Tag Archives: financial
Average UK home changes hands every 23 years, new research shows
The average home in the UK changes hands every 23 years and while this may seem not very often it is almost three times longer than in the 1980s, new research shows. The low housing turnover is driven by people buying their first homes later, a larger private rented sector and the baby boomer ‘hoarding effect’, according to the annual report from the Intermediary Mortgage Lenders Association (IMLA). The report, which examines trends in the mortgage and housing markets in order to assess the strength of the post-recession recovery, also shows that annual turnover of the private housing stock fell from over 12% to 4.5% over the last three decades. As a result, IMLA’s analysis indicates the average home currently changes hands once every 23 years compared with every eight years during the 1980s. The IMLA report argues that low housing turnover is driven by a combination of people buying their first homes later; by a larger private rented sector where turnover is lower; and by the baby boomer ‘hoarding effect’ where middle aged home owners are staying put, tying up a large part of the housing stock. These factors are likely to keep turnover down for the foreseeable future, potentially limiting mortgage lending and restricting access to existing properties. IMLA’s analysis also shows the estimated contribution of mortgage finance to the total value of UK housing transactions hit a new all-time low of 41.7% last year. It means just £4.17 of every £10 spent on house purchases in 2014 was funded by mortgages while cash or equity made up £5.83 or 58.3%. Despite forecasting a slight increase in gross mortgage lending over the next two years, the IMLA expects the estimated contribution of cash, including deposits and cash purchases, to housing transactions will exceed 60% for the first time on record by 2016. ‘These figures paint a picture of a housing market where turnover has drastically slowed in the last thirty years. Quite simply, in the absence of a sustained rise in housebuilding and improved affordability and turnover, the fact that properties are coming onto the market less frequently severely limits the scope for would-be first time buyers to graduate to owning their own homes,’ said Peter Williams, IMLA executive director. ‘Inertia in the property market spells danger for future owner-occupation levels, and the growing influence of cash and equity is sowing the seeds of a permanent social divide. Having said that, we will see some continued growth in mortgage lending and as the market stabilises and wages rise, we may also start to see affordability improving,’ he added. The report also assesses how the mortgage market recovery has been tempered in the last year by worsened housing affordability and tighter lending restrictions since April’s implementation of the Mortgage Market Review (MMR) and October’s macro-prudential changes prompted by the Financial Policy Committee (FPC). While gross mortgage lending was running 36% up year on year in January 2014, it was… Continue reading
Residential rents in Scotland rising at slowest pace for over two years
Scottish rents have increased by just 1.1% in the year to February 2015, their slowest pace for over two years, according to the latest buy to let index. But despite this slower and more affordable pace of rent growth in Scotland, the financial health of tenants has declined over the same period, and February saw the highest proportion of late rent since December 2012. The Scotland buy to let index from letting agent network Your Move, also shows that the average residential rent across the country has increased only £6 in the last year, reaching £537 per month in February. This represents a significant downtrend in annual rent rises, which peaked at 4.3% a year previously in February 2014 equal to a £21 annual boost in cash terms. On a monthly basis, Scottish rental prices have climbed a modest 0.2% since January, but this marks the first monthly rent rise witnessed since November 2014, as the market had slowed down. ‘Such an incremental rise in Scottish rents over the past year shows admirable stability in the private rented sector. Despite high demand for homes to let in the face of the current housing shortage, rent inflation in the lettings market has remained remarkably affordable for tenants,’ said Brian Moran, area lettings director at Your Move. ‘After cruising along on a pretty even keel until late 2012, we then saw steep rent rises stack up against tenants as the abolition of tenancy fees in Scotland knocked the market out of kilter. The Scottish private rented sector has subsequently been on quite a rollercoaster ride, but rent growth has its feet firmly on the ground once again, and is making steady strides forward,’ he explained. ‘But while improvements in the affordability of the lettings market mean that tenants are able to keep up with rent rises, other economic factors are holding them back from making solid financial progress and continuing to drag tenants into the red,’ he added. A breakdown of the figures shows that rents are now higher than a year ago in three out of five regions of Scotland. Edinburgh and the Lothians have experienced the strongest annual rent growth, with prices climbing 2.5% in the 12 months to February 2015. This is closely followed by Glasgow and Clyde where rents are up 2.3% year on year. The East of Scotland saw a 2.2% annual rise in average rents, setting a new record of £530 per month. However, rents have fallen in two regions in the past year. The Highlands and Islands experienced the biggest annual drop in average rents, falling 1.6% while monthly rents in the South of Scotland are 1.5% lower than in February 2014. On a monthly basis, rents have increased in just two out of five regions of Scotland. For the first time in eight months, rents in the South rose on a monthly basis, up 1.3% since January 2015 to £489. In the East of Scotland rents climbed… Continue reading
Stamp duty changes in UK push first time buyer deposits to 18 month high
First time buyer deposits in the UK have increased by 15% in a year to average almost £30,000, driven by lower stamp duty bills for new buyers, according to the latest analysis. The average first time buyer deposit was £29,127 in January, up 7% compared to December 2014 and 15% higher than £25,314 in January 2014, the first time buyer tracker report from estate agents Your Move and Reeds Rains shows. The data also shows that first time buyers are saving the largest amount for their deposit since July 2013, some 18 months ago, as savings from December’s stamp duty changes take effect. This has also helped drive rising purchase prices for first time buyer homes, which have climbed to a new record. New buyers paid an average of £160,304 in January, 12% more than £143,343 a year ago. Revisions to the stamp duty slab system have reduced the upfront costs for many first time buyers, allowing them to divert that cash into a deposit fund. First time buyers paying the average purchase price would have been liable for stamp duty fees of around £1,600 before the graduated system was implemented, but this would now have been reduced to £700, saving them roughly £900. The report also says that simultaneously, as wages start to see a significant pick-up in real terms, growing purchasing power is reflected in the average first time buyer Loan to Value ratios and these have fallen 1.1% over the last three months, suggesting deflation and growing wages are allowing first time buyers to put together slightly larger deposits. Despite this, the average loan to income ratio for first time buyers has risen on an annual basis. On average, deposits now represent 75.4% of a first time buyer’s income, compared to 70.6% a year ago. ‘A fusion of economic factors is alleviating some of the financial burden of forming a deposit. Wages are starting to recover and inflation has fallen to a record low, meaning buyers have slightly more cash to play with day to day. And stamp duty fees were slashed for many new buyers when the government reformed the old slab system, freeing up further funds. It’s still difficult to save, with savings rates tied closely to the low base rate. But it’s easier to put cash aside than it was a year ago,’ said Adrian Gill, director Your Move and Reeds Rains. ‘However, property prices have pushed a new record for first-time buyers, meaning these extra funds are being diverted directly into larger deposits. Putting together a deposit to buy a property remains one of the most arduous tasks for prospective home-buyers, and schemes like Help to Buy are essential to allow the swathes of buyers reliant on higher LTV mortgages to get onto the housing ladder,’ he explained. The data also shows that there were 21,200 first time buyer… Continue reading
