TSI
US home sales maintain recent momentum, up 6% from April 2015
Despite ongoing inventory shortages and faster price growth, existing home sales in the United States have sustained their recent momentum and moved higher for the second consecutive month. The latest data from the National Association of Realtors shows a surge in sales in the Midwest and a decent increase in the Northeast which offset smaller declines in the South and West. Total existing home sales, which are completed transactions that include single family homes, town homes, condominiums and co-ops, rose 1.7% to a seasonally adjusted annual rate of 5.45 million in April from an upwardly revised 5.36 million in March. After last month's gain, sales are now up 6% from April 2015. According to Lawrence Yun, NAR chief economist, April's sales increase signals slowly building momentum for the housing market this spring. ‘Primarily driven by a convincing jump in the Midwest, where home prices are most affordable, sales activity overall was at a healthy pace last month as very low mortgage rates and modest seasonal inventory gains encouraged more households to search for and close on a home,’ he said. ‘Except for in the West, where supply shortages and stark price growth are hampering buyers the most, sales are meaningfully higher than a year ago in much of the country,’ he added. The NAR data also shows that the median existing home price for all housing types in April was $232,500, up 6.3% from April 2015 and this is the 50th consecutive month of year on year gains. Total housing inventory at the end of April increased 9.2% to 2.14 million existing homes available for sale, but is still 3.6% lower than a year ago. Unsold inventory is at a 4.7 month supply at the current sales pace, up from 4.4 months in March. ‘The temporary relief from mortgage rates currently near three-year lows has helped preserve housing affordability this spring, but there's growing concern a number of buyers will be unable to find homes at affordable prices if wages don't rise and price growth doesn't slow,’ Yun explained. Properties typically stayed on the market for 39 days in April compared to 47 days in March, which is unchanged from a year ago but the shortest duration since June 2015 when it was 34 days. Short sales were on the market the longest at a median of 120 days in April, while foreclosures sold in 51 days and non-distressed homes took 37 days. Some 45% of homes sold in April were on the market for less than a month, the highest since June 2015 when it was 47%. ‘Looking ahead, with demand holding steady and supply levels still far from sufficient, the market for entry level and mid-priced homes will likely continue to be the most competitive heading into the summer months,’ Yun explained. The index show that the share of first time buyers was 32% in April, up from 30% both in March and a year ago…. Continue reading
Property sentiment remains steady in the UK, latest index shows
Households across the UK perceive that the value of their home rose in May, according to the latest house price sentiment index to be published. Some 25.6% of the 1,500 households surveyed for the index from Knight Frank and Markit Economics across the UK said that the value of their home had risen over the last month, while 3.6% said that prices had fallen. This resulted in a HPSI reading of 61.0 and although this was a slight increase on the 60.1 recorded in April, it remains below the peak of 63.2 reached two years previously in May 2014. The index report says that while sentiment picked up over the course of the month, it remains in line with the longer term trend. On a three month rolling basis the HPSI reading was 60.6 compared to 59.2 for the comparable period three months previously There was a notable pick-up in perceived house price growth among those aged 18 to 24 with the index rising to 57.7 in May, up from 52.6 in April, potentially reflecting affordability concerns among this age group. Conversely, household sentiment softened among those aged over 55 month on month, although such individuals remain the most bullish when it comes to perceived price growth. According to Gráinne Gilmore, head of UK residential research at Knight Frank, the steadiness of the headline house price sentiment index during such political uncertainty over the future of the UK in the European Union is a reflection that the fundamentals of the market remain unchanged. ‘There is still an imbalance between demand and supply of housing, and for those with access to deposit payments, mortgage rates are still near record lows. However, there has been some softening in sentiment among those aged 55 and over, the age-group who have the largest equity stake in the UK housing market,’ she pointed out. ‘While the sentiment reading for this group is still one of the highest, indicating they expect prices to rise, there has been a notable fall from last month, indicating that the current economic and political climate is affecting some corners of the market,’ she added. The future HPSI, which measures what households think will happen to the value of their property over the next year, rose slightly in May to 70.3, from 68.8 in April. Households in the South East were the most confident that prices will rise in the next 12 months at 79.5, followed by those in London at 78.2 and the East of England at 77.9. Expectations that interest rates will remain low for longer, as shown by Markit’s UK Household Finance Index, appear to have helped offset any concerns over the wider economic backdrop. Around 46% of households expect rates to rise in the next 12 months, down sharply from a peak of 78% in August 2015. Tim Moore, senior economist at Markit, explained that house price sentiment not only rose in May, but moved above the 2016 peak… Continue reading
Demand leaves key Scottish city centres short of office space
A lack of suitable office space in Scotland’s key cities, combined with rising rents, is leading to companies looking to take offices in locations outside the city centre, new research shows. According to the latest Scottish Office Market report from real estate firm Savills, take-up of office space outside the central business districts of Aberdeen, Edinburgh and Glasgow was 4% higher in the first quarter of 2016 than the previous quarter. The firm believes this trend is set to increase as occupiers continue to be attracted by the low rents on offer in out of town locations, where in some cases there can be a 50% discount on the £30 per square foot prime rents being achieved in the city centre. ‘The out of town markets are on the cusp of experiencing a resurgence in popularity, particularly in Edinburgh and Glasgow. This is primarily due to occupiers being able to save money on rents compared to inner city locations,’ said Mat Oakley, head of commercial research at Savills. As a result Savills predicts Scotland’s strongest rental growth could be seen in the out of town markets of both Edinburgh and Glasgow, where rents in the early £20's could be achieved in the next three years. Savills research also shows that demand for office space across Scotland has increased significantly this year. Glasgow has seen approximately 300,000 square foot of space let in the first quarter of 2016 alone, more than half of the total amount of space taken in the city during the whole of 2015. Edinburgh, meanwhile, saw its second strongest quarter of leasing activity since 2013 at 324,000 square feet. According to the report, this spike in demand, combined with further employment growth and falling availability of Grade A space, has led to a squeeze in supply. Total supply in Glasgow has now fallen below two million square feet for the first time since 2011, with only approximately 500,000 square feet of Grade A space available. In Edinburgh availability has steadily fallen since its peak in 2008. Savills estimates that there is now only 2.1 million square feet of office space available across the city’s combined central business district and out of town markets, of which only 365,000 square feet is Grade A. The report also points out that Scottish office investment volumes have stayed healthy, with just over £811 million transacted in 2015, 33% above the long run average, and just over £300 million transacted in Aberdeen, Edinburgh and Glasgow in the year to date. Prime yields have fallen in Edinburgh and Glasgow, leaving both markets at 5%. However, Aberdeen's recent slowdown in leasing activity has seen yields there rise from 6% to 7% over the last two years. Of all Scottish office investments in 2015 some 44% were by non-domestic investors according to Savills research. Figures show this has continued into 2016 with 89% of all purchases made by non-domestic investors. Savills attributes this to a combination of UK… Continue reading
