Uk
New research shows huge fall in home ownership in England, not just London
Home ownership in England has fallen to a 30 year low with cities in the north of the country worst hit by lower number of people owning their own home, according to new research. Greater Manchester, South and West Yorkshire and the West Midlands Metropolitan area have seen double digit falls in home ownership since their early 2000s peak, the analysis report from think tank the Resolution Foundation. The analysis shows that having peaked at 71% in 2003, the proportion of people owning their own home across England has fallen steadily over the last decade by 8% and suggests that the widely reported increase in home ownership in 2014 was likely a blip to correct a sharp fall the year before, rather than a welcome reversal of a long standing trend. The Foundation says that while much of the discussion around the struggle to buy a home has centred on London, Greater Manchester has actually recorded the sharpest fall in home ownership of any major city area in the last decade or so. In 2003 some 72% of households living in Greater Manchester were owners, slightly above the average across England as a whole. However, home ownership has since plummeted by 14%, almost twice as fast as it has in England and a whole, and by last year just 58% of households living in Manchester owned their own home. The Foundation notes that people living in Greater Manchester are no more likely to own a home than people living in Outer London, and that home ownership rates have fallen below all other big northern city areas apart from Tyne and Wear. It says falling deposit affordability has played a major role in this trend. The Foundation warns however that plummeting home ownership isn’t confined to Greater Manchester. It notes that Outer London, South and West Yorkshire, and the West Midlands Metropolitan Area have also experienced double digit falls in home ownership since the early 2000s. This fall in home ownership has corresponded with a near doubling in the proportion of private renters across England, up from 11% in 2003 to 19% in 2015. The proportion of households renting privately in Greater Manchester has more than trebled over that period, from 6% to 20%, while Outer London and West Yorkshire have also reported double digit growth. The Foundation says that the shift from home ownership to private renting, which is taking place throughout England, particularly among young people, is concerning for a number of reasons. It notes that households in the private rented sector spend a far higher share of their income on housing than those who own with a mortgage, 30% compared to 23%, helping to explain the fact that the share of income that households spend on housing across the UK has increased by around a quarter since 2003 and by around a third in the North West. Renters are also more likely to face the greater insecurity associated with short term contracts,… Continue reading
Remortgage numbers in UK up in June, but value down
The number of remortgages taken out in the UK increased in June, but are down slightly in value month on month and year on year, the latest data shows. The value of remortgaging is now lower than the same time last year, the first month in 2016 where the value of remortgage lending has fallen year on year, according to the figures from LMS. It means that the average amount of equity withdrawn in June has fallen by 15% year on year and 13% month on month while total equity withdrawn is 14% lower than the same time last year. Overall there were 32,873 remortgage loans taken out in June, a rise of 6% from May when there were 30,900 loans and 1% higher than June last year, when there were 32,700 However, June was the first month in 2016 where the value of remortgage lending fell year-on-year, according to LMS and suggesting a drop in momentum. Each month of 2016 saw annual increases in the value of remortgage lending but June bucked the trend, falling from £5.3 billion in June 2015 to £5.1 billion, a drop of 3%. The average amount of equity withdrawn per customer from remortgaging is also lower than last year, down 15% in comparison to June last year when it stood at £34,505. The average amount of equity release has also decreased 13% month on month from £33,691 in May to £29,375 in June. Annually, the total amount of equity withdrawn has also fallen, by 7% from £1.04 billion in May to £966 million in June. This is 14% lower than the same time last year, when equity withdrawn from remortgaging hit £1.13 billion. There is some good news for remortgagors in terms of affordability pressures. In May 2016, average household income was £45,672, recovering slightly from a 10% fall between March and April. The rise in household incomes, and because rates remained stable, means annual repayments for remortgages have fallen from £8,694 to £8,390, nearly £300 less. The monthly rise in income has therefore driven the annual repayment as a percentage of income down from 19.3% in April to 18.4% in May. ‘We witnessed a strong start to the year with remortgage lending up year-on-year each month in 2016, when in a safer, surer climate, home owners had rushed to remortgage in a desire to lock into better rates before a possible rate rise. But activity in June has slowed with the value of remortgage lending down as indecision increased in the lead up to, and following, the referendum,’ said Andy Knee, chief executive of LMS. ‘While we’ll only begin to see the referendum result’s real impact from July’s figures onwards, it is very likely the small drop occurred as people took pause amid Brexit uncertainty before making any decisions. As the terms for Brexit are negotiated, there will be… Continue reading
Pending home sales static in US in June, latest index shows
Pending home sales in the United States were mostly static in June but the latest index from the National Association of Realtors is now at its second highest reading over the last year. However, supply and affordability constraints prevented a bigger boost in activity from mortgage rates that lingered near all-time lows through most of the month and increases in the Northeast and Midwest were offset by declines in the South and West. Overall the NAR’s pending home sales index, a forward looking indicator based on contract signings, was up 0.2% month on month and is 1% higher than June 2015. But it is noticeably down from this year's peak level in April. According to Lawrence Yun, NAR chief economist, a solid bump in activity in the Northeast pulled up pending sales modestly in June. ‘With only the Northeast region having an adequate supply of homes for sale, the reoccurring dilemma of strained supply causing a run-up in home prices continues to play out in several markets, leading to the last two months reflecting a slight, early summer cooldown after a very active spring,’ he said. ‘Unfortunately for prospective buyers trying to take advantage of exceptionally low mortgage rates, housing inventory at the end of last month was down almost 6% from a year ago and home prices are showing little evidence of slowing to a healthier pace that more closely mirrors wage and income growth,’ he pointed out. ‘Until inventory conditions markedly improve, far too many prospective buyers are likely to run into situations of either being priced out of the market or outbid on the very few properties available for sale,’ he added. One noteworthy and positive development occurring in the housing market during the first half of the year, according to Yun, is that sales to investors have subsided from a high of 18% in February to a low of 11% in June, which is the smallest share since July 2009. Yun attributes this retreat to the diminished number of distressed properties coming onto the market at any given time and the ascent in home prices, which have now risen year on year for 52 consecutive months. ‘Limited selection of homes at bargain prices is reducing the number of individual investors willing or able to buy. This will hopefully open the door for first-time buyers, who made some progress last month but are still buying homes at a subpar level even as rents increase at rates not seen since before the downturn,’ Yun explained. In spite of the slight slowdown in contract signings from April's peak high, existing home sales this year are still expected to be around 5.44 million, 3.6% higher from 2015 and the highest annual pace since 2006 when it was 6.48 million. After accelerating to 6.8% a year ago, national median existing home price growth is forecast to slightly moderate to around 4%. A breakdown of the figures show that in the Northeast the index was up 3.2%… Continue reading
