Tag Archives: stumbleupon
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
Survey suggests UK tenants concerned about rent rises due to change of tax regime
Tenants in the UK are concerned about rent rises resulting from the recent decision by the Chancellor of the Exchequer to scrap mortgage tax relief for private sector residential landlords. New research shows that some 38% of tenants are feeling uncertain as to how the cuts will affect them and over 50% are calling for greater rent control measures to be introduced. Indeed 35% of tenants say that they would move to a different property in the event of a rent increase, according to the research from comparison website Makeitcheaper. A breakdown of the survey findings show that just 20% of tenants would stay in their current housing, one in 10 said they would be forced to seek council housing and 17% would be more motivated to buy their own property. These results show that landlords may run a high risk of losing tenants by increasing rent, around 80%, as many would be simply unable to afford a price hike. There are certain rules around rent price increases that landlords must adhere to. For example, landlords cannot raise prices in a fixed term tenancy prior to the end date, without the tenant's agreement. But, even with these precedents in place, there's a good chance that tensions between landlord and tenant could grow in the event of price rises. However, the latest landlord research by buy to let lender Paragon Mortgages has revealed that 75% of landlords are confident their tenants will not get into more difficulty in the next 12 months as rental arrears will remain stable. The lender’s PRS Trends Survey results for the second quarter showed a 4% increase in those landlords who felt tenant rental arrears would remain stable, the third successive improvement. The proportion of landlords reporting an expected increase remained low and unchanged from the previous quarter at 8% whilst those landlords expecting a decline in arrears was 6%. The survey also revealed that 17% of landlords are planning to purchase additional rental properties over the summer quarter. There was little movement in the most popular property types landlords are looking to buy, with terraced properties and semi-detached houses topping the list at 38%, followed by 35% looking to buy apartments. ‘Landlords continue to experience strong tenant demand and are keen to add to their portfolios. The positive signals being picked up elsewhere around the economy also seem to have flowed through to the PRS with landlords experiencing low arrears and low, stable voids,’ said John Heron, director of Paragon Mortgages. Continue reading
