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Optimism returns to UK housing market after mid 2014 dip, says BSA
Regardless of potential uncertainties such as the forthcoming general election, optimism has returned to the UK property market after a dip in the middle of 2014, a new survey shows. Some 36% of respondents to the property tracker index from the Building Societies Association said they believe that now is a good time to buy a home. The rebound since September is particularly marked by a substantial drop in the number of people who think now is a bad time to buy. Taken together, the Property Tracker index has bounced back from a 9% low in September 2014 to 23%. It points out that the dip in 2014 coincided with the introduction of new mortgage regulations and the announcement by the Financial Policy Committee of actions to limit lending in the housing market. Results now indicate that transaction volumes may begin to slowly pick up after cooling off late last year. Despite average wages increasing and high levels of employment, raising a deposit is the greatest barrier to buying a home. Overall, 59% of those surveyed say that this is the biggest hurdle they have to overcome, up by three percentage points on December 2014. The future prospect of a rise in the Bank Rate is an issue for many. Over one in 10 borrowers say that they would be forced to miss a payment on a bill if interest rates rose by 1% over the year ahead. A further 12% said that making loan repayments would be a constant struggle. ‘Optimism in the housing market is back after a long, slow winter. Conditions in the mortgage market and the wider economy are improving and this confidence is driving consumer sentiment, especially those looking to purchase a home,’ said BSA head of mortgage policy, Paul Broadhead. ‘Consumers and providers are also cheered by the fact that house building is starting to increase, household finances are less squeezed and inflation has fallen to 0%. Even if deflation happens, provided it is short lived and is not generated by a fall in demand in the economy, it should not be damaging,’ he pointed out. ‘The Financial Policy Committee will keep watching property prices and sales volumes carefully. It, saw the need to act last year and now has a range of new tools at its disposal. A more sustainable cure for the affordability challenge is increased housebuilding,’ explained Broadhead. ‘Earlier this month we asked for a revolution in the provision of new housing in our discussion document Housing at the Heart of Government. Like millions of others, we now await the outcome of the general election to discover whether housing will sit at the top of the political agenda as promised,’ he added. According to Paul Smith, chief executive officer of haart estate agents, it should be remembered that the last two years have been full of very positive news, particularly for first time buyers. He pointed out that they have benefitted from the introduction of… Continue reading
House price growth in UK cities continues to fall, latest index shows
The rate of house price inflation in UK cities continues to slow with growth of 10% in the 12 months to February compared to 11.6% six months ago, the latest data shows. But there is considerable regional variation with house price growth ranging from 3.6% in Newcastle to 12.9% in London, according to the Cities House Price Index from residential analysts Hometrack. The highest growth cities in the last quarter were Glasgow and Liverpool, but average values remain 13% and 15% below their 2007 peak. While house price growth in high value cities such as London, Oxford and Cambridge continues to slow, lower value cities registered a sharp uplift in transaction volumes in 2014 as demand for housing grows, which suggests there is substance to the recent pick-up in house price growth. Rising transaction volumes are an important precursor to house price inflation. The 15% to 35% uplift in transactions in 2014 indicates the most significant recovery in house market activity in cities outside of the South East of England since 2007. Belfast, Leeds, Liverpool and Cardiff all registered a 20% to 39% growth in sales volumes in 2014 compared to the average for the previous five years. Rising demand and increased market activity have resulted in increased house price inflation, which is running at between 5% and 8%. In contrast, double digit house price to earnings ratios in the higher value cities in the South East of England are impacting demand. Growth in housing transactions in 2014 compared to their five year average was well below average. Sales volumes were down in all the high growth cities over 2014 compared to 2013, specifically falling 13% in Cambridge, 7% in Aberdeen, 2% in Oxford and 1% in London. Lower sales volumes are feeding into a slower rate of house price growth in these cities, the index report says. It also says that falling sales volumes combined with a general slowdown in activity in the run up to the general election are resulting in lower mortgage approvals for home purchase. Home owners using a mortgage to buy a home accounted for two thirds of sales in 2014 according to analysis by Hometrack. The remaining third of sales were to cash buyers or those borrowing with a buy to let mortgage, groups who are not subject to mortgage affordability tests. ‘Transactions are a lead indicator for house prices. The acceleration in house price growth in London in the last two years was preceded by three years of rising transactions,’ said Richard Donnell, director of research at Hometrack. ‘A similar pattern is being registered in the cities outside the south of England, as pent-up demand returns to the market supported by low mortgage rates and an improving economic outlook,’ he explained. ‘While the pick-up in activity is welcome news, housing sales in 2014 are still 38% lower than the level seen in 2007 and 10%… Continue reading
Prime property market in Dubai sees sales fall
Dubai luxury home prices remain relatively resilient despite a drop-off in sales activity, according to the latest analysis of the Emirate’s residential real estate market. Sales in Dubai’s prime segment, comprising properties worth over AED10 million, hit the lowest level since the end of 2012 in the final three months of 2014, the research document from international real estate firm Knight Frank shows. Despite this however, Knight Frank’s prime residential price index saw a relatively modest fall in the three months to December of 1.2% quarter on quarter, the second consecutive quarterly fall. Indeed an examination of the data shows that these two declines nearly reversed the increases seen in the first half of last year, leaving values just 0.3% higher year on year in the fourth quarter of 2014. Despite the lower level of transactional activity however, the nationalities investing in real estate in Dubai remained diverse. Data from the Dubai Land Department (DLD) shows that, in 2014, more than 140 nationalities bought property in the Emirate. A breakdown of the figures shows that Indians remained the top foreign property investors, spending around AED18.1 billion, while the British and Pakistanis invested AED9.3 billion and AED7.6 billion, respectively. Overall though, the Emiratis spending AED 22.8 billion were the leading real estate investors, accounting for approximately 21% of the total spent last year. Between 2013 and 2014 Indians and Saudis increased their levels of real estate investment in Dubai while the British and Pakistanis, as well as the aggregate of the remaining GCC countries, spent 1% to 12% less. The total level of real estate investment from all other countries also fell in 2014, by almost 5% year on year. An assessment of web traffic to KnightFrank.ae’s website shows that around 44% of the total viewings in 2014 originated from the UAE. But the report points out that a significant proportion of these will have been expats. What’s more, another 18% of those clicking through to Knight Frank’s UAE website were doing so from the UK, while 7% were from India and 4% from the United States. As a proportion of the total, the level of web traffic from Russia also fell year on year in 2014 however, this did not come as a surprise since the rouble has nearly halved against the US dollar, to which the UAE dirham is pegged, since July, making it significantly more expensive for this nationality to buy property in Dubai. Finally, the strengthening of the US dollar and the weakness of the euro also means that demand from European buyers has also begun to wane, in turn adding further downward pressure on residential property prices in Dubai. Continue reading
