Tag Archives: california
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
Not enough new homes are being built in many metro areas in the US
Despite positive improvements in the labour market in recent years, new home construction is currently insufficient in a majority of metro areas in the United States, new research has found. The situation is contributing to persistent housing shortages and unhealthy price growth in many markets, according to the report from the National Association of Realtors. NAR measured the volume of new home construction relative to the number of newly employed workers in 146 metropolitan statistical areas (MSAs) throughout the US to determine whether home building has kept up with the steadily improving pace of job growth in the past three years. The findings reveal that home building activity for all housing types is underperforming in roughly two thirds of measured metro areas and NAR chief economist Lawrence Yun said that low inventory has been a prevailing headwind to the housing market in recent years. 'In addition to slow housing turnover and the diminishing supply of distressed properties, lagging new home construction, especially single family, has kept available inventory far below balanced levels,' Yun explained. 'Our research shows that even as the labour market began to strengthen, home building failed to keep up and is now contributing to the stronger price appreciation and eroding affordability currently seen throughout the US,' he added. The study examined job creation in 146 metro areas from 2012 to 2014 relative to single family and multi-family housing starts over the same period. Historically, the average ratio for the annual change in total workers to total permits is 1.2 for all housing types and 1.6 for single family homes. The research found that through 2014 some 63% of measured markets had a ratio above 1.2 and 72 percent had a ratio above 1.6, which indicates inadequate new construction. According to Yun, with jobs now being added at a more robust pace in several metro areas, the disparity between housing starts and employment is widening. In 2014 alone, the average ratio of single family permits to employment jumped to 3.7, while the ratio for total permits increased 50 percent to 2.4. 'Affordability issues for buying and renting because of low supply are already well known in many of the country’s largest metro areas, including San Francisco, San Diego and New York. Additionally, our study found that limited construction is a widespread issue in metro areas of all sizes,' Yun pointed out. The markets with the largest disparity of jobs versus home construction, single family, and currently facing supply shortages are San Jose, California, at 22.6, San Francisco at 22.4, San Diego and New York, both at 13.9 and Miami at 11.1. Yun explained that while construction is limited in some markets such as Trenton–Ewing in New Jersey and Rockford, Illinois, they aren’t facing inventory shortages despite having high ratios because their job gains are more moderate. Single family housing starts are seen as nearly adequate to local job growth at a ratio of 1.6 in Jackson, Mississippi, Colorado Springs, Chattanooga in Tennessee, Amarillo, Texas, and St. Louis. Looking ahead, Yun said that there’s… Continue reading
Renting a home in the US less affordable than ever, new research suggests
Renting a home in the United States is less affordable than ever before with tenants paying 30% more of their income on paying for their home compared with home owners at 15%, new research shows. Mortgages remain affordable by historical standards while rent is unaffordable in three quarters of housing markets, especially high demand locations in Miami, San Francisco and San Jose, according to the latest report from real estate firm Zillow. It also shows that rental affordability worsened year on year in 28 of the 35 largest metro areas covered by the Zillow index while Denver, Los Angeles, San Francisco, San Jose and San Diego are unaffordable for both renters and buyers. Overall in the second quarter of 2015 renters paid some 30.2% of their monthly income toward rent, the highest percentage ever. Before the real estate downturn tenants could expect to spend about 24.4% of their incomes on rent. In contrast, buyers pay 15.1% of their income towards mortgage payments, which is still less than what they spent historically. From 1985 through 2000, home owners spent about 21.3% of their monthly income on mortgage payments. In Denver and four California metros, both renters and buyers can expect to pay more of their income towards either rent or mortgage payments than in pre-bubble years. In San Jose, renters and buyers should each plan to put about 42% of their incomes towards housing. ‘Our research found that unaffordable rents are making it hard for people to save for a down payment and retirement, and that people whose rent is unaffordable are more likely to skip out on their own healthcare,’ said Zillow chief economist Svenja Gudell. ‘There are good reasons to rent temporarily, for example when moving to a new city, but from an affordability perspective, rents are crazy right now. If you can possibly come up with a down payment, then it's a good time to buy a home and start putting your money toward a mortgage,’ added Gudell. The Zillow report says that mortgage payments will continue to be affordable even if mortgage rates rise as expected. If rates reach 6% next year, home buyers can still expect to spend 30% or less of their income on mortgage payments in 265 out of 290 or 91.4% of the metros Zillow analysed, and mortgage payments will be considered more affordable than in pre-bubble years in 72.1% of metros. Rents, on the other hand, are already unaffordable compared to historic norms in 77% of metros, and with relatively stagnant wage growth, this likely won't improve as rents keep climbing. Continue reading
