TSI
Rent controls not best way forward for young people to access housing in Europe
A group of over 30 private housing and property bodies from across Europe have come together to find solutions on how to improve younger people’s participation in the housing market. The International Union of Property Owners (UIPI), which represents more than five million property owners around Europe, says that there enormous challenges for young people accessing housing and rent controls are not necessarily the best way forward. At its Annual Congress, UIPI committed to continuing to discuss solutions on how to improve young generations’ participation in the housing market, by fostering home ownership and promoting access to affordable housing. ‘Young generations’ access to the housing market is a major issue of the running decade and it needs to be tackled. UIPI has a clear role to play in this debate and we have to promote solutions that stimulate the inclusion of young Europeans in the European housing market,’ said UIPI president Stratos Paradias. He pointed out that the new generation faces higher unemployment which is reaching some worrying rates in a number of European Union countries, and many have low and unstable incomes. ‘This is the harsh reality owed to the financial crisis making difficult for them to access home ownership market through mortgage loans despite current low interest rates,’ he explained. ‘Even our own children, who should inherit our own home and properties, are reluctant to do so, because they might be unable to cope with the payment of the transfer and inheritance taxes, not to mention the annual property taxation imposed in more and more countries, at ever increasing and alarming levels,’ he pointed out. ‘This situation forces an increased number of young Europeans to live with their parents, or to be financially dependent on them, postponing their family plans. It also puts additional pressures on the residential rental market,’ he added. He also explained that the burden on both the private and social housing sectors is amplified by population migration, notably of young EU citizens leaving their country of origin in search of suitable jobs, in already densified areas of the European centres of economic activities. ‘Low incomes, tightened lending and demand pressure on rental housing is a combination that generates political demands for stricter rent regulation, rent control or further investment in public housing and/or housing allowances. Rather than imposing rent control and high taxation, we believe that we have to correct the damages of the crisis in a way that does not endanger financial as well as macroeconomic stability,’ Paradias concluded. Richard Price, director of operations at the UK’s National Landlords Association (NLA) and executive director at the Association of Letting Agents (ALA) explained that younger generations are finding it much harder to enter the housing market across Europe. ‘Increasing the supply of affordable housing is the most likely factor to improve the situation in the UK, but this needs to go hand in hand with a stable economy and confidence in employment prospects,’ he said. The meeting… Continue reading
UK buy to let tax change will restrict lending in the short term, says new report
The restriction of mortgage interest relief for UK buy to let landlords will, in the short term, curb lending in the sector, which currently makes up 15% to 16% of mortgage lending, according to a new analysis. At the same time, 2015 is on track to become the best year for buy to let mortgage deal issuance since the credit crunch, says the special report from Moody's Investors Service. ‘The government's decision to restrict buy to let mortgage interest relief reflects a willingness to put investors and owner-occupied borrowers on a more level playing field, given that the latter cannot claim tax relief on their mortgages,’ said Moody’s analyst Emily Rombeau. ‘First time buyers' affordability has declined, as they struggle to get on to the property ladder. Affordability constraints and demographic changes have increased the share of privately rented housing and this sector's evolution has strongly contributed to the rapid growth of the buy to let sector in recent years,’ she explained. ‘Repeat issuers and new players will support a robust pipeline of buy to let RMBS deals this year. Issuance for this segment has accounted for 25.6% of total UK RMBS issuance so far this year, up from 10.2% in 2014,’ she added. Over the coming months, Moody's forecasts that reduced demand for buy to let properties will soften UK house price growth. Moody's forecasts that UK house prices will nonetheless rise by up to 5% in 2015, albeit at a slower pace than in 2014. ‘Notwithstanding the softening in house price growth, the risk of an immediate house price decrease is limited given the housing shortage and the economic recovery,’ Rombeau pointed out. According to the Moody's report, the buy to let market has grown at a steady pace since early 2010, accounting for 16.8% of total gross mortgage lending and 25.3% of total house purchases as of the first quarter of 2015. Buy t let gross lending volumes have substantially increased, rising to £7.6 billion in the first quarter of 2015 from £2 billion in the first quarter of 2010. Paragon, the UK's largest buy to let specialist, has accounted for around 40% of buy to let issuance since the financial crisis, with a total of nine transactions collectively worth £3.2 billion, the report says. Mortgages also entered the buy to let securitisation sphere this year; the recently established specialist lender has already completed two buy to let transactions for a total amount of £426 million since January 2015. Moody's research says that, while UK house prices increased by 3.5% in the first half of 2015, according to data from the Nationwide, most regions, except for Northern Ireland and Yorkshire and Humberside experienced a further slowdown in annual price growth in the second quarter of 2015. The monthly year on year growth in UK house prices gradually declined to 3.3% from 11.8% in the 12 months to June 2015. David Whittaker, managing director of Mortgages for Business, said that… Continue reading
US home prices up 6.5% year on year, latest index shows
Home prices across the United States, including distressed sales, increased by 6.5% in June 2015 compared with the same month in 2014, according to the latest index. It is the 40th month in a row of year on year price increases and values were also up month on month with growth of 1.7% in June compared to May, the CoreLogic home price index also shows. Excluding distressed sales, home prices increased by 6.4% in June 2015 compared with June 2014 and increased by 1.4% month on month with only Massachusetts (-1.5 percent) and Louisiana with an annual price fall of 1.5% and 0.1% respectively. Including distressed sales, that is short sales and real estate owned sales (REO), some 35 states were at or within 10% of their peak prices in June 2015 and 15 reached new price peaks. The firm’s latest house price forecast indicates that home prices, including distressed sales, are projected to increase by 0.6% month on month from June 2015 to July 2015 and by 4.5% on a year on year basis from June 2015 to June 2016. Excluding distressed sales, home prices are projected to increase by 0.5% month on month from June 2015 to July 2015 and by 4.2% year on year from June 2015 to June 2016. The index report also shows across the country there was 4.8 months supply but the measure varied greatly across cities. In San Jose and Denver, there was only 1.6 months’ supply of homes on the market, whereas Philadelphia had a seven months’ supply and Providence had a 6.6 months’ supply. Frank Nothaft, chief economist for CoreLogic, explained that the stronger appreciation was registered in cities with limited inventory and strong homebuyer activity, such as San Jose and Denver. According to Anand Nallathambi, president and chief executive officer of CoreLogic pent-up buying demand and affordability, together with higher consumer confidence buoyed by a more robust labour market, are a potent mix fuelling the 6.5% jump in home prices with more increases likely to come. Including distressed sales, the five states with the highest home price appreciation were Colorado with growth of 9.8%, Washington up 8.9%, New York up 8.3%, South Carolina up 8% and Nevada also up 8%. Excluding distressed sales, the five states with the highest home price appreciation were Colorado up 9.3%, New York up 8.5%, Washington up 8.3%, Oregon up 8.2% and Nevada up 7.9%. Including distressed sales, only four states experienced home price depreciation with the biggest fall of 5% in Massachusetts, while Connecticut was down 0.6%, Louisiana down 0.4% and Mississippi with a fall of 0.3. The five states with the largest peak to current declines, including distressed transactions, were Nevada with a fall of 32.2%, Florida at 28.7%, Rhode Island at 26.5%, Arizona at 25.8% and Maryland down 21.2%. Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, some 93 showed year on year increases while seven showed year on year declines… Continue reading
