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Pending home sales in the United States up solidly in February
Pending home sales in the United States rose solidly in February to their highest level in seven months and remain higher than a year ago, according to the National Association of Realtors. Led by a sizeable increase in the Midwest, all major regions except for the Northeast saw an increase in contract activity in February, the date from the forward looking index based on contract signings show. Overall the index rose 3.5% to 109.1 in February from a downwardly revised 105.4 in January and is now 0.7% above February 2015. Although the index has now increased year on year for 18 consecutive months, last month's annual gain was the smallest. ‘After some volatility this winter, the latest data is encouraging in that a decent number of buyers signed contracts last month, lured by mortgage rates dipping to their lowest levels in nearly a year1 and a modest, seasonal uptick in inventory,’ said Lawrence Yun, NAR economist. ‘Looking ahead, the key for sustained momentum and more sales than last spring is a continuous stream of new listings quickly replacing what's being scooped up by a growing pool of buyers. Without adequate supply, sales will likely plateau,’ he added. According to Yun, the one silver lining from last month's noticeable slump in existing home sales was that price appreciation lessened to 4.4% which is still above wage growth but certainly more favourable than the 8.1% annual increase in January. ‘Any further moderation in prices would be a welcome development this spring. Particularly in the West, where it appears a segment of would be buyers are becoming wary of high asking prices and stiff competition,’ Yun pointed out. Existing homes sales this year are forecast to be around 5.38 million, an increase of 2.4% from 2015. The national median existing home price for all of this year is expected to increase between 4% and 5%. In 2015, existing home sales increased 6.3% and prices rose 6.8%. A breakdown of the figures show that the index in the Northeast declined 0.2% to 94 in February but is still 12.6% above a year ago. In the Midwest the index shot up 11.4% to 112.6 in February and is now 2.5% above February 2015. Pending home sales in the South increased 2.1% to an index of 122.4 in February but are 0.4% lower than last February. The index in the West climbed 0.7% in February to 96.4, but is now 6.2% below a year ago. Continue reading
Property prices in England and Wales down slightly month on month
Residential property prices in England and Wales increased by 6.1% in the year to February 2016 taking the average value to £190,275. The latest data from the Land Registry also shows that overall month on month prices fell by 0.2% but most regions have seen prices rise. London has seen the greatest increase in average property values over the last 12 months with a rise of 13.5% to £530,368 but at the opposite end the North East saw prices fall by 3.2% year on year. The North East also saw the most significant monthly price fall with a decrease of 1.2% the North West saw the greatest monthly price rise with a rise of 1.8%. According to David Brown, chief executive officer of Marsh & Parsons, the monthly dip in property prices disguises the fact that the majority of regions are experiencing striking growth. ‘There have been a lot of stimulants spurring on the housing market this spring To beat the 01 April implementation of additional stamp duty, second home buyers and buy to let investors have been frantically pushing through purchase completions as quickly as possible,’ he pointed out. ‘We’ve had documents collected and delivered by hand across London to solicitors to avoid postal delays, and our teams have been in at the crack of dawn to make sure all parties involved in the transaction are meeting their deadlines,’ he explained. ‘This short term whirlwind should go some way to balance out the slower sales activity seen at the end of last year, but only time will tell how buy to let demand tapers off as we enter into new territory. As buy to let investors face yet another blow from the banks, the incredibly strong buyer demand we’re seeing will take the reins, and keep the market on a stable course,’ he added. Rob Weaver, director of investments at property crowdfunding platform Property Partner, pointed out that price rises in London are more than double the rate compared to all other regions excluding the South East and the East. ‘High demand, a shortage in supply and out of reach properties in prime central London, has seen potential buyers flocking to outer London boroughs for more affordable housing and in turn that’s pushed prices ever skyward. Six of the outer boroughs have experienced annual price rises of more than 15% with Hillingdon top of the league at 17.1%,’ he said. ‘Again the upward trends continue west of the capital along the M4 corridor with Slough notching up a 19% annual increase. There’s a widening gulf with the rest of England and particularly Wales with the average house at a fifth of the price you pay in London. And sadly, we’re likely to see downward pressure on prices in south Wales over increasing uncertainty around Steel jobs in Port Talbot,’ he added. Continue reading
UK new house building target not over ambitious, analysis suggests
The UK Government’s target of building a million new homes over the next few years is not as ambitious as some may think, according to a new analysis from the Royal Institution of Chartered Surveyors (RICS). The individual components of the goal includes 200,000 Starter Homes, an initiative still working its way through parliament, and 135,000 shared ownership properties about which little has been said to date. Trying to access the success of such a programme it about the official data on housing starts, according to RICS chief economist Simon Rubinsohn, and these show that a mere 144,000 new units were begun through the course of 2015. But he points out that other data produced by the Department for Communities and Local Government (CLG) casts some doubt on the accuracy of the quarterly figures which are produced on a high frequency basis and released within a short period following the end of the quarter. He explains that there is arguably more value to be gained by focusing on the less frequently released net supply numbers, which are based on completions rather than starts, as they reflect the additions to the stock of housing units for habitation. The quarterly completions series showed an additional 125,000 homes built in 2014/2015, the last full year for which data is available, while the annual net supply series puts completions at 155,000. Rubinsohn adds that net conversions added close to nearly 5,000 additional units over the period and this was supplemented more than 20,000 units from ‘change of use’. The latter figure has increased sharply over the past few years as a result of Permitted Developments Rights enabling the shift from office class to residential. And then demolitions amounted to just over 10,500 in 2014/2015. ‘So pulling this altogether, in the last financial year, there may have been 125,000 housing completions in England, 155,000, just over 180,000 or, after demolitions, 170,000. And on the basis of the higher number (gross additions to supply), the government doesn’t appear that far off its ambition for 2020,’ Rubinsohn argues. ‘None of this is designed to minimise the fundamental nature of the housing crisis which reflects the fact that household formation is still projected to comfortably outstrip projections for the supply of new units even on the most generous calculations,’ he says. ‘This is also clearly visible in the estimates by our professionals for medium term growth in house prices and rents. The February Residential Market Survey suggested both are likely to increase by at least another fifth over the next five years comfortably outstripping the probable rise in wages,’ he adds. Continue reading
