Tag Archives: shows
House prices up for third month in a row across whole of UK
House prices have risen across all parts of the UK for the third consecutive month in October whilst stocks continue to fall, the latest residential market survey shows. The residential report from the Royal Institution of Chartered Surveyors (RICS) says that prices are expected to rise by 4.5% per annum over the next five years, a cumulative increase of around 25%. It also says that new sales instructions extend their streak of uninterrupted decline stretching back to February but although sales growth has paused, expectations remain a little more positive. In October some 49% more chartered surveyors saw house prices rise across the UK, compared to 44% more in September. As prices rise in all areas of the UK, East Anglia has consistently seen the fastest rises over the last three months and 91% more chartered surveyors reported seeing a rise rather than fall in prices in October. In contrast, 25% more chartered surveyors saw prices rise in London over the last three months, with only 5% more expecting a rise in prices in the capital over the next three months, the lowest reading across the UK over this time period. However the 12 month view for the capital is still relatively strong. Contributing to the rise in prices across the country, demand from potential buyers grew across the UK in October with 12% more respondents seeing a rise in new buyer enquiries. The report also shows that demand continues to considerably outpace supply and the number of new instructions has decreased for the ninth month in succession, with 10% more chartered surveyors reporting a fall. The supply of new stock to the UK market has been in decline since the middle of 2014, with the number of new instructions only increasing in one of these months. Despite the lack of new stock to the market, sales activity is relatively healthy and following a small pick-up in agreed sales in September, activity was little changed this month across the UK. This chimes with HMRC transactions data, which continues to see the number of sales rising consistently over the year. In the UK lettings market, demand is also continuing to outpace supply in the three months to October. This has been the trend nationally for some time, with the growth in demand outstripping that of supply since 2009. Unsurprisingly, rental expectations remain strong and respondents continue to expect rents to rise over the year ahead. Rental growth is anticipated to accelerate to an average of just under 5% per year over the coming five years. ‘It is hard to get away from the issue of supply when it comes to the current state of the housing market. The legacy of the drop in new build following the onset of the global financial crisis is now really hitting home, with both the sales and letting markets continuing to show demand outstripping supply on a month by month basis,’ said Simon Rubinsohn, RICS chief… Continue reading
A mortgage in the US is generally more affordable than renting, new report says
Paying for a mortgage is still more affordable than renting in the United States but saving enough money for a down payment has become increasingly difficult for first time buyers. According to the latest analysis report from real estate firm Zillow this is particularly the case in markets where home values are rising rapidly. With the majority of renters in the largest metros putting about 30% of their monthly income toward a rental payment, saving money for a 20% or 10% down payment is extremely difficult. The report suggests that first time buyers and millennials are left trying to find other ways to break into the housing market, turning to friends and family for financial help. In 2014 alone, 13% of home purchases were bought using a loan or gift from friends or family for the down payment. Rental affordability has worsened in 28 of the 35 largest metros over the past year, and mortgage affordability worsened in just 18 of them, according to the report covering the third quarter of 2015. Residents of the Denver metro can expect to spend about 21% of their income on a mortgage, compared to 34% on rent. In the US as a whole home owners can expect to spend 15% of their income on a mortgage and 30% on rent. But getting that mortgage payment requires a home buyer to have saved $62,760 for a 20% down payment, the industry standard, on a median valued Denver home, which is $313,800. In the Boston and Miami markets, the median monthly mortgage payment requires just 22% and 20% of monthly income, respectively. Renting is substantially more expensive, influencing many renters to start thinking about purchasing a home. Some 35% of the median income pays the median rent in Boston and 44% in Miami. However, to purchase a home in Boston a 20% down payment is $76,220 while in Miami, buyers need to have saved $44,680. The report also shows that breaking into the housing market is less of a challenge in more affordable markets, like Cleveland. A 20 % down payment on a median home there is $25,000, or $12,500 for a 10% deposit. Residents of Cleveland can expect to spend 11% of their monthly income on a mortgage while for renters it is 27% of their monthly income. ‘In general, paying a mortgage is more affordable than renting, and has been for some time. Unfortunately, many current renters aren't able to realize the savings that come with homeownership because as home values and rents keep rising, it's getting increasingly difficult to clear the down payment hurdle,’ said Zillow chief economist Svenja Gudell. ‘It's not uncommon for a 20% down payment on even a modest home to represent savings of $50,000 or more in some areas. And that number itself is a moving target, rising as home values escalate and harder to achieve as more money goes to landlords and less goes to savings,’… Continue reading
Call for UK mortgages to be more user friendly for older people
Building Societies in the UK are being urged to review the maximum age limits for mortgage borrowers to support home owners needing finance into and in retirement as life expectancy rises. This is one of nine recommendations contained in an interim report entitled Lending into Retirement, from the Building Societies Association (BSA) which points out that the UK already has 11.6 million people over the age of 65. By 2034 it is estimated that around a quarter of the population will be 65 plus and lifestyle changes, including divorce, mean that people are tending to buy later and go for longer repayment terms. BSA research shows that around half of 25 to 34 year olds think they will need a mortgage that lasts into retirement and the average age of an unassisted first time buyer has already hit 31. The report also calls for more availability of suitable housing options for older home owners who want to move to a property that meets their changing needs and better cross departmental co-ordination to rationalise Government policy on the treatment of older borrower’s housing wealth. It would also like to see the delivery of regulation that encourages innovation along with the provision of clear information that empowers older consumers and points out that working with insurers would develop policies that enable lenders to mitigate the different risks involved in lending to older borrowers. Other areas for improvement include make holistic financial planning in retirement available, the formation of a cross-industry alliance with other bodies focused on the needs of older consumers and the creation of a mortgage product that adapts to the different stages of a person’s life. ‘We have been working together as a sector to look at this issue and we are making some early recommendations for change. Some put the ball firmly in our court, others can only be delivered in partnership and a few may require regulatory change,’ said Dick Jenkins, chair of the BSA. He explained that the Financial conduct Authority has been involved in preparatory work. ‘We have also sought the views of many others and these will now contribute to the next stage of the project, to deliver progress for those who want, need and deserve to buy a home of their own into and in retirement,’ he added. According to BSA head of mortgage policy, Paul Broadhead, it is natural for the building society sector to kick-start and lead this work. ‘We already tend to have a more flexible approach to lending with higher and sometimes no age limits and a willingness to assess applications considering an individual’s circumstances,’ he said. ‘As the average age of a first time buyer continues to increase, borrowing into retirement is becoming increasingly commonplace, rather than a niche form of lending. This report identifies a number of areas that need further attention if we are going to meet the inevitable growth in demand for borrowing into, and in, retirement,’ he added. ‘The time… Continue reading
