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Sales in US reach highest level for a decade and prices reach all time high
Existing home sales in the United States increased in May to their highest pace in almost a decade and median sales prices reached an all-time high. While the uptick in demand this spring amidst lagging supply levels pushed the median sales price to an all-time high, according to the National Association of Realtors®. All major regions except for the Midwest saw strong sales increases last month. Total existing home sales, which are completed transactions that include single family homes, town homes, condominiums and co-ops, were up by 1.8% to a seasonally adjusted annual rate of 5.53 million in May from a downwardly revised 5.43 million in April. The data from the National Association of Realtors (NAR) shows that with last month's gain, sales are now up 4.5% from May 2015 and are at their highest annual pace since February 2007. ‘This spring's sustained period of ultra-low mortgage rates has certainly been a worthy incentive to buy a home, but the primary driver in the increase in sales is more home owners realizing the equity they've accumulated in recent years and finally deciding to trade-up or downsize,’ said Lawrence Yun, NAR chief economist. ‘With first time buyers still struggling to enter the market, repeat buyers using the proceeds from the sale of their previous home as their down payment are making up the bulk of home purchases right now,’ he pointed out. ‘Barring further deceleration in job growth that could ultimately temper demand from these repeat buyers, sales have the potential to mostly maintain their current pace through the summer,’ he added. Surpassing the peak median sales price set last June of $236,300) the median existing home price for all housing types in May was $239,700, up 4.7% from May 2015 and the 51st consecutive month of year on year gains. The data also shows that total housing inventory at the end of May rose 1.4% to 2.15 million existing homes available for sale, but is still 5.7% lower than a year ago while unsold inventory is at a 4.7 month supply at the current sales pace, which is unchanged from April. ‘Existing inventory remains subdued throughout much of the country and continues to lag even last year's deficient amount. While new home construction has thankfully crept higher so far this year, there's still a glaring need for even more, to help alleviate the supply pressures that are severely limiting choices and pushing prices out of reach for plenty of prospective first time buyers,’ said Yun. The share of first time buyers was 30% in May, down from 32% both in April and a year ago. First time buyers in all of 2015 also represented an average of 30%. Properties typically stayed on the market for 32 days in May compared to 39 days in April, which is below a year ago when it was 40 days and the shortest time since NAR began tracking in May 2011. Short sales were on the market the longest… Continue reading
Vote on UK in the EU unlikely to have much impact on rental market
On the eve of the historic referendum in the UK on the future of the country in the European Union research shows that letting agents do not anticipate a major shift in the rental market. Whatever the outcome of the vote, lettings agents do not believe supply, demand, or rental costs will be significantly affected, according to the latest sector report from the Association of Residential Letting Agents (ARLA). Some 65% of ARLA agents expect supply to stay the same if the UK votes to leave the EU, compared to just a fifth 22% who predict it will fall as international landlords pull out of the market. The research also found that 31% see demand decreasing, as relocating to the UK becomes a less attractive prospect, but over half, 55%, think it will remain as high as it currently is. In London, however, almost half, 43%, of agents expect the number of prospective tenants per property to fall in the event of a ‘Brexit’, as international demand weakens. While 19% of agents expect a Brexit result will cause upward pressure on rent costs, the majority don’t imagine a massive change for tenants’ rents, should Britain leave the EU. ‘There is no avoiding the EU Referendum at the moment; and whatever the outcome, we are likely to feel the impact of the fallout of this debate in different ways,’ said David Cox, managing director of ARLA. ‘However, it’s important to put this into perspective and not get carried away in a zeitgeist. As outlined in our recent Brexit Report, the lettings market hosts a large number of non-UK born citizens and any change in migration policy is likely to have an impact down the line, especially in London. However, our monthly report clearly shows the sentiment amongst members is that the immediacy of this effect is likely to be minimal,’ he pointed out. The monthly report also looked at the issue of stamp duty reforms. Two months since the extra 3% was added to buy to let and second homes some 37% of agents reported a fall in supply of buy to let properties. This figures was much higher in Wales, where 80% of agents saw a dip in supply in May, as well as East Midlands and Yorkshire where 50% of ARLA agents have seen a decline. Looking forward, nearly half, 48%, of agents expect supply will continue to fall as more landlords walk away from the market as a result of the mortgage interest relief changes coming into force next year. The research shows that month on month supply is consistently lower than in 2015. The number of properties managed per branch dropped in May, with agents recording an average 171 properties on their books. Demand also fell marginally last month, as agents registered 33 prospective tenants per branch, compared to 34 in April. ‘The EU… Continue reading
UK property sales up slightly but still well below a year ago
Residential property sales in the UK increased by 1.5% between April and May 2016 but the month’s seasonally adjusted figure is 11.9% lower compared with a year ago. The latest report from HMRC says that the large increase in transactions for March 2016 followed by the substantial reduction in April is likely to be associated with the introduction of higher stamp duty rates on additional properties in April 2016. But it points out that whilst April and May 2016 are lower than the corresponding months in 2015, it should be noted that the total for March to May 2016 is still substantially higher than the corresponding period last year. The additional property rates were announced in the Autumn Statement 2015 for England, Wales and Northern Ireland, and in the Scottish Government's draft 2016/2017 budget for Scotland. The report also says that additional non-tax factors may have played a role as well, for example the Bank of England's plans to curb buy to let mortgages resulting in a rush to purchase. The residential count includes properties paying the main and additional rates. Greg Bryce, managing director at SearchFlow, also believes that uncertainty surrounding the referendum on the future of the UK in the European Union has also been affecting the market and looking ahead activity levels in June look set to be dampened as buyers and investors are holding off any decision to purchase until after the vote. However, once the dust settles post referendum, it is expected that activity levels in the housing market will remain buoyant with a strong economy, employment level high, interest rates and mortgage rates low and the economic and housing policies unlikely to change very much. The market is expected to bounce back if the vote is for the UK to remain in the EU, according to Doug Crawford, chief executive officer of My Home Move. ‘Ultimately, high levels of demand for both rental and owner-occupied accommodation will drive transaction figures upwards,’ he said. The firms most recent forecast predicts that sales will rise by 7% this year and by 20% by 2020. The figures show there has been a continued ripple effect from the stamp duty change, according to Rob Weaver, director of investments at property crowdfunding platform Property Partner. ‘The desperation to complete before the April 1st deadline pulled forward thousands of housing transactions that would normally have happened in April or May. March recorded the highest number of transactions in a decade,’ he said. He also pointed out that overall, 2016 is beating 2015 with transactions for the first five months of the year up 13% on the same period last year. ‘If we vote Remain on Thursday, we can expect a rising trend in activity as buyers and sellers re-engage after the referendum,’ he explained. ‘Transactions should slowly rebuild as the summer months are historically strong. But the dire shortage of supply is the main reason why we see house prices on… Continue reading
