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As US home price growth continues to soften, expert says market is not back to normal
Home price growth across the US has softened for six months in a row with experts warning that the overall health and recovery of the residential real estate market is far from guaranteed. National home prices in April were up 5.1% year on year but while the quarterly rate of growth continued its path to normalisation coming in at 0.5%, according to the latest data from real estate firm Clear Capital. Most of the regions sustained price growth through the winter, but the Midwest is already seeing negative quarterly declines of 0.10% Midwest and the region remains volatile. The report points out that for nearly seven years, it has struggled to get on equal footing with the nation. Within the top performing markets for April, eight are Western markets. While the West’s market by market performance may exceed the other regions, gains have been softening since the beginning of 2014 and this is leading to softening gains at the national level, the firm says. Three Florida markets that rank among the top performers boast high levels of distressed and short sales. All three markets have distressed saturation rates that are at least 10% higher than the national level, at 16.5%, suggesting growth is dependent on a higher propensity of distressed inventory in this area. The report also points out that the stigma once associated with REOs has turned around and today, REOs and short sales signal opportunity to investors and traditional home buyers alike, and an indication that market level gains could be ahead. ‘While spring brings renewed confidence and demand, the numbers through April are mixed. Sales may be up, but subsiding gains imply the recovery is at a critical inflection point,’ said Alex Villacorta, vice president of research and analytics at Clear Capital. ‘As the market normalises, which is a good thing for housing overall, small losses could have greater impact, forcing a standstill or even worse, a return to negative territory in certain areas across the country,’ he explained. ‘Confidence is down in April, suggesting consumers aren’t quite convinced that the economy, much less housing, is as rosy as some early spring metrics suggest. Yet, we continue to see blooms of opportunity as distressed properties continue to provide fertile ground for investors of all sizes to take advantage of a red hot rental market. As we saw back in early 2013, this type of inventory can be the catalyst that revives confidence and re-engagement,’ he added. ‘The early spring numbers are encouraging but rest assured, the overall market is far from being back to normal. There is reason to be hopeful, but arm yourself with accurate data and remember to read headline numbers with the right perspective,’ he concluded. Continue reading
UK buy to let landlords increasingly looking for semi-detached properties
There has been a big jump in UK landlords looking to buy semi-detached property with demand for terraced houses almost half previous levels, new research shows. Landlords are also planning for steady growth in the buy to let property sector as optimism rises, according to the latest landlord research by Paragon Mortgages. The data shows that landlords on the lookout for a semi-detached property amongst those expecting to purchase buy to let property soon, have increased from 23% in the fourth quarter of 2014 to 35% in the first quarter of 2015. The specialist lender’s Private Rented Sector Trends survey, which has been tracking landlord confidence and views on the buy to let market for 13 years, also shows that the proportion of landlords looking to buy terraced property had fallen from 67% to 35%. The lenders says that this sharp turnaround in demand for these two different property types results in a more even distribution of interest across the broad spectrum of property types from landlords than previously. Overall, among those looking to buy, 30% of landlords expressed interest in adding a flat to their portfolio, 35% were on the look-out for a semi-detached house, 35% for a terraced house and 22% said they were considering more specialist units such as multi-unit blocks and HMOs. The report also finds a higher proportion of landlords are optimistic about the prospects for their property portfolios, with 27% feeling positive about the future and an increase in those expecting to buy sometime soon, up from 15% to 18%. ‘The growing proportion of landlords looking to purchase buy to let property sometime soon points to continued, steady growth in the private rented sector,’ said John Heron, the firm’s director of mortgages. ‘Meanwhile, a closer look at interest levels for different property types suggests landlords are taking a broader perspective in order to cater for the wider range of households looking for a suitable home in the rental sector,’ he added. Continue reading
UK property market set for further growth due to stable election result
House prices in the UK, especially the prime property market in London, are set to rise on the back of the Conservative win at the general election, according to property experts. London is likely to see sales surge as people who put off buying, particularly overseas buyers, now go ahead and make a decision with the possibility of a mansion tax evaporated. Indeed, according to Edward Heaton, of Heaton and Partners property search agency prime country house prices could rise by as much as 10% within weeks. ‘There will be bun fights in the next few weeks for the best houses which come to the market as confidence in the top-end of the regional market returns,’ he said. ‘For many operating in the prime property market, there is a palpable sense of relief at the election outcome as there were some genuine concerns about the possible impact of mansion tax tied in with the attack on non-doms proposed by Labour,’ he added. The result will bring stability to the markets, according to Michelle van Vuuren, managing director of residential development at Sotheby’s International Realty UK. The firm is already getting calls from would be international buyers. ‘The removal of the uncertainty that has clouded the last year of the coalition will allow developers to plan confidently for the medium term with a consistent economic policy. Having said that, we do hope to see the Tories come good on their annual pledge of 200,000 new homes and freeing up brownfield sites for development,’ she said. ‘Increasing the supply of homes is the only way to truly overcome the hurdles that the housing market places for the majority of buyers. At the top end, for the next five years at least, a cessation of the clamour for a mansion tax will see a number of transactions that have stalled to come back on line as certitude creeps back into the market. It is going to be an exciting time to be in the London market,’ she added. ‘Andrew Ellinas, director of central and north west London agency Sandfords, believes that confidence will return quickly and it is likely that there will be a significant late spring bounce in activity as those who have held back start to act. ‘London has established itself around the world as a safe and thriving place to invest and increased confidence will once again be restored and with that see the return of overseas investors. It has felt like the market was becalmed and now will steam ahead once again, with London prices that have been subdued steadily rising throughout the second half of the year,’ he pointed out. ‘My advice to those who have been thinking about selling, but awaiting political certainty, is to make a move now and beat the rush. The market has been challenged most recently by a lack of stock, but this is likely to change quite swiftly now, creating more competition for vendors. Take… Continue reading
