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Property prices in Scotland down slightly in run up to Brexit, but up 4% year on year

Residential property prices in Scotland increased by 4% year on year in June but fell by 0.4% month on month, according to the latest data to be published. Overall prices flattened slightly in the run up to the European Union referendum with the first monthly decline since February but it was still the largest annual growth rate since May 2015, says the Your Move Acadata index. While monthly house prices were down compared to May, the average price of property was £170,404 in June, still 0.97% higher compared to the start of the year. A breakdown of the figures shows that a number of areas did not see prices fall in June, most notable Aberdeen where a fall in oil prices have hit the city hard in recent months, but it saw prices rise by 1.6% month on month. Prices increased month on month by 3.8% in Glasgow, by 2.8% in East Dunbartonshire, by 2.5% in Stirling, by 2% in Shetland, by 1% in Moray, by 1.3% in South Lanarkshire, by 1.2% in North Lanarkshire, by 0.5% in Argyll and Bute, by 0.4% in West Dunbartonshire, by 0.2% in Renfrewshire, the Borders and East Ayrshire, by 0.1% in South Ayrshire and North Ayrshire and were unchanged in Edinburgh. Prices fell by 6.4% in Inverclyde, by 5.9% in Fife, by 5% in Perth and Kinross, by 3.9% in East Lothian, by 3.5% in Dumfries and Galloway, by 3.3% in Orkney, by 3% in West Lothian, by 2.4% in Dundee, by 2.4% in Clackmannanshire, by 2.3% in East Renfrewshire, by 1.8% in Midlothian, by 1.3% in Aberdeenshire and by 0.1% in Falkirk. Christine Campbell, Your Move managing director in Scotland, pointed out that the data covers the period up to the end of June, so any impact from Brexit is not yet reflected in the figures. ‘What we can see is that the underlying fundamentals of the market remain strong. We’re benefitting from record low mortgage rates, high employment levels, and high demand for property. Following April’s introduction of the 3% tax increase on second homes, house prices and transaction figures remain arguably skewed in the second quarter of this year, as buyers pushed to complete before the surcharge came into effect,’ she said. She also explained that June was the first month that the spike in house prices as a result of the 2015 LBTT changes dropped out of the annual figures. ‘This previous distortion in property prices goes some way to explaining the seemingly significant annual price increase we saw this June,’ she commented. ‘Whilst market sentiment remains strong, with continued demand from both buyers and sellers, it will be interesting to watch how potential Brexit implications play into transaction and price figures over the coming months,’ she added. ‘Long term, the outlook for the housing market looks favourable. However, with housing demand continuing to vastly outstrip supply, it is important that we see a concerted focus on building new property to ensure there are… Continue reading

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Negative equity rates down in the US but still affecting one in 10 owners

Negative equity is still affecting more than one in 10 home owners in the United States five years after the nation’s housing market recovery began, new research shows. Home owners who owe more than their homes are worth are nearly equally dispersed among urban and suburban communities in most metros across the country, says the latest report from real estate firm Zillow. But the numbers are falling. Nationally, some 12.1% of mortgaged home owners were underwater in the second quarter of 2016, down from 12.7% in the first three months of the year and below the 14.4% recorded a year ago. A breakdown of the figures show that 13.7% of owners in urban regions are underwater and 11.2% of those in suburban regions while Cleveland and Detroit have the greatest difference between urban and suburban negative equity rates. After the housing bubble burst, nearly a third of home owners in the United States were underwater on their mortgages. As the market recovered, many home owners have gained back the lost value on their homes, freeing them to sell or refinance. In most areas of the country, negative equity is nearly equally spread across urban and suburban areas. In 13 of the nation's largest metros, the share of urban and suburban homeowners who are underwater is within two percentage points. But some metros are seeing notable gaps in the share of underwater homeowners between urban and suburban areas. Cleveland and Detroit have the biggest difference between negative equity rates in urban and suburban neighbourhoods at 13.6% and 10.8% respectively. In these metros, home values in the main urban centres are trailing behind the overall region's recovery, and are still well off from their peak levels. By contrast, negative equity is equally common among urban and suburban areas in the Seattle area, where a more balanced recovery and strong economic growth have led to home values near or exceeding their bubble peak levels in urban and suburban areas alike. ‘At its worst, negative equity touched all kinds of home owners in all kinds of markets. The type of community a given home was in, urban or suburban, mattered little. Fast forward a few years, and the relative vibrancy of a given community and how it has performed over the past few years, and not necessarily its location in the city or suburbs, matters a great deal,’ said Zillow chief economist Svenja Gudell. For the first time, all of the largest markets in the country now have negative equity rates below 20% and the data shows that Western metros with strong job and housing markets have the lowest rates of negative equity. Less than 5% of mortgaged home owners in San Jose, San Francisco, Portland, Denver, and Dallas are underwater. Continue reading

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Brexit having more of an effect on Greater London property than rest of UK

Asking prices in the Greater London property market fell by 1.2% between July and August with analysis suggesting Brexit is having more of an impact on the city than other parts of the UK. This is the third monthly fall in a row, with Greater London's average asking prices falling by 1.1% between June and July and by 0.4% the previous month, according to the date from Home.co.uk. The annual rate of price inflation for Greater London property now stands at just 2.5% and falling. The firm is predicting this will fall to 0% within a mere two months, highlighting the very real danger that negative equity is just around the corner. Foreign buyers who purchased a property in London within the last 12 months are probably already in negative equity, the analysis suggests and it points out that in terms of Euros, Greater London home prices have shown a dismal performance over the last year, with values in the region dropping 11% since May and 17% since November last year. However, there is a potential upside that European buyers may be attracted back to the market but house prices and sterling will need to stabilise for that to occur. Housing supply figures from Home.co.uk strongly suggest further price falls are inevitable in the capital as Greater London vendors overload the property market in the aftermath of June's Brexit vote. Between July 2016 and July 2015 new listings in London increased by 27%, compared to a year on year rise of 6% the month before. The typical time on the market has also risen sharply from 68 days in July to 73 days in August, forcing vendors to further cut prices in a property market that was already in a precarious position through buy to let taxation changes and warnings about overvaluation. The South East of England, where in August asking prices fell by 0.2% for the second month in a row, is showing signs of becoming the next property price slump hot spot, as panic selling in the capital spreads out into the capital's commuter belt and beyond, the report also suggests. Between July 2015 and July 2016 the supply of property for sale in this region rose by 19% and the firm is predicting that the South East's typical time on the market of 63 days is likely to rise markedly due to the boost in supply in this region. ‘It is clear that the referendum result certainly unnerved many investors. We will be keeping a particularly close eye on the London market over the next month, watching whether or not the surge in new listings becomes a stampede,’ said Doug Shephard, director at Home.co.uk. ‘This would inevitably lead to a home price crash in the region and stress mortgage lenders to the limit or beyond. Property investors would be well advised to weather the storm and not join a rush to market,’ he added. Continue reading

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