Tag Archives: united-states
Pending home sales fall across all regions of the United States
After steadily increasing for three months, pending home sales in the United States let up in May with the first year on year fall for almost two years with all four major regions seeing a decline. The Pending Home Sales Index, a forward looking indicator based on contract signings from the National Association of Realtors fell by 3.7% to 110.8 in May from a downwardly revised 115 in April and is now 0.2% lower than May 2015. But even with last month’s decline, the index reading is still the third highest in the past year, but declined year on year for the first time since August 2014. According to Lawrence Yun, NAR chief economist, pending sales slumped in May across most of the country. ‘With demand holding firm this spring and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity,’ he said. ‘Realtors are acknowledging with increasing frequency lately that buyers continue to be frustrated by the tense competition and lack of affordable homes for sale in their market,’ he added. Despite mortgage rates hovering around three year lows for most of the year, Yun explained that scant supply and swiftly rising home prices which surpassed their all-time high last month are creating an availability and affordability crunch that’s preventing what should be a more robust pace of sales. ‘Total housing inventory at the end of each month has remarkably decreased year on year now for an entire year. There are simply not enough homes coming onto the market to catch up with demand and to keep prices more in line with inflation and wage growth,’ Yun pointed out. Looking ahead to the second half of the year, Yun believes that the fallout from the UK’s decision to leave the European Union breeds both immediate opportunity as well as potential headwinds for the US housing market. ‘In the short term, volatility in the financial markets could very likely lead to even lower mortgage rates and increased demand from foreign buyers looking for a safer place to invest their cash,’ he said. ‘On the other hand, any prolonged market angst and further economic uncertainty overseas could negatively impact our economy and end up tempering the overall appetite for home buying,’ he added. In spite of last month’s step back in contract signings, existing home sales this year are still expected to be around 5.44 million, a 3.7% boost from 2015. After accelerating to 6.8% a year ago, national median existing home price growth is forecast to slightly moderate to between 4% and 5%. A regional breakdown of the figures shows that the PHSI in the Northeast dropped 5.3% to 93 in May, and is now unchanged from a year ago. In the Midwest the index slipped 4.2% to 108 in May, and is now 1.8% below May 2015. Pending home sales in… Continue reading
Call for UK to drop tax on new prime property developments
The UK Chancellor George Osborne should pause housing tax at the top end of the market or risk distorting the wider market, it is claimed in anew analysis report. Up to a 100% rise in stamp duty on high luxury homes has seen buyer interest drop at a time when there has been a 40% rise in prime properties planned in London, according to the report from design and consultancy firm Arcadis. It points out that the unintended consequences of successive stamp duty rises means projects in development for a number of years have been disproportionately affected and the delivery of affordable homes could be threatened as a result. Despite initially encouraging investment in prime residential property as a means of stimulating wider economic growth, the government has since changed policies mid-cycle, the report suggests. It says that this is regardless of the fact that many developers have already committed to major schemes. Since the end of 2014, the stamp duty alone on a £6 million home has almost doubled, rising from £420,000 to £810,000 when bought as a second property. The timing of these reforms has come just when certain parts of the market had already begun to slow. In order to ensure sales, some developers who had committed to schemes before 2014’s reforms have been forced to discount prices or resort to ‘stamp duty paid’ deals. These sales discounts have hit margins by as much as 4% on prime homes and up to 7% on super prime properties. Meanwhile, others have opted merely to delay construction, meaning that a significant number of affordable homes, planned as part of the original development, are not being built as quickly. Furthermore, with fewer would-be purchasers willing to pay such high rates of tax, many investors are eyeing homes under the £1.5 million price threshold. This additional wave of interest risks distorting the mid-market and inadvertently pricing out those people who would typically be looking to purchase these as family homes, the research adds. According to Mark Cleverly, Arcadis head of commercial development, to accelerate the delivery of affordable housing currently in the pipeline and ensure the construction sector remains sustainable, the Chancellor must impose a temporary reduction in stamp duty on new build properties. In tandem with this, he must better focus the debate onto ensuring acceptable levels of affordable housing are delivered as part of new developments. Cleverly suggests that this approach would get the market moving again, meaning both a steady flow of affordable homes coming onto the capital’s market and making schemes viable again for developers, safeguarding jobs and ensuring development can proceed as planned. ‘The Chancellor has to act on prime property tax. Despite initially encouraging investment in prime housing, the government since changed its mind and attempted to stem demand through ongoing tax increases and new fiscal regulations. This has prompted a drop in buyer interest at the very top of the market, creating… Continue reading
French Alps ski property market reviving thanks to low mortgages and new infrastructure
The French ski property market is recovering with new build apartments, rather than chalets, are leading the way and interest boosted by new infrastructure projects, new research shows. Those choosing to buy in key Alpine resorts will also find far more facilities available such as the €36 million mini-resort Mille8 in Les Arcs, a family friendly resort within a resort with new nursery slopes, tobogganing runs, a swimming pool, spa, gym and Courchevel's €63 million waterpark and spa Aquamotion. La Compagnie du Mont Blanc announced recently that it would spend €477 million over 40 years on new lifts and pistes in Chamonix while Val d’Isère has just spent €16 million renewing lifts, pistes and restaurants on La Tête de Solaise, immediately above the town. Rock bottom Euro mortgage rates are another key factors behind the recovery, according to the French Alps Property Report from Erna Low Property. It points out that it is now possible to get a 15 year fixed rate repayment mortgage with the interest set at just 1.4%. However, it is easier to get a small mortgage than a large one at the moment. Indeed, according to Stephane Briere of French mortgage brokers CAFPI International banks would rather approve 10 €100,000 mortgages than a single €1 million one. The report suggests that activities and facilities in the summer are as important for buyers in the Alps as the winter sports. Road cycling, mountain biking and trail running have all made the summer fashionable again in the mountains, and buyers want to know what a mountain resort offers in July and August as well as winter. In part, that's because some are keen runners and cyclists themselves: but also because they're looking for better rental returns. Also leaseback schemes, which allow buyers to reclaim the VAT on their property purchase provided they put their apartment into a rental pool are becoming more flexible. In the past, most leasebacks gave owners just three or four weeks' annual use of their property. But now some allow owners 26 weeks of use along with the full 20% VAT refund. The report also says that a new wave of developments is giving buyers who are keen skiers the chance to buy back door entry to the world's most famous ski areas and make big savings in the process. Buying in Les Menuires, for example, will give the owner the whole of the Three Valleys. Meanwhile, an apartment in Tignes-les-Brevières gives access to the slopes of Val d'Isère. According to Francois Marchand, Erna Low property director, sales volumes are up, revenues are up, and so too is the average price of each property sold and British buyers are returning but they are more realistic about what buying a second home in the mountains means. ‘These days, our clients see their property purchase as bricks and mortar with benefits, a long term investment whose primary purpose is to improve their quality of life. We’re noticing more… Continue reading
