TSI
First time buyers lending in Scotland up 23% last year
Lending for homes in Scotland fell in the final quarter of 2014 but there were more mortgages going to first time buyers compared to the same period the year before. The latest data from the Council of Mortgage Lenders shows that overall lending was up 23% last year but mortgages fell at the end of the year. Scotland accounted for 6.6% of UK wide annual house purchase activity, down from 6.9% in 2013. Lenders advanced 27,700 loans to first time buyers in Scotland totaling £2.9 billion, 16% up in volume compared to 2013, and 23% up in value. A breakdown of the figures show that there were 7,000 first time buyer loans in Scotland, worth £750m. This was down compared to the third quarter 5% by value and 4% by volume. Compared to the fourth quarter of 2013, the number of loans increased by 3% and the amount borrowed by 9%. There were 8,000 loans to home movers, valued at, £1.2 billion, down 8% in volume and down 9% in value compared to the third quarter. Compared to the fourth quarter of 2013, there was a decrease of 8% in volume and a decrease of 5% in value. The total number of remortgage loans declined in the fourth quarter to 5,700 loans at £650 million, which was down 3% in volume but unchanged in value on the third quarter. Compared to the fourth quarter of 2013, activity was down 17% in volume and 13% in value. First time buyer affordability changed slightly in Scotland quarter on quarter with first time buyers typically borrowing 2.90 times their gross income, less than the 2.94 income multiple in the third quarter and less than the UK average of 3.38. The typical loan size for first time buyers was £97,200 in the fourth quarter, down from £98,600 in the previous quarter. The typical gross income of a first time buyer household was £33,965 compared to £33,520 in the third quarter. The relatively low level of interest rates saw first time buyers' payment burden remaining relatively low in the third quarter at 16.8% of gross income being spent to cover capital and interest payments, higher than the third quarter's 17.3%. Home mover affordability changed fractionally, with home movers typically borrowing 2.64 times their gross income compared 2.62 in the third quarter and to 3.03 for the UK overall. The typical loan size for home movers was £128,244 in fourth quarter, down from £130,000 in the previous quarter. The typical gross household income of a home mover was £50,773 in fourth quarter compared to £50,971 in the third quarter. Home movers' payment burden remained relatively low in Scotland at 16.5% of gross income being spent to cover monthly capital and interest payments, less than the 16.9% in the third quarter and considerably less than the 18.4% UK average. Overall for 2014, remortgage lending in Scotland was 23,400 loans reflecting a value of £2.6 billion. This was 14% down in volume compared to 2013,… Continue reading
Property prices in Australia up 0.3% in February
Property prices in Australian capital cities increased by 0.3% in February, taking the annual rise in values to 8.3%, the latest index data shows. Sydney again recorded the largest increase at 13.7% year on year followed by Melbourne at 7.4% and Brisbane at 5.9%, according to the CoreLogic RP Index. In contrast, dwelling values have increased by less than 4% in every other capital city over the year. The data also shows that since the beginning of the growth cycle in June 2012, dwelling values have moved 22.6% higher across the combined capital cities. According to Tim Lawless, head of research, this demonstrates the heat emanating from the Sydney market with values up 34.8% cumulatively over the cycle to date across Australia’s largest capital city. Lawless pointed out the latest month on month results show a moderation in the rate of dwelling value growth compared with the December and January figures. The monthly rate of growth slowed from 1.3% in January and 0.9% in December, however the growth trend remains strong, particularly in Sydney and Melbourne. ‘The slower rate of capital gain in February may come as a surprise to some who were expecting lower mortgage rates to instantly propel the pace of home value growth higher. We are already seeing the effect of lower mortgage rates, with auction clearance rates surging to the highest levels we have seen since 2009 and valuation activity reaching new record highs based on daily averages over the second half of February,’ said Lawless. ‘Despite the flurry of activity, it will likely take some time to see this flow through to a higher rate of capital gain. We might not see the lower interest rate environment stimulate the housing market as much as it has in the past,’ he explained. ‘Weaker jobs growth, higher unemployment, declining affordability, low rental yields and political uncertainty are all factors that could dent consumer confidence and provide some counter balance to the rate cuts and quell any additional market exuberance,’ he added. The report also says that there is evidence of compressed rental yields continuing across each of the capital city markets. A year ago the gross rental yield for a capital city dwelling was averaging 4.3% but by the end of February the typical gross yield has been eroded down to just 3.7%, due largely to the consistent high rate of dwelling value growth relative to rental growth. According to Lawless, over the current growth cycle to date, capital city dwelling values have risen at more than three times the pace of weekly rents. ‘The bi-product of such strong capital gains and relatively weak rental growth is that rental yields are being forced lower and lower,’ he said. In Melbourne, the yield profile is the lowest of any capital city with the typical Melbourne dwelling showing a gross yield of just 3.3%. Sydney isn’t far behind with a gross dwelling yield of 3.6%. However, Lawless noted that if Sydney dwelling values… Continue reading
Prime farm land sees 14% growth in UK, but with regional variations
Values for prime arable land has strengthened across the UK by 14% to average almost £10,000 per acre, according to the latest survey figures. It is set to see 8% capital growth and 5% to 6% rental growth from 2015 to 2019, an analysis in the latest Savills farm land value survey suggests. The average capital value of farm land has shown very significant growth of over 250% during the past decade, however, this conceals regional variations with factors including land quality, position and local demand key drivers to an outcome. ‘The flight to quality, particularly in respect of arable farm land is a major contributor to the widening gap in values including between England and Scotland,’ said Alex Lawson head of Savills farms and estates. ‘If this gap continues widening the opportunity for investors to acquire land in Scotland starts to become quite compelling. Likewise there are buyers who are choosing to take advantage of the relatively good value poorer quality livestock land,’ he added. Market activity continues to include a variety of buyers and sellers. Last year non farming and lifestyle sellers accounted for more buyers than farmers compared with in 2000, when almost three quarters of them were farmers. On the buying side, political uncertainty coupled with the latest CAP reforms have encouraged some potential farmer buyers to sit tight. They represented 45% of all buyers down from 60% in 2011. The proportion of overseas buyers has remained steady over the past three years at around 8%. This is almost double the activity during the height of the recession from 2009 to 2011, but significantly below the mid noughties when collectively they accounted for over 20% of all buyers. According to Savills’s forecasts top quality agricultural land will be a long term performer in 2015 to 2019 with 8% capital growth and 5% to 6% rental growth, while investors with industrial properties as well as secondary office schemes could be set to see as much as 10% capital growth in 2015, with secondary retail at 9%. ‘Farmland supply is historically low, product is finite and competing land uses combined with diverse ownership keep values positive but a local understanding of market conditions is key to investing well in this sector, and only the top quality stock will achieve 8% growth,’ said Ian Bailey head of rural research at Savills. The report points out that the key to these returns is the focus on supply and demand fundamentals whilst taking into account factors such as the UK general election, mansion tax proposals and mortgage market review. However, whilst there may be an effect on sentiment in the run up to the election, the impact for commercial and agricultural markets is likely to be muted. Drawing on the macro-economic story, Savills predicts base rates will not move in the short… Continue reading
