Tag Archives: yahoo
UK property sales could get boost from April pension changes
UK pension changes could trigger a significant increase in residential property transactions but for most households, this is unlikely to involve the acquisition of an investment property. But the increase in sales is more likely to come from continued trend of pensioners selling larger properties and properties in prime areas and purchasing smaller properties and properties in cheaper areas in order to release additional equity to help fund their retirement years, according to real estate firm Chestertons. In a new report it says that there are a number of reasons that property is likely to prove a popular investment choice for those who decide to take control of their pension pots and invest in something other than an annuity. These include the fact that residential property is generally seen as a less volatile and relatively safe long term investment, when compared to other assets such as equities and can provide a regular rental income. Also, a strong capital appreciation over the medium to long term is anticipated and property is a tangible asset that people generally feel more comfortable with and understand better than other more complicated investment vehicles. If estimates of demand turn out to be accurate then there is likely to be a near doubling in the number of pensioners buying at least one investment property and that would push house prices up. ‘If the properties purchased were then held as rental investments, this would help alleviate the current shortage of rented accommodation, which is especially prevalent in London, thereby stabilising the rental market somewhat,’ said Nick Barnes. However, he believes that financing a property investment is likely to prove difficult for many 55 plus year olds as lenders have been toughening their stance on borrowers who cannot repay their mortgage before retirement. ‘Buying properties with cash is of course an option, but with the average pension pot in the UK standing at just £25,000, the number of people with enough contributions to cover the cash purchase of a property will be very small, especially in London where prices are much higher,’ he explained. ‘The more likely scenario is that those looking to invest in property would need to supplement their pension pots by selling their existing property and either downsizing or moving to a cheaper area. This said, many pensioners have already taken these options and dipped into their pensions to help their children and grandchildren onto the property ladder so a significant uplift in activity is unlikely,’ he added. For those that can afford to buy an investment property, identifying the right property to ensure a longer term income stream and capital growth will be the challenge. Location and rentability are key issues and a realistic assessment of operating costs and voids will need to be made, the report points out. Barnes also said that tax liability is a further important consideration and owners will need to be aware that their rental income when added to their pension or… Continue reading
UK annual house price growth falls again
Annual house price growth in the UK slowed to 5.1% in March from 5.7% in February and prices were up just 0.1% month on month, according to the latest index figures. It means that annual house price growth has now slowed for seven months in a row, taking the average price of a property to £189,454, the data from the Nationwide Building Society shows. UK house prices are currently around 2% above their pre-crisis levels. However, the pace of housing market activity has remained subdued, with the number of mortgages approved for house purchase in January around 20% below the level prevailing a year ago. ‘Economic conditions have remained supportive, with labour market conditions continuing to improve and mortgage interest rates close to all-time lows,’ said Robert Gardner, Nationwide's chief economist. While house price growth has moderated across the UK, there is still significant regional variation. Prices in London and the South of England continued to see the strongest rates of annual growth, though there was a noticeable softening this quarter, particularly in London Price growth also continued to cool in the North West of England, Scotland and Wales, even though prices in these regions remain some way below their 2007 peak. Indeed, in annual terms, prices in Wales declined by 0.5% in the first quarter of 2015. A breakdown of the figures show that all regions except the North of England saw a further slowing in annual price growth in the first three months of 2015. Across the UK as a whole, prices rose by 0.6% over the quarter, after allowing for seasonal effects. Prices were up 5.9% compared with the first quarter of 2014. London remained the strongest performing region, with average prices up 12.7% year on year, although annual house price growth has slowed noticeably compared with recent quarters, with growth down from 17.8% in the fourth quarter of 2014. Amongst the other English regions, the Outer Metropolitan area continued to outperform, with annual price growth not far behind London at 12%. Yorkshire and Humberside was the weakest performing English region, with prices up 1.3% over the last 12 months. Northern Ireland saw a slowing in annual price growth to 5.7%, while annual price growth in Scotland moderated to 1.3%. Wales remained the weakest performing region and was also the only region to see a fall in average prices, which were down 0.5% compared with the first quarter of 2014. There was a further slowing in annual house price growth in Scotland, from 4.2% last quarter to 1.3% this quarter. Edinburgh was the best performing area, with prices up 11% on the previous year. The Highlands and Islands saw the weakest growth, with prices up 2%. The Land and Buildings Transaction Tax (LBTT) is set to be introduced in Scotland on 01 April. Under LBTT, those purchasing properties above £333,000 will pay more tax compared with marginal stamp duty land tax (SDLT) system now in use in the rest of the… Continue reading
UK property market cooling in run up to general election in May
Almost a third of house sales in the UK are going to first time buyers but overall the market is cooling in the run up to the general election, according to estate agents. Some 30% of total house sales in February were to people getting on the housing ladder for the first time, the highest number since September 2014, says the latest monthly survey from the National Association of Estate Agents (NAEA). The data also shows that 46% of NAEA members have seen a cooling in the property market as the May general election approaches and 27% think the election will have the biggest impact on the housing market this year. Findings in February also show that demand for property is up, with 366 house hunter’s registered per NAEA member branch, up from 353 in January. With supply marginally down from 44 houses per branch last month, to 43 this month, there’s still a significantly higher demand than supply of housing, a problem that is unlikely to be solved anytime soon. The total number of sales agreed in February remained the same as previous months, with eight house sales going through per NAEA member branch. ‘It’s clear from the findings in the report that things are starting to ease for first time buyers, which could be down to reduced property prices or more accessible funding, especially following December’s stamp duty reforms,’ said Mark Hayward, NAEA managing director. ‘We will all be waiting with bated breath to see if the first time buyer figures increase following the new Help to Buy ISA, and whether we see real momentum in the market. It still remains notoriously hard to get cut through in the property market, especially for first time buyers, so any green shoots are encouraging,’ he added. When it comes to policy proposals in the run up to the election some 45% of agents think that the Conservatives’ pledge to build 200,000 more homes will have the best impact on the housing market. On the downside, 57% of agents think Labour’s proposed Mansion Tax will have a negative impact on the housing market. ‘Demand is still vastly outweighing supply in this country, so it is clear something needs to be done to aid this growing problem. It will be interesting to see the outcome of this year’s General Election, but whoever wins it is vital that building more affordable homes is top of their agenda,’ Hayward concluded. Continue reading
