percentage of respondents declaring it harder to get a mortgage now than three months ago has almost halved from 49% to 26% since the Mortgage Market Review (MMR) was introduced in April 2014, the fact that more than a quarter of homeowners have noticed a recent increase in difficulty suggests that it isn’t all plain sailing, the report says. It also suggests that with ongoing speculation around when the Bank of England will raise interest rates and lenders maintaining a watching brief, it may well be that competitive products aren’t quite as freely available as they were in the earlier part of the summer and borrowers previously spoilt for choice are noticing the change. ‘As the end of the year approaches, homeowners are the most optimistic they have been in some time. With the brightening national economic outlook this bodes well for the property market in 2016,’ said Lawrence Hall of Zoopla. ‘While traditionally the estate agency market tends to take a break over Christmas in terms of completions and viewings, home owner confidence shows no sign of slowing down and many individuals use the end of the year as a landmark to evaluate how much their property has appreciated over the calendar year,’ he explained. ‘The only slight chink in the armour is the fact that a sizeable number of people still feel securing a mortgage is becoming more difficult, despite the fact that the MMR was implemented with consumers’ best interests at heart,’ he pointed out. ‘It could also be an indication that the supply of… Continue reading
Global property prices up 4.7% year on year led by Hong Kong, latest data shows
Global house prices have increased by a median of 4.7% year on year led by Hong Kong, Turkey, Ireland, Sweden and Australia, a new international report shows. Overall prices have increased in 21 of the 26 countries tracked by the Economist House Price Index but growth does vary from nation to nation. The growth is topped by Hong Kong with annual price growth of 20.8%, followed by Turkey with a rise of 18,8%, Ireland up 13.4%, Sweden up 10.3% and Australia up 7.5%. At the bottom end of the index the country with the biggest annual drop in property prices is Greece with a fall of 5.9%, Singapore down 3.7%, Italy down 3.3%, China down 2.4% and France down 2.3%. All other countries has seen annual price growth according to the index which measures national affordability by comparing prices to the long run average of their relationship with rents and income. In Hong Kong prices have now doubled in five years despite seven separate round of cooling measures being introduced but with little effect. The latest, in March this year, reduced the average loan to value ratio for new mortgages from 64% to just 52%. But the index report suggests that in practice it is China’s recent stock market crash is likely to be a bigger dampener on demand as mainland investors put off new purchases. Meanwhile, China’s own housing market, it is one of only five in the index where prices are falling, but the report points out that prices are falling at a slower rate than before. The government has been trying to boost the market over the past 10 months, cutting interest rates by 1.4% and relaxing rules on down payments. Prices are now rising on a monthly basis in many cities including Beijing and Shanghai. The report points out that in the United States annual growth of 4.7% shows the real estate market is well into recovery. Some cities are seeing strong growth such as San Francisco with prices up by 10% in the year to July and up by 75% since 2009. Other countries’ housing markets are already well above fair value and the report reckons that houses are more than 30% overvalued in six markets, including Canada and Australia, with the UK the most supply constrained of this group where demand is outstripping the number of properties coming to the market. It points out that in the UK although prices have risen by 35% since their trough in January 2009, house building is failing to respond. Just 140,000 homes were completed in the year to March 2014, some 25% below the long term norm. Continue reading
Bank of England already has power to regulate buy to let, it is confirmed
The UK’s expanding buy to let sector could be hit if plans announced by Chancellor George Osborne to regulate mortgages in this part of the lending market go ahead. The sector has been taken aback by Osborne’s announcement during a Treasury Committee hearing that he has already given the Bank of England additional powers to regulate the buy to let market. He had already said he would consult about such a move after Bank Governor Mark Carney said that the buy to let market could be a threat to the UK’s economic recovery. But now it seems that the Bank can regulate the sector anyway, should it wish to do so. It already has the power to regulate the rest of the residential mortgage market in a move that was designed to prevent the housing sector from overheating as demand is pushing prices ever higher. Banks must now ensure that no more than 15% of residential mortgages are given to people borrowing more than 4.5 times their income and are also required to ensure that borrowers can repay their loans even when interest rates rise. However, it was thought that until now these rules do not currently apply to buy to let mortgages which account for around a sixth of the home lending market. Indeed, Osborne confirmed that he took Carney’s views on the buy to let market ‘very seriously’, adding that one of the biggest challenges is managing credit booms and house price cycles. ‘We have given the FPC powerful tools to, for example, tighten mortgage standards if they feel there’s a credit bubble developing. The governor of the Bank and the FPC have asked for additional powers over buy to let mortgages which weren’t included and we have granted those powers so they have that tool as well,’ he told the committee. Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), said he is disappointed that the promised consultation does not seem to be happening. ‘The Government stated its intention earlier this year to hold a post-election consultation to assess the evidence for granting powers of direction over buy to let lending to the Financial Policy Committee (FPC),’ he pointed out. He explained that the Chancellor’s statement to the Treasury Select Committee suggests ‘stage of evidence-led policy making has been removed, and that the consultation may be limited to what those powers will be when, rather than if, they are granted’. ‘It seems somewhat ironic that this development comes just days after Mark Carney also spoke to the Select Committee about the need for a wider stock take of financial regulations. There is a common interest in ensuring we have a stable market for buy to let, and we feel this would be aided by an open debate about the case for additional FPC powers based on the strength of evidence,’ he added. He also pointed out that the FPC itself recently judged that there is ‘no immediate cause to take action… Continue reading
