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Property sales in England and Wales surged in October, according to latest index
The property market in England and Wales has shrugged off the general slowdown as sales surged 9% in October, according to the latest LSL/Acadata house price index. Prices were up 0.7% in October and 10.5% year on year but this annual figure drops to 5% if data from London and the South East is excluded. It takes the average house price to £277,390 and average house prices across England and Wales have reached a new record for the sixteenth successive month. The data also shows an uplift in activity outside of London has helped drive the highest number of completed home sales in seven years but prices have fallen at the top end of the London market. ‘This increased level of house sale completions marks a considerable, though laborious, reflection of the increased buyer activity earlier in the year since the recession zapped the energy from the market,’ said David Newnes, director of Reeds Rains and Your Move estate agents. ‘October saw the highest level of house sales completed in a month since November 2007. In part this was driven by a better throughput of sales that had sat in the pipeline for some time, finally coming through to completion,’ he explained. ‘On a monthly basis, house price inflation has edged up from just a 0.3% increase in September, as we see some modest growth. Recent hiccups in the market have not shaken the overall underlying stability and the average UK home owner has seen the value of their property rise £26,500 or 10.5%) in the past year,’ he explained. He also pointed out that the biggest uplift in completions in the third quarter of 2014 compared to the same period of 2013 has been witnessed outside of London. Indeed, completed house sales in both the West Midlands and East Midlands have risen 22%, while in London house sale completions are up by just 3% over the same period. In regions such as the North and East Anglia, which saw average house prices slump during September, further growth in activity is critical to warm up the local recovery. First time buyers in particular need shielding from any future cooling interventions from the government or Bank of England. However, the regions have seen a more complex path of growth. Only three regions saw house prices set peak highs. These were the South West, South East, and London as the recovery continues to advance with a Southern leaning slant. ‘If we omit London and the South East from our calculations, a milder 5% annual change in property prices emerges. Yet at the very top end of the housing market in prime central areas of London, growth is subsiding. Average house prices across London overall rose by only 0.4% in September, the smallest monthly increase the capital has seen for 15 months as the pace of price inflation cools down from the summer heat,’ said Newnes. ‘Property prices have dropped in six out of the seven most expensive boroughs over… Continue reading
Prices dip in prime outer London as election cools demand
Prices in prime outer London fell in October, ending a period of 40 consecutive months of growth, according to the latest report from Knight Frank. A decrease of 0.2% was the first fall since May 2011, which meant annual growth slowed to 10.1% from 11.8% in September. Despite the fact annual growth eased, it exceeded the figure of 8.4% in October last year. Knight Frank forecasts growth in prime outer London will slow to 3% in 2015, predominantly due to the possibility of a mansion tax after the general election in May next year, though we expect cumulative growth of 26% between 2015 and 2019 as demand continues to exceed supply. Doubt also surrounds the timing of an interest rate rise even though weak wage growth and low inflation means the likelihood of a near term increase has receded. ‘The combination of this uncertainty and the fact prices have risen strongly over a prolonged period of time means annual growth will unavoidably slow, which it has been doing since the summer,’ said Tom Bill, He pointed out that in many cases, more realistic asking prices have re-awakened the interest of buyers. The most marked decrease was in Fulham where prices fell 1.1% in October. The area has a high number of houses worth between £2 million and £4 million, which could potentially be liable for mansion tax. Meanwhile, there was growth in east London, with prices increasing by 0.4% in Wapping and 0.1% in Canary Wharf in October, the only two Knight Frank offices in prime outer London to record a rise. Bill explained that both areas benefit from their relative proximity to London’s two financial centres of the City and Canary Wharf, the fact they have fewer £2 million plus properties and the emergence of high quality new build schemes in east London that lifts prices in the re-sales market. Rental values fell 0.1% in October and the annual decline was 0.9%. Despite the decrease, demand rose in the third quarter of 2014, which meant quarterly growth remained positive, as figure two shows. Meanwhile, yields jumped by the most in over three years to 3.59%, their highest level in seven months. The Knight Frank Prime Outer London Index, established in 1997, is the longest running and most comprehensive index covering the prime outer London residential marketplace. The index is based on a repeat valuation methodology that tracks capital values of prime outer London residential property. Continue reading
US real estate price growth slows to more realistic level, says latest index
Home value growth has peaked in the United States and the cooling real estate market has banished concerns about a property bubble, according to experts. Home values are still rising in most markets, but the rate of appreciation has slowed considerably, making the housing market less competitive for buyers, according to the latest data from real estate firm Zillow. It means that home buyers who have been priced out of hot markets will welcome the cooling off, and the most recent data should further combat worry about another housing bubble. The rate of annual home value appreciation peaked at 8.1% in April and has fallen in every month since. That means that US home values were up 6.5% year on year at the end of the third quarter, to a Zillow Home Value Index of $176,500. The rate of appreciation is expected to continue to slow. Home values are forecasted to grow at 3%, roughly half their current pace, through the end of the third quarter of 2015, according to the Zillow Home Value Forecast. As the market cools, the dynamic between buyers and sellers is also changing. At the end of the third quarter, there were 18.6% more homes on the market than last year, and more homes listed recently had a price cut. In September, nearly 37% of listings on Zillow had at least one price cut in the past month, up from 33.6% in September 2013. The softening market means home buyers will find less competition. The pace of home value appreciation dropped off significantly in markets that had been among the hottest at times during the housing recovery, particularly in California and the Southwest. In Los Angeles, home price appreciation slowed from 18.5% annually in the third quarter of 2013 to 8.3% over the past year. Annual appreciation in San Francisco slowed to 8.2% compared to 23.5% over the same time period last year. ‘What a difference a year makes. At this time last year, we were worrying about a number of frothy markets that looked like they could be on the edge of another housing bubble, places where homes were appreciating at more than 20 percent per year and where buyers' heads were spinning just trying to keep up,’ said Zillow chief economist Stan Humphries. ‘We always knew these market conditions couldn't last, and it's good to see us now on a more natural and sustained glide path down toward more normal market conditions of roughly 3% annual appreciation and more balance between buyers and sellers,’ he explained. ‘Home values should continue to grow, but that growth will increasingly be driven by traditional market fundamentals like household formation and job growth, and less by artificial stimulants like decreased supply and widespread investor demand,’ he added. Nationally, rents rose 3.5% year on year in the third quarter, to a Zillow Rent Index of $1,335, rising 1.8% compared to the second quarter. Continue reading
