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Some urban homes values in the US outpacing traditional suburbs
Homes values in some urban areas in the United States are outpacing the value of homes in the suburbs in most top tier metros, new analysis has found. City life is gaining in popularity and high-end condos are popular in Boston, Washington, D.C., Seattle, and other cities with fast changing downtowns, according to a report from real estate firm Zillow. It points out that homes in the suburbs, a longstanding symbol of the American Dream, have typically been worth more, on average, than homes in urban areas. While that is still true in much of the country such as Nashville, Cincinnati, Ohio, and Richmond in Virginia, elsewhere things are changing. The change is most marked in in Boston, Washington, D.C., and San Francisco where the mean value of urban homes has recently surpassed the mean value of homes in suburban areas. And urban homes are gaining ground in Denver, Phoenix, and Chicago. The shift reflects demographic trends of millennials delaying family life and choosing condos, and shifting preferences, as people seek walkable neighbourhoods with urban amenities, the research suggests. It has vast implications for low income people who have traditionally lived in cities to be near services and employment. Zillow recently found that, in San Francisco and Seattle, high income people are making shorter commutes to downtown, while low income people are traveling much further to get to work in the urban core. Zillow based its analysis of urban and suburban home values on a survey of how people define their own neighbourhoods as either urban, rural, or suburban and then used characteristics of those places to extrapolate the results and define ZIP codes all over the country. By looking at home values within those areas, Zillow could see how home values have fared in each type of place over the years. ‘This trend, in part, reflects home buyers' changing preferences, as they seek amenity-rich, dense and walkable areas that are often closer to their workplace,’ said Zillow chief economist Svenja Gudell. ‘In the future, this lifestyle trend will change some suburbs as we know them, and they'll start to feel more urban as buyers move further from city centres in search of affordable housing in communities that still feel urban,’ she added. Nationally, suburban home values grew 5.9% in 2015, while urban home prices increased by 7.5%. In 1997, urban home values grew at 3.8%, slower than suburban values which grew 4.1% that year. On a per square foot basis, home values for urban areas are way up, indicating that people are willing to pay more for less space to live in the city. In Washington, D.C., for example, urban homes in 1996 cost 6% more per square foot than suburban homes. Today, they cost 41% more per square foot. Continue reading
Stamp duty change led to super prime sales in London falling by a third in 2015
The number of super prime £10 million plus property sales in London fell by a third in 2015 as the impact of a stamp duty increase at the end of 2014 made buyers more price sensitive. However, the latest research report from international real estate firm Knight Frank says there are indications vendors have started to factor in higher transaction costs and the annual decline was accentuated by a series of deals before the new rates came into effect in December 2014. The number of Knight Frank super prime transactions fell 16% over the same period as the stamp duty increase meant the transaction tax on a £10 million property rose to £1.1 million from £700,000, or an additional 4% of the sale price. The report points out that the 2014 reform is likely to be followed in April 2016 by a further three percentage point increase for buy to let properties and second homes. However, according to the report the resulting slowdown in activity, there are signs the market has begun to absorb the 2014 changes and asking prices that increasingly reflect the more subdued state of demand have ended the stand-off between buyers and sellers. The report suggests that to some extent buyers and sellers have become tired of the inaction and as asking prices become more realistic, buyers have seen the market is flat rather than falling off a cliff and are therefore encouraged to act. But the overriding mood is one of caution and annual price growth in the super prime market remains subdued, standing at 0.5% in December after a marked slowdown in recent years. However, it is suggested that the safe haven appeal of prime central London property continued to support demand in a year marked by economic volatility centred on events in China and geopolitical concerns around the world. There were mixed fortunes for London’s different prime central London markets in 2015. Kensington and Mayfair continued their upwards trajectory in 2015 and both areas grew their super prime market share and Kensington was the largest super prime market in 2015. The report also points out that the high quality of London’s super prime pipeline is evident in the growing share of new build deals done above £10 million, which has gone from a fifth in 2012 to over a third in 2015. Continue reading
Average UK rents up 1.2% in January compared to the same month in 2015
Average rents in the UK rose 1.2% to £906 a month in January compared to the same month in 2015, the slowest increase in three years, the latest rental index shows. But average rents are some 12% above their pre-recession peak, reaching the highest level on record, according to the data from the Countrywide monthly lettings index. The data also shows that London has seen the largest growth in rents anywhere in the country since 2007, with rents 34% higher than their pre-recession record. Between 2007 and 2016 the average Londoner has seen their rent rise from £966 to £1,295 a month. However, despite rising rents, over the past nine years the majority of the country has experienced rents growing steadily in line with incomes. Average income has increased by 12% since 2007 according to the ONS compared to a 12% increase in average rents. But there is a classic North/South divide. In the North West, North East and Wales the average tenant is still paying less than they were in 2007 by £12 a month. Across the UK as a whole, one in five tenants is still paying less rent than they were in 2007. In London rents have grown well beyond incomes. Incomes have only increased by 10% since 2007 in London whilst rents have grown by 34% fuelled by a lack of supply and high demand. As a result tenants have had to either share, downsize or move further from the centre in order to accommodate this rise, the report suggests. It also points out that at current rates of rental growth the three regions where rents remain below their previous peak will see average rents surpass 2007 levels by the middle of 2016. In these regions landlords have increasingly looked to renegotiate with long term tenants, some of whom have enjoyed years without any increase in their rent. This January more landlords were able to increase the rent for tenants who renewed their contract in the North East, North West and Wales than at any time since 2012. In 2007 the average monthly rent for a home in the UK peaked at £809 before the recession hit. Between the end of 2007 and 2008 the average cost of renting a newly let home fell 11%, equating to a fall in the average monthly rent of £87. This brought the cost of renting the average home down to £720. It wasn’t until the start of 2010 that rents started rising again. ‘Nationally rents in January rose at the slowest rate since 2012, as some of the upward pressure on prices subsided and affordability limited further rises. Across most of London and the South East the slowdown in rental growth is the first since 2010, where rents have been growing for the past six years,’ said Johnny Morris, research director at Countrywide . ‘The most sustainable way of creating a more affordable rental market in London and the South… Continue reading
