Uk
Older home owners in UK underestimate the value of their home by almost £90,000
Older home owners in the UK underestimate what their property is worth with 60% not having it valued since first buying it, new research shows. It leaves many over 55s with far greater housing wealth than they realise, which could be used in later life to help fund a more comfortable retirement, according to the research from the Equity Release Council. The study found that the average UK home owner aged 55 and over paid £100,756 for their existing home. Having lived there for an average of 17 years and 10 months, they now estimate it is worth £257,584. This equates to an overall house price rise of 156%, leaving them with an extra £156,828 of equity even before mortgage repayments are accounted for. However, the analysis suggests even this may underestimate the individual housing wealth as according to the Office for National Statistics (ONS), the average UK house price has risen by 244% over the last 17 years and 10 months. Having originally been bought for £100,756 at the start of this period, the average property among over 55 home owners could therefore have a value of £346,861 today, almost £90,000 more than they estimate. By examining market trends, the research suggests people's tendency to misjudge their housing wealth may be linked to low awareness of how price rises have affected the property market in the region where they live. Even those who have had their property valued since first buying it did so four and a half years ago on average. Asked to consider the role of pension savings and property wealth in funding later life, the research suggests that 80% of home owners aged 55 plus would consider using housing wealth to get the most from their retirement. Some 31% said that they feel the best solution is to use their pension savings before their property wealth, 10% said they would prefer to use their savings and property wealth at the same time and 9% said they would rely solely on property wealth or use it before their savings. This leaves 11% who want guidance or advice on the best option for them, while 19% say they do not care which approach they take so long as it gives them the best outcome. The remaining 20% feel the best outcome for their retirement will rely solely on pension savings. The research also found that 38% think unlocking money from the value of their home is likely to benefit them financially in later life, while another 29% are unsure. Among those who would consider using their housing wealth to help pay for retirement, downsizing is the main preference, cited by 42%. However, 22% would prefer to stay in their current home and use a lifetime mortgage to release some equity. The remaining 36% said they are open to either option based on their circumstances. ‘It is no secret that the property market has been kind to… Continue reading
Home owners in London most confident about house price growth
Households across the UK perceived that the value of their home rose in December, led by those in London while households in the North East reported no change in prices. Some 11.1% of individuals said they plan to buy a house within the next two years, but this was down from a 12 month average of 12.8% according to the House Price Sentiment Index (HPSI) from Knight Frank and Markit Economics. December’s reading was a slight increase from the 58.7 recorded in November and was higher than the average reading of 58.5 recorded across 2015. However, it remained below the peak of 63.2 achieved in May last year, reflecting the more modest house price growth seen across the country over the last 12 months. The future HPSI, which measures what households think will happen to the value of their property over the next year, was unchanged in December compared to the previous month. An index reading of 70.3 was the joint second highest of the year. Households in 10 of the eleven regions covered by the index reported that prices rose in December, led by households in London at 68.7. In the North East a reading of 50 and households perceived no change in prices over the course of the month. This is only the third time that a region within Great Britain has reported no change or a fall in prices since August 2013. There are a number of regional differences in expectations for price growth with households in London at 77.9, the South East at 76.7 and the East of England at 74.5 the most confident that prices will rise over the next 12 months. Mortgage borrowers were the most confident that prices will rise over the next year at 76.1, followed by those who own their home outright at 74.9. ‘The localised nature of the housing market is highlighted in the index, with the regional difference between households’ perceptions of house price changes in December at its greatest for nearly 18 months. This regionalised picture is expected to continue next year, with households’ in London expecting the strongest growth in prices in 2016,’ said Gráinne Gilmore, head of UK residential research at Knight Frank. ‘The supply of housing coming onto the market has dipped to record lows in recent months – affecting the ability of families to move up and down the housing ladder. The survey suggests this trend is also set to continue, with a lack of available housing also likely to continue to underpin pricing in many areas,’ she added. According to Tim Moore, a senior economist at Markit, UK households seem to anticipate little fundamental change in prevailing supply and demand dynamics over the course of 2016. He pointed out that buoyant forecasts were reported for property values over the next 12 months, with expectations at a remarkably similar level to those seen at the end of 2013 and 2014. ‘At the same time, the proportion of UK… Continue reading
Aberdeen property market set for declines unless oil price picks up
Aberdeen has seen some of the strongest growth in the residential real estate market in recent years but now it is under a period of adjustment after seven years of phenomenal growth, according to a new analysis. The residential market across the Aberdeen area is being affected by uncertainty within the oil dependent local economy and prices have started falling, data for the third quarter of 2015 shows. According to the report from real estate firm Savills in the 12 months to the end of September 2015 the overall average sale price in Aberdeenshire was the second highest in Scotland, behind Edinburgh. The average price in Aberdeen City was the fourth highest, behind East Renfrewshire, over the same period. Indeed, data for the 10 year average for the overall residential market, values are 24% higher in Aberdeen City and 19% higher in Aberdeenshire, compared to 11% for Scotland as a whole. Furthermore, prime values in the Aberdeen area are 34% higher than they were in 2007, the peak of the Scottish market. This compares to a drop of 22% for Scotland as a whole. Despite the recent turmoil, monthly residential rental prices in Aberdeen remain the highest in Scotland. However, there was a fall of 2% in Aberdeen City and 4% in Aberdeenshire in mainstream prices during the third quarter of 2015, compared to the same period last year. Prime values in the Aberdeen area have dropped by 9% over the same period, with properties in rural locations most affected compared to city locations. Rental values in Aberdeen City dropped by 7% over the same period. The biggest impact has been felt in the volume of sales. During the year ending September 2015, the number of residential sales in Aberdeen City and Aberdeenshire fell by 5% and 11% respectively, compared to the same period last year. However, Faisal Choudhry, director of Savills Scottish research, pointed out that despite these drops, there are some sections of the market that have bucked the trend. These include properties between £300,000 to £400,000, which have seen a slight annual increase in sales of 5%. ‘Our analysis of new build developments shows an increase in the number of properties currently available between £200,000 and £300,000. This includes first time buyers, professionals and young families who are continuing to benefit from the comparatively lower rates of taxation and mortgages,’ he said. He also pointed out that while as a whole the introduction of the new Land and Buildings Transaction Tax (LBBT) in April pushed the number of prime property sales up by 10% but this was not the case in the Aberdeen area, where the number of prime sales fell slightly to 669 during the year ending September 2015, compared to 678 during the previous 12 month period. ‘This suggests the market was further constrained by uncertainty within the oil sector. Prime activity has been further compounded by higher levels of taxation as a result of LBTT, with the… Continue reading
