Investment
US holiday home market cooled in 2016, but still second best sales in a decade
Holiday home sales in the United States cooled off in 2015 but remained at the second highest amount in nearly a decade, new research shows. The survey report from the National Association of Realtors also shows that investment purchases increased for the first time in five years. And mirroring the strong price growth seen throughout the US, the median sales price of both holiday and investment homes surged in 2015. They Investment and Vacation Home Buyers Survey, covering existing and new home transactions in 2015, found that holiday home sales last year declined to an estimated 920,000, down 18.5% from their most recent peak level of 1.13 million in 2014. Investment home sales in 2015 jumped 7% to an estimated 1.09 million from 1.02 million in 2014. Owner occupied purchases jumped 15.9% to 3.74 million last year from 3.23 million in 2014, the highest level since 2007. According to Lawrence Yun, NAR chief economist, while holiday homes sales took a sizeable step back in 2015 they still came in at the second highest amount since 2006. ‘Baby boomers at or near retirement continue to propel the demand for second homes, although headwinds softened the overall volume of vacation sales last year,’ he said. ‘The expanding pool of buyers amidst a dwindling number of bargain priced properties led to tighter supply and fewer sales and caused the price of vacation homes to rise. Furthermore, the turbulence that hit the financial markets the second half of the year likely seized some would-be buyers' available cash,’ he added. The median sales price of both vacation and investment homes soared in 2015. For holiday homes at $192,000 it was up 28% from $150,000 in 2014. The median investment home sales price was $143,500, up 15.3% from $124,500 a year ago. According to Yun, many of the metro areas with the strongest price appreciation in 2015 were in the South, the most popular destination for vacation buyers, and particularly in several Florida markets. While increased buyer demand contributed to the run-up in prices, it also likely squeezed less affluent households looking to purchase vacation properties. Holiday home sales accounted for 16% of all transactions in 2015, down from 21% in 2014 but still the second highest share since the survey was first conducted in 2003. The portion of investment sales remained unchanged from a year ago at 19% and owner occupied purchases increased to 65% from 60% in 2014. ‘Despite a smaller share of distressed properties coming onto the market, investment purchases reversed course in 2015 after declining for four straight years. Steadily increasing home prices and strong rental demand appear to be giving more individual investors assurance that purchasing real estate will diversify their portfolios and generate additional income if they decide to rent out the home,’ Yun said. The survey found that in addition to longer term rentals, investors are most likely to attempt to and rent their properties for less than… Continue reading
UK prime country house market affected by stamp duty change in first quarter of 2016
Prime country house prices in the UK increased by 0.3% on average in the first quarter of 2016, taking annual growth to 2.4%, down from a high of 5.2% in 2014. The easing of price growth since 2014 reflects a greater sensitivity to pricing from buyers in the prime market following successive increases in stamp duty that culminated in the changes introduced in December 2014. The details from the latest prime country house index from Knight Frank also shows that homes under £1 million have outperformed other sectors, rising by over 4% annually. Sales volumes in the first three months of 2016 were up by nearly a quarter year on year and Knight Frank forecasts price growth of 3% across the prime country market in 2016. This first quarter of the year has probably been affected by the announcement in November 2015 that buy to let investors and those purchasing second homes would be subject to an extra 3% on the rate of stamp duty from April 2016, the index report explains. It says that the November announcement has acted as a catalyst for some buyers looking to forestall a higher tax bill. This contributed to a notable rise in activity in the first three months of 2016, with Knight Frank figures showing a 24% rise in sales volumes across the prime country market compared to the corresponding period of 2015. During this time, activity has primarily been concentrated on the sub-£1 million market, boosted further by a growing economy and continued low interest and mortgage rates. As a result this sector experienced the strongest price growth. In contrast, homes worth £5 million or more saw values fall by 2.7% over the same period, with the higher transactional costs increasingly factored into pricing. With Knight Frank forecasting price growth of 3% on average this year, the report also says that key town and city locations are likely to outperform, as the trend for urban living continues to grow and more Londoners make the move out of the capital. In the short term, however, uncertainty surrounding the outcome of the European Union referendum could have an impact on the market, causing some buyers to adopt a wait and see approach until after the vote, the report concludes. Continue reading
Homes in national parks and outstanding rural spots still command a price premium
Despite the rise of urban living in the UK, many home buyers are still searching for the ultimate period property in an idyllic green setting, research suggests. In particular, the country’s 15 designated green breathing spaces or National Parks along with 45 smaller Areas of Outstanding Natural Beauty (AONBs) often appeal to many. A new analysis from real estate firm Savills of these areas across the country, excluding coastal locations, shows that the average sale price for a detached house within a National Park or AONB is £450,000. This compares with a value of £347,000 for properties in the same county not within the park or AONB and represents a hefty 29.7% premium for buyers seeking their perfect property in these locations. The research report identifies key established prime and emerging prime hotspots throughout the UK and the most expensive areas were found to be in the south of the country. Surrey Hills is the most expensive green location in the prime market while Snowdonia National Park in Wales is the cheapest. The established prime areas are named as Surrey Hills where the average sale prices in 2015 was £963,000, some 82.4% over the rest of the county and up 9% compared to five years ago. Next is the South Downs with an average 2015 sale price of £721,000, some 57.6% above the rest of the county and up 20.1% over five years. Then it is the Cotswolds with an average price of £558,000, some 47% more than the rest of the area and up 9.8% over five years. Emerging prime areas are topped by Cranborne Chase and West Wiltshire Downs with an average sale price of £507,000 in 2015, some 26.5% more than the rest of the area and up 10.9% over five years. Next is the Kent Down with an average of £565,000 but this is 4.4% less than the rest of the country although average prices are up 8.4% over five years. Then is High Weald with a 2015 sales price average of £570,000, some 7% above the rest of the area and up 5.7% over five years. In the emerging prime market, the Midlands and Wales saw strong growth, with the Lincolnshire Wolds showing an 11.9% increase over a five year period, attracting a premium of 25.8% above county averages. Clwydian Range and Dee Valley in Wales has an average sale price of just £272,000 but this is some 26.2% over the country average and up 9.6% over a five year period. In the North of the country the Howardian Hills, populated with scenic villages and historic houses, maintained a 36.9% premium over the surrounding county. In the Yorkshire Dales the average 2015 sales price at £380,000 is some 27.2% compared with the rest of the country but is down 2.6% over five years. In Scotland in the Cairngorms National Park the average price of £250,000 is some 0.8% below the average and up just… Continue reading
