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First UK house price estimates published ahead of new national index in June
The first estimates for the new single official UK House Price Index which will be first published in its entirety in June 2016, have been published. The new improved index has been developed jointly with other official producers of house price statistics following a review by the National Statistician, uses data from, amongst others, the Land Registry and Council of Mortgage Lenders. By using these comprehensive datasets together, as well as by employing the best internationally agreed methods, the new UK HPI aims to give the best and most detailed picture of the UK housing market. For the most recent period, December 2011, the new UK HPI shows an average price level of £185,000 for England and Wales. This is lower than the price recorded by the current Office of National Statistics index for England at £222,000 for the same period. But it is above the equivalent price levels recorded by the Land Registry for England and Wales at £157,000, the Halifax for the UK at £157,000 and Nationwide for the UK at £163,000. The main reason for the decrease in price levels from the ONS index to the new UK index is the use of the geometric mean, which reduces the impact of very high value properties on the headline data. Over the period from 2003 to 2011, which is the longest comparable period available, the average annual growth is 5.2% for the ONS index for England, 4.6% for the Land Registry index for England and Wales, 4.7% for the Halifax for the UK, 5.3% for Nationwide for the UK and 6.1% for the new UK index for England and Wales. The inclusion of cash sales and improved weights are both contributing to the increased growth seen in the new UK index, according to ONS statistician Chris Jenkins. ‘By combing different data sets and using the best internationally agreed methods, the new UK HPI will give the best possible picture of the changing UK property market,’ he explained. ‘For the first time, consistent high quality data will be available for both national and local areas, helping policy makers to make better decisions,’ he added. Continue reading
Many UK landlords unaware of new mortgage legislation, research suggests
Accidental landlords in the UK are most at risk of being caught out by new European Union mortgage legislation, new research suggests. Some 55% buy to let mortgage applicants are unaware of the impending changes to mortgage law and accidental landlords, those who did not intentionally set out to rent out a property, are least likely to know about these regulatory changes. The research by landlord insurance provider Direct Line for Business amongst mortgage brokers also reveals that 62%of applicants were unaware of either the changes to mortgage tax relief or the EU's Mortgage Credit Directive (MCD) and therefore changes which could impact their ability to secure a mortgage. This lack of awareness rises to 71% amongst 'accidental landlords', namely those who rent out property due to unforeseen circumstances such as being unable to sell, or inheriting a home. Mortgage advisers estimate that accidental landlords account for 17% of new mortgage applications, with overall buy to let mortgage applications growing by 29% in the past year. The research also shows that only 7% of mortgage advisers believe that the MCD will have a positive impact on approvals of buy to let mortgage applications while 59% expect it to have a negative impact. The EU's MCD could see circumstances where landlord mortgage lending will be viewed as ‘consumer’ lending and therefore could be subject to more stringent lending criteria. Accidental landlords with one or two rental properties may not be able to pass the expected new affordability tests. Changes to the mortgage tax relief are set to be phased in from April 2017 with landlords no longer able to deduct mortgage interest payments before calculating their tax bill. They will instead get a tax credit equivalent to 20% basic rate tax on this amount. Landlords are also now paying a 3% surcharge on stamp duty. ‘The new EU legislation on mortgages coupled with the Government's increase in buy to let taxation could significantly alter the buy to let market, so we would encourage any mortgage applicants to think carefully about the new law and how this could impact them as a landlord,’ said Nick Breton, head of Direct Line for Business . ‘With house prices in the UK rising by 7% in the year leading to October 20152, and with the estimated average deposit standing at more than £61,000, it is imperative that landlords are able to maintain a suitable amount of property to house the population of young people saving up to buy their first property, or those seeking a temporary stay in a town or city,’ he added. With the new legislation set to be phased in between 2017 and 2020, Direct Line for Business is providing landlords looking to protect their income with suggestions. It says that as letting and management agents currently charge between 10% and 15% of the monthly rent in fees those with the time and who are prepared to take on the… Continue reading
More US housing markets were less affordable in first quarter of 2016
More housing markets in the United States were less affordable than their historically normal levels in the first quarter of 2016 than a year ago, new research shows. Some 9% of county real estate market were less affordable compared with 2% a year ago, according to the analysis of median home prices from publicly recorded sales deed data collected by RealtyTrac and average wage data from the US Bureau of Labour Statistics. The affordability index was based on the percentage of average wages needed to make monthly house payments on a median priced home with a 30 year fixed rate and a 3% down payment, including property taxes and insurance Out of the 456 counties analysed in the report, some 43 had an affordability index below 100 in the first quarter of 2016, meaning buying a home was less affordable than the historically normal level for that county going back to the first quarter of 2005. That was up from 10 counties in the first quarter of 2015. At the peak of the housing bubble in the second quarter of 2006 some 454 of the 456 counties analysed, more than 99%, were less affordable than their historic norms. In the first quarter of 2012, when median home prices bottomed out nationally, only two counties out of the 456 analysed, less than 0.5%, exceeded their historically normal affordability levels. ‘While the vast majority of housing markets are still affordable by their own historic standards, home prices are floating out of reach for average wage earners in a growing number of U.S. housing markets,’ said Daren Blomquist, senior vice president at RealtyTrac. ‘The recent drop in interest rates has helped to soften the blow of high flying price appreciation in some markets, but the affordability equation could change quickly if interest rates trend higher and home prices continue to rise faster than wages,’ he explained. The top 20 county housing markets least affordable in the first quarter of 2016 compared to their historic affordability norms included counties in Denver, New York City, Omaha, Nebraska, Austin, Dallas, San Francisco and St. Louis. The five most populated county housing markets less affordable than their historic norms were Kings County, New York Brooklyn, Dallas County, New York County, New York Manhattan, Alameda County, California in the San Francisco metro area, Oakland County, and Michigan in the Detroit metro area. The top 20 county housing markets most affordable in the first quarter of 2016 compared to their historic affordability norms included counties in Boston, Baltimore, Birmingham Alabama, Providence, Rhode Island and Chicago. The five most populated county housing markets still more affordable than their historic norms were Los Angeles County, Cook County, Chicago, Harris County Texas, Maricopa County Arizona and San Diego County. Nationwide in the first quarter of 2016, the average wage earner needed to spend 30.2% of monthly wages to make monthly mortgage payments including property taxes and insurance on a median priced home at $199,000, up… Continue reading
