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Rental prices in Scotland increased at end of 2015, latest index shows
There was a last minute end of year surge in Scottish rent growth with average residential rents up 0.4% in December, the highest monthly rise since June, the latest index report shows. This was uptick from a modest 0.1% rise the previous month and took the average monthly rent in Scotland to £548, just £1 below the summer peak reached in July, according to the data from lettings agent network Your Move. On an annual basis, rent growth is also starting to accelerate. Year on year rent rises had been steadily slowing since June when they stood at 3.1% but Scottish rents are now on average 2.2% higher than a year ago, up from 1.4% in the 12 months to November. The rise is due to a shortage of supply and an improvement in wages means that tenants can afford the rents, according to Brian Moran, lettings director at Your Move Scotland. ‘Outside of the summer months, the New Year often sees the second biggest cycle of new tenancies, and ushers in a busy time for the lettings market. It’s the period where people typically take up fresh career opportunities, and implement new life changes and this wave is already evident in the uptick of rents over November and December, as savvy tenants act quickly to beat the January rush,’ he explained. He pointed out that one major factor likely to affect the market in 2016 include the extra 3% property tax on buy to let properties from April. ‘It is likely to distort the natural flow of the market, with any further buy to let investment likely to be front loaded into the early months of the year. Once that deadline passes, and if investment into the private rented sector becomes more hesitant, tenants’ rents may become much more exposed to the problem of supply,’ added Moran. A breakdown of the figures show that in December, three of five regions saw month on month rent increases. The South saw the biggest with average rents rising 1.3% while Edinburgh and the Lothians saw a rise of 0.7% and Glasgow and the Clyde up by 0.5%. The Highlands and Islands saw the most significant monthly fall in rents in December with a fall of 0.9% while in the East of Scotland they fell by 0.3% month on month. On an annual basis, rents are higher across four of the five regions of Scotland. The biggest rise was in the Highlands and Islands with rents up 4.9%, Edinburgh and the Lothians they increased 4.8%, in Glasgow Clyde rents were up by 0.2% and in the East of Scotland rents dropped 0.7%. The report also shows that while there is typically a seasonal spike in arrears around the Christmas period, tenant arrears in Scotland dropped for the second month in a row in December, with the proportion of rent in arrears falling to 11.9% of… Continue reading
New pilot scheme starts in UK as part of Right to Buy scheme
Housing association tenants in some part of the UK can now move towards home ownership under new government plans to extend their right to buy. They are the first in the country to be able apply to the new Voluntary Right to Buy scheme as part of a pilot that is being run by five housing associations ahead of a national rollout later this year. It is part of a voluntary agreement between the government and the National Housing Federation to extend the Right to Buy to 1.3 million housing association tenants. Under the agreement, every home sold will be replaced nationally with a new affordable home. The existing Right to Buy gives social housing tenants the opportunity to buy their home with a discount of £103,900 in London and £77,900 elsewhere. ‘Thanks to the historic voluntary agreement with the sector a further 1.3 million housing association tenants now have the chance to open the door to their own home, starting with this trailblazing pilot scheme,’ said Communities Secretary, Greg Clark. He explained that the pilot will help inform the design and implementation of the main scheme before it is rolled out across the country following the passage of the Housing and Planning Bill. Applications for the pilot scheme are now open. He added that the government is committed to getting a million more people into home ownership by 2020 and it has recently been announced that investment in housing is doubling to more than £20 billion over the next five years to support the largest housing programme by any government since the 1970s. Continue reading
Sales in US up strongly, but aided by transaction carryover
Existing home sales in the United States increased again in December after seeing some months of dwindling transactions and were up 14.7% compared to November. But the data from the National Association of Realtors includes a carryover of delayed transactions from November into December as a result of the Know Before You Owe initiative. However the existing homes sales index shows a rise in sales in all four major regions, led by the South and West and transactions are now up 7.7% year on year. It means that 2015 was the best year of existing home sales at 5.26 million since 2006 when it was 6.48 million. ‘While the carryover of November's delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015,’ said Lawrence Yun, NAR chief economist. ‘Additionally, the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year,’ he added. Prices are also rising. The median existing home price for all housing types in December was $224,100, up 7.6% from December 2014, the 46th consecutive month of year on year gains. The data also shows that total housing inventory at the end of December dropped 12.3% to 1.79 million existing homes available for sale, and is now 3.8% lower than a year ago. Unsold inventory is at a 3.9 month supply at the current sales pace, down from 5.1 months in November and the lowest since January 2005 when it was 3.6 months. ‘Although some growth is expected, the housing market will struggle in 2016 to replicate last year's 7% increase in sales. In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas,’ Yun explained. The share of first time buyers was at 32% in December, matching the highest share since August, up from 30% in November and 29% a year ago. First time buyers in all of 2015 represented an average of 30%, up from 29% in both 2014 and 2013. A separate NAR survey from the NAR revealed that the annual share of first time buyers in 2015 was at its lowest level in nearly three decades. ‘First time buyers were for the most part held back once again in 2015 by rising rents and home prices, competition from vacation and investment buyers and supply shortages,’ said Yun. ‘While these headwinds show little signs of abating, the cumulative effect of strong job growth in recent years and young renters' overwhelming interest to own a home should lead to a modest uptick in first time buyer activity in 2016,’ he explained. All-cash sales were 24% of sales in December, down from 27% in November and are down from 26% a year ago. Individual… Continue reading
