Uk
Call for more support for equity release in UK housing market
Housing wealth in the UK should be used to better support an ageing population by making equity release more accessible and allowing it to develop further, it is claimed. The Equity Release Council has released key recommendations in a White Paper calling on the Treasury to take a lead on coordinating relevant policy to benefit consumers. It examines how people's housing wealth can provide people with an additional source of finance in later life and help the Government to better support the UK's ageing population. The Council proposes that the Treasury's oversight of other relevant departments, including the Department for Work and Pensions, the Department for Communities and Local Government and the Department of Health, combined with its responsibility for financial services, makes it the natural choice to coordinate policy on equity release. The report also identifies where Government policy could do more to consider equity release as a way of meeting people's retirement needs, and where regulation is providing direct challenges to the development of the sector. It argues that a cohesive approach across departments is necessary to avoid unforeseen consequences and ensure the maximum benefit for consumers and Government. The White Paper includes specific recommendations, including that the Government should consider the role of equity release as part of its strategy for addressing the challenges of an ageing society, ensuring that people are able to utilise housing wealth to improve their income and wellbeing in retirement where appropriate. It also suggest an expansion of the scope of the Pension Wise service to enable users to understand how accessing housing wealth may provide solutions to satisfy their objectives and a consideration of how equity release can be utilised to help people pay for home care, providing financial resources which can help people retain ownership of their home and stay living in it for longer. In conjunction with local authorities and other stakeholders, it says it is possible to develop clear pathways for local authorities to use to help people who are seeking support on financing care services understand when they should access regulated financial advice and how they should go about doing so. It also calls for the development of a range of case studies to illustrate best practice on referral to financial advice on care funding and using the Financial Advice Market Review as an opportunity to ensure that people nearing retirement are able to access independent financial advice, which allows them to consider the full range of relevant issues including retirement funding, paying for care, home adaptations and leaving money to children and grandchildren. It wants the Financial Conduct Authority's (FCA) review of the equity release market is wide ranging and considers the impact of the regulatory framework on the equity release market, as well as other potential barriers to increasing the size of the market. ‘The equity release sector is growing fast, and is likely to become even more popular in the next few years. This growth is driven by a… Continue reading
Over half of UK home owners think EU vote will affect property prices
The UK referendum on the country’s future in the European Union is still years away but already home owners think it will have an impact on property prices. Some 55% believe that leaving the EU will have an impact on house prices in the UK. Of these 34% think leaving the EU would actually strengthen the value of their home, with 21% believing it will lead to a decrease in their property price, according to the poll by eMoov. It is thought the economic impact of leaving the EU will be felt hardest in London, however some 52% of those surveyed in London think it will push up the price of their property, with just 23% thinking the opposite. When Britain first joined Europe in 1973, the average house prices was just £9,045. Despite a post legislative referendum in 1975, UK house prices continued to increase for another 16 years to 1989. During Britain’s tenure as a member of the EU the average UK house price has increased by more than 2,000%. Based on these figures, it would seem the EU has been good for the UK property market, but Britain’s future in Europe still remains uncertain. ‘The consequences of exiting the European Union stretch far beyond its effect to UK property prices, however homeowners across the nation are understandably apprehensive as to the impact it could have on their property price, as our research shows,’ said the firm’s chief executive officer Russell Quirk. Pro EU campaigners have forecast central London will be worst hit if Britain does choose to leave the EU. ‘We saw how pre-election uncertainty froze property demand in the prime central London market. The uncertainty of Britain’s future in the EU could result in a similar effect on a much larger scale, but 52% of home owners in London seem confident a Brexit will only strengthen the value of their home,’ he explained. ‘This said, post-election stability failed to revive the high end London market, so who’s to say the same won’t happen if we do come out of the EU,’ he concluded. Continue reading
Property prices in Australia up the most in Sydney and Melbourne
Property prices in Sydney and Melbourne continue to be the highest in Australia although the two cities are seeing growth ease slightly, the latest index shows. Prices increased by 0.3% in Sydney and 0.6% in Melbourne in October compared with a national average of 0.2%, according to the CoreLogic RP Data index. Overall prices increased by 1.4% quarter on quarter and are 10.1% higher year on year although the combined capitals index has been easing since July this year when the index was rising at 11.1% per annum. According to CoreLogic RP Data’s head of research, Tim Lawless, a range of factors are contributing to the slowdown. ‘It’s not just the fact that mortgage rates have recently risen outside of any lift in the cash rate. We are also seeing approximately a 30% premium on investment related mortgage rates, tighter lending standards and borrowers generally requiring a larger deposit,’ he said. ‘Gross rental yields at record lows and affordability constraints are acting as a further disincentive, particularly in Sydney where the median unit price is equal to, or higher than the median house price in every other capital city,’ he explained. ‘Additionally, new housing supply is moving through record levels which should help to ease the upwards trajectory of home values,’ he added. He pointed out that since the end of 2008, the Sydney housing market has recorded a cumulative capital gain of 77% while Melbourne values have moved a cumulative 66.6% higher over the same time frame. Based on the median selling price at the end of 2008, Sydney home owners have accrued approximately $316,000 in gains from the housing market compared with around $246,000 in Melbourne. ‘While the rate of growth is significant, it is important to remember that this growth is across two cycles. Dwelling values were broadly tracking backwards during both the 2008 calendar year and between late 2010 through to the middle of 2012,’ said Lawless. The only capital city where home owners have seen the value of their homes move lower since the end of 2008 is Hobart where the CoreLogic RP Data index is down 0.4% since the end of the global financial crisis. The weakest housing market conditions continue to be found in Darwin and Perth where values are down 3.7% and 3.6% respectively over the past 12 months. According to Lawless, the slowdown in resources related infrastructure spending has caused ripples of economic weakness that are likely to persist for some time. ‘Capital expenditure relating to the mining and resources sector has fallen substantially which means tougher labour conditions and little in the way of migration which has previously fuelled housing demand in these areas,’ he said. Continue reading
