Tag Archives: lending
US commercial real estate recovery lags behind residential, say agents
The US commercial real estate market still faces its share of challenges but property agents specialising in the sector are confident that marked improvement seen over the last year will continue. At a commercial economic issues and trends forum National Association of Realtors chief economist Lawrence Yun led a panel discussion about the forces shaping commercial real estate markets. The panellists agreed that the market has improved and expressed confidence that continued recovery in the economy will drive commercial real estate growth. ‘Commercial real estate usually recovers two years behind the economy. However, NAR members who practice commercial real estate are seeing a three to four year wait. It has been a long and slow recovery, but it is happening,’ said Yun. The forum heard that there are still headwinds facing the commercial sector. Subpar Gross Domestic Product growth, stagnating wage growth and low employment rates are all affecting demand for commercial properties. Yun explained that improving those underlying fundamentals is instrumental in maintaining a strong commercial market and another major hurdle facing the recovery is the lack of financing available for small investors. While large companies can access financing from Wall Street or international buyers, most financing for smaller investors still comes from regional or local banks and credit unions. Many of those small banks are hesitant or reluctant to give out commercial loans. ‘New financial regulations for all banks, big and small, are resulting in smaller banks bearing proportionally higher compliance costs. The little guys are taking the brunt of this. Maybe there should be waivers for smaller banks so they can give out the loans businesses need and help with community development,’ Yun added. According to Sam Chandan, founder and chief economist of Chandan Economics and associate faculty member at The Wharton School of the University of Pennsylvania, when it comes to multifamily homes Millennials love to rent. They prefer the flexibility and proximity to amenities that comes with renting rather than owning. However, that fails to take into account that while Millennials will always be Millennials, Millennials will not always be in their twenties. You could ask a 22 year old at any point in history if they want to own a house in the suburbs, move away from urban centres, or own a minivan and they will say no. But that answer has changed in the past and it will change again, and the multifamily sector needs to develop a narrative that takes that into account,’ he explained. The same problem is affecting other commercial markets, such as retail. Online commerce has changed the way commercial retail positions itself and attracts buyers. ‘While it’s true that you will never be able to get a haircut online, the same cannot be said for buying books or groceries. We cannot assume that because people always shopped at grocery stores that they will not learn and adopt another way,’ said Chandan. ‘The commercial market needs to develop a narrative that evaluates how… Continue reading
UK first time buyers waiting longer to get on housing ladder, new research suggests
First time buyers in the UK are having to wait longer than planned to take their first step onto the property ladder according to new research. Some 65% have had to wait longer than they hoped to move into their dream home, while only 8% managed to become a home owner quicker than planned, the first time buyer’s survey from Clydesdale and Yorkshire Banks shows. The figures show a slight improvement on the previous 12 months when 68% had to delay getting on the property ladder, however the largest percentage, 17%, of those who are unable to meet their home ownership deadline are waiting between one and two years longer than planned. The challenge to get on the property ladder means that the majority of new home owners plan to stay in their first property for a number of years. Some 21% plan to stay for between four and five years with 19% having no intention of moving from their home for nine to 10 years. In both the Midlands and the North East the largest percentage plan to stay in their first home for between nine and 10 years in comparison to London, South West and Wales where the highest number aim to keep the keys to their first home for between three and four years. ‘Clydesdale and Yorkshire Banks have extensive experience of helping first time buyers get onto the property ladder and we know how difficult it can be to buy your first home,’ said Steve Fletcher, director of retail banking. ‘It is positive that our research shows that there is a small improvement on the previous year, however almost two thirds of first time buyers still face challenges in meeting their own timescales for being a home owner,’ he added. Clydesdale and Yorkshire Banks are currently offering a range of first time buyer mortgages with a £1,000 cashback. These include a three year fixed rate mortgage with a 90% LTV with a rate of 3.59% and a three year fixed rate mortgage with a 95% LTV and rate of 4.89%. Continue reading
Scottish house prices rise twice as fast as in England and Wales
House prices in Scotland have increased by 11.2% in the last 12 months, twice as fast as the 5.6% seen in England and Wales, the latest index shows. In March alone average property prices in Scotland increased by 5.4% or £9,200 ahead of the new Land and Buildings Transaction Tax (LBTT) being introduced in April, taking the average price of a home to £178,930. At the same time completes sales increased 29%, mainly at the top end of the market where the new tax is higher. Indeed, some 36 homes worth £1 million or more were sold, the highest number ever in a single month. Edinburgh and the surrounding area saw an especially strong surged, with East Lothian prices up 11.8% in one month, the Your Move/Acadata index also shows. ‘In what would have been an unimaginable trend just a year ago, house prices are now rising faster in Scotland than in London,’ said Christine Campbell, regional managing director of Your Move. She pointed out that part of the surge was due to a short term scramble to avoid the new LBTT which was introduced on 01 April. ‘For the top of the market especially, a pre-deadline rush has boosted the average price paid in March, so the latest surge in prices is unlikely to be sustained to quite the same extent in April under the new regime,’ she explained. But she also pointed out that even before the one-off effect of looming tax changes, Scottish house prices were rising on an annual basis by 6% in February, already on a par with 6.8% south of the border. As prices cool across the rest of Britain, Scotland has seen the opposite trend, with prices accelerating upwards. ‘Once the new tax regime has become an established feature of the property market, the effects could be different again. On the face of things, there are clear benefits for those buying a home for less than £254,000 as they will have to pay less tax than under the old system,’ said Campbell. ‘But it remains to be seen if this will be quickly countered by higher prices for these properties, as buyers with a little more buying capacity just bid up the average price for these homes. On the other hand, by far the clearest effect is already for the top of the market. There were a record number of million pound transactions in March as wealthy buyers rush to save thousands before the onset of the new law,’ she explained. Continue reading
