TSI
House valuations increase in the UK despite house price growth falling
House price growth in the UK may be falling but last month saw a rebound in valuations activity on a monthly basis, according to the latest research from Connells Survey & Valuation. The total number of valuations conducted in September increased by 42% compared to August. However, this was not enough of a seasonal rebound to take valuations volumes ahead of September 2013. On an annual basis, housing market activity has decreased by 12%, a steeper fall than the 4% annual drop seen in August 2014. ‘Sustainability is the new watchword for the housing market. Higher interest rates are getting closer and caps on mortgage to income ratios officially come into force in October, both closely following the Mortgage Market Review which has now become a settled feature of the landscape,’ said John Bagshaw. ‘In particular a base rate rise isn’t just a factor for the financial world. In the property market, buyers and sellers are increasingly factoring in slightly higher interest costs and a potential slowdown in house price growth,’ he added. He pointed out that steadier progress isn’t necessarily bad news. ‘Autumn last year was exceptionally good for housing market activity. Now, as the UK searches for a long lost measure of normality, the housing market is displaying sensible levels of caution, a healthy and often life-preserving characteristic. Stability will be important as activity keeps growing into 2015,’ he explained. Remortgaging was the strongest performing of all sections of the housing market in September. Compared to August remortgaging activity is up 57%, leaving remortgaging valuations down 9% since September 2013, the smallest annual fall. According to Bagshaw remortgaging levels appear to reflect the wisdom of crowds. ‘Most people don’t follow the detailed workings of monetary policy, and no-one can predict inflation or UK growth in six months’ time. And yet households are taking advantage of cheaper mortgage rates now, as the perception grows that locking in to that market will not be possible for ever,’ he added. First time buyers have seen the second fastest monthly pick up in activity since August, up 39% on a monthly basis. On an annual basis, this leaves first time buyer activity down 13% compared to September 2013. Activity was slightly more muted for those owner-occupiers moving home further up the property ladder, with such home mover activity up 32% compared to August. However on an annual basis the number of home mover valuations has seen the same 13% drop as first time buyers since September 2013. Bagshaw believes that first time buyers are proving unwavering and many are now ready and determined to buy their first home after putting off the move for many years due to the financial crisis. ‘Alongside this sheer number of potential home owners, lenders are increasingly playing their part and are even more willing to back new buyers, partly thanks to Help to Buy. The overall result is a consistent buoyancy… Continue reading
Foreclosure and distressed property sales in the US fall considerably year on year
There are fewer homes in the United States being sold which are in foreclosure as the real estate market continues its recovery. The national foreclosure inventory fell by 33% year on year in August 2014 to approximately 629,000 properties, or 1.6% of all homes with a mortgage, down from 936,000, or 2.4% in August 2013. According to the data from CoreLogic this marks 34 months of continuous year on year declines in the inventory of foreclosed homes, including 19 straight months of declines greater than 20%. Also in August, the 12 month sum of completed foreclosures continued to decline, dropping 20% from a year ago to 576,000. The seriously delinquent inventory fell to 1.6 million loans, a 21.7% decline from August 2013. The five states with the largest year on year drop in the foreclosure inventory were Utah which was down 46%, Idaho down 45.6%, Arizona down 44.5%, Florida down 43.6% and Iowa down 42.6. The data also shows that 49 states posted declines in the foreclosure inventory from a year ago, with 44 states showing decreases of more than 20%. Only the District of Columbia and Wyoming saw year on year increases in foreclosure inventory. Florida has seen the biggest improvement, falling 7.3% from its February 2011 peak level of 12.5% to its August rate of 5.2%. The foreclosure rate in New Jersey peaked in March 2013, much later than in Florida and the state has a 1.6% improvement in the foreclosure rate from its peak rate. Both New York and Hawaii experienced peak foreclosure rates in September 2012, and have experienced similar declines in foreclosure rates, with New York falling 0.9% from its peak and Hawaii falling 1.1% from its peak. Distressed sales (Real Estate Owned and short sales) accounted for 11.1% of total home sales in July 2014, the lowest share since December 2007 and a strong improvement from the same time a year ago when this category made up 15.5% of total sales. Within this category, REO sales made up 7.1% of total home sales, and short sales made up 4% of total sales in July. At its peak, the distressed sales share totalled 32.5% of all sales in January 2009, with REO sales making up 28% of that share. CoreLogic says in its report that the ongoing shift away from REO sales is a driver of improving home prices, as REOs typically sell at a larger discount than do short sales. There will always be some amount of distress in the housing market, so one would never expect a 0% distressed sales share, and by comparison, the pre-crisis share of distressed sales was traditionally about 2%. Michigan had the largest share of distressed sales of any state at 26.3% in July, followed by Florida at 23.3%, Illinois at 23.3%, Nevada at 21.9% and Georgia at 19.8%. California experienced a 13.7% drop in the distressed sales share from a year earlier, the largest of any state. California also saw the largest improvement from peak distressed… Continue reading
Lending for homes falls in the UK, latest CML data shows
Home buying lending in the UK has started to decline amid concerns that mortgage regulation is having an impact on the market. The latest figures from the Council of Mortgage Lenders show that lending fell in August compared to July, the first month on month drop in house purchase lending volume since February this year. Lending fell across all sectors. First time buyer lending fell by 4% compared with July but it still 9% up on August 2013. Lending to home movers declined by 3% but is up 7% on August last year. Remortgage lending fell 4% month on month and is 11% down on the same month last year. Buy to let lending fell 13% but increased 11% compared to August last year. Total gross lending in August was £18.1 billion, some 8% lower than July when it was £19.7 billion, but 10% higher than August last year when it was £16.4 billion, according to the Bank of England. ‘The lending climate had a glass half full, glass half empty feel about it in August. On the one hand it saw a decline in all lending types month on month, which would suggest a levelling off of the market, with remortgaging remaining flat. Yet, on the other hand, we saw the highest August house purchase lending levels since 2007,’ said Paul Smee, director general of the CML. He pointed out that recent Bank of England Credit Conditions Survey expects an upward trend in remortgaging in the final months of the year and overall, these figures give no support to any fears of a developing bubble in housing. ‘This has been a year of major change, and the market has shown significant resilience and responsiveness to the changing environment, improving the availability of lending without compromising financial stability, as the Bank of England's assessment last week highlighted,’ he added. According to David Newnes, director of Your Move and Reeds Rains, the change is due to shifted lending conditions. ‘Securing mortgage finance is not a conundrum restricted to first time buyers, but is a considerable hurdle for landlords too. Demand for rented accommodation is climbing, and there’s little sign of this stopping,’ he said. ‘Secure house prices and spirited tenant demand are encouraging budding buy to let investors and existing landlords to add to the number of available homes to let. Balancing the asymmetry between supply and demand depends on the growing number of buy to let investors being able to acquire affordable mortgages, in order to broaden the pool of rental accommodation on offer and keep rent rises at sustainable levels,’ he explained. ‘The government and Bank of England need to ensure that any further regulatory changes do not lift lending out of reach for good applicants, and destroy growth at the same time. The benefits of more investment will be felt in tenants’ back pockets at the end of the month, as the strain of rent rises eases further,’ he added. Continue reading
