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Canadian home sales expected to see gradual rise this year and into 2016
Home sales in Canada are set to see a continued gradual improvement and housing market but oil prices are likely to continue to weigh on the economy and thus real estate confidence. The latest forecast for home sales activity from the Canadian Real Estate Association (CREA) says that in the Prairie region in particular lower oil prices are dampening consumer confidence and side lining potential home buyers. Home sales elsewhere in Canada are continuing to evolve mostly as expected, with the exception of a slower than expected spring market in Nova Scotia due to extraordinarily inclement weather and stronger than expected sales activity across much of British Columbia. It says that low rise property markets remain tight in parts of British Columbia and Ontario. These are the only two provinces where a shortage of listings for low rise homes is expected to fuel average price gains above inflation this year. In other provinces, listings have begun to decline but remain elevated. Average prices across the Prairies, Quebec and the Atlantic region are unlikely to see much in the way of price growth over the forecast horizon as sales gradually deplete listings. The forecast for national sales in 2015 has been revised upward, reflecting stronger than anticipated activity in British Columbia. National sales are now projected to rise by 1.3% to 487,200 units in 2015, which is slightly above its 10 year annual average. British Columbia is projected to post the largest annual increase in activity in 2015 at 12.2% while Alberta and Saskatchewan are expected to post the largest annual sales declines with a fall of 18.2% and 12.9% respectively. Modest changes in annual home sales are forecast for all other provinces. The forecast for national average home price growth has been revised upward to $429,400 for an annual increase of 5.2% in 2015. This reflects forecast average price gains in British Columbia and Ontario together with a projected increase in their proportion of national sales. British Columbia is expected to be the only province where average price rises faster at 8.5% than the national average, while the rise in Ontario’s average price of 5.6% is predicted to be roughly in line with the national increase. Average prices are projected to remain largely stable in other provinces this year, with annual changes ranging between plus or minus 1%. The exception is Alberta, where average price is forecast to slip by 2.8% amid a pullback in higher priced property sales activity. In 2016, national sales activity is forecast to reach 491,200 units, a further annual gain of 0.8%. The increase reflects an anticipated rise in sales activity in Alberta and Saskatchewan, in line with a gradual improvement in their economic outlook. Although sales in British Columbia are expected to remain strong in 2016, it is the only province where they are forecast to moderate by 2.9% due to stretched affordability. ‘Strengthening economic prospects should translate into slow and steady gains in… Continue reading
Rent controls would not work in UK, research suggests
Rent controls and similar policies which are thought to work well in other countries cannot be easily replicated in the UK’s private rented sector, according to findings from a new interim report. The interim report by the London School of Economics and Political Science (LSE) and commissioned by the National Landlords Association (NLA) looks at evidence from the UK as well as from other countries where stronger regulatory policies are already in place, including Germany, Ireland, San Francisco, New York and the Netherlands. It suggests that in Ireland, which apparently provided the model for the Labour Party’s proposals in the run up to last month’s UK general election, controls introduced in the last few years have had very limited effect. The country is experiencing a housing crisis, with rapidly rising rents and a near standstill in new housing production. In Germany, often cited as the best example of a country with a stable private rental sector, the system of indefinite security and in-tenancy rent stabilisation has in the past been cushioned by low house prices and demand. Moreover, initial rents can be well above current market levels in high-demand areas. It also says that in San Francisco and New York the main beneficiaries are older middle class households and the young hardly get a look in. ‘The report is required reading for those such as the Labour leadership and London Mayor hopefuls, who seem to be ignoring both academic evidence and the overwhelming rejection of similar policies by the electorate last month,’ said Carolyn Uphill, chairman of the NLA. ‘Private rented sectors in many countries, regulated or not, are facing major problems in high demand areas. Market fundamentals cannot just be regulated away,’ she added Kath Scanlon of LSE London said the research found clear evidence that inflexible controls reduce supply. ‘But the strongest message was that what may work in one country cannot simply be transferred to a different market and institutional environment,’ she added. During the election there were also calls to abolish business tax relief for buy to let, alongside the introduction of rent controls. However, the LSE report found that where rent controls are already in place the negative impacts are usually offset by a more favourable tax treatment of landlords, an area which the UK falls behind in comparison with other countries. ‘The taxation of buy to let is a touchy subject for some, even though landlords in the UK receive no special treatment compared to other businesses. This report reinforces why successive governments have chosen to treat landlords as businesses. Doing so encourages best practice and, above all, helps to ease the housing crisis,’ Uphill concluded. The full details of the report are due to be published later this year and will include more detail on London. Continue reading
UK asking price discounts falling
The average property for sale in the UK is discounted by 6.05% but by almost 10% in some areas, the lowest figures since 2010. Rotherham has the most properties that sell for less than the asking price at 43.6% while the largest discounts are in Blackpool, according to new research from online property portal Zoopla But despite the lower discounts on offer, some 31% of properties currently on the market for sale have had their price reduced at least once since originally being listed. And that equates to over £2 billion of reductions in total have been made from houses and flats currently on the market across Britain. The top 10 areas with the highest percentage of properties with reduced asking prices are all in the north of England, with more than two fifths of all properties listed. After Rotherham the next location with the highest number of discounts is Preston at 43.2% and then Barnsley at 42.3%. After Blackpool the next location with the largest asking price reductions is Manchester at 8.3%) and Bradford at 7.9% while in London it is 7.4% with typical discounts in the capital city can exceed £75,000. Looking at London in more detail, the neighbouring boroughs of Merton at 28.7%, Richmond-upon-Thames and Croydon, both at 27.3%, have the highest proportion of reduced properties for sale, but those looking for the largest reductions will find them in Havering, a borough soon to benefit from Crossrail, where the typical property price discount is 10.45%. At the top end of the national market, more than a fifth of properties valued over £1 million have been reduced since originally coming on to the market, at an average discount of more than £185,000. ‘Buyers may be disheartened by the decrease in the typical discounts on offer but can take cheer from the fact that almost a third of houses are listed today below their original asking price,’ said Lawrence Hall of Zoopla. ‘This means that despite ever increasing house prices, there is still room for some good, old-fashioned negotiating. On the flip side, vendors can be pretty confident of achieving close to their initial asking price. Zoopla has a unique feature on its website that allows potential buyers to track original asking prices and subsequent reductions,’ he added. Continue reading
