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Development land prices in England and Wales down 0.9% in second quarter of 2015
The average price of greenfield land in England and Wales fell by just under 1% between April and June, according to the latest sector index. The 0.9% fall was a more moderate decline than the 1.8% fall recorded in the first quarter and it takes the annual fall in prices to 2.4%, the residential development land index from Knight Frank shows. However, the market remains localised. Development land prices in prime central London, for example, are up by 0.9% in the second quarter of the year and up 12.1% on an annual basis. Prices have returned to levels last seen in Autumn 2013. The firm’s index report says that prices reflect the fact that house builders have had access to relatively higher levels of consented land in the last few years because of the National Planning Policy Framework which has allowed them to top up their supply of land. As a result, house builders and developers are more selective about the sites they are now choosing to buy. There is a shortage of supply of consented greenfield land in some areas of the Home Counties due to the planning system for example, and a resulting premium for the sites that do come on the market. The report says that in central London there is still good demand for development land, although buyers are applying more detailed criteria before making offers, with a bigger consideration being paid to build cost inflation. ‘The sales market has returned to more normal conditions, along with absorption rates, and this is being reflected in a slowing in the growth of development land prices,’ said Gráinne Gilmore head of UK residential research at Knight Frank. ‘While there are also signs that build cost inflation, which has risen sharply over the last 18 months, is now levelling off, developers are still having to factor these higher costs into their offers. In addition, house builders are generally maintaining their margins, and this is weighing on land prices,’ she explained. ‘However there is still strong competition in areas which are considered to have real opportunity for growth, these include areas in outer London, and particularly for sites where completed units can be delivered for less than £1,000 per square foot,’ she added. Continue reading
Research reveals chromic shortage of first time buyers in UK housing market
The UK housing market is experiencing a potentially serious shortage of first time buyers, particular in the South East and North West, new research has found. First time buyer activity in the North East and Yorkshire and Humberside is less than half of what it was pre-recession while London is the least affected, according to the report from private mortgage insurer Genworth based on an analysis of government and industry data. The South East averaged 86,733 first time buyers a year from 1974, when records began, up until 2006. But since 2007 when the financial crash hit, this has fallen to just 47,863 a year. As a result, this has created a total shortfall of 310,967, the biggest of any English region. The North West has also seen first time buyer numbers drop from 46,461 a year between 1974 and2006 to 23,875 between 2007 and 2014. This has created a shortfall of 180,685 first-time buyers. The North East’s first time buyer market is less than half of its pre-recession size as the data analysis shows that the average number of first time buyers between 2007 and 2014 at 10,575 is just 46% of the pre-2007 average of 23,191, the lowest percentage of any region. In contrast, London is the least affected in relative terms and has lost just a quarter of its first time buyers in percentage terms. Its average of 39,175 between 2007 and 2014 is equal to 73% of the pre-recession average, despite the continued house price increases London has seen in recent years. The report says that comparing these shortfalls to the regional populations of 18 to 45 year olds who are traditionally first time buyers, suggests a significant percentage are potentially ‘denied home owners’ as a result of the fall in first time buyer numbers. For example, a shortfall of 100,927 first time buyers in the North East compared to an 18 to 45 population of 1.3 million means as many as 21% could be classed as ‘denied home owners’. In the South East a shortfall of 310,967 compared with an 18 to 45 population of 1.6 million means 19% are in the same position. ‘Tougher regulation and higher capital requirements for lenders as a result of the recession have accelerated the fall in homeownership and dramatically reduced the number of people, especially younger households, who are able to buy their first home,’ said Simon Crone, vice president for mortgage insurance Europe at Genworth. ‘A dual crisis has emerged with the shortage of new homes exacerbated by a shortage of loans traditionally used to help first time buyers get on the property ladder with 5% or 10% deposits. Our analysis shows that all regions have felt the impact of the squeeze on first time buyers, regardless of the so-called ‘North/South’ divide,’ he explained. ‘While London and the South East face the biggest pressure of high house prices, a lack of housing… Continue reading
Inventory falls in US housing market, especially for first time buyers
There were fewer homes for sale in the United States in June than there were a year ago, increasing competition for potential buyers, the latest research shows. Most of these declines were among the lowest valued homes sought by first time homebuyers, according to the report from real estate firm Zillow. In the lowest priced third of homes for sale, the number of homes on the market fell year on year in 28 of the nation's 35 largest metro areas. By comparison, among the highest priced homes, inventory fell year on year in only 10 metro areas. The total number of homes listed for sale on Zillow in June was down 6.5% year on year but was up 2.1% on a monthly basis. Large metros where inventory has increased the most annually include Austin, up 30.3%, Atlanta up 22.4% and Washington DC up 18.9%. ‘Historically low mortgage rates continue to keep overall ownership affordability very good by historical standards, making it a great time to buy a home, especially with rent becoming increasingly unaffordable,’ said Zillow chief economist Stan Humphries. ‘Finding a house is the last hurdle for many buyers who have saved a down payment and gotten pre-approved for a mortgage. But low inventory levels like those we're seeing across the country can bring the home buying process to a screeching halt. In many markets, there just isn't a lot to choose from in terms of homes on the market,’ he added. Overall, home values in the United States rose 3.3% from June 2014, and 0.3% from May to a Zillow Home Value Index of $180,100. As home values continue to rise, buyers are faced with more challenges in a tighter market, especially in hot markets like Denver, which saw the highest home value appreciation from last year, surpassing even San Jose and San Francisco. Rents have also continued to rise in the second quarter, up 4.3% from this time last year to a Zillow Rent Index of $1,369 with annual growth led by San Francisco with a rise of 14.5% followed by Denver up 13% and San Jose up 12.5%. Metros that are seeing strong appreciation in rents, as well as home values, are experiencing healthy increases in demand with often thriving job markets and sometimes tight inventory supply, the report also says. Of the 863 metropolitan and micropolitan areas covered by the index, some 645 saw annual growth in rents in the second quarter and 527 metro areas saw rents increase from the first to second quarters. Over the next year, home value growth is expected to slow even further, to 2.4% through to the second quarter of 2016, according to the Zillow Home Value Forecast. The report explains that continued steady growth in the real estate market shows signs that the market is maintaining stability after going through the housing bubble and bust of 2007 through 2012. Continue reading
