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Annual UK residential valuation activity cooled last month, latest research shows
UK housing market valuation activity increased 13% on a monthly basis in August but down 4% compared with a year ago, according to the latest analysis. One reason it is still quieter than a year ago could partly be due to August 2013 being a particularly strong month. John Bagshaw, corporate services director of Connells Survey & Valuation said it was the first time where it was clear the property market was moving into sustained positive territory. ‘Since last summer progress for the housing market is on a new, steadier, and more sustainable track. It’s worth remembering, activity is now up 5% compared to August 2007, so hardly a poor base for future progress,’ he explained. ‘Moreover, initial signs are positive for September and barring unforeseen financial wobbles the housing market is set for solid and sustainable progress through the autumn and into the New Year,’ he added. The firm’s report also shows that first time buyers still represent the largest sub-section of activity, with new buyers representing a 30% proportion of all valuations in August. Compared to July, first time buyer activity increased by 8%. However, a year-on-year fall of 4% in the number of valuations for first time buyers is in line with the drop in total valuations activity compared to August 2013. Home movers already on the property ladder fared better than first time home-buyers in August, in contrast to previous trends. Valuations on behalf of home movers numbered 18% more in August than in July. On an annual basis home mover activity is also in line with an overall fall of 4% since August 2013. ‘Since the recession, those further up the ladder have been more content to stay put in their homes, to stick with the asset they have. Such a strong showing from home movers looking to up-size is a positive sign for sentiment in the rest of the housing market. Meanwhile, first time buyer activity has bounced back well from a particularly strong summer slowdown,’ Bagshaw pointed out. By contrast, remortgaging activity has fallen most sharply on an annual basis, down 5% compared to August 2013. This is despite an 8% increase in the number of remortgaging valuations on a monthly basis, compared to July 2014. ‘Remortgaging is certainly still on the agenda and still makes financial sense for plenty of households. This has just been on the back burner a little over the summer period, when people have other things to think about,’ said Bagshaw. ‘With the return from holidays, and as the back to school mood sets in, house holders may start to reconsider their monthly finances. The long term trend is clear, a higher base rate is on the way. The cheapest mortgage deals are only set to become rarer over coming years, so in the medium term remortgaging activity will reflect that,’ he added. Buy to let… Continue reading
Waterfront homes in the US command massive premiums, research shows
A typical oceanfront or lakefront family home in the United States is worth more than double the median value of all homes, and in some locations 10 or more times, new research shows. Currently the median price for a family home is about $171,600, while the median waterfront house was valued at $370,900, a premium of 116.1%, according to the analysis by real estate firm Zillow. Among large cities the biggest difference between median non-waterfront family home values and median waterfront house values are in Tampa, Florida with a premium of 733%, followed by Honolulu, Hawaii, with a premium of 334.5% and Long Beach, California with a premium of 321.6%. ‘The allure of ocean and lakefront living is powerful and undeniable, and millions of home owners nationwide dream of one day owning a home on the water. But those dreams come at a price,’ said Zillow chief economist Stan Humphries. ‘Waterfront properties are both relatively scarce and highly coveted, and that high demand and limited supply leads to higher home prices. Additionally, added insurance, floods, environmental mitigation and infrastructure costs are often part of the tab when buying a waterfront home,’ he pointed out. ‘Still, as long as buyers understand the added costs and potential headaches, waterfront living is likely to remain one of life's simple pleasures for many, many years to come,’ he added. The median waterfront home value is calculated in the same way as the Zillow Home Value Index and represents the median value of all single family waterfront homes in a given community. The index includes family homes located 150 feet or closer to the waterline of an ocean or lakes with a total combined size of 10 square kilometers or greater. Properties separated from direct waterfront by a road with a speed limit of 25mph or less are also considered waterfront. Riverfront properties were not included in this analysis, nor were condominium or co-op housing units. Zillow's initial analysis covers 250 cities and towns nationwide with at least 100 waterfront homes meeting the criteria. Continue reading
New mortgage regulations hitting buyers with dependents and low incomes the most
Borrowers in the UK with dependents and on low incomes seeking a mortgage to buy a home have been the hardest hit by the new MMR regulations introduced earlier this year, new research shows. Lenders identified low income borrowers (85%), borrowers with dependents (77%) and self-employed or single borrowers (both 38%) as the three types of borrowers who have felt the biggest impact in terms of what they can borrow. Brokers felt borrowers with dependents have been the most affected (72%), followed by low income borrowers (60%) and self-employed borrowers (47%), according to the research by the Intermediary Mortgage Lenders Association (IMLA). Almost two thirds of brokers, 63%, believe significantly more borrowers are being turned down as a result of interest rate stress tests, but just 15% of lenders agree. The difference is likely to reflect the fact that while lenders are reporting on trends within their individual businesses, brokers working with multiple lenders have a view across the wider market. It may also be the case that brokers are advising some borrowers against submitting an application to lenders, based on a discussion about their finances and needs. However, both parties do agree that stress tests have had more of a direct impact on the amount consumers can borrow, compared with other changes to the MMR approval process. Some 79% of brokers believe interest rate stress tests have reduced the amount that can be borrowed, with over half of lenders, 55%, in agreement. More than one in three brokers, 35%, feel that stress tests have reduced loan sizes by more than 10%. Fewer brokers believe that more detailed income/expenditure assessments (58%) or evidencing requirements (42%) have had a direct impact on what consumers can borrow, although these numbers are still significant. Lenders report less of an effect with 45% believing income/expenditure assessments have reduced loan sizes, but fewer than 10% feeling evidencing requirements have had any effect. The majority of lenders, 71% and 58% of brokers believe that MMR will have a positive effect on consumers by improving the quality of advice they receive. Some 81% of lenders also believe the changes will improve consumers’ awareness of mortgage affordability and their related expenditure, with 61% of brokers agreeing. However, there are concerns over the implications on products, with 71% of brokers believing MMR will have a negative impact on sourcing mortgages. Reflecting this, 54% of lenders feel it will negatively impact product innovation and limit their capacity to develop new offers. ‘For many lenders, the MMR switchover has been more of a gradual shift than an overnight change. Even so, these are still early days and with processes being fine-tuned the real test will come beyond the six month milestone when we see if these effects have eased off or endured,’ said Peter Williams, IMLA executive director. ‘The fact that interest rate stress tests are having the biggest impact on borrowers shows they are doing their job by identifying those who would struggle to manage their repayments if rates rise…. Continue reading
