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England and Wales house prices break new record, even as monthly growth falters
House prices in England and Wales increase £16,446 annually to £290,640, a 6% increase on November last year, according to the latest index figures. But the monthly rate of house price growth fell to 0.6%, slower than the 0.9% monthly uplift seen in October, the data from the Your Move index also shows. Excluding London and the South East, the annual rate of change drops to 4.4% but the capital is not seeing the strongest growth. While the South East overtook East Anglia as the region with the fastest growth in house prices, London dropped to fourth. The index also shows that home sales fell 15% in November, with completed sales for the year still 3.4% behind the same point in 2014. It is predicted that the Stamp Duty 3% surcharge on second homes and buy to let buyers may cause a late winter surge as these kind of buyers hurry to beat the April 2016 deadline for the new higher rate. Adrian Gill, director of Reeds Rains and Your Move estate agents, pointed out that despite being within grasping distance of the £300,000 mark, it may be a few months yet before average prices reach this symbolic level. He also pointed out that house prices in the South East have risen by an average of 7.1% this month, with values increasing in every local authority in the area. ‘It appears that the double digit price rises first seen in the prime London market, then the other London boroughs, are now rippling out even further to London’s commuter towns, with house prices in Reading rising by 18.3% and Luton increasing 17.3%,’ he explained. He believes that the housing market will need a Christmas boost to sales to beat last year’s figures. And the Chancellor’s changes could be the gift required. ‘House prices soared in the five months following Nigel Lawson’s withdrawal of the multiple mortgage tax relief in 1988,’ said Gill. ‘More recently in Scotland, after the Land and Buildings Transaction Tax was announced there was also a surge in the sales of high end properties to beat the deadline. England and Wales may now feel the same forces, as there will be a growth in demand from both first time buyers with extra financial support and buy to let landlords hoping to invest before the tax changes come into force,’ he explained. ‘While the Chancellor has planned to increase the number of houses being built, none of these will be completed in the next few months. As the number of houses on the market is at an historically low level, those rushing for the April deadline will be fighting for a decreasing number of properties. So we could see a spike in both house prices and sales over the normally frosty winter period,’ he added. He said that this potential surge in demand could be most obvious in places like Salcombe, Devon. The town has the highest percentage of second homes in England. In… Continue reading
A quarter of UK home owners call in builders to fix their DIY
UK property owners are spending an additional £42 million a year to salvage work around the home that they’ve tried to do themselves or abandoned midway through. New research from the Federation of Master Builders (FMB) shows that more than a quarter of home owners admit they have started and then abandoned home improvement jobs, with 30% calling in a tradesperson to finish or rescue the job, costing an additional £871 on average than it would have cost if they’d hired professionals at the start. Some 27% claim they have ‘given up’ on a job ever being completed with 19 months identified as the average length of time before a job is abandoned while 40% admit unfinished projects have caused arguments at home. Beyond this, almost 60% don’t even bother starting the work in the first place, continually putting off work that they’ve planned, such as kitchen and bathroom upgrades, painting and replacing windows. One in five say their attempts at home improvement projects have been ‘disastrous’, with 62% of these admitting that DIY building blunders have reduced the value of their property and a further 18% believing their properties are now harder to sell. The biggest disasters came from painting the property themselves, self-installing a kitchen or a bathroom or trying to landscape their garden. When looking at the main reasons home owners have dragged their heels, 55% say they are worried about the cost, while 30% claim they haven’t had time to organise the work. An indecisive 20% can’t decide or agree on what they want, while 17% haven’t been able to find someone to do the work. ‘While it’s noble that people want to have a go at home improvement projects themselves, our research confirms that if you don’t know what you’re doing, you’re risking not just increased costs, but also your property value not to mention your health and safety when it comes to serious builds and renovations,’ said Brian Berry, chief executive of the FMB. ‘Unfinished work and botched DIY attempts are increasingly cited as reasons people turn to FMB members, so we urge home owners to be realistic about what they are capable of doing,’ he added. Continue reading
Negative equity still preventing the full recovery of the US housing market
Despite improvements in the negative equity rate, underwater mortgages are holding back the housing market in the United States from full recovery, especially in hard hit areas, a new report suggests. The rate of negative equity among home owners dropped a full percentage point in the third quarter of 2015, from 14.4% to 13.4%, and down 16.9% from a year ago, according to the latest research from real estate firm Zillow. It said that declining negative equity will allow almost a million newly freed home owners who have not yet refinanced or have been waiting to sell to do so before mortgage rates rise, which will likely happen in coming weeks. It also pointed out that negative equity affects not just the home owners who are underwater, but entire markets where high rates of negative equity are slowing recovery. Negative equity is one of the most persistent reminders of the housing market crash. Home owners who owe more on their mortgage than their homes are worth cannot sell, which holds back markets from recovering. So, some eight years after the housing crash, it remains a major barrier to a full recovery in certain markets. In Las Vegas, for example, 22% of home owners remain underwater, and another 19% are effectively underwater, meaning they have less than 20% equity in their home and therefore can't cover the cost of selling their home and buying another. Las Vegas has had the highest negative equity rate in the country for the past four and a half years, and Kansas City and Cleveland, with 16.6% and 16.8% negative equity respectively, are not far behind. San Francisco and San Jose are the only large markets where less than 5% of home owners are underwater. Almost a million home owners were freed from negative equity in the third quarter of 2015. The improving rate means those people may be able to sell or refinance their homes before mortgage interest rates rise, as they are expected to do in the coming weeks. ‘Negative equity has become almost an afterthought in a handful of the nation's hottest markets, but is holding back the recovery in dozens of large markets nationwide,’ said Zillow chief economist Svenja Gudell. ‘Despite steady declines in negative equity, many cities are still facing tight inventory, especially among entry level homes. Those homes that are available are often not in demand and stay on the market for a long time. This can be extremely frustrating for buyers and sellers alike, as they come face to face with the difficult side effects of negative equity,’ she explained. She also pointed out that negative equity affects individual home owners, but markets with high negative equity rates tend to have fewer homes for sale, especially lower priced homes favoured by first time home buyers. In markets with a lot of negative equity, homes generally take longer to sell than in other places. The top five large metros with the smallest share of underwater… Continue reading
