Investment
House prices increase more than average earnings in over 25% of UK districts
Average house prices have increased by more than the average employees net earnings in more than a quarter of local authority districts across the UK, according to new research. The number of areas where house prices are outpacing earnings over the last two years has increased significantly over the past 12 months from 73 or 19% out of 384 to 108 of 28% out of 380. The Halifax research also shows that the vast majority of these areas are in London, the south east, and east of England with these three regions representing 97 or 90% of the 108, with the biggest gap between rising property values and earnings in Three Rivers in Hertfordshire, where house prices increased by an average of £147,990 over the last two years, exceeding average take home earnings in the area by £97,992. Seven London boroughs appear in the top 10 districts while the top performers outside southern England were Warwick in the West Midlands and South Northamptonshire in the East Midlands, with house price gains in excess of earnings of £24,723 and £14,837 respectively during 2014 and 2015. ‘The housing market recovery over the last few years has led to substantial price rises in some areas of the country, particularly in London, the south east and the east of England. This has resulted in homes increasing in value by more than total take-home earnings for the average home owner in many areas of the country,’ said Martin Ellis, housing economist at the Halifax. ‘Clearly, this is good news for some home owners. However, it does make conditions tougher for those looking to buy their first home in such areas, with prices being pushed increasingly out of range for many young people,’ he added. Over the past five years, 35 local areas in the UK or 9% of the total have seen average house prices increase by more than total average pay, up from 23 districts or 6% in 2015. The biggest differential was in Hammersmith and Fulham, where average property prices have increased by £248,971, surpassing average take home pay during the period by £108,653. The top 10 performers are all in London. All 35 areas are in London, the South East and the East. Over the past decade, house prices have increased by more than total pay in four areas across the UK led by Brent up £11,760, Haringey up £8,255, Hammersmith and Fulham up £4,438 and Cambridge up £1,767. Continue reading
Cost of housing in UK means more young people still living with their parents
Affordability issues mean that more young adults aged 20 to 34 in the UK are more likely to be sharing a home with their parents than any time since 1996, new research shows. There were 618,000 more young adults living with their parents in 2015 than in 1996 at 3.3 million compared with 2.7 million, according to the data from the Office of National Statistics (ONS). Nearly half of 20 to 24 year olds lived with their parents in 2015, compared with a fifth of 25 to 29 year olds. For 30 to 34 year olds, this figure was less than one in 10. The research shows that the percentage of young adult householders owning their home decreased from 55% in 1996 to 30% in 2015 for 25 to 29 year olds and from 68% to 46% for 30 to 34 year olds. The percentage of 25 to 34 year old householders renting their home has surpassed those who own their homes over the last decade. There has been a noticeable increase in renting since the early 2000s and the ONS says that this may be due to increased demand for rented housing as house prices increase and an increased supply of privately rented housing from a growing number of buy to let investors. The increase in renting has been largest for householders who are aged 20 to 24. In 2015 some 91% of householders aged 20 to 24 were living in rented accommodation; this is higher than all other age groups. Only 9% of 20 to 24 year old householders owned their homes either outright or with a mortgage or loan in 2015, down from 30% in 1996. Saving for a deposit is often seen as one of the biggest hurdles to home ownership and the report says that first time buyers’ deposits have increased from around 10% of the purchase price in 1996, to a peak of 27% in 2009. This was the height of the economic downturn, when mortgage lenders placed greater restrictions on the mortgage lending criteria used to assess applicants’ ability to afford a home loan. In recent years the size of deposits paid has fallen slightly but remained above 20% of the purchase price on average. The size of deposits paid by first time buyers has risen more than deposits paid by existing home owners. This is because prospective first time buyers who have smaller deposits saved were less likely to be approved for a mortgage, and therefore less likely to buy a home. That left only those with larger deposits who did buy their first home, which in turn pushed up the average deposit paid. Between 1971 and 1999, the amount paid for a house by first time buyers with a mortgage fluctuated between two and three times their annual income. After 2000, this ratio increased rapidly, driven by increasing house prices , reaching a peak of more than 4.5 times their annual income in 2004 and… Continue reading
Rental prices in Spain fall for 34th month in a row
Rental values in Spain are continuing to fall with the latest figures showing that average rents fell by 0.4% in January compared to the same month of 2015, the 34th month in a row of declines. The data from the National Statistics Institute (INE) shows that rents fell in all regions except in Galicia where they increased by 0.3%, the Balearic Islands and Catalonia both up 0.1%, ad were static in Murcia and Navarra. The most significant fall in rental prices were in La Rioja where they were down by 2% while in Castilla y Leónand Castilla-La Mancha rents fell by 0.9%, were down 0.8% in Madrid and Extremadura and down 0.7% in Asturias and Valencia. The regions of Andalucía and Aragón registered the same rate of decline as the national average at 0.4%, while in Cantabria rents fell by 0.3% and the Canary Islands, the Basque Country and Ceuta all recorded declines of 0.2%. But in the buying and selling market the news is more positive with the INE data showing that the Spanish housing market grew by 11% last year after bottoming out in 2014. There were 318,055 home sales last year, the first time sales have risen above 300,000 a year, and following 260,000 in 2012 and 2013. But sales are still considerably below the 700,000 recorded before the global economic downturn in 2007. In terms of percentage growth, the housing market expanded by 11% last year, after rising 4% in 2014, and according to Mark Stucklin of Spanish Property Insight this suggests that the market has finally turned around. The crash in sales started back in 2008, and declined in five of the six years between 2008 and 2013, with dramatic double digit falls in most of those years. However, looking just at December, sales were up 8% year on year, meaning the market expanded every month in 2015, the first year that has happened since the crisis began. There were 77,865 new home sales registered last year, and 276,267 resales, meaning that resales were 78% of the market, down from parity as recently as 2013. ‘The new homes market has failed to recover as quickly as resales in part due to a lack of new developments on offer, though sales may start to recovery this year as more new projects come on stream,’ Stucklin explained. Of the selected regions most of interest to foreign buyers, Barcelona’s property market increased the most last year, up by 20%, but new home sales fell 20% while resales were up 32%. This was followed by Cadiz province, Las Palmas in the Canaries and the Balearics all up 15%. Indeed, all regions were positive with the exception of Huelva, home to the North Western end of the Costa de la Luz, also known as the Spanish Algarve, where they fell by 2%. ‘The Spanish property market now looks to be on a growth path after years in crisis. Sales growth was particularly… Continue reading
