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Residential rental stock falls in UK
The supply of rental housing stock on letting agents’ books in the UK fell in March, to the lowest level since the start of last year, the latest data shows. Demand also dropped in March, according to the March private rental sector report from the Association of Residential Letting Agents (ARLA). ARLA agents had 33 prospective tenants registered per branch on average, down 11% from 37 in February. This stands below the figure recorded in March last year when agents registered 36 on average. Supply has also fallen year on year. In March 2015, the average number of properties managed per branch was 192, which is down 12 per cent this year with just 169 rental properties managed per branch, the lowest level since records began in January 2015. It’s a brighter picture in Scotland, where agents had on average 273 properties on their books, and Yorkshire and Humberside, where 207 properties were recorded on average per branch. In London however, agents had just 122 properties on their books per branch. In March 65% of ARLA agents predicted that current and prospective buy to let landlords will walk away from the market following the April stamp duty changes, causing a decrease in the supply of rental properties. Rent costs rose in March for 32% of tenants and 61% of ARLA members fear they will increase further as a result of the changes, a growing sentiment since last month when 57% of agents agreed on this. ‘We don’t expect falling supply to stop here. The recent stamp duty changes are very likely to cause supply to decrease even further, as landlords withdraw from the market,’ said David Cox, ARLA managing director. ‘Not only do our agents predict that rent costs will increase further, but rental homes may also face a decline in quality over time, as landlords struggle to keep up with maintenance costs alongside the higher stamp duty charge,’ he explained. ‘Whilst landlords adjust to the increase in costs we can expect to see one of three outcomes prevailing in the buy to let market: landlords absorbing the cost and taking the hit; landlords withdrawing from the market causing supply to fall; or landlords regaining those costs through hiking rents. Next month we can start to assess the damage,’ he added. Continue reading
US pending home sales up for 19 months in a row
Pending home sales in the United States increased slightly in March for the second consecutive month and reached their highest level in almost a year, according to the latest index. The Pending Home Sales Index from the National Association of Realtors, a forward looking indicator based on contract signings, increased by 1.4% in March and is now 1.4% above March 2015. It means that after the slight gain, the index has increased year on year for 19 consecutive months and is at its highest reading since May 2015 and Lawrence Yun, NAR chief economist, said it signals a solid beginning to the spring buying season. ‘Despite supply deficiencies in plenty of areas, contract activity was fairly strong in a majority of markets in March. This spring’s surprisingly low mortgage rates are easing some of the affordability pressures potential buyers are experiencing and are taking away some of the sting from home prices that are still rising too fast and above wage growth,’ he explained. He also pointed out that in the short term, the healthy labour market and favourable borrowing costs should lead to sustained buyer demand and a durable pace of sales. However, Yun he believes that the consequences from a failure to construct more single family homes in recent years are starting to impact some top job producing markets, where endless supply shortages continue to limit choices for buyers and are driving up prices beyond what a growing share of households can comfortably afford. ‘Demand is starting to weaken in some areas, particularly in the West, where the median home price has risen an astonishing 38% in the past three years. As a result, pending sales in the region have now declined in four of the last five months and are lower than one year ago for the third month in a row. Closed sales in the region in March were also below last year’s pace,’ Yun said. A breakdown of the figures show that the index in the Northeast increased 3.2% and is now 18.4% above a year ago while in the Midwest the index inched up 0.2% but is now 4% above March 2015. Pending home sales in the South rose 3% but are still 0.6% lower than last March and the index in the West declined 1.8% in March and is now 7.9% below a year ago. Continue reading
First time buyers increased in the UK in March and paid less for their home
The number of first time buyers in the UK increased in March to a total of 32,500, the highest figure since June 2014, according to the latest tracker report. Overall first time buyer volumes grew by 47.7% on a monthly basis and as well as cheaper prices the burden of deposit costs and mortgage payments dipped, the data from the Your Move and Reeds Rains report shows. This means that, between February and March, the total flow of buyers managing to step foot on the ladder for the first time grew by 10,500 and on an annual basis, the total number of first time buyers in March grew by 34.9% compared to March 2015. Adrian Gill, director of estate agents Your Move and Reeds Rains, pointed out that while much was made of March being the month of the buy to let landlord and the second home buyer due to the April deadline for additional stamp duty, the surge was not at the expense of the bottom rungs of the ladder. He believes that a continuation of the broadly positive economic climate has likely been a factor spurring would-be first time buyers. ‘However, what’s really getting those numbers up is the fact that the range of support options available to first time buyers is at last beginning to be recognised and utilised,’ he said. ‘The Help to Buy scheme is assisting those with limited capital recognise their dreams, while the Government’s offer of cut price homes for first time buyers is easing supply in a part of the market that typically struggles to match roaring demand with constrained supply,’ he added. The data also shows that March has seen a lightening of home ownership costs and the charges associated with it. The average purchase price paid by first time buyers in March stood at £166,559, down 1.2% in absolute terms compared with February which previously marked the highest average price on record. But on an annual basis, the average purchase value of a first time buyer property rose by 9.2%. Deposit and monthly mortgage payment costs also declined. First time buyer deposits averaged £28,233 in March, down 4.1% compared with the previous month. In addition, the proportion of an average first time buyer’s monthly income that is consumed by deposit costs fell 3.1% between February and March from 74.9% to 71.8%. Meanwhile, over the same period, monthly mortgage payments accounted for a steadily decreasing amount of average first time buyer income, falling from 20.4% of monthly income in February to 20.3% as of March. Besides the falling costs of home ownership, lending conditions for firs time buyers have remained favourable. The average loan to value (LTV) ratio reached 83% in March, marking a 0.5% uptick on the previous month, meaning first time buyers will be able to borrow more against the value of the home they wish to purchase. The average first time buyer mortgage rate continues to fall, dropping from 3.14% in February to… Continue reading
