Investment
Buying is cheaper than renting across most of the UK, new research shows
People looking for their first home in the UK are better off buying than renting with the gap more than doubling over the last five years, new research shows. Indeed, first time buyers are on average £865 or 10% a year better off with their own home compared to those who rent, according to the research by Lloyds Bank. The South East of England is the only region where renting is the cheaper option with average monthly buying costs at £965, some £65 higher than average monthly rental costs of £900. The calculations show that the average monthly buying cost, including mortgage payments, associated with a first time buyer purchasing a three bedroom house stood at £672 in December 2015, some £72 or 10% lower than the typical monthly rent of £744 paid on the same property type. This represents an increase of £105 over the past year compared with the annual saving associated with buying a home instead of renting of £760 in 2014. The difference has grown as average monthly rents have increased more steeply by £24 or 3% compared to a £15 or 2% increase in monthly buying costs. The current financial gap between buying and renting of £865 is more than double the annual saving of £397 in 2010. Over this period, the average rent has grown by 23% or £139 a month from £605 whilst average buying costs have increased by 17% or £100 a month from £572. The research report says that buying has consistently been the cheaper option since 2009, when the average monthly payment was £561 for renting compared with £575 for buying. While buying is more expensive in the South East, the data shows that buying is most affordable compared to renting in cash terms in the North West, where the typical first time buyer is paying £133 a month less than the average renter at £525 against £658. The next most affordable is Scotland where a buyer pays £525 against £645, a saving of £120, and then Wales at £471 against £574, a saving of £103. The number of first-time buyers is estimated to have totalled 310,000 in 2015, largely unchanged from 311,700 in 2014. This represents an increase of 60% since the number of first time buyers fell to a recent low of 193,700 in 2011. The number of first time buyers accounted for 46% of all house purchases made with a mortgage in 2015. This share has grown from 36% at the start of the housing downturn in 2007. ‘We’ve seen a significant shift over the past five years, with people consistently paying less on average per month when owning their property as opposed to renting. In 2015 this gap widened by over £100 to an annual saving of £865,’ said Mike Songer, mortgage director at Lloyds Bank. ‘This has been helped by record low mortgage rates and rising private rents, making owning a home a much more attractive proposition than renting,’… Continue reading
Nationally home prices in Canada up 17% year on year
Residential property sales across Canada edged upwards from December to January with annual transactions increasing by 8% compared to a year ago. The data from the Canadian Real Estate Association (CREA) also shows that home prices were up 17% year on year but not everywhere with British Columbia and Ontario seeing values fall slightly. Month on month sales increased by 0.5% and this lifted national sales activity to the highest level since late 2009. The number of local housing markets was almost equally split between those where sales were up from the month before, and those where sales were down. Monthly sales increases in the Greater Toronto Area (GTA) and Lower Mainland of British Columbia fuelled the national sales increase and offset monthly sales declines in Calgary, Edmonton and the Okanagan Region. ‘Single family home buyers in the GTA and Lower Mainland of British Columbia had been expected to bring forward their purchase decisions before tightened mortgage regulations take effect in February 2016,’ said CREA president Pauline Aunger. ‘If listings in these and nearby markets were not in such short supply, January sales activity would likely have reached even greater heights. Meanwhile, other major urban housing markets have an ample supply of listings, particularly where some home buyers have become increasingly cautious amid an uncertain job market outlook,’ she added. CREA chief economist Gregory Klump pointed out that single family homes in the GTA and Greater Vancouver areas were in short supply amid strong demand in contrast to side lined home buyers and ample supply in a number of Alberta housing markets. ‘Tighter mortgage regulations that take effect in February may shrink the pool of prospective home buyers who qualify for mortgage financing and cause national sales activity to ease in the months ahead,’ he added. A breakdown of the figures shot that actual, not seasonally adjusted, is now 2.6% above the 10 year average for the month of January. Activity was up compared to January 2015 among roughly two thirds of all local markets. B.C.’s Lower Mainland and the GTA again contributed most to the national increase. Greater Vancouver saw the biggest rise in annual prices with growth of 20.56% followed by the Fraser Valley up 16.94% and Greater Toronto up 10.69%. Home prices in Victoria increased 7% and were up 5.5% in Vancouver Island. By contrast, home prices fell by 3% in Calgary, by 2% in Saskatoon, and by less than 1% in Regina. While home prices have begun to decline in Calgary and Saskatoon only fairly recently, they have been trending lower in Regina since early 2014. Prices crept higher on a year on year basis in Ottawa by 1.10%, increased by 1.48% in Greater Montreal and were up 6.57% in Greater Moncton. The actual, not seasonally adjusted, national average price for homes sold in January 2016 was $470,297, up 17% year on year but continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which are among Canada’s most… Continue reading
UK buyers choose renovation properties to try to save money, research suggests
Some 35% of home owners in the UK who bought a property that needed renovation had to as it was the only way that could afford to buy a home, according to new research. Some 8% bought a home needing renovation but found that in reality they could not afford to do the work and 10% ended up living on a ‘building site’ for a year or more before starting the work. The research from price comparison site Confused.com also found that for those who persevere the hard work can be worth it 19% made a profit of between £25,000 and £50,000 from a successful renovation project. The sale prices of properties that need renovation are normally much lower than the prevailing market price in that particular locality. On average, home owners who have bought a renovation property have saved themselves £44,037. Home renovators are paying on average £152,792 for a property that needed some work done to it, compared to the average UK house price which is valued at £196, 829. Some 38% admitted to buying a property that needed some work as it saved them thousands of pounds compared to buying a home that needed no work. In fact, 40% of home owners admit they would buy a property that needed renovation if it saved them money. On average, home owners spent £33,089 on doing up their properties with 12% spending more than £50,000 renovating their home. Some 62% did work on the kitchen and 61% on the bathroom. However, renovating a property can often be more expensive than first anticipated with 45% of home owners saying they spent more than intended, with many spending £2,886 over their budget. Indeed, some 26% ended up going over their budget by more than £5,000 and 22% said that they would never buy a renovation project again. And the research also found that 41% who have carried out renovation work on their property have not let their insurer know. ‘As house prices seem to be continuing to rise, it would appear that more and more people are resorting to buying properties that need renovation. Deciding to renovate a property is a big decision and often more expensive than first anticipated,’ said Gareth Lane, head of home insurance at the firm. Continue reading
