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US pending home sales up 1.1% in March, but with regional variations
Pending home sales in the United States continued upwards in March and reached their highest level since June 2013, according to the latest index figures. The Pending Home Sales Index, a forward looking indicator based on contracts signed, from the National Association of Realtors climbed 1.1% to 108.6 in March from an upward revision of 107.4 in February and is now 11.1% above March 2014. The index has now increased year on year for seven consecutive months and is at its highest level since June 2013. NAR chief economist Lawrence Yun said that contract signings picked up in March as more buyers than usual entered this year's competitive spring market. ‘Demand appears to be stronger in several parts of the country, especially in metro areas that have seen solid job gains and firmer economic growth over the past year, While contract activity being up convincingly compared to a year ago is certainly good news, the increased number of traditional buyers who appear to be replacing investors paying in cash is even better news. It indicates this year's activity is being driven by more long term home owners,’ he explained. Yun expects a gradual improvement in home sales in the months ahead but says insufficient supply and accelerating prices could be a drawback to sales reaching their full potential. ‘Demand in many markets is far exceeding supply, and properties in March sold at a faster rate than any month since last summer. This in turn has pushed home prices to unhealthy levels, nearly four or more times above the pace of wage growth in some parts of the country. Simply put, housing inventory for new and existing homes needs to improve measurably to improve affordability,’ he added. A breakdown of the figures shows there is considerable regional variation. The index fell 1.5% in the Northeast fell, the fourth month in a row it has done so but is still 0.6% above a year ago. In the Midwest the index fell 2.5% but is 11.3% above March 2014. Pending home sales in the South increased 4% and are 12.4% above last March while the index in the West rose 1.7% in March and is now 15.6% above a year ago. Continue reading
Irish property prices on the rise again and now up 16.8% year on year
After two months of falling prices, property in Ireland is on the rise again with values up 0.9% across the country, according to the latest index. Residential property prices are now up 16.8% on an annual basis and in Dublin they are 22.8% higher than March 2014 after a 1.1% monthly rise. A breakdown of the figures from the Central Statistics Office shows that in Dublin house prices rose by 1% in March whilst apartment prices increased by 2.1%. However, a CSO spokesman pointed out that it should be noted that the sub-indices for apartments are based on low volumes of observed transactions and consequently suffer from greater volatility than other series. Outside of Dublin residential property prices rose by 0.7% in March and prices are up 10.7% compared with March 2014. Prices still need to catch up considerably before reaching anywhere near their peak levels of 2007. At national level prices were 38.2% lower than their peak level. Dublin house prices are 36.9% behind, apartment prices 42.2% lower than their peak and Dublin residential property prices overall were 38.7% lower than their highest level. Outside of Dublin residential property prices are still 41.5% lower than their highest level in 2007. However, the 16.8% overall year on year rise in property prices is the largest annual increase since the height of the property boom and confirms that the real estate market is heading in the right direction in a steady manner. According to Alan McQuaid from Merrion Stockbrokers the monthly declines in house prices in the first two months of 2015 were probably weather related, with the lack of supply the key driver of prices. ‘Although the tighter lending restrictions imposed by the Central Bank and the end of the Capital Gain Tax property purchase incentive scheme may weigh negatively to some degree, it appears that house price growth may be stronger in 2015 than we previously envisaged,’ he explained. He believes that the improving economy should sustain the house price recovery in the short term even with credit restrictions. Continue reading
Legal experts says major changes are needed to meet UK’s chronic housing shortage
Seismic changes are needed if any of the top political parties' housing targets in the UK are to be met in the short or long term, it is claimed. Planning permissions, regulatory requirements, funding, the economy and lack of skills have all added to the current housing shortage, according to Rosemary Edwards, partner and head of residential development with corporate solicitors Shulmans LLP, who has acted for many of the UK's top house builders for over two decades. ‘I have heard of many major house builders being accused of land banking but this is patently ridiculous. A house builder's business is entirely based on selling homes. If they can build them and sell them, why would they hold back?’ she said. In reality a house builder will struggle to sell more than say 40 houses a year on any one site, so natural market forces mean that a scheme of 200 houses may take five years to build out. Increased planning and regulatory hurdles have added time and cost, such as the new Community Infrastructure Levy, now effective in some districts, including Leeds. Staff shortages in local authority planning departments can also add to delays,’ she explained. She also pointed out that there is also the problem of mortgage finance. ‘We may say that we need 200,000 new houses or more each year, but not everyone who wants a house can afford one and mortgage eligibility criteria have tightened up considerably in recent years,’ added Edwards. According to Tim Halstead, Shulmans' managing partner and a nationally acknowledged authority on house building, while there's a great deal of talk about building on brownfield sites, doing so throws up as many problems as it supposedly solves. ‘Such sites often have several land owners, so you have to bring them all together or persuade the local authority to exercise compulsory purchase powers. That all takes time and of course you have to build houses, where people want to live which may not be on a former industrial site,’ he said. ‘There is often the added complication of expensive clean-up of contamination or increased costs arising say from digging out old foundations. Those costs can make schemes unviable without subsidy. As long ago as the 1980s we worked on a site in Hull that got a central government grant of £20 million but there just isn't that kind of money around right now,’ he added. Halstead also pointed to a chronic UK skills shortage being another factor in the low numbers of new houses being built. ‘Many skilled construction workers left the industry during the recession. You can't just click your fingers and bring in an endless supply of tradesmen to get new houses built,’ he explained. ‘House builders are now competing, more so than ever before, to recruit skilled labour and to maintain relationships with quality contractors and suppliers. That drives up costs and can cause delays,’ he added. Recent proposals include encouraging small and medium… Continue reading
