Tag Archives: australian
Property tax changes in England and Scotland weigh on prime country house market
Prime country house prices in the UK rose by 0.7% between July and September, continuing the modest upward trend of growth that started in early 2013, the latest research report shows. Prices have shifted upwards now for 11 consecutive quarters with annual growth also up slightly to 2.7% on average, up from 2.3% in the second quarter but down from a recent high of 5.2% in 2014. The market continues to feel the impact of the increased cost of stamp duty, following the Autumn Statement in December 2014, according to the report from real estate firm Knight Frank. It says that this continues to weigh on both price growth and activity at the top end of the market. In fact, the latest figures from the Land Registry show that between January and July there have been 35% fewer sales with a value above £1.5m outside of London compared to the same period last year. The prime market below £1.5 million has been less affected by these tax changes and prices for homes in this sector have risen by nearly 4% annually over the year to September. In comparison, over the same time properties priced above £1.5 million, the point at which the 12% rate of stamp duty kicks in, have risen by 2%. Under £1.5 million, price growth has generally been underpinned by demand for homes in urban centres. Price growth in town and city markets including Bristol, Bath and Oxford for example, where buyers continue to be attracted by good schooling, amenities and transport links, has outperformed the wider prime market. ‘There remains a significant price differential between property prices in the prime country market and in London, while anecdotal evidence from agents suggests that there is pent up demand from buyers in the Home Counties and the South West. This could help underpin prices and an increase in activity levels across the market as the year progresses,’ the report says. However, the average prime country house price is still 14% below its 2007 peak. In contrast, prime prices in London are, on average, 34% higher than their previous peak values. ‘The rise in London prices in the last few years means that buyers looking to swap the city for the country are able to get a lot more property for their money, with such buyers able to take advantage of the relative discount which currently exists,’ the report adds. In Scotland the country house market has also been affected by tax changes with the new Land and Buildings Transaction Tax (LBTT) being introduced in April 2015. The report shows that as a result prices fell by 0.7% between July and September, the first time that prime prices have fallen on a quarterly basis in over two years. The report points out that the levy, which replaced Stamp Duty Land Tax, has resulted in a significant increase in purchase costs for buyers in the prime market and adds that negotiations between buyer and… Continue reading
Cooling house market growth in California affects US market as a whole
A California cooling effect could put a freeze on US property market growth with affordability in many of the state’s markets out of reach, says the latest analysis report. Since 2012 price growth in California has buoyed the West of the nation and helped support nationwide prices appreciation, according to the report from Clear Capital, but now there is evidence of cooling price appreciation across the state. It explains that typically, price increases are driven by increases in demand, however, a look at the San Francisco housing cycle shows that between 2011 and 2015 the spike in prices has not been the result of increases in overall transactions. Rather, the tight supply is pushing prices on an upward trajectory placing the market even further out of reach for new buyers. It also shows that in slower growth markets like Los Angeles, a mortgage payment requires upwards of 70% of a potential first time buyer’s income, certainly quelling demand. Even the San Jose MSA’s appreciation, which began experiencing dramatic bubble like growth in 2013, is beginning to slow down with quarterly growth of 2.5%, less than half of the 5.8% quarterly growth seen two years ago. While the West continues to lead in sustained gains, markets outside of California will need to work harder to defend the region’s top position, according to the report. Las Vegas and Portland have both seen boosts of 0.2% in quarterly growth since last month. Denver, Seattle and Sacramento continue to hold steady at 1.7%, 1.6% and 1.5% quarterly growth, the data also shows. The Midwest and South continue to ride the wave of the peak summer real estate season with quarterly growth rates at or above the national benchmark of 0.8%. The South ends the quarter at 0.8% growth, and the Midwest ahead at 0.9%. Subsiding losses in the Southern region is a good sign for a region that has exhibited volatility in price trends, the report points out. The Northeast continues to lag behind the rest of the nation in both quarterly and yearly growth at 0.2% and 2.1% respectively. While most of the MSAs in the region are still experiencing positive quarterly growth, with the exception of Providence with a fall of 0.8%, the rate of growth in markets like Boston and New York are over double that for the rest of the region, driving down affordability. ‘The strong continued growth in the Midwest, South and West, in particular the California Bay Area, suggests strong consumer and investor confidence has been seemingly unaffected by talk of looming interest rate hikes,’ said Alex Villacorta, vice president of research and analytics at Clear Capital. ‘However, if and when interest rates do rise, likely occurring by the end of 2015, it will be timed with a decrease in real estate market activity typical through the fall and winter seasons,’ he explained. ‘Unfortunate pairing will most likely cause a slowdown in price growth for most markets,… Continue reading
UK landlords now have choice of almost 1,000 buy to let mortgage products
The number of available buy to let mortgage products has leapt in Q3, according to the latest Complex Buy to Let Index from specialist brokers Mortgages for Business. Landlords in the UK now have the widest choice of mortgage options on record, almost 1,000 in the third quarter of 2015, a rise of 11% since the previous quarter. On an annual basis this represents an increase of 35% in buy to let mortgage products, according to the latest index from specialist brokers Mortgages for Business. The report also shows that standard ‘vanilla’ buy to let properties already offer the lowest gross yield to landlords, but this has now dropped 0.8% in the space of three months, to the psychologically important level of 5%. On an annual basis, yields on vanilla properties have fallen further by 0.9% since the third quarter of 2014. Similarly, between the second and third quarters of 2015, the yield on a multi-unit freehold blocks (MUFBs) fell from 7.1% to 6.1%. Compared to a year ago, when the average MUFB yield was 8.6%, yields for such properties have seen a 2.5% fall. However, at 6.1%, the absolute level remains considerably higher than for ‘vanilla’ properties. Houses in multiple occupation (or HMOs) have seen yields perform comparably well. Between the second and third quarters HMO yields fell by only 0.1% to 9%. As well as more modest yields overall, this means the spread between the lowest yielding property type (vanilla) and the highest yielding (HMOs) has widened to 4%. ‘The number of new mortgages coming onto the market has rocketed in recent months. There is huge interest in mortgages suitable for limited companies as landlords take advice from their accountants,’ said David Whittaker managing director of Mortgages for Business. ‘Meanwhile, as rents fail to keep pace with racing property prices, yields are continuing to plateau. Returns on vanilla buy to let have now fallen to the 5% mark. Landlords with reasonable borrowing costs and a strong portfolio of these sorts of properties will still be making a solid income from such investments but this changes the case for those considering new purchases. With average yields on HMOs still nearer 10%, more complex property types are likely to attract a growing portion of new investment,’ he explained. The research also shows that remortgaging has outperformed new purchase loans for the fourth quarter running. In the third quarter some 66% of new vanilla buy to let loans were for remortgaging, compared to 34% for new property purchases, a 4% increase in favour of remortgaging since the previous quarter. Similarly, for MUFB properties, remortgaging made up 89% of new mortgages in the third quarter of 2015, compared to 82% remortgaging in the second quarter and just 67% in the third quarter of 2014. In the second quarter new purchases made up just one in 10 mortgages for homes in multiple occupation, some 10%, however, the third quarter has seen the proportion revert to… Continue reading
