Investment
Home prices in Canada see biggest year on year gain since 2010
National home sales in Canada increased by 3.1% from March to April and prices were up 13.1% year on year, the biggest gain since May 2010, the latest index shows. The data from the Canadian Real Estate Association (CREA) also shows that actual (not seasonally adjusted) activity was up 10.3% compared to April 2015 while the number of newly listed homes was little changed with a decline of 0.2% from March to April. Sales were up in April compared to the previous month in about 70% of all local markets, led by the National Capital Region and Edmonton. Following small declines the previous month, activity held steady in the Greater Toronto Area (GTA) and edged lower in Greater Vancouver. ‘National home sales set new monthly records over the past two months, even as activity in Greater Vancouver and the GTA appears to have topped out,’ said CREA president Cliff Iverson. ‘With almost three quarters of all local markets posting sales gains in April, there are plenty of other places where sales are climbing as we head into the busiest time of the year for home buyers,’ he added. CREA chief economist Gregory Klump pointed out that supply shortages and tight housing market conditions have become self-reinforcing in the GTA and the Greater Vancouver Area appears to be heading in that direction too. ‘While significant home price gains may entice some homeowners in these markets to list their home for sale, the issue for many is that the decision to move means they would also be looking to buy while competition for scarce listings is fierce,’ he explained. ‘As a result, many home owners are deciding to stay put and continue accumulating capital gains. That’s keeping listings off the markets at a time when they are already in short supply,’ he added. Actual (not seasonally adjusted) sales activity rose 10.3% year on year ago to shatter all previous records for the month of April. It also marked the second highest level for transactions for any single month and stood 16.5% above the 10 year average for the month of April. Activity was up from year-ago levels in about 70% of all local markets, led by a number of markets in British Columbia as well as the GTA and the number of markets where new supply rose and where it fell was fairly evenly split. New listings were up most in Edmonton and on Vancouver Island but fell in the GTA, London and St. Thomas as well as Newfoundland and Labrador. The national sales to new listings ratio rose to 64.5% in April 2016, the ratio’s tightest reading since October 2009. A sales to new listings ratio between 40% and 60% is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively. The ratio was above 60% in about half of all local housing markets in April, virtually all of which are located in British Columbia, the… Continue reading
Mortgage lending in UK fell in April, but no surprise due to March buy let boost
Gross mortgage lending in the UK reached £18.5 billion in April, some 29% lower than March’s lending total of £26.2 billion, but 16% higher than the £16 billion lent in April last year. CML economist Mohammad Jamei pointed out that a fall was expected due to a rush in buy to let lending in March as landlords rushed through sales to beat the new 3% surcharge on additional homes that was introduced on 01 April. ‘As we move past the stamp duty change that came into effect at the start of April, we expect to see a quieter second quarter, as some transactions that were due to take place were brought forward to the first quarter of this year,’ he explained. ‘This is likely to mean that over the next few months buy to let takes a back seat as lending is driven by first time buyers, movers and remortgage customers. The underlying picture still shows signs of growth, as the market remains underpinned by strong fundamentals such as increasing wages and rising employment,’ he pointed out. ‘But it is possible that the uncertainty around the upcoming European Union referendum in June will weigh on activity in the upcoming months,’ he added. According to David Brown, chief executive officer of Marsh & Parsons, April lending was never going to live up to the March boost which was characterised by massively increased borrowing to landlords and second home owners. ‘But while we’ve seen a bit of a monthly comedown since then, the annual fundamentals are indicative of strength in the mortgage market. Widely expected to be an underwhelming month, April has still set an impressive benchmark for this time of the year, with lending levels harking back to the pre-recession era,’ he said. ‘Buy to let investors are just one type of buyer after all, and borrowing isn’t going to ground to a halt while they have a breather. The stamp duty changes didn’t affect the plans and intentions of hordes of other first time buyers and home movers, and in these areas buyer demand is still bursting at the seams,’ he added. David Whittaker, managing director of Mortgages for Business, pointed out that underneath the month on month lending patterns, there is a strong and steady current of buy to let lending critical to meet growing public demand for private rented accommodation. ‘Underlying annual growth in April shows a more sustainable path aside from any short term fluctuations and the need for buy to let mortgages to support the role of landlords,’ he added. The extremes of March make it futile to try to extract any meaningful insight from April's numbers, according to John Eastgate, sales and marketing director of OneSavings Bank. More importantly, market feedback suggests that normality has returned at enquiry level, although it will be the third quarter before we see this in new lending,’ he said. ‘A strong undercurrent of demand and a growing UK population means… Continue reading
Latest index figures show Spanish property prices are stable, but rents down
Average residential property prices in Spain have remained stable, rising 0.1% in April compared to a year ago, according to the latest index data to be published. But the April increase is more moderate than the year on year growth recorded in March and February at 0.8% and 2.1% respectively, the data from real estate appraisal firm Tinsa shows. However the figures also show that between January and April, house prices have accumulated an average increase of 1.9% and compared to the peak of the market in 2007 they are down 41.1%, a level similar to the summer of 2003. A breakdown of the figures show that the biggest year on year price increase was on the Mediterranean Coast with growth of 4.4%. Prices in metropolitan regions were unchanged year on year and in large cities they were down 0.2%. The Balearic Islands and the Canary Islands, where prices have been rising, saw a fall of 0.4% and the other municipalities group recorded a fall of 0.9% but this group had the biggest increase in prices between January and April at 3.8%. Another set of figures show that compared with the end of 2015 prices are up more substantially, with growth of 3.8% in other municipalities in the first quarter of 2016, up 2.9% in the Balearic and Canary Islands, up 2.7% on the Mediterranean coast, up 1.1% in metropolitan areas and up 0.7% in large cities. While prices are down overall by 41.1% comparted to the peak of the market, this decline varies according to location. It is down 30.6% in the Balearic and Canary Islands, down 35.8% in other municipalities, down 46.7% on the Mediterranean coast, down 45% in large cities and down 44.4% in metropolitan areas. Separate figures from the National Statistics Institute show that average rents in Spain were down 0.1% in April year on year. It means that rents have now fallen for 37 months in a row. But the latest decline is more moderate than the 0.2% recorded in March while for the first four months of the year rents are up 0.1% and there is regional variations. Rents in Galicia increased by 0.4%, were up 0.3% in the Balearic Islands, up 0.2% in Navarre, Murcia, Andalucia, Catalonia and Melilla, but were unchanged in Cantabria. But a number of regions saw declines, including a fall of 1.9% in La Rioja, down 0.6% in Castilla-La Mancha, Castilla y León, Extremadura and the Basque Country. Madrid record rental fall of 0.5%, while rents were down 0.3% in Asturias, by 0.2% in Aragón and Ceuta and by 0.1% in Valencia and the Canary Islands. Continue reading
