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Research reveals the downsize windfall possible in UK property market
In the UK an average of £121,686 can be potentially raised by downsizing to a semi-detached home with London the most lucrative place to do so, new research suggests. Downsizing to a bungalow is the most common option, with those moving from a detached house releasing an average of £103,715 and those moving to a semi-detached house standing to raise up to £121,686. The latest report from Lloyds Bank also shows that 52% of those looking to move in the next three years considering downsizing, and it continues to be the main reason to sell a home and downsizing in 2014 is nearly 10% more profitable than in 2004. For those trading down, the potential amount that can be raised by downsizing from a detached property to a bungalow has risen by 8% or £8,081 over the past decade. A downsizer today would receive an average of £103,715 compared with £95,634 in 2004. The potential amount of cash home owners could raise by downsizing their property from a detached home to a semi-detached stood at an average of £121,686 in 2014, an increase of 6% or £6,943 since 2004 Three in four expect to make money when they downsize. Of those, 43% will reinvest this money in a new property, 26% will invest in other financial products and 13% will invest in their pension or give to their family members. Some 26% are planning to move to a more affordable area, 5% less than in 2013. Some 63% said one of the main reasons for downsizing is to find a smaller property that better suits their current circumstances. After this, 40% are looking to downsize to help reduce bills and outgoings. Some 28% of downsizers are also looking to release equity from their property, and 25% are looking to help support their retirement plans. The research also found that 25% of downsizers are trading down earlier than expected and there are a variety reasons for this including health, change in relationship status and proximity to amenities. The average downsizer is 56 years old, with the greatest proportion having lived in their current property between 11 and 20 years, and having moved in to that property at the age of 39. ‘Downsizing is clearly still a major part of the housing market with over half of potential home movers considering a smaller property. The volume of downsizers is therefore helping to keep the market moving, freeing up larger properties for those making their way up the ladder,’ said Andy Hulme, mortgages director at Lloyds Bank. ‘Once people do look to trade down, the benefits are clear. Downsizing can generate significant amounts of money, on average over £100,000 in 2014. It also helps to lower the cost of household bills and frees up funds so that people can enjoy their retirement or invest their money for the future,’ he added. A breakdown of the figures show that downsizers in London stand to make the most in monetary… Continue reading
New home starts in Australia hit all-time high, latest data shows
More new homes in Australia were started in the September quarter of 2014 than in any quarter since records began in the mid-1980s, the latest figures shows. Building activity figures from the Australian Bureau of Statistics shows that detached dwelling commencements increased by 0.8% in the quarter while ‘other dwelling’, predominantly multi-unit dwellings, rebounded by 30.2%. In aggregate, the total number of dwellings commenced increased by 12.5% in the quarter to reach 52,380, a new record. With New South Wales, Victoria, Queensland and Western Australia, the four largest states, all recording their strongest quarters on record for multi-unit dwelling commencements at the same time, there is little surprise that activity reached a new record, according to the Housing Industry Association. ‘Furthermore, another incremental increase in detached dwelling starts sees this part of the market record the strongest quarterly result since 2010. This result confirms that residential building activity was tracking along at a very strong level during 2014,’ said HIA senior economist Shane Garrett. ‘However, part of the particularly strong September quarter result can be attributed to a catch up after the rather disappointing result in the June quarter when the number of starts fell well short of expectations,’ he pointed out. ‘Following the surge in residential buildings approved in late 2013 and early 2014, there was a substantial accumulation of multi-unit residential building projects that had obtained approval but did not commence construction in the first half of the year. The figures confirm that much of the activity in the pipeline entered the construction phase in the September quarter,’ he added. A breakdown of the figures show that new home starts increased in all states with the exception of South Australia where activity fell by 5.7%. Activity in New South Wales increased by 30.7%, in Victoria by 0.9%, in Queensland by 18.1%, in Western Australia by 5.1%, in Tasmania by 2.9%, in the Northern Territory by 9.6% and by 22.8% in the ACT. Continue reading
Middle market set to benefit from new property tax rates for Scotland
Changes to the rate of property tax payable in Scotland from April have been confirmed with the middle sector of the market benefitting. From 01 April under the Land and Buildings Transaction Tax (LBTT) the zero threshold has been raised to £145,000 and other band adjusted. Some 2% will be paid between £145,000 and £250,000, a new band of 5% will apply to properties between £250,001 and £325,000. There is then a jump to 10% for those buying homes between £325,001 and £750,000 and high value properties over £750,001 will be taxed at 12% under the review by Finance Secretary John Swinney. It is disappointing news for buyers and sellers of Scottish homes, according to estate agency Strutt & Parker. It said that while the changes may well boost the market for first time buyers and the lower end of the sector, they are far from offering the hoped for stimulus to the middle of the property market. ‘While LBTT will help first time buyers, the average price of a house in Scotland is £170,000. It has been widely derided as an unfair attack on families and a punitive tax on aspiration, particularly in the affluent centres of Glasgow, Edinburgh and Aberdeen and the changes announced are no better,’ said Andrew Rettie, head of estate agency for Strutt & Parker in Scotland. ‘Strutt & Parker backed the Scottish Conservatives' proposals for the introduction of a mid-tier rate of 5% between £250,001 and £500,000 and we were hopeful that Swinney would introduce something along those lines but while this review offers a concession to the lower end of the market it is a blow to everyone else and a missed opportunity to provide a fillip to the property,’ he pointed out. ‘If families can't upsize because of the increase in tax, they will not sell, leading to a stalemate in the middle of the market, which is really the engine room of a thriving housing sector,’ he explained. The firm is currently very busy at present with buyers and sellers aiming to complete deals before the April deadline. ‘However, once LBTT comes into effect we anticipate buyers will be more cautious in their offers to take account of the heavier tax burden,’ added Rettie. CKD Galbraith, an independent property consultancy, said the changes may have significant implications for the Scottish housing market. ‘There are winners and losers amongst property buyers and sellers,’ said partner John Bound. ‘While there is good news for first time buyers and those at the lower end of the property market, transactions carried out at the mid to higher end will still trigger a significant tax bill. While there are savings for some on what was originally proposed by the Scottish Government there will be increases on what people have been paying to date,’ he explained. ‘This will affect a large section of houses in the Scottish market and overall we estimate that there… Continue reading
