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Annual savings of £742 for those getting on the UK housing ladder
First time buyers in the UK are £742 or 9% a year better off with their own home compared to those who rent, according to new research by the Halifax. The average monthly buying cost, including mortgage payments, associated with a first time buyer buying a three bedroom house stood at £658 in December 2014, some £62 lower than the typical monthly rent of £720 paid on the same property type. With the price of a typical first time buyer home rising by 8% in 2014, the difference has narrowed from £80 or 12% to £62 since 2013 as the average monthly buying costs grew by £46 while average monthly rents increased by £28. However, at the same time, the number of first-time buyers increased by an estimated 22% in 2014, with 326,500 first time buyers getting on the ladder, the highest annual total since 2007 when it was 359,900. In 2014, first time buyers in London had, in cash terms, experienced the largest benefit from buying rather than renting a home. The average monthly cost of £1,275 for those who have bought compares to an average monthly rental price of £1,387, a saving of £112 a month or £1,338 over the year. The second largest difference is found in the North West where first time buyers were paying 17% less a month, £109 a month or £1,304 annually, than the typical private tenant in the region. The smallest differences between the monthly cost of buying and renting are in the East Midlands at £6 or 1%, and the South East at £15 or 2%. The research shows that the gap between cost of buying and renting still substantially higher than in 2009. Five years ago the average monthly cost of buying was £15 higher than the typical rent paid at £576 versus £561. Since 2009 the substantial improvement in the affordability of buying relative to renting largely reflects a 28% or £159 rise in average monthly rental costs over the past five years. This increase was twice as fast as the 14% or £83 rise in average monthly buying costs. ‘Average home buying costs are significantly lower than average rental costs, providing first-time buyers with a large financial saving if they can get on the housing ladder,’ said Craig McKinlay, Halifax mortgage director. ‘While the timescales associated with raising a sufficient deposit to buy a home present a hurdle to many potential first time buyers, the significant difference in costs between buying and renting, combined with still low mortgage rates, increased consumer confidence and the Help to Buy scheme, have all been factors driving the substantial rise in first-time buyers over the past two years,’ he added. Continue reading
Increasing demand and lack of supply hitting UK first time buyer market
The UK housing market is seeing increasing demand and limited supply and first time buyers are finding it increasingly difficult to get on the property market, according to a new analysis. Since 1980, there has been considerable fluctuation in the UK housing market and while house prices have been increasing, home ownership among younger age groups generally has declined. The analysis from the Office of National Statistics also shows that if the number of households in England grows to 24.3 million in 2021 as projected, this would be equivalent to an additional 221,000 households per year. Housing is therefore likely to remain an important topic in the future. Overall, the UK housing market comprises 27.8 million residential properties, the report says. Linked to income, wealth and availability of lending, the housing market is sensitive to the overall economic climate. On average house prices have increased by 6.9% per year since 1980 and the greatest annual increase in house prices was 25.6% in 1988. In 2013, the average price (mix adjusted) of a property in the UK stood at £242,000. There were seven years between 1980 and 2013 where, on average, UK house prices fell, the majority of which occurred during the recession of the early 1990s. The biggest drop, however, was 7.6% in 2009. The economic downturn in 2008 had a considerable impact on the UK housing market. The decline in house prices was accompanied by reduced mortgage availability and stricter lending criteria, and this is a major reason in the UK for the continuing low level of housing transactions. The number of property sales in the UK almost halved from a peak of 1.67 million in 2006 to 0.86 million in 2009. Since 2009, however, the number of sales has partially recovered, increasing to 1.07 million in 2013. The report points out that rising house prices could partially explain the decline in the number of first time buyers taking out a mortgage. Between 1980 and 2002, the number of mortgages agreed for first time buyers was averaging around 486,000 per year. However, in 2003 there was a 31% decline in the number of mortgages for first time buyers from 2002. It also shows that in 2008 saw a further 47% decrease from 2007 as the effects of the economic downturn impacted on the housing market. While some recovery in the numbers of first time buyers has been apparent in 2013/2014, the level remains below the average seen prior to 2003. The report says that the reduction in the numbers of first time buyers has subsequently had an impact on the age of home owners. In 1991, 67% of the 25 to 34 age group were home owners. By 2011/2012, this had declined to 43%. There were also reductions in home ownership over the same period for the 16 to 24 age group from 36% to 10% and for the 35 to 44 age group from 78% to 64%. By contrast, home ownership has increased among… Continue reading
Miami saw record demand for property in 2014
The Miami real estate market continued to perform robustly in the fourth quarter of 2014 due to renewed consumer confidence and increasing demand from both domestic and international buyers, according to the latest monthly index report. The median sales price for single family homes increased to $246,140 in the fourth quarter, a 4.7% jump compared to the same period last year, the data from the Miami Association of Realtors shows. The median sale price for condominiums increased 8.6% to $190,000 in the fourth quarter compared to a year earlier. Miami-Dade County has now seen 12 consecutive quarters of growth for both single family homes and condominiums. ‘We expect Miami home prices to continue to increase in 2015 but at a more moderate rate. Limited supply and strong demand for single family homes is still reflective of a seller’s market,’ said Christopher Zoller, the association’s residential president. ‘There is also strong demand for both new construction and existing condominiums, so we will continue to see price growth for residential properties in Miami-Dade,’ he added. Compared to the fourth quarter of 2013, the average sales prices for condominiums in Miami-Dade County increased 18.5% to $375,269. The average sales price for single family homes decreased 2% to $394,095. Sales of single family homes, which set an all-time record for all of 2014, increased 7.7% to 3,426, while condominiums decreased 3.3% to 3,981 compared with the same period in 2013. ‘Much of the increase in single-family home sales activity is due to consumer confidence. Many buyers who were staying on the side lines are now buying. Huge gains in job growth and more solid economic indicators are resulting in more consumers returning to the housing market,’ explained Carlos Gutierrez, the 2015 president-elect of the association. Home and condominium listings also increased in the fourth quarter of 2014, up 3% in the fourth quarter of 2014 compared to the same period last year. New condominium listings increased by 4.2%. At the current sales pace, the number of active listings represents 5.6 months of inventory for single family homes and 8.4 for condominiums. Compared to the fourth quarter of 2013, the month’s supply of inventory for condominiums increased 19.7%. The inventory for single family homes decreased 0.2%. A balanced market between buyers and sellers offers between six and nine months of supply inventory. The median days on the market of single family home listings during the fourth quarter was 45 days compared to 40 days during the same period last year, an increase of 12.5%. Similarly, the median days on the market for condominium listings were 58 days compared to 47 last year, an increase of 23.4%. In the fourth quarter of 2014, some 55% of closed sales were all cash compared to 60% a year ago. All cash sales were 41.4% of single family home closings and 66.9% of all condominium sales. Since nearly 90% of foreign buyers pay cash, this reflects Miami’s top position as a prime… Continue reading
