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US property market set to continue steadily upwards in 2016
Steady job growth, affordable home prices, attractive mortgage interest rates and pent-up demand will help the US housing market continue on a gradual upward trajectory in the year ahead, it is claimed. However, supply side headwinds led by a shortage of construction lots and labour, along with tight access to acquisition, construction and development loans, continue to hamper a more robust recovery, according to economists who participated the National Association of Home Builders (NAHB) Spring Construction Forecast event. ‘Builders remain cautiously optimistic about market conditions. This should be the first year since the recession in which the growth rate for single family production exceeds that of multifamily. And we see single-family growth accelerating in 2017 as the supply chain mends and we can expand production,’ said NAHB chief economist Robert Dietz. The event heard that steady job growth has bolstered consumer confidence and rekindled housing demand. Nationally, payroll employment has surpassed its pre-recession peak by a modest margin; only a small number of states still lag behind those levels. Looking ahead, single family production is expected to post a 14% gain in 2016 to 812,000 units and rise an additional 19% to 964,000 units in 2017. Using the 2000/2003 period as a healthy benchmark, when single family starts averaged 1.3 million units on an annual basis, single family production currently stands at 58% of normal activity. The NAHB projects that single family production will rise to 64% of normal by the fourth quarter of this year and climb to 77% of normal by the end of 2017. On the multifamily side, production ran at 395,000 units last year, above the 331,000 rate that is considered a normal level of production. Multifamily starts are expected to decline 4% to 379,000 units this year, and rise 6% to 402,000 units in 2017. Residential remodelling activity is expected to increase 3.3% in 2016 over last year, and rise an additional 1.3% in 2017. Len Kiefer, deputy chief economist at Freddie Mac, cited several factors that should make this year’s home sales the best in a decade including fewer household formations than normal and data showing that more owners are current on their mortgages, with fewer defaults and less foreclosures along with solid job gains include rising salaries and wages. He pointed out that house prices are rising about 6% annually and appear to be in line with incomes and rents while demographic tailwinds are helping to propel the housing market forward. Freddie Mac is projecting 5.9 million total home sales this year, the highest level since 2006, and 6.2 million in 2017 and regionally, Kiefer said that house price growth is the strongest in the South and West, with Nevada, Oregon, Washington, Colorado and Florida all posting double digit state-wide house price appreciation between December 2014 and December 2015. NAHB senior economist Robert Denk said that housing market conditions are improving across the nation, but the pace of the recovery continues to vary by state and region. ‘A common… Continue reading
Mortgage advisors report short term uncertainty over growth of buy to let in UK
Buy to let volumes in the UK increased in the first quarter of 2016 but uncertainty remains over the long term, according to the latest financial advisor confidence tracking report. The increase in the volume of buy to let business being written by mortgage advisers was modest in the first three months of the year and financial advisors have concerns about the longer term prospects for the market. Those surveyed for the Paragon Mortgages report said that 24% of their business in the first quarter 2016 consisted of buy- to let, up from 23% in the previous quarter. Volumes of first time and next time buyers also increased. Reflecting these increases, remortgages declined from 35% of intermediary business in the previous quarter, to 32% currently. The report suggests that recent government policy has affected confidence in future business, however, with 13% of respondents expecting all types of mortgage business to decrease over the coming quarter, while 53% expect business to remain stable and 34% expect an increase. On buy to let, opinion is evenly divided with 49% of intermediaries expecting demand for buy to let products to increase or stay the same, as compared to 50% who expect a decline in demand with 1% unsure. Despite this uncertainty the number of intermediaries stating that landlords will ‘keep current properties but not buy any more’ as a result of changes to income tax relief, has nearly halved from 32% in the fourth quarter of 2015 to 18% currently, indicating that purchase intentions may be returning to the buy to let market. Likewise 23% of intermediaries stated that changes to tax relief would make ‘no difference’ to landlord plans, up from 19% in the previous quarter. Remortgages continue to constitute the largest proportion of buy to let business in the first quarter of 2016, accounting for 38% of business, up from 36%. Nevertheless, some 32% of new buy to let finance was secured for portfolio expansion. ‘Our latest report reveals that advisers are circumspect about future volumes of buy to let business as a result of recent policy developments. Over the short term around half of intermediaries expect to see a decline in buy to let business,’ said John Heron, director of mortgages at Paragon. ‘That said, on the question of what impact income tax changes will have over the longer term, sentiment appears to have improved materially over the last quarter with a sharp reduction in the proportion of landlords that are expected to sell property,’ he pointed out. ‘Increased volumes of remortgaging in the buy to let market shows that there is healthy competition with landlords shopping around for a better deal. Whether the market remains as competitive once all the fiscal and regulatory changes are implemented remains to be seen,’ he added. Meanwhile, new figures released today by the Finance and Leasing Association (FLA) show that the number of second charge mortgage repossessions in the first quarter of 2016 was down 52.8%… Continue reading
French property market set to see growth in 2016
Enquiries into French property are up by 60% in the first quarter of 2016 compared with the previous year, the latest data shows, with steady growth predicted for the rest of the year. Figures from the FNAIM, the national association of French estate agents, show that a record breaking 800,000 older properties were sold in 2015. The annual analysis of the French property market from Home Hunts suggests that there was a large resurgence of British buyers last year. It says that it was a good a year for negotiations due to a combination of flexible property prices, low interest rates and favourable currency pairings Overall the prime property market on the Riviera is booming, boosted by price falls inland, and an increase in sales in coastal locations, such as Cannes and Saint Tropez, the report says. It predicts that the prime markets on the Riviera, in Paris, Toulouse, Bordeaux and parts of Provence and the Alps are due to see price rises throughout 2016. While the upcoming referendum in June on the future of the UK in the European Union could have an effect on British buyers' confidence in the market, the firm reports that so far there hasn't been much of a noticeable effect. ‘While the market continues to improve, June’s EU referendum will certainly unsettle certain British clients, but, if there is a Brexit, I don’t believe it will greatly impact those buying property overseas,’ said Tim Swannie, Home Hunts director. ‘So far it does not seem to have affected British buyers’ appetite for French property. The pound has lost a little strength compared to last year, but it is still comparatively high if you look at it over the past five to six years, so British buyers can still really make the most of their budgets,’ he added. However there are also many Dutch, Belgian, German, Scandinavian, Swiss, American and Middle Eastern buyers active in the market and the report points out that the new LGV (Ligne à Grande Vitesse) train line which will connect Bordeaux with Paris in 2017 means that property in the area is increasing in value. Similarly, the TGV now runs from London to Marseille and areas of Provence are becoming more popular as a result. Looking ahead the report suggests which areas of France are likely to be good buys. It says that on the popular Riviera locations such as Biot, Opio, Roquefort-les-pins, and Chateauneuf de Grasse could prove popular as buyers are now getting more for their money. In neighbouring Provence areas such as Bormes-les-Mimosas and Carqueiranne are described as offering excellent value for money. In the south west of the country, another location popular with British buyers, Cahors, Saint-Cirq-Lapopie, and Figeac currently offer better value than the Dordogne, while in Languedoc the city of Beziers is in an area undergoing a facelift and housing stock is starting to move. The report also says that Paris saw increased sales in 2015, particularly in November… Continue reading
