Tag Archives: crisis
Metro area home prices soar in US with first plus $1 million median value recorded
Home prices are continuing to rise in the United States with the median value for a single family home reaching more than $1 million in a metro location for the first time. The record prices was reached in San Jose, California, while the vast majority of metro areas seeing prices rise in the second quarter of 2016, the data from the National Association of Realtors shows. Overall the median existing single family home price increased in 83% of measured markets, with 148 out of 178 metropolitan statistical areas showing gains based on closed sales in the second quarter compared with the second quarter of 2015. Just 29 metros recorded lower median prices from a year earlier and 25 saw double digit increases. According to Lawrence Yun, NAR chief economist, a faster pace of home sales amidst languishing inventory levels has pushed home prices higher in most metro areas during the second quarter. ‘Steadily improving local job markets and mortgage rates teetering close to all-time lows brought buyers out in force in many large and middle tier cities,’ he said. ‘However, with homebuilding activity still failing to keep up with demand and not enough current homeowners putting their home up for sale, prices continued their strong ascent and in many markets at a rate well above income growth,’ he added. The national median existing single family home price in the second quarter was $240,700, up 4.9% from the second quarter of 2015, which was previously the peak quarterly median sales price. The median price during the first quarter of this year increased 6.1% from the first quarter of 2015. Total existing home sales, including single family and condos, rose 3.8% to a seasonally adjusted annual rate of 5.5 million in the second quarter from 5.3 million in the first quarter of this year and are 4.2% higher than the 5.28 million pace during the second quarter of 2015. ‘Primarily from repeat buyers moving up or trading down, existing sales increased each month last quarter and could’ve been even higher if not for a few speedbumps. Closings were slowed a bit by meagre supply levels and home prices in many areas that are still rising too fast,’ Yun explained. At the end of the second quarter, there were 2.12 million existing homes available for sale, which was below the 2.25 million homes for sale at the end of the second quarter in 2015. The average supply during the second quarter was 4.7 months, down from 5.1 months a year ago. According to Yun, without enough new construction being built, existing inventory seriously failed to keep up with the growing demand for buying. As a result, homes typically stayed on the market for around a month throughout the second quarter and over 40% of listings sold at or above list price, with June being the highest share since NAR began tracking in December 2012. Yun pointed out that many listings in… Continue reading
Stamp duty change more of an impact than Brexit on prime central London
Stamp duty change is more of an issue for the prime central London sales market than the UK leaving the European Union, new research suggests. However, the vote to leave the EU has created a backdrop of short term uncertainty that is affecting behaviour in the prime central London property market. As a result prices are now down 1.5% compared to a year ago and the number of new prospective buyers has fallen by 6.2% over the same period, according to the latest index from real estate firm Knight Frank. The index report also shows that the number of exchanges, including new build properties, fell by 10.5% in the first half of 2016 but the number of viewings was 40.8% higher than in 2015. However, the sub-£1 million market registered a relatively stronger performance, with annual price growth of 1.1%. According to Tom Bill, head of London residential research, early indications suggest the Brexit vote is reinforcing existing pricing trends and viewing the referendum in the context of the preceding two-year period is helpful. In June 2014, annual growth in prime central London was 8.1%, the last peak before a period that saw growth fall steadily to -1.5% in July 2016. ‘This slowdown was a natural consequence of strong price rises between 2009 and 2013, however the process was accelerated by two stamp duty increases and a series of other tax measures,’ said Bill. ‘Despite the widespread media coverage devoted to the EU referendum and its potential impact on house prices, the primary factor curbing demand in prime central London remains stamp duty. The result of this two year slowdown is that vendors had already begun to adapt to the new pricing environment and in many cases Brexit has been a trigger to make overdue reductions to asking prices,’ he explained. ‘Indeed, had the result of the referendum been a victory for Remain, it is likely there would have been a similar mismatch between expectations and reality that followed the 2015 general election. Following the formation of a majority Conservative Party government, high stamp duty costs acted as a brake on demand that was widely expected to surge. Since the vote, a number of buyers have requested discounts due to the climate of political and economic uncertainty,’ he pointed out. ‘However, where the asking price was set at an appropriate level before the vote, deals are proceeding with no reductions. In other cases, the Brexit vote has encouraged vendors to show increased flexibility. It is too early to say whether the reductions are likely to trigger higher transaction levels,’ he added. Bill also pointed out that there is no uniform picture across London and the situation is compounded by thin trading during seasonal summer lull. However, it is possible to see the benefit of recent downward repricing in some markets. In Belgravia overly ambitious vendor expectations, which had led to weak trading over the past two years, has been replaced by a more realistic approach from… Continue reading
Call for stamp duty on property purchases in UK to be abolished
A new report calls on the government to undertake real reform to tackle the housing shortage in the UK and in particular to abolish the stamp duty payable on home purchases. According to the TaxPayers' Alliance successive governments have avoided meaningful reform, instead focusing on tinkering around the edges which has only served to worsen the situation and drive up prices. It says that recent tax changes will drive up rents and the recently implemented 3% stamp duty additional homes surcharge and new restrictions on finance cost relief will also advantage richer prospective buyers at the expense of poorer tenants. The TPA says stamp duty is an unfair tax which stops people from buying their own home, settling down with a family, moving for work or downsizing and makes the dream of home ownership ever more distant for millions of families. The report explains that the 3% stamp duty additional homes surcharge will help prospective buyers but it will hurt tenants in rented accommodation and the restriction of finance cost relief for individual landlords will also advantage prospective buyers at the expense of tenants. It believes that both policies will distort housing markets, with implications for incomes, employment and overall welfare and the tax hikes make Britain’s complex tax system even more complicated and distort ownership structures. Other local policy choices such as increasing the cost of houses in multiple occupation (HMO) licences and introducing landlord licencing schemes will hit tenants and as existing owner occupiers take advantage of lower house prices this will result in a tightening of supply conditions in the lettings market, raising rents. The report calls for the stamp duty surcharge to be cancelled, for all stamp duty rates to be halved immediately in a run up to the tax being abolished and reform to planning restrictions to declassify some green belt land and allow taller, denser construction in urban areas. It explains that pressure needs to be taken out of the housing market by making land available for development less rare and less expensive to build on and says that declassifying just 5% of the green belt around London would allow the city to expand by almost a sixth. ‘For decades politicians have failed to tackle the root causes of the housing crisis: a chronic lack of supply. What's more, Stamp Duty is still punitively high and gimmicky tweaks to the tax system will ultimately end up penalising tenants and increasing rents,’ said Jonathan Isaby, chief executive of the TaxPayers' Alliance. ‘The new Chancellor should now seize the opportunity to drastically simplify and reduce property taxes as well as liberalise planning restrictions, which prevent huge swathes of land from being built on for no good reason at all,’ he added. David Cox, managing director of the Association of Residential Lettings Agents (ARLA) said he would welcome a renewed debate on property tax. ‘ARLA has been consistent in our view that increasing tax for landlords will increase rents and reduce property standards… Continue reading
