Uk
Sales in US up strongly, but aided by transaction carryover
Existing home sales in the United States increased again in December after seeing some months of dwindling transactions and were up 14.7% compared to November. But the data from the National Association of Realtors includes a carryover of delayed transactions from November into December as a result of the Know Before You Owe initiative. However the existing homes sales index shows a rise in sales in all four major regions, led by the South and West and transactions are now up 7.7% year on year. It means that 2015 was the best year of existing home sales at 5.26 million since 2006 when it was 6.48 million. ‘While the carryover of November's delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015,’ said Lawrence Yun, NAR chief economist. ‘Additionally, the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year,’ he added. Prices are also rising. The median existing home price for all housing types in December was $224,100, up 7.6% from December 2014, the 46th consecutive month of year on year gains. The data also shows that total housing inventory at the end of December dropped 12.3% to 1.79 million existing homes available for sale, and is now 3.8% lower than a year ago. Unsold inventory is at a 3.9 month supply at the current sales pace, down from 5.1 months in November and the lowest since January 2005 when it was 3.6 months. ‘Although some growth is expected, the housing market will struggle in 2016 to replicate last year's 7% increase in sales. In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas,’ Yun explained. The share of first time buyers was at 32% in December, matching the highest share since August, up from 30% in November and 29% a year ago. First time buyers in all of 2015 represented an average of 30%, up from 29% in both 2014 and 2013. A separate NAR survey from the NAR revealed that the annual share of first time buyers in 2015 was at its lowest level in nearly three decades. ‘First time buyers were for the most part held back once again in 2015 by rising rents and home prices, competition from vacation and investment buyers and supply shortages,’ said Yun. ‘While these headwinds show little signs of abating, the cumulative effect of strong job growth in recent years and young renters' overwhelming interest to own a home should lead to a modest uptick in first time buyer activity in 2016,’ he explained. All-cash sales were 24% of sales in December, down from 27% in November and are down from 26% a year ago. Individual… Continue reading
Rental values increased across almost every London borough in 2015
Residential rental values have climbed to record highs across almost every borough in London as renting a home has become a more attractive option that buying, a new report suggests. Changes in stamp duty, fluid job markets and the way many overseas professionals are taxed in the UK, means that many people are opting to rent, according to the report from Benham & Reeves Residential Lettings. With demand continuing to rise and the anticipated exit of amateur landlords from the market due to more restraints such as the new 3% top up stamp duty, rental values in 2016 are likely to continue on this upward trajectory, the firm says. Its figures for 2015 show that virtually every borough in zones 1 and 2 saw rental values increase by more than 4% year on year. Indeed, only Richmond-upon-Thames and a small area around Edgware Road in central London saw rents fall. However, rental values became slightly more modest the further away from the city centre with even outlying boroughs such as Barnet and Ilford seeing significant growth, the report points out. Hackney saw the biggest increase in rental values in 2015, up 33% while Bow, Bethnal Green and Haringey all experienced double digit growth as well. As the British economy has emerged from recession and tenants have finally moved to bigger accommodation in line with increasing household income, the rental market has benefitted, the report also points out. The most significant change, however, has been the changes to stamp duty which have affected London more than any other area of the country. With the average of a house in London now standing at over £500,000, many family homes are now liable for the 10% stamp duty rate with many modest family homes even incurring the 12% stamp duty rate. Many tenants have calculated that they can rent for years, often in better neighbourhoods than those in which they could afford to buy, for the sum they'd pay in stamp duty alone. ‘George Osborne has done more for the rental market than any other chancellor in history. Thanks to the changes in stamp duty rates, he has made renting long term a more attractive option for many tenants. Couple that with the fact that many overseas tenants can write their rent off against tax but must pay capital gains on any property they own and renting becomes a no brainer,’ said Marc von Grundherr, the firm’s lettings director. ‘We are advising landlords who are already in the market to hang onto the properties, and not be tempted to sell ahead of changes to wear and tear allowance and mortgage relief. Many nervous investors will leave the market and when they do, supply will be limited even further. The rent increases that will inevitably result will more than mitigate landlords' extra costs,’ he added. Continue reading
House prices in UK cities reach 15 month high
House prices in key UK cities increased by 11.4% in December, a 15 month high due to unseasonal strong market activity, according to the latest index report. Cambridge and London lead growth although sales volumes in these cities are lower over 2015 and the impetus for growth continues to come from regional cities, like Liverpool and Glasgow. Demand is increasing in the face of short supply and while there is some increased interest from buy to let buyers, eight out of 10 sales are still to owner occupiers, the Hometrack index also shows. Cambridge saw the highest annual rate of growth at 14.4% followed by London at 13.8% and then Bristol at 12.8%. All these high growth markets are growing at a broadly similar rate to the levels seen a year ago. The report points out that while residential values may be rising, overall sales volumes across Cambridge and London look on track to be lower over 2015, bucking the national trend of flat volumes, as scarcity of homes for sale and affordability pressures limit overall volumes. It also shows that the falling oil price continues to affect the housing market in Aberdeen. House price growth in the city is down 1.4% compared to a rise of 13.5% and looks set to remain weak over 2016. Newcastle and Sheffield are recording the next lowest growth rates of 3.7%, still higher than average earnings, and in cities where the housing recovery is at a much earlier stage. Overall the impetus for growth continues to come from regional cities where prices are rising off a low base as household confidence improves and home owners utilise record low mortgage rates to access the market. Glasgow and Liverpool have recorded a significant increase in house price growth over the last 12 months in cities where the recovery has been running for just two to three years. A year ago Glasgow price inflation was running at 0.1% but this has risen to 8.5%, similarly Liverpool price growth is up to 5.7% from 1.3% a year ago. A quarter of homes in the 20 cities covered by the index is private rented property and strong private investor demand will explain some of the additional growth in city level house prices relative to the UK rate of growth, the report says. Much has been made of the impact of tax changes for buy to let investors with mortgaged property and the proposed new 3% stamp duty levy from April 2016. Indeed, the latest Bank of England Credit Conditions Survey for the fourth quarter of 2015 points to expected strong demand for mortgages from buy to let landlords in the first three months of 2016. ‘Demand for buying property as an investment is far from dead and 2016 looks set to be a year of consolidation for investors, especially those who are mortgage reliant. A portion of investors are likely to accelerate purchases before April but we should not read… Continue reading
