Tag Archives: real-estate
Chancellor says house prices could fall by up to 18% if UK votes to leave EU
House values in the UK could fall by 10% and up to 18% due to the economic shock that would hit the country if people vote to leave the European Union in the referendum next month, according to the Chancellor of the Exchequer. George Osborne, speaking at the G7 finance ministers’ meeting in Japan, revealed that the forthcoming Treasury analysis on the short term economic consequences of a vote to leave will demonstrate a wide range of negative impacts on families and businesses, including the housing market. It concludes that by 2018, home owners will be hit as growth in Britain’s housing market will be reduced by at least 10% and up to 18% compared to what is expected if the UK remains in the EU, as heightened uncertainty generated by Brexit hits financial markets, consumer confidence and home values. Independent authorities, including the International Monetary Fund, have warned that if Britain votes to leave the EU then mortgage interest rates would also rise because of financial market instability, meaning fewer people being able to get a mortgage and mortgage costs rising for all. The Treasury conclusion follows warnings from Virgin Money’s Chief Executive, the CEBR, S&P, Fitch and Deutsche Bank about the potential negative impact on Britain’s housing market from a vote to leave the EU. The Chancellor said finance ministers from other G7 countries attending the summit in Sendai confirmed that in their assessment, leaving the EU could cause significant financial market turbulence, affecting families and businesses. The Chancellor also challenged the idea that negotiating a new relationship with the EU would be easy if the UK votes to leave, warning that instead it would be a long, costly and messy divorce. In the coming days the Treasury is going to publish analysis of what the immediate impact will be. Osborne also said that mortgages will get more expensive and mortgage rates will go up. ‘If we leave the European Union there will be an immediate economic shock that will hit financial markets. People will not know what the future looks like. And in the long term the country and the people in the country are going to be poorer,’ Osborne said. ‘That affects the value of people’s homes and the Treasury analysis shows that there would be a hit to the value of people’s homes by at least 10% and up to 18%. And at the same time first time buyers are hit because mortgage rates go up, and mortgages become more difficult to get. So it's a lose-lose situation,’ he pointed out. ‘We all want affordable homes, and the way you get affordable homes is by building more houses. You don't get affordable homes by wrecking the British economy. And of course if we left the EU, mortgage rates would go up, it would become more difficult… Continue reading
US home sales on track to reach highest pace since 2006 despite market challenges
Relentless supply constraints and home price growth outpacing wages are testing the patience of home buyers in the United State this year, but existing home sales are still on track to come in at their highest pace since 2006. Monthly existing home sales were uneven in the first quarter but still came in at a seasonally adjusted annual rate slightly higher at 5.29 million than last year’s overall annual pace of 5.26 million, National Association of Realtors chief economist told the 2016 Legislative Meetings and Trade Expo. He pointed out that demand has mostly remained strong, especially in the top job producing metro areas and is being upheld by mortgage rates near three year lows and the 14 million jobs gained since 2010. ‘The housing market continues to expand at a moderate pace in spite of the fact that home prices are rising too fast in some areas because of insufficient supply fuelled by the grossly inadequate number of new single family homes being constructed. Pending sales in recent months have remained stable and should support a modest gain in home sales heading into the summer,’ he explained. Yun forecasts existing sales to finish 2016 at a pace of around 5.40 million which would be the best year since 2006 when it was 6.48 million. After rising to 6.8% in 2015, the national median existing home price is forecast slightly moderate to between 4% and 5% this year. Senator Elizabeth Warren told the meeting that college debt is hampering young people from getting on the housing ladder. She explained that seven out of 10 college graduates that need to borrow thousands of dollars to attend college and then spend countless years afterwards repaying the debt at high interest rates. ‘Student debt is crushing young people, it’s hurting the nation's economy and delaying the opportunity for many to buy their first home. Every monthly payment going to reducing their student debt could instead be money going towards saving for a down payment on a house,’ she added. Yun remarked that the ongoing absence of first time buyers is the missing link to a full housing recovery despite it being a time when conditions are ripe for a larger share of them buying homes. ‘Job growth has been strong for multiple years, rents have soared in many areas and mortgage rates are historically low. Unfortunately, a multitude of factors such as increasing home prices amidst flat wage growth, the lack of available starter homes and repaying student loan debt is thwarting many young would be buyers,’ he told the meeting. ‘Spectacularly low mortgage rates mean today’s prospective home buyers are the luckiest in a generation but the unluckiest in actually becoming home owners because of the roadblocks hampering their ability to buy,’ added Yun. Warren urged Congress to pass the Bank on Students Emergency Loan Refinancing Act, which would give a much needed break to student debt… Continue reading
Capital city rents edging lower in Australia
Rents in capital cities in Australia increased slightly by 0.1% in April, but overall rental rates edged lower and have now fallen by 0.2% over the past 12 months. This takes the average rental rate to $490 a week for houses and $467 a week for units across combined capital cities, according to the data from the latest CoreLogic monthly rental review report. Five of the eight capital cities saw a modest rise in rents over the past 12 months, including Sydney up 1.4%, Melbourne up 1.7%, Adelaide up 0.5%, Hobart up 1.1% and Canberra up 2.5%. Perth with a fall of 8.9% and Darwin with a decline of 12.6% both experienced large drops in rent rates and have collectively pulled the combined capital average lower while in Brisbane rents dropped by 0.6%. ‘We anticipate that the weakness in the rental market will persist over the year and rents will continue to fall over the coming months. The annual change in rental rates continues to be at its slowest pace since before 1996,’ said Research analyst Cameron Kusher. ‘At the same time last year, rental rates increased by 1.7% which indicates a sharp slowdown in rental growth over the past year,’ he pointed out, adding that factors contributing to a slowing in rental growth include falling real wages, excess rental supply in certain areas and lower rates of population growth, all of which have impacted on demand for rental accommodation. ‘With dwelling approvals at recent record highs and construction activity set to peak over the next 24 months, accompanied by many new properties still to settle, we anticipate that the weak rental market conditions will persist with rental growth continuing to slow and, or, fall in most capital cities,’ Kusher explained. He also pointed out that based on current market conditions, landlords won’t be in a position to lift rental rates and may actually need to reduce rents in order to keep their tenants. ‘We see renters as holding a stronger negotiation position and where they now have the potential to upgrade into higher grades of accommodation for a similar, or lower rents,’ Kusher said. Canberra is the only capital city where the annual rental change is currently stronger than it was a year ago. Kusher said this highlights the weakness in rental market conditions is being felt across all other capital city markets. With rental rates increasing in some cities in April, rates in Sydney, Adelaide and Hobart are at record highs. In all remaining cities, rental rates are now below their highs with the declines recorded respectively down 0.1% in Melbourne, 0.8% in Brisbane, 13.7% in Perth, 17.3% in Darwin and 5.4% in Canberra. The results show that as rental changes outpace home value changes, gross rental yields have trended lower and have hit record lows of 3.3% for houses and 4.2% for units. ‘In our two largest capital cities, we’ve seen rental yields move to record lows of 3.1% for houses and… Continue reading
