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Steady price growth forecast for London’s prime property market
Homes in London’s prime property market are set for steady price growth in the mid term as the market adjusts to new constraints such as tax and inflation, new research shows. Stamp duty reform at the end of last year, very low inflation and the mortgage market review which came into being in 2014 will continue to moderate London’s prime housing markets over the short term, according to the latest five year forecast from real estate advisor Savills. But the fundamentals of wealth generation and demand point to a steady medium term price growth and the key trend will be different patterns of growth across the different tiers of the prime London market. The prime market covers a broad swathe stretching from Ealing in the west to Canary Wharf in the east and from Highgate in the north to Wimbledon in the south, dictated as much by price band as by location. As such, the higher value markets of prime central London, where the average house price in the Savills index is around £5 million, are expected to remain flat next year, but record five year growth of 21.5% given the medium term forecasts for international and domestic economic growth and wealth generation. Prime central London values are currently showing annual price falls of 4.6% but are expected to have largely absorbed the impact of higher stamp duty charges by the end of 2015, to close 2015 some 2% down year on year. Other prime London markets are less impacted by higher stamp duty charges and are expected to see moderate price growth through next year, rising 2%, the report says. However, tighter lending criteria will continue to be a constraining factor for these more domestic markets, capping five year growth at lower 18.2%. ‘The stamp duty reform of December 2014 was a defining moment for the top end of the prime London market, particularly as it was looking fairly fully priced having grown significantly to outperform the rest of the market over a 10 year period,’ said Lucian Cook, Savills head of residential research. ‘It is fair to say that last year’s Autumn Statement took the market by surprise and has essentially prevented any bounce back in values post-election, leaving little scope for significant value uplift next year, particularly in a low inflation environment,’ he explained. ‘As such, we have pushed out our five year forecast by a year to 18 months, building in a period of little or no growth as the market continues to adjust to a new fiscal and regulatory environment,’ he pointed out. ‘Thereafter, we expect the depth of the market and the maturity of London as a global city, coupled with job creation and economic growth forecasts to return to long term trend rates of real price growth, particularly, but by no means exclusively, in core prime central London… Continue reading
Majority of Americans believe in home ownership and are positive about the market
The majority of people in the United States believe that buying a home is a good financial decision, that now is a good time to buy and that they could sell their home for at least its initial purchase price. The survey from the National Association of Realtors which measures consumers' attitudes and concerns about housing issues in the nation's 50 largest metropolitan statistical areas, found that more than eight in 10 Americans are positive about the housing market. Some 68% believe that now is a good time to buy a home, 71% that they could sell their house for what they paid for it, a jump of 16% compared to 2013, the data shows. When asked for reasons about why home ownership matters to them, respondents’ answers have not changed significantly from past years. Building equity, wanting a stable and safe environment, and having the freedom to choose their neighbourhood remain the top three reasons to own a home. ‘Home ownership is part of the American Dream, and this survey proves that dream is alive and thriving in our communities,’ said NAR president Chris Polychron. The research also found that the number of renters who are now thinking about purchasing a home has increased since the last survey in 2013, up from 36% to 39and 61% said that owning a home is a priority for their future. According to the survey 80% of respondents believe that pre-purchase counselling programmes and classes are very or somewhat important. Indeed, 45% of home owners who said they did not take a counselling programme reported they would have taken part in one had it been easily available to them. Attitudes about the housing market have improved in recent years and 49% of respondents indicated that they feel activity in the housing market has increased in the past year, compared to 44% in 2013 and 12% in 2011. The study shows that 89% expect home sales in their area to either increase or remain the same. Concern about foreclosures has also declined, with only 15% of respondents indicating that foreclosure is a major concern. In addition to improved attitudes about the housing market, survey participants also showed an improved outlook regarding the economy. Only 36% think that job layoffs and unemployment are a big problem, a substantial drop from 45% in 2013. Perceived obstacles to home ownership have remained mostly unchanged compared to recent years and 78% of respondents pointed to college debt and student loans as the main obstacle to making a home purchase affordable. On top of this 76% said they have a full time job but still did not make enough money to purchase a home while 74% believe they do not have enough money for a down payment and closing costs. As the market has improved, concern about the cost of housing has increased. Two thirds of survey participants said that home prices are more expensive than they were a year ago. There is… Continue reading
Skills crisis threatens ambitious UK home building programme
A growing skills crisis in the UK building industry threatens the Prime Minister’s ambition to increase home ownership and will undermine wider economic growth, it is claimed. The Prime Minister stated last week that he wants his legacy to be defined by increasing home ownership, but this won’t be possible without an ample supply of skilled construction workers, according to the Federation of Master Builders (FMB). The organisation’s latest survey covering the third quarter of 2015 suggests that a skills time bomb is in danger of exploding with 60% of small construction firms struggling to hire bricklayers, up from 49%three months ago. The research also shows that 54% of firms are struggling to hire carpenters and joiners, up from 47% in the previous quarter. ‘If the skilled labour isn’t available, the Government’s ambitions for home ownership won’t be realised,’ said Brian Berry, FMB chief executive. ‘It’s not just house building and home ownership that are being hampered by the skills shortage. The future economic growth of our country relies on major infrastructure projects, such as HS2 and Hinkley Point, being built,’ Berry pointed out. ‘We urgently need to boost our workforce by convincing people, in their thousands, to return to our industry or join us for the first time. Key to this is the need to address the severe shortfall in apprenticeships,’ he explained. Continue reading
