Tag Archives: house
Home buyers in London borrowing higher amounts, latest CML data shows
More mortgages were completed and a higher amount borrowed in Greater London in the third quarter of this year than in any quarter since 2007, according to the latest data from the Council of Mortgage lenders. House purchase lending to home buyers increased 12% quarter on quarter in London totalling £7.1 billion, a rise of 15% on the second quarter. Compared to the third quarter of 2013, the number of loans increased 3% and value of these loans increased by 13%. This is the highest quarterly volume in London since the fourth quarter 2007, and the highest amount borrowed since the third quarter of 2007. First time buyers took out more loans and borrowed more in total than in any quarter since 2007 totalling 13,300 loans and £3.3 billion. The affordability levels slightly improved with first time buyers typically borrowed 3.86 times their gross income, less than the 3.90 in the previous quarter but above the UK average of 3.41. The typical loan size for first time buyers was £221,997 in the third quarter, up from £212,500 in the previous quarter. The typical gross income of a first time buyer household was £58,000 compared to £55,255 in the second quarter. First time buyers in London have tended to put down larger deposits than in the UK, typically putting down a deposit worth 24% of the property value compared to the UK average of 17%. In the third quarter, first time buyers paid 21% of gross monthly income towards capital and interest payments, a minor change from the second quarter when it was 21.1%. Due to higher house prices within London compared to the UK overall, there was a continued shift in the mix of properties bought by first time buyers in London towards more expensive properties. In the third quarter, 66% of first time buyers bought properties priced at more than £250,000, up from 63% in the second quarter and 54% in the same period last year. This was significantly higher than the UK overall level of 20%. In the third quarter of 2014, lending to home movers saw larger growth quarter on quarter compared to first time buyer lending, but a slight decline in lending volumes when looking at year on year comparisons. Home movers did however borrow more this quarter than any other quarter since 2007 totalling £3.7 billion. Home mover affordability changed fractionally, with home movers typically borrowing 3.69 times their gross income compared to 3.66 in the second quarter and the 3.05 in the UK overall. The typical loan size for home movers was £290,000 in third quarter, up from £281,000 in the previous quarter. The typical gross household income of a home mover was £83,596 in third quarter compared to £82,614 in second quarter. Home movers in Greater London spent 20.8% of their gross income to cover monthly capital and interest payments, slightly changed from 20.6% in the second quarter and less than the 18.8% UK average. The number of loans advanced for… Continue reading
Home building reaches a new high in Australia
This year has seen a record number of new homes being built in Australia, according to the latest outlook report from the Housing Industry Association. However, the growth in new residential construction has been slower to gather momentum and breadth in terms of both geographical location and dwelling type, it says. According to HIA chief economist, Dr Harley Dale, this means that the ‘look and feel’ of this building cycle is different to historical experience. ‘In aggregate, we will commence nearly 190,000 new dwellings in 2014, surpassing the previous record of 187,000 back in 1994,’ said Dale. ‘The momentum culminating in this milestone has provided a substantial boost to Australia’s economy at a crucial juncture in the cycle. Below trend economic growth and weak labour market outcomes would be considerably worse without the reach a new home building recovery is exerting into the broader economy,’ he explained. He pointed out that against this backdrop the HIA believes it is unfortunate that policy makers have failed to grasp the reform initiative required to compliment record low borrowing costs and send new home building levels higher still in 2015 and 2016. ‘Australia’s economic growth and labour market performance will be weaker than otherwise as a consequence of this lack of policy action. Record low borrowing costs have combined with other factors such as high net overseas migration to unleash substantial pent-up demand for new housing,’ said Dale. ‘These factors will keep the level of new homes commenced at historically elevated levels. However, what the economy needs is further growth in new home building over the next couple of years, but that will only occur as a consequence of taxation and regulatory reform,’ he pointed out. ‘It is still an impressive achievement to build a record number of new homes, at a level that approaches what the average build rate will have to be if we are to adequately house our growing and ageing population in coming decades,’ he said. He explained that renovations investment has not joined the new housing ride this cycle, increasing by only 0.3% in 2013/2014 from a decade low. ‘Unemployment concerns, a lack of available credit, and an elevated household savings rate are but three elements in the current environment which mean there has not been room for a renovations recovery alongside new home building activity and existing property price growth,’ said Dale. But he pointed out that that situation looks to be slowly changing as growth of 0.9% in renovations investment in 2014/2015 is forecast to accelerate to 2% growth in the subsequent three years. ‘That would be a great outcome, but it is a long road back for this important sector of Australia’s domestic economy,’ Dale concluded. Continue reading
Existing home sales in US above year ago levels for first time in 12 months
Existing home sales rose in the US increased in October for the second straight month and are now above year on year levels for the first time in a year, according to the latest report from the National Association of Realtors. Total existing home sales, which are completed transactions that include single family homes, town homes, condominiums and co-ops, rose 1.5% to a seasonally adjusted annual rate of 5.26 million in October from an upwardly revised 5.18 million in September. Sales are at their highest annual pace since September 2013 when they were also 5.26 million and are now above year on year levels for the first time since last October. Lawrence Yun, NAR chief economist, said that the housing market this year has been a tale of two halves. ‘Sales activity in October reached its highest annual pace of the year as buyers continued to be encouraged by interest rates at lows not seen since last summer, improving levels of inventory and stabilizing price growth,’ he explained. ‘Furthermore, the job market has shown continued strength in the past six months. This bodes well for solid demand to close out the year and the likelihood of additional months of year on year sales increases,’ he added. The data also shows that the median existing home price for all housing types in October was $208,300, which is 5.5% above October 2013 and the 32ndconsecutive month of year on year price gains. Total housing inventory at the end of October fell 2.6% to 2.22 million existing homes available for sale, which represents a 5.1 month supply at the current sales pace, the lowest since March. Unsold inventory is now 5.2% higher than a year ago, when there were 2.11 million existing homes available for sale. ‘The growth in housing supply this year will likely prevent the drastic sales slowdown and coinciding spike in home prices we saw last winter due to low inventory. However, more housing starts are needed to increase supply, meet current demand and keep price growth in check,’ said Yun. All cash sales were 27% of transactions in October, up from 24% in September but down from 31% in October of last year. Individual investors, who account for many cash sales, purchased 15% of homes in October, up from 14% from the previous month but below October 2013 when it was 19%. Some 65% of investors paid cash in October. The percent share of first time buyers in October remained at 29% for the fourth consecutive month. First time buyers have represented less than 30% of all buyers in 18 of the past 19 months. A separate NAR survey has found that the annual share of first time buyers fell to its lowest level in nearly three decades. Distressed sales were in the single digits for the third month this year, decreasing to 9% in October from 10% in September and 14% a year ago. Some 7% of October sales were foreclosures and 2% were short… Continue reading
