TSI
Prime country house prices in Scotland affected by new land and building tax
Prime country house prices in Scotland increased by 0.2% between April and June taking annual growth to 1.4%, the latest index analysis report shows. But this is down from the recent high of 2.8% in June last year and the recently introduced Land and Building Transaction Tax (LBTT) seems to have had the greatest bearing on market performance. The analysis report from Knight Frank also suggests that the recent landslide SNP general election victory in Scotland on 07 May has had an impact, albeit a more modest one. Under LBTT those buying homes worth less than £333,000 now pay less tax for homes, but those purchasing property with a value above this threshold now pay more in purchase taxes. For example, a house in Scotland valued at £1.5 million would have attracted a stamp duty liability of £43,750 under the old system. Based on the new LBTT rates, that same property now attracts a bill of £78,350, a near 80% increase. As a result, buyers and vendors brought forward prime transactions prior to the introduction of LBTT in order to benefit from the lower stamp duty charges. There was a spike in activity during the first three months of 2015 with the number of sales completed by Knight Frank nearly 50% higher year on year. Since then, however, the prime market has been subdued, with the number of sales completed between April and June notably lower than the same period of 2014. There is likely to be an ongoing period of adjustment at the top end of the market as individuals factor in the increased cost of moving, according to Ran Morgan, head of Scotland residential sales at Knight Frank. He pointed out that there are still pockets of activity in Scotland’s prime market however, mostly in areas within commuting distance of large towns and cities. Prices in the central Scottish region, within an easy commute of Edinburgh and Glasgow, for example, rose by 0.4% between April and June and have risen by 2.8% on an annual basis. ‘In spite of higher levels of tax, Scottish property prices remain some way below their previous market peak. The market continues to offer good value, especially when compared with London and southern England,’ Morgan added. Continue reading
Property prices and sales still falling in Dubai and Abu Dhabi
Residential sales and prices in Dubai are still on a downward trajectory and in neighbouring Abu Dhabi the market is also down apart from rentals. The Dubai residential property sales price index from REIDIN fell by 1.29% in May and prices are now down 5.7% year on year. A breakdown of the figures shows that apartment sales prices fell 1.19% month on month and are down 6.8% year on year while villa sales prices registered were down 1.72% on a monthly basis and down 0.8% year on year. Residential property prices in the Dubai rental market fell by 0.37% in May 2015 but have increased 1% year on year. In this sector apartment rental prices fell 0.44% month on month but are up 1.2% year on year while villa rental prices also fell 0.44% month on month and are unchanged on an annual basis. The firm’s Abu Dhabi residential property price index fell by 0.27% in May and prices are down 2.3% compared to May 2014. A breakdown of the figures shows that apartment sales prices fell 0.52% month on month and 4.5% year on year while villa sales prices increased 0.8% on a monthly basis but are still down 1.2% year on year. Residential property prices in the Abu Dhabi rental market have fared better, up 0.37% month on month and up 5.1% compared to May 2014. Apartment rental prices increased by 0.18% month on month and 2.8% year on year while villa rental prices were up 0.68% on a monthly basis and 7.5% year on year. Meanwhile, the latest figures from the Dubai Land Department (DLD) show that Dh64 billion of property transactions were completed in the first quarter of 2015 of which Dh24 billion was from property and land sales and Dh37 billion the result of new mortgages. The most popular areas for unit sales were Business Bay, where 1,202 units were sold for a combined Dh1.84 billion, followed by Dubai Marina. Of the Dh24 billion worth of land and property bought, some Dh9 billion was bought by GCC investors with Dh5.8 billion to Emiratis and Dh1.9 billion to Saudis. Dh3 billion was from other Arab investors and Dh12 billion from non-Arabs. When it comes to buyers outside of the Gulf region, the data shows that Indians bought Dh3 billon of properties, British buyers bought Dh1.9 billion and Pakistanis bought Dh1.4 billion. Iranian and Russian buyers rounded out the top five nationalities of non-Arab investors. ‘The figures are showing a well-established trust in our real estate market,’ said the DLD director general, Sultan Butti bin Mejren. Continue reading
Bank voices concern about higher mortgages and potential effect on UK economy
The Bank of England is concerned that home buyers are taking on bigger mortgages because house prices are rising too fast in the UK, but it is first time buyers who are not offered enough, experts warn. The Bank says that with prices rising faster than mortgages there could be rising debt levels and the economy could be at risk if interest rates rise and home owners struggle to keep up with their mortgage payments. The Bank's deputy governor, Sir Jon Cunliffe, said he is prepared to step in if the debt mountain gets out of hand in the bank’s latest financial stability report. 'Our concern is not so much about house prices, it is the chain between high house prices, prices growing faster than people's incomes, and people having to take out bigger and bigger mortgages and the debt that families then have relative to their income growth,’ he explained. Bank took action a year ago amid similar concerns and put a debt to income limit on mortgage lending. While the market cooled in the second half of the year it is now rising again on a steady basis. ‘Prices stopped growing as fast as they have been, mortgage approvals came down. There are now signs the market is coming back up again. We are not seeing the sort of growth in momentum we saw this time last year, but given the high level of debt to income we have in the UK anyway, and the ability of this market to move very fast, this is something we need to watch and that's why we have left that insurance policy in place,’ Cunliffe added. But his comments come at a time when mortgage lending is still low compared with historical averages and experts have voiced concerns about certain sectors in particular are seeing fewer loans available, for example first time buyers who are crucial to the health of the housing market. Indeed, a new analysis in the latest edition of the Genworth/Moneyfacts mortgage tracker report says that new product launches and falling interest rates are masking a growing crisis in high loan to value (LTV) mortgage lending. Despite more products being offered at record low prices, Genworth’s analysis of government and industry data suggests this part of the mortgage market is rapidly falling back into decline. It reveals that with total 95% LTV lending down by £147 million year on year in the first quarter of 2015, average lending per product has dropped by 38% over the same period. This has contributed to a 10% fall in first time buyer numbers which means that 10,400 fewer people have succeeded in buying their first home so far in 2015 than was the case last year. It also points out that new products come with extra price premium despite rates hitting record lows. The Tracker shows the number of products available to house buyers with a 5% deposit hit a… Continue reading
