Investment
Rents in UK down by 0.4% in November, latest index shows
Residential rents in the UK fell by 0.4% in November, taking the annual rate of increase from 3.9% to 2.9%, according to the latest index figures to be published. The drop was led by London where rents fell by 0.6% month on month as part of the seasonal slowdown in monthly rent prices, according to the Landbay Rental Index. This took the average monthly rent in the UK to £1,290 and November’s rent increases were fastest for one beds that are most popular with first jobbers and young professionals which were up 4% year on year. The data also shows that three bed properties, which are often rented by families moving for work, saw rents rise by 3.6%. Overall, the index report points out that rents have been on a strong upward trajectory since early 2013 and have climbed 7% since January 2013 when they stood at £1,206, slightly ahead of wage growth which is up 4.8% since January 2013. The rental increase over this period has been led by rent rises for one bed flats, up 8.6% over the same period. The November data also reveals that the South East dominates the areas with the fastest rental growth. York was the only area from outside the South East to feature in the top 10 rental risers. According to John Goodall, chief executive officer of Landbay, London’s rental market is very sensitive to changes in supply and demand. ‘The November dip is likely to reflect softening tenant demand as new hiring slows in the run up to Christmas and fewer people move to the capital for work,’ he said. ‘On an annual basis rental inflation is tracking wage growth quite closely. Scotland was only part of the UK to see rental growth below 2%. The big picture is that we are in the midst of a housing crisis and that wages are rising and both these facts mean that rents are more likely than not to continue to climb next year,’ he explained. ‘With house prices rising at the same time it is little wonder that there is such a strong appetite for investments that are secured against British homes,’ he added. Continue reading
Experts pick out markets that are too hot in the US
San Francisco's housing market has grown so unaffordable that some experts say the market is already in a bubble and it's not the only market in the United States that they are concerned about. A third of the experts surveyed in the latest Zillow Home Price Expectations Survey said the San Francisco housing market is in a bubble and another 20% believe the market is at risk for bubble conditions within the next year. The survey, sponsored quarterly by Zillow and conducted by Pulsenomics, asked more than 100 panelists about their expectations for the housing market. Of those, 66 answered a question about bubble conditions in 20 local housing markets. The survey responses revealed that some housing experts are concerned about over valuation in some of the nation's hottest housing markets and that there is significant disagreement among experts about whether the rapid home value growth in those markets puts consumers at risk. ‘A handful of markets, especially the Bay Area, are very hot right now, and it's possible home values may actually begin to fall somewhat in these places as more residents are priced out amidst rising affordability concerns, especially when interest rates rise,’ said Zillow chief economist Svenja Gudell. ‘Whether those local conditions constitute a 'bubble' is up for debate, even among economists. Without 20/20 hindsight, it's difficult to identify bubbles as they're happening, but it is very clear that nationally we are not seeing a return of the conditions that caused the last national bubble,’ she explained. ‘Tighter lending restrictions today mean we aren't seeing buyers get loans they realistically can't pay back, like we did in years past. It's significant that some experts are starting to worry about bubble conditions, but in my opinion, there's no real danger of a severe crash like the one we all remember from the last decade,’ she added. Some experts said they think bubble conditions are already present in Miami, Los Angeles, Houston, San Diego, and Seattle. A quarter of respondents said they think there is significant risk of a housing bubble in the next three years in Boston. However, the same number of panellists said there is no risk of a bubble in Boston in the next five years. The bubble fears are coming to the surface even as home values overall are expected to gradually level off over the next several years. The ZHPE panel projects an annual growth rate of 3.9% through to the end of 2015, a gradual slowing of the US housing market. Over the next five years, among all 108 panel respondents, the expected average annual home value appreciation rate is now just over 3%. This scenario would result in a national median home value of more than $215,000 by the end of 2020. ‘The long term outlook for US home values has diminished to a three year low, and a clear cut consensus among the experts remains elusive, even at the… Continue reading
Lending across all housing sectors in UK up in October, latest data shows
House purchase lending increased in the UK by 8% in October with all sectors, including first time buyers seeing a rise, according to the latest data from the Council of Mortgage Lenders (CML). A breakdown of the figures show that first time buyers borrowed £4.6 billion for house purchases, up 10% on September and October last year. This totalled 29,900 loans, up 8% month on month and 3% year on year. First time buyer lending grew for the second month in a row, to be the joint highest monthly lending level, alongside July 2015, by volume and by value since August 2007. Competitive mortgage rates mean first time buyers continue to pay low levels of their monthly household income to service the capital and interest rate payments of their mortgage at 18.4% in October. Home movers took out 35,400 loans, up 9% month on month and 3% compared to October 2014. In total, this was £7.1 billion borrowed, up 8% on September and 13% year on year. The October figure was only behind July this year for the highest amount borrowed since 2007. Home movers spent 18.2% of their monthly gross household income to pay capital and interest repayments, slightly more than last month but a decrease compared to September 2014. Home owner remortgage activity also increased, up 6% by volume and 10% by value compared to September. Compared to October 2014, remortgage lending was up 19% by volume and 34% by value. This is the most amount of remortgage loans in a month since January 2009, and the most amount borrowed for remortgage since June 2008. Gross buy to let saw month on month increases up 4% by volume and 3% by value, but more substantial growth year on year to the highest monthly gross buy to let lending level by value and by volume since the CML began tracking buy to let data on a monthly basis in January 2013. Buy to let remortgage is currently driving this with larger year on year growth compared to October 2014. ‘Home owner and buy to let activity have both continued the upward trend seen last month, and the market looks set to finish the year strong, despite taking time to gain momentum after a slow start to 2015,’ said Paul Smee, director general of the CML. ‘With increasing employment and the current absence of inflationary pressures in the UK, conditions for continuing demand in the housing market seem likely going into the new year. How supply will respond to this challenge going forward is a crucial question for 2016,’ he added. The data also shows that house purchase lending in the UK in October saw an increase by volume and by value of mortgages advanced compared to September and October last year. This was the second highest monthly house purchase levels, after July 2015, since 2007. As previously reported, UK gross lending overall in October totalled £21.9 billion, up 9%… Continue reading
