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Latest data suggests a sustained slowdown in US property prices in main cities
There has been a sustained slowdown in residential real estate prices in major US cities, according to the most recent published data from the S&P/Case-Shiller home price indices. The 10 city and 20 city composites each a slowdown with annual returns of 6.7% in July, falling from the previous month's 8.1% and 8% annual returns, respectively. Nineteen of the 20 metropolitan area indices saw year on year returns worsen, despite continuing to post annual increases, ranging from 0.9% growth in Cleveland to 12.8% growth in Las Vegas, compared to July 2013. Miami and San Francisco were the only other metro indexes that surpassed 10% year on year increases in home prices, posting gains of 11% and 10.3%, respectively. On a month on month basis, just three of the 20 metropolitan areas posted a positive change in seasonally adjusted home prices, while three had no change and the remaining 14 dropped month over month. Las Vegas, Dallas and Charlotte in North Carolina each had positive growth rates in seasonally adjusted home prices compared to June, ranging from 0.1% to 0.3% growth. At the other end of the scale, Minneapolis, Chicago, Detroit and San Francisco saw the largest decreases month on month, ranging from growth rates of negative 1% to falls of 1.6%. ‘The broad based deceleration in home prices continued in the most recent data,’ said David Blitzer, chairman of the index committee at S&P Dow Jones, but pointed out that despite the dropping growth rates, home prices continue to rise at two to three times the rate of inflation. ‘The slower pace of home price appreciation is consistent with most of the other housing data on housing starts and home sales. The rise in August new home sales, which are not covered by the S&P/Case-Shiller indices, is a welcome exception to recent trends,’ he explained. Sales of new single family homes in August increased month on month and year on year, according to the most recent data released jointly by the US Census Bureau and the US Department of Housing and Urban Development. The seasonally adjusted annual sales rate for new single family homes in August was 504,000, 18.0% above the revised July rate of 427,000, and 33.0% above the August 2013 estimate of 379,000. Three of the four regions saw a rise in new home sales on a month on month basis, with the West representing the largest growth since July, posting a 50% increase to a rate of 153,000 units sold. The West's year on year increase of 84.3% from the 83,000 annualized new home sales rate in August 2013 was more than triple the annual growth of any other region. The Northeast saw a large gain in new home sales month on month, with an August annual rate of 31,000 homes, a 29.2% increase from July. The region's year on year performance, however, fell 3.1% from the 32,000 unit sales rate the previous year. The South's pace of 262,000 new homes sold in August represented a 27.2%… Continue reading
UK house prices down 0.6% in September, latest index shows
In another sign that UK property price growth is slowing the latest index figures show that they increased by just 0.6% in September to an average of £187,188. The index from the Halifax also shows that inn the three months to September they were 2.7% higher than in the preceding three months. However, this was the second successive decline in the quarterly rate. Annually, prices were 9.6% higher in the three months to September than in the same three months last year. This was similar to the 9.7% recorded in August and below July’s 10.2%. ‘The recent rapid rise in house prices in some parts of the UK, earnings growth that remains below consumer price inflation and the possibility of an interest rate rise over the coming months, appear to have tempered housing demand,’ said Martin Ellis, Halifax housing economist. ‘This weakening in demand has led to a modest easing in both house price growth and sales. Annual house price inflation may have peaked around 10%. A moderation in growth looks likely during the remainder of 2014 and into next year as supply and demand become increasingly better balanced,’ he added. The Halifax report also points out that mortgage approvals for house purchases, a leading indicator of completed house sales, fell for the second consecutive month in August, to 64,200. According to seasonally adjusted figures from the Bank of England, approvals were 16% below their recent peak in January 2014 and only 1% higher than in August 2013. Also, the number of new buyer enquiries fell for the second consecutive month in August, according to the latest data. Market conditions, as measured by the ratio of house sales to the stock of unsold properties reported by the Royal Institution of Chartered Surveyor's monthly survey loosened slightly in August as a result of lower sales. This suggests a better balance between supply and demand is materialising which, if sustained, would help to dampen the pace of house price growth. According to Jonathan Hudson of West End estate agent in London, Hudsons Property, the new figures are not a surprise. ‘House prices in London haven’t risen in the same period so whilst this shows growth nationally, one shouldn’t forget that the figures mainly represent property transactions which were agreed some time before. Therefore, it will be interesting to see how the London slow down affects the UK market over the next quarter,’ he said. ‘Prices in the three months to September being 9.6% higher than in the same three months a year earlier, is again not surprising given the huge rises we have seen in the UK, especially over the last 10 months in areas which haven’t seen growth since 2008,’he pointed out. ‘The 0.6% increase between August and September shows transactions that were agreed sometimes months before and completed in this time frame,’ he added. Continue reading
Micro mansions set to become popular in UK, it is suggested
Rising house prices, particularly in London, have left many people with little option but to opt for the most affordable, and sometimes smallest, home they can find, it is claimed. However, extra small living spaces or micro mansions are in fact highly sought after in many cities providing they are well designed and perfectly positioned, according to agents. In its Housing Futures report, national estate agents Strutt & Parker identifies the trend for this type of property as something we should expect to see a lot more of in the UK in the years to come. ‘Small can be beautiful. The micro mansion serves as the ultimate living solution for those who prize location over space. As urbanisation gathers pace around the world, central locations in the most sought after cities have become too expensive for the majority,’ said Stephanie McMahon, head of research at Strutt & Parker. She explained that dedicated tiny living spaces are not oddities that can be found in every city, where broom cupboards have been converted into some semblance of accommodation but carefully designed and well planned homes. ‘The rise of the micro flat looks set to mirror what has happened with modern technology. Everything in our homes will shrink as they become smarter and more compact,’ she added. Whilst proper micro mansions are not big in the UK as yet, they are far more common in Japan and the US. A micro mansion is 100 to 250 square feet, compared to a typical small bedroom flat of around 750 square feet. They often have the ceiling height to accommodate mezzanine sleeping spaces and are designed to be much like a boat with each component serving two of more uses. Typical features are under floor storage, pull down beds, steps that convert to chairs and sofas, and kitchen worktops that slide away after use. ‘Micro mansions have the potential to provide a viable solution to the UK’s housing crisis in crowded cities. They attract those requiring short term space, or who work in multiple locations and simply need a place to sleep. As our cities accelerate their pull on the global workforce, they will be increasingly popular,’ said McMahon. Continue reading
