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Families in rented homes struggle to save a deposit, new research shows
Families who rent their homes are less likely to have a cushion of savings or protection products to protect them against financial shocks, according to a new financial report. Some 25% of private renting families, or 650,000 people would struggle to cope compared to 11% of those who have a home with a mortgage and 5% who own their home outright, says the research from insurance firm Aviva. Renting families are also less likely to have insurance in place to provide financial cover should they become ill or die. Just 20% families who rent privately have life insurance, compared to 25% who own their home outright and 48% who own their home with a mortgage. Similarly, 4% of renting families have critical illness cover and only 3% have income protection. The findings follow a significant rise in the proportion of families with dependent children living in rented accommodation, according to Aviva’s analysis of data from the Office for National Statistics (ONS) In 2013 some 17.7% of couples with dependent children were private renters. This rose by 3.6 percentage points to 21.3% in 2014. The same trend is true for single parents with 31.9% in rented accommodation in 2014, compared to 30.2% in the previous year, a rise of 1.7%. As a result, there were 1.5 million families with dependent children in rented accommodation in 2014, a 19% rise since 2013 when it was 1.3 million. ‘Renters might not have a mortgage to pay, but they still have financial obligations like bills and monthly rent. Not having a savings cushion in place means unexpected costs could make day to day living a struggle, while a lack of income protection could be disastrous should they become ill and unable to work,’ said Louise Colley, managing director, protection at Aviva. ‘With growing numbers of parents in rented accommodation, it’s vital all families think about the future and put financial plans in place, regardless of whether they are a home owner or not,’ she added. Aviva’s Family Finances report also reveals renting families are less happy with their homes. While 32% of home owning families with a mortgage feel emotionally attached to their home, this falls to just 18% of families who are private renters. The take-up of home contents insurance is also lower amongst renting families, with 42% owning this product compared to 81% of families with a mortgage. Unsurprisingly, the majority of renters have ambitions to move on. Only 4% of privately renting families want to stay in their current home for the rest of their lives versus 20% who own their home with a mortgage and 76% would like to become home owners in the future. However, the need to save for a deposit is the main barrier to the property market for today’s renters and 30% of families who rent privately say they cannot afford the deposit and fees associated with purchasing a house, equating to 775,800 households. On top of this some 574,500… Continue reading
Annual property price growth in England and Wales down to slowest for two years
The average property price in England and Wales increased 4.2% year on year and 0.5% month on month, according to the latest data from the Land Registry, the lowest annual growth for two years. This took the average property value to £184,682 with the growth led by London which had the largest monthly rise of 1.7% and annual growth of 6.6%, taking the average price to £493.026. On a regional basis the biggest annual price rise was in the East of England with growth of 8.4% and the North West saw the biggest monthly fall of 1.4%. The North West also has the lowest annual price rise of 0.2%. A breakdown of the data shows a considerable range of price movements in London. The borough with the highest annual price rise was Newham, up 15.5% while Barking and Dagenham experienced the highest monthly price increase, up 2.2%. Camden saw the largest annual fall of 1.7% and Kensington and Chelsea experienced the greatest monthly fall with average prices down 1.1%. The most up to date figures available show that the number of completed house sales in England and Wales decreased by 13% to 70,404 compared with 80,823 in June 2014 and the number of properties sold in England and Wales for over £1 million was down 1.7% to 1,031 from 1,237 a year earlier. The data also shows that repossessions in England and Wales decreased by 43% to 498 compared with 868 in June 2014 and the region with the greatest fall in the number of repossession sales was London. Rob Weaver, director of property at residential investment platform, Property Partner, believes that the stamp duty change is affecting the London market. ‘That prices in Kensington and Chelsea fell more than all other London boroughs in August underlines how the more punitive tax regime is having an impact at the higher end of the market,’ he said. He also pointed out that the North/South house price divide is still very much in evidence. ‘Annual growth in the North East and West is way off the pace compared to the South. The broader theme within the property market remains much the same, namely low transaction levels, rising prices and weak supply,’ he explained. ‘To achieve a sustainable and balanced property market, supply has to improve. To boost supply will require initiatives from all quarters, both private sector and Government. Resolving the supply crisis looks set to be the dominant narrative of the next decade and beyond,’ he added. The market in London appears to have got the ball rolling again, as buyers get used to the heavier taxation, and prices in the capital and surrounding regions are seeing a must faster pace than in the North West, North East, and Yorkshire, according to Adrian Gill, director of Your Move and Reeds Rains estate agents. He believes that while sales activity may look slightly subdued on an annual basis, transactions have actually been picking up speed solidly since… Continue reading
Some home markets in the US are still struggling to recover, latest index suggests
More than a quarter of homes across the United States lost value over the past year, despite the ongoing housing market recovery, according to the latest real estate market report. Some markets have already surpassed home values reached at the height of the housing bubble, while other markets are struggling to leave the recession behind, the analysis from real estate firm Zillow shows. Nationally, homes appreciated 3.3% from a year ago, rising to a Zillow Home Value Index of $180,800. However, the national growth rate has levelled off over the past five months, suggesting the housing recovery is ending and the market is returning to normal. Overall some 27.9% of homes lost value over the past year. Before the housing market crashed, an average of 21.2% of homes were losing value and in December 2008 some 81.6% of homes lost value, the highest amount during the recession. Markets on the East Coast and in the Midwest had the highest share of homes that lost value, led by 48.1% of homes in Baltimore which saw prices fall over the past year. Philadelphia with 43.4% and Washington DC at 41.2% also had large shares of homes losing value. Conversely, few homes lost value in hot markets like Denver, Dallas, San Jose, and San Francisco, which all saw double digit home value growth over the past year. Just 1.5% of homes in Denver and 4% in Dallas were worth less in August 2015 than they were a year ago. ‘We're not going in reverse, but we are hitting the brakes a bit in some markets. It's easy to say the recession is over when a third of the biggest markets are more expensive now than ever before, but we're still seeing a number of homes losing value. The reality is there are still areas lagging behind in the recovery,’ said Zillow chief economist Svenja Gudell The report suggests that renters looking to become home owners may find more opportunities in slower markets like Philadelphia. According to the January 2015 Zillow Housing Confidence Index when home values there were growing at 2.8% annually, eight percent of renters in the area said they planned to buy within a year. This jumped to 18% in the most recent survey, when home value growth was nearly flat at 0.3%. The index data also shows that rents are still growing faster than home values. The Zillow Rent Index rose 3.8% on an annual basis to $1,381, giving potential buyers another reason to consider entering the market. Continue reading
