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Pending home sales fall across the United States, latest index shows
Pending home sales in the United States cooled in September for the second month in a row, taking them to their second lowest index reading in 2015, according to the latest index. All four major regions experienced a pullback in activity in September, the Pending Home Sales Index, a forward looking indicator based on contract signings, from the National Association of Realtors shows. The index declined 2.3% to 106.8 in September from a slightly downwardly revised 109.3 in August but is still 3% above September 2014 when it was 103.7. With last month's decline, the index is now at its second lowest level of the year but has still increased year on year for 13 straight months. Lawrence Yun, NAR chief economist, said that a combination of factors likely led to September's dip in contract signings. ‘There continues to be a dearth of available listings in the lower end of the market for first time buyers and realtors in many areas are reporting stronger competition than what's normal this time of year because of stubbornly low inventory conditions,’ he explained. ‘Additionally, the rockiness in the financial markets at the end of the summer and signs of a slowing US economy may be causing some prospective buyers to take a wait and see approach,’ he added. Despite contract activity softening from the more robust levels seen earlier this year, Yun believes the housing market will still likely be one of the brighter spots in the economy in coming months. ‘With interest rates hovering around 4%, rents rising at a near eight year high, and job growth holding strong, albeit at a more modest pace than earlier this year, the overall demand for buying should stay at a healthy level despite some weakness in the overall economy,’ he added. The PHSI in the Northeast fell 4% to 89.6 in September, but is still 3.9% above a year ago. In the Midwest the index declined 2.5% to 104.7 in September, but remains 4.3% above September 2014. Pending home sales in the South decreased 2.6% to an index of 118.3 in September and are now 0.1% below last September. The index in the West inched back 0.2% in September to 104.4, but is still 6.6% above a year ago. Continue reading
Rural homes in the UK £43,490 more expensive than those in urban areas
Property prices in the countryside in the UK are, on average, £43,490 or 22% higher than in urban areas, according to the latest annual Halifax Rural Housing Review. There is a rural premium in all regions with countryside homes typically commanding a significant price premium over urban areas, although there are large variations across the country. In rural areas of West Midlands the average house price of £252,927 is £84,610 or 50% higher than in the region's urban areas at £168,317, the largest difference in the index. In the East of England, the premium is £16,806 or 6%, the smallest difference. House prices in rural areas are less affordable than in urban areas, the research also shows. The average property price in rural areas is seven times average annual earnings compared with a ratio of 5.9 in urban areas. The least affordable rural local area district is Tandridge in Surrey where the average house price of £433,932 is 10.8 times local annual average earnings of £40,266. All 10 of the least affordable rural districts in Britain are in southern England, including East Dorset where the average house price of £329,056 is 9.6 times local annual average earnings. This is followed by Purbeck in Dorset at 9.4, Mid-Sussex, Cotswold and North Devon all at 9.2. The least affordable rural district outside the south are Hambleton at 8.2 and Ryedale at 8.1, both in the North York Moors. Copeland in West Cumbria is the most affordable rural district with an average house price of £140,364 that is 3.7 times local average annual earnings of £38,367 while Chiltern is the most expensive with an average house price of £465,970. The next most expensive rural districts are Waverley in Surrey at £462,145, Tandridge and South Oxfordshire at £396,287. The average house price in Chiltern is four times higher than in East Ayrshire at £115,394 which is the least expensive rural district. Despite the higher price for buying in the countryside the gap with urban prices is narrowing, and property prices have risen more slowly in rural areas during the past five years, according to the research. Between 2010 and 2015, the average price of a home in the countryside rose by 13% compared with an average increase of 23% in urban areas. Between 2014 and 2015, the average price of a home in the countryside has risen by 5% compared with an average 8% increase in urban areas, excluding Greater London. Overall, the rural/urban premium has narrowed from 34% or £52,279 over the last decade. First time buyers account for 42% of all mortgage financed purchases in rural areas. This is significantly lower than in urban areas where first time buyers account for 54% of such purchases. Affordability difficulties are the key factor behind the lower level of first time buyers in rural areas. Due to the high level of property prices, getting on the rural property ladder is at its most challenging for first time… Continue reading
American and Continental style Build to Rent set to take off in UK
American style Build to Rent developments are catching on in the UK with the first due to be complete later this year and more set to come on stream in the next 18 months. The Build to Rent concept, known as multifamily in the US, could potentially transform the private rental sector into a service industry in the UK, according to industry experts. A report from law firm Addleshaw Goddard and the British Property Federation says the growth of the sector is good news for the economy, investors and tenants. With nine million people renting in the UK, Build to Rent has the potential to improve standards and provide better value and greater transparency. These developments are converted offices or purpose built apartment blocks which are professionally managed by specialist companies and rented out to private tenants. They mark a big step away from the traditional renting scene in the UK and some countries on the continent, including France and Spain, where residential properties are largely privately held and development of apartments has failed to keep pace with demand. ‘What it means for your average tenant is probably a better quality of life. When for example, the toilet breaks, there are people to fix it right away. As a tenant you don’t spend time managing the property, you get someone else to do it for you and you get on with living your life,’ said Adam Challis, head of residential research at real estate services firm JLL. Indeed, good maintenance of properties is an area where many small private landlords currently fall short. ‘Build to Rent has the potential to vastly improve standards in housing and because companies invest for the long term, they are more open to innovative design and more creative approaches which keep customers happy,’ said Marnix Elsenaar, head of housing at Addleshaw Goddard. As a growing sector, Build to Rent is now attracting the interest of investors. ‘The London story, and the UK story generally, is pretty unique in that we don’t have an institutional quality residential asset class yet,’ Challis explained, adding that this is set to change if the build to rent sector in countries such as the UK, Spain and France follows in the footsteps of the US. Multifamily investment is big business in America. Popular among private equity and pension funds, it offers some of the best returns in American real estate and last year saw record breaking volumes of $110 billion, topping the 2007 peak. And European countries such as Germany and the Netherlands already built up a multifamily market which continues to grow. JLL figures show demand for development and new build investments in the major German cities remains robust with €340 million invested in the first quarter of 2015. Similarly in the Netherlands, residential investment volumes hit €710 million, which is a 189 percent increase year on year and Sweden’s residential sector also continues to perform well. This bodes well for development in the… Continue reading
