Investment
Households across the UK positive about property price growth
UK house price sentiment remains positive with households in all regions believing that property prices increased in September, the latest index shows. Some 22.5% of households surveyed across the UK said that the value of their home had risen over the last month, while 3.8% said that prices had fallen, according to the index from Knight Frank and Markit Economics. The index, which is a bellwether for house price movements across the country, recorded a reading of 59.3 and has now had a reading above 50 for 30 months in a row. Any figure over 50 indicates that prices are rising, and the higher the figure, the stronger the increase. Any figure below 50 indicates that prices are falling. However there is a north-south divide with the average reading for the north of England in September at 54.9 and the south of England at 64.1. This is the second widest gap between the two readings this year. While households in all UK regions perceive that property prices rose in September, Londoners perceived the highest rate of house price growth over the course of the month, followed by those in the East of England. However, in Yorkshire and the Humber perceptions of house price growth eased notably in September after rising for the previous three months to reach 60.4 in August. While households in the region still perceive that prices are rising, they are reporting that the pace of increases has slowed, with a reading of 54 this month. The index also shows that households in all UK regions expect house prices to rise over the next 12 months, led by households in the East and South East of England while some 5.9% of households expect to buy a property over the next 12 months, while a further 6.4% said that they would purchase a house within one to two years. The future HPSI, which measures what households think will happen to the value of their property over the next year, rose in September to 70 from 69.5 the previous month. However, the future HPSI remains well below its peak of 75.1 achieved in May last year, the report points out. ‘UK price sentiment remains in positive territory, and has stayed broadly stable since the election in May. However the north-south divide is evident, with the average reading for the north of England in September at 54.9 and the south of England at 64.1,’ said Gráinne Gilmore, head of UK residential research at Knight Frank. ‘This is the second widest gap between the two readings this year. Overall, households expect prices to rise over the next 12 months, with eight times as many households anticipating a rise in the value of their home as anticipating a decline,’ she explained. ‘Sentiment is being underpinned by the improving economy, with positive employment data as well as wage growth boosting buyer confidence. At the same time a shortage of stock on the market is serving, in some cases,… Continue reading
Debt is not holding back graduates in the US buying a home, new research shows
Having a lot of student debt doesn't greatly reduce young people's chances of home ownership in the United States, as long as they graduate, a new analysis has found. The findings challenge a popular concern that giant student loan payments are holding back people from home ownership. As it turns out, graduates' debt loads don't materially hurt their chances of buying a home, especially if they get at least a four year degree. Overall student debt has only a small negative effect on the odds of home ownership for a person with a bachelor's degree or higher, according to the research from real estate firm Zillow. The chances of a married couple with no student debt owning a home are about 69.8% if at least one of them has a bachelor's degree. If the same couple has $30,000 in student debt, their homeownership chances drop slightly, to 67.7%. ‘The income advantage of getting a degree pays off in terms of being able to buy a home in the long run. Student debt isn't the evil-doer it's made out to be, at least not when it comes to homeownership,’ said Zillow chief economist Svenja Gudell. ‘As long as students stay in school and get a degree, student debt doesn't deter them from homeownership, although it is possible that student debt could delay home ownership. People in their 20s and 30s are renting longer because they're delaying marriage, paying a lot in rent, and struggling to qualify for a mortgage when they finally find an affordable home. Add to that list that they are paying off student debt,’ she explained. The research also found that the least likely to own homes are people who have student debt, but no degree. In fact, a couple who borrowed more than$30,000 for school but never graduated has a less than 40 percent chance of home ownership. Graduates with advanced degrees are the most likely to own a home, even if they racked up a lot of student debt. For example, if a couple owes $50,000 in student loans, but one of them has a master's degree, they have a 75% chance of home ownership. A similar household with just $10,000 in loans and only a bachelor's degree has just a 69% chance of home ownership. Student debt has the greatest impact on the home ownership rate of people with two year associate's degrees. A couple with AA degrees and no debt has a 70% chance of owning their home. That declines significantly as debt grows. If the same couple has $50,000 in student debt, they own their home only 57% of the time. Getting an associate's degree improves chances of home ownership until a person has borrowed $70,000. After that, their chances of home ownership would have been better without a degree and no student loan debt. Getting a bachelor's, master's or doctorate degree, regardless of debt, increases the chances that people will… Continue reading
Row breaks out over issue of retirees downsizing in the UK
Older home owners in the UK should not be forced to downsize just to let the younger generation onto the housing ladder. Saga, a services and advice provider for people aged over 50, has hit out at remarks attributed the Financial Conduct Authority, the UK’s financial watchdog, that retired people should not continue living in properties that are too big for them. Lynda Blackwell, head of mortgages at the FCA, is reported to have told Ministers that they need to address the situation in the UK where retired people continue living in the family home once their children have left. She explained that the current housing shortage could be addressed by these so called ‘last time buyer’ moving to smaller properties to free up homes for people lower down the housing ladder. But Saga believes it is a form of bullying. ‘If people have saved and paid for their house over their working lives, it's down to them if they want to fill it with family or live on their own,’ said Saga’s director of communications, Paul Green. ‘But setting the generations against each other or talking about tackling older home owners is not just unhelpful it's insulting,’ he added. He explained that recent research carried out by Saga in association with Wadswick Green retirement village clearly showed that two thirds of older home owners would like to consider moving home ready for retirement but are prevented from taking that step either because there aren't sufficient appropriate properties to move to, or the costs to move far outweigh any benefit from doing so. ‘One of the solutions Saga has researched is allowing one stamp duty free move for those rightsizing for retirement which, according to independent economists CEBR, would release 111,000 family homes onto the market,’ said Green. ‘This is a win for older home owners who want to downsize, but also for younger families that want to move up the ladder and also for the exchequer. The research shows that by giving this tax free move it would be counterbalanced by an estimated £461 million of stamp duty that would be generated by the house sales that might otherwise not have taken place,’ he explained. ‘If we want to tackle the housing crisis we need to do so holistically. First time buyer schemes for the young are a good start, but we need to consider incentives to help encourage those that would like to move, to take that step. The FCA are right, we definitely need to do more and do it better, but using divisive language will only alienate the very people we need to help and encourage,’ he added. Continue reading
