Tag Archives: investments
UK first time buyers deposit saving scheme criticised
Concerns have been raised about the UK’s Help to Buy Isa which is aimed at first time buyers saving towards a deposit for their first home. When the scheme was announced last year by then Chancellor George Osborne it was assumed that young people would receive the extra money put in by the Government towards the purchase of a home as part of their deposit. With the average deposit on a first home around £15,000 the Chancellor announced that if first time buyers saved £12,000 they would get the next £3,000 paid for them. But now it has emerged that the scheme will no pay out before a home is actually purchased, leaving first time buyers needing to save the whole £15,000 before they can actually complete a home purchase. The small print of the Government's flagship Isa states that the bonus will not be paid out until the sale is complete and a spokesman suggested that it was never designed as a deposit saving scheme but to be put towards the cost of a home overall. It is thought around 500,000 would be home owners have already taken out Help to Buy Isas and they now need to discuss with their banks what will happen when they are ready to receive the promised bonus from the government. Mark Hayward, managing director of the National Association of Estate Agents, said that it has changed the goal posts for first time buyers who have saved in a Help to Buy Isa. ‘Consumers have been putting money aside on the basis that they believed it would be applied to their deposit on a new home,’ he pointed out. ‘To now clarify that it is not actually available until completion is the perfect example of a painful lack of transparency and frankly nothing short of deception. First time buyers are already struggling with getting on to the housing ladder and this much hyped initiative was welcomed at the time as a way of helping them, but in fact could have ended up costing buyers if they have gone ahead with a purchase believing that the bonus counted towards the deposit,’ he added. Continue reading
Negative equity rates down in the US but still affecting one in 10 owners
Negative equity is still affecting more than one in 10 home owners in the United States five years after the nation’s housing market recovery began, new research shows. Home owners who owe more than their homes are worth are nearly equally dispersed among urban and suburban communities in most metros across the country, says the latest report from real estate firm Zillow. But the numbers are falling. Nationally, some 12.1% of mortgaged home owners were underwater in the second quarter of 2016, down from 12.7% in the first three months of the year and below the 14.4% recorded a year ago. A breakdown of the figures show that 13.7% of owners in urban regions are underwater and 11.2% of those in suburban regions while Cleveland and Detroit have the greatest difference between urban and suburban negative equity rates. After the housing bubble burst, nearly a third of home owners in the United States were underwater on their mortgages. As the market recovered, many home owners have gained back the lost value on their homes, freeing them to sell or refinance. In most areas of the country, negative equity is nearly equally spread across urban and suburban areas. In 13 of the nation's largest metros, the share of urban and suburban homeowners who are underwater is within two percentage points. But some metros are seeing notable gaps in the share of underwater homeowners between urban and suburban areas. Cleveland and Detroit have the biggest difference between negative equity rates in urban and suburban neighbourhoods at 13.6% and 10.8% respectively. In these metros, home values in the main urban centres are trailing behind the overall region's recovery, and are still well off from their peak levels. By contrast, negative equity is equally common among urban and suburban areas in the Seattle area, where a more balanced recovery and strong economic growth have led to home values near or exceeding their bubble peak levels in urban and suburban areas alike. ‘At its worst, negative equity touched all kinds of home owners in all kinds of markets. The type of community a given home was in, urban or suburban, mattered little. Fast forward a few years, and the relative vibrancy of a given community and how it has performed over the past few years, and not necessarily its location in the city or suburbs, matters a great deal,’ said Zillow chief economist Svenja Gudell. For the first time, all of the largest markets in the country now have negative equity rates below 20% and the data shows that Western metros with strong job and housing markets have the lowest rates of negative equity. Less than 5% of mortgaged home owners in San Jose, San Francisco, Portland, Denver, and Dallas are underwater. Continue reading
Brexit having more of an effect on Greater London property than rest of UK
Asking prices in the Greater London property market fell by 1.2% between July and August with analysis suggesting Brexit is having more of an impact on the city than other parts of the UK. This is the third monthly fall in a row, with Greater London's average asking prices falling by 1.1% between June and July and by 0.4% the previous month, according to the date from Home.co.uk. The annual rate of price inflation for Greater London property now stands at just 2.5% and falling. The firm is predicting this will fall to 0% within a mere two months, highlighting the very real danger that negative equity is just around the corner. Foreign buyers who purchased a property in London within the last 12 months are probably already in negative equity, the analysis suggests and it points out that in terms of Euros, Greater London home prices have shown a dismal performance over the last year, with values in the region dropping 11% since May and 17% since November last year. However, there is a potential upside that European buyers may be attracted back to the market but house prices and sterling will need to stabilise for that to occur. Housing supply figures from Home.co.uk strongly suggest further price falls are inevitable in the capital as Greater London vendors overload the property market in the aftermath of June's Brexit vote. Between July 2016 and July 2015 new listings in London increased by 27%, compared to a year on year rise of 6% the month before. The typical time on the market has also risen sharply from 68 days in July to 73 days in August, forcing vendors to further cut prices in a property market that was already in a precarious position through buy to let taxation changes and warnings about overvaluation. The South East of England, where in August asking prices fell by 0.2% for the second month in a row, is showing signs of becoming the next property price slump hot spot, as panic selling in the capital spreads out into the capital's commuter belt and beyond, the report also suggests. Between July 2015 and July 2016 the supply of property for sale in this region rose by 19% and the firm is predicting that the South East's typical time on the market of 63 days is likely to rise markedly due to the boost in supply in this region. ‘It is clear that the referendum result certainly unnerved many investors. We will be keeping a particularly close eye on the London market over the next month, watching whether or not the surge in new listings becomes a stampede,’ said Doug Shephard, director at Home.co.uk. ‘This would inevitably lead to a home price crash in the region and stress mortgage lenders to the limit or beyond. Property investors would be well advised to weather the storm and not join a rush to market,’ he added. Continue reading
