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Prime property country locations set to outperform London, new analysis suggests
Country locations are set to outperform London as the prime property markets enter the next stage of the housing cycle, according to a new analysis report. Stamp duty changes introduced in the 2014 autumn Statement have had a bigger impact than many forecast, the effect initially being masked by the uncertainty in the run up to the General Election, according to the report from property firm Savills. However, it points out that both the prime housing markets of London and the country have reacted relatively rationally to the changes. Indeed, small price falls were recorded in the higher value markets where the stamp duty liability has increased but by contrast, in the lower value prime markets where there is now a tax saving, values have continued to rise, albeit at a slower rate than in 2014. The challenges faced by the prime markets of late are reflected by the fact that the total value of housing stock in Kensington and Chelsea fell in 2015, though the loss of £693 million is dwarfed by the gains of £68 billion over the preceding 10 years, the report explains. Transaction levels, though undoubtedly lower than in 2014, have not collapsed as some would argue. Figures from the Land Registry indicate a 5 to 10% fall above £1 million across England and Wales. ‘While this suggests there is still a market for appropriately priced stock, it also means we are unlikely to see cuts to rates of stamp duty at the top end,’ said Sophie chick of Savills research team. ‘Indeed, in the 2015 autumn Statement, more stamp duty changes were announced for buyers of additional homes (second homes and buy to let) causing further small price falls in markets with high concentrations of such buyers in the last quarter of last year,’ she explained. Chick pointed out that to understand what lies ahead it is helpful to look back and identify what happened between 2002 and 2005 when the market was at a similar stage in the housing cycle. ‘In prime London, over the three and a half year period from June 2002, prices increased by just 5%. Currently, average values have seen no net growth since the first quarter of 2014, so if the market follows a similar trend we would expect prime London values to remain broadly flat through 2016 and most of 2017,’ she said. ‘Over the same period, prices in the prime country markets outperformed London with an average increase of 17%. We expect a similar trend this time round as the ripple effect took hold and more equity flows to the housing markets beyond London,’ she explained. The analysis shows that in terms of how residential value is concentrated, Kensington and Chelsea sits far ahead of any other borough or local authority across the UK, not just by virtue of high property prices but also the relative density of housing in the borough. The combination of the two means that on average in… Continue reading
Lack of homes for sale hampering buyers in the United States
A lack of homes for sale across the United States continues to limit choices available to potential buyers, putting a strain on markets across the country, new research reveals. In January buyers had 8.6% homes to choose from than they did last year, according to the latest real estate market report from property firm Zillow. It also shows that housing starts reached a three month low in January, indicating that newly built homes will not be a significant benefit for buyers, either. The firm says that a restricted supply of homes for sale will mean increased competition for homes that are available, and bidding wars that can price out entry level or first time buyers. Low inventory, along with a strong job market has been driving up home prices, especially on the West Coast. Across the country, only a quarter of markets saw inventory increase over the past year. Among the largest metros in the country Atlanta saw the largest increase in available homes for sale at 6.8% while buyers in San Diego have significantly fewer options with inventory down 30%. Besides inventory, Zillow looks at price cuts and days on market to help identify whether markets are better for buyers or sellers. It found that markets that benefit sellers are mostly grouped in the West, where buyers are more likely to face bidding wars. Buyers will find themselves with more bargaining power in the East, in markets like Philadelphia and Baltimore. ‘If you're looking for a home or trying to sell, it's important to know what kind of market you're in. Hopeful buyers in a strong sellers' market should be prepared to move quickly, since homes don't stay on the market as long,’ said Zillow chief economist Svenja Gudell. ‘In a buyers' market, they can afford to take their time and be more selective. However, low inventory is a factor affecting the majority of the country, so buyers should be prepared for a limited selection as we enter the home buying season,’ she explained. National home values rose 4.2o % $184,000, according to the Zillow data meaning that the pace of home value appreciation has increased for 10 months in a row. Denver and Dallas continue to lead the way, with strong double digit increases in home values. Rents, on the other hand, continued their recent trend of levelling off, growing 2.9% year on year from January 2015. San Francisco was the only large metro to see double digit rent increases. Continue reading
January saw highest total approvals for home buying in UK for a year
The number of loan approvals for house purchase in the UK increased by 22% in January with the month seeing the highest number of total approvals since the beginning of 2014. The data from the Bank of England also shows that the number of remortgage approvals increased by 33% year on year. A breakdown of the data shows that purchase approvals reached 74,581 in January compared to the average of 70,221 over the previous six months while those for remortgaging was 42,228, compared to the average of 40,306 over the previous six months. According Peter Williams, executive director of the Intermediary Mortgage Lenders Association, the threat of a rate rise is no longer driving the remortgaging uplift and instead it is being supported by home owners looking to improve their financial situation through cheaper monthly repayments. ‘In particular, landlords are preparing for fewer tax reliefs like the loss of the wear and tear allowance and restriction of mortgage interest deductability. Accessing cheaper deals through remortgaging will help offset these when they come into place,’ he said. ‘With rising home owner equity and a range of competitive deals in the market, home owners have also been determined to capitalise on currently low rates and intense market competition amongst lenders,’ he explained. He also pointed out that the stability in lenders’ mortgage funding continues to improve. ‘While the government and the Bank of England have supported funding the market, an increase in retail deposits over mortgage balances is underpinning improved mortgage lending, with the savings inflow exceeding that lending by £215 billion or 17% in the last quarter of 2015,’ he added. Adrian Gill, director of Reeds Rains and Your Move estate agents, believes it signals a strong spring buying season ahead. ‘Interest rates aren’t going anywhere fast and while cheaper mortgage deals stick around, buyer demand is chomping at the bit. With all the various government initiatives now in place, many first time buyers consider this their best shot at making the finishing line and purchasing their own home and they are upping the ante to make sure they don’t miss out,’ he said. But in reality, he pointed out that the market currently favours sellers. ‘Those looking to put their home on the market haven’t been in such a strong position since before the recession. House price growth is gaining strength on both an annual and monthly basis, and with an army of eager first time buyers it’s a brilliant time for existing home owners to be advancing up the property ladder. Ultimately, activity levels won’t be able to keep up the pace unless there’s a steady stream of homes for sale entering the ring,’ he added. But Martin Stewart, managing director of the independent mortgage broker, said that the forthcoming referendum on the UK as a member of the European Union could slow the market. ‘The beginning of 2016 has been far busier than usual in the… Continue reading
