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Lack of homes for sale hampering buyers in the United States

Lack of homes for sale hampering buyers in the United States

Image A lack of homes for sale across the United States continues to limit choices available to potential buyers, putting a strain on markets across the country, new research reveals.

In January buyers had 8.6% homes to choose from than they did last year, according to the latest real estate market report from property firm Zillow.

It also shows that housing starts reached a three month low in January, indicating that newly built homes will not be a significant benefit for buyers, either.

The firm says that a restricted supply of homes for sale will mean increased competition for homes that are available, and bidding wars that can price out entry level or first time buyers. Low inventory, along with a strong job market has been driving up home prices, especially on the West Coast.

Across the country, only a quarter of markets saw inventory increase over the past year. Among the largest metros in the country Atlanta saw the largest increase in available homes for sale at 6.8% while buyers in San Diego have significantly fewer options with inventory down 30%.

Besides inventory, Zillow looks at price cuts and days on market to help identify whether markets are better for buyers or sellers. It found that markets that benefit sellers are mostly grouped in the West, where buyers are more likely to face bidding wars. Buyers will find themselves with more bargaining power in the East, in markets like Philadelphia and Baltimore.

'If you're looking for a home or trying to sell, it's important to know what kind of market you're in. Hopeful buyers in a strong sellers' market should be prepared to move quickly, since homes don't stay on the market as long,' said Zillow chief economist Svenja Gudell.

'In a buyers' market, they can afford to take their time and be more selective. However, low inventory is a factor affecting the majority of the country, so buyers should be prepared for a limited selection as we enter the home buying season,' she explained.

National home values rose 4.2o % $184,000, according to the Zillow data meaning that the pace of home value appreciation has increased for 10 months in a row. Denver and Dallas continue to lead the way, with strong double digit increases in home values.

Rents, on the other hand, continued their recent trend of levelling off, growing 2.9% year on year from January 2015. San Francisco was the only large metro to see double digit rent increases.

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Karolina Woźniak
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Prime property country locations set to outperform London, new analysis suggests

Prime property country locations set to outperform London, new analysis suggests

Image Country locations are set to outperform London as the prime property markets enter the next stage of the housing cycle, according to a new analysis report.

Stamp duty changes introduced in the 2014 autumn Statement have had a bigger impact than many forecast, the effect initially being masked by the uncertainty in the run up to the General Election, according to the report from property firm Savills.

However, it points out that both the prime housing markets of London and the country have reacted relatively rationally to the changes. Indeed, small price falls were recorded in the higher value markets where the stamp duty liability has increased but by contrast, in the lower value prime markets where there is now a tax saving, values have continued to rise, albeit at a slower rate than in 2014.

The challenges faced by the prime markets of late are reflected by the fact that the total value of housing stock in Kensington and Chelsea fell in 2015, though the loss of £693 million is dwarfed by the gains of £68 billion over the preceding 10 years, the report explains.

Transaction levels, though undoubtedly lower than in 2014, have not collapsed as some would argue. Figures from the Land Registry indicate a 5 to 10% fall above £1 million across England and Wales.

'While this suggests there is still a market for appropriately priced stock, it also means we are unlikely to see cuts to rates of stamp duty at the top end,' said Sophie chick of Savills research team.

'Indeed, in the 2015 autumn Statement, more stamp duty changes were announced for buyers of additional homes (second homes and buy to let) causing further small price falls in markets with high concentrations of such buyers in the last quarter of last year,' she explained.

Chick pointed out that to understand what lies ahead it is helpful to look back and identify what happened between 2002 and 2005 when the market was at a similar stage in the housing cycle.

'In prime London, over the three and a half year period from June 2002, prices increased by just 5%. Currently, average values have seen no net growth since the first quarter of 2014, so if the market follows a similar trend we would expect prime London values to remain broadly flat through 2016 and most of 2017,' she said.

'Over the same period, prices in the prime country markets outperformed London with an average increase of 17%. We expect a similar trend this time round as the ripple effect took hold and more equity flows to the housing markets beyond London,' she explained.

The analysis shows that in terms of how residential value is concentrated, Kensington and Chelsea sits far ahead of any other borough or local authority across the UK, not just by virtue of high property prices but also the relative density of housing in the borough. The combination of the two means that on average in each square kilometre of the borough, there is over £9.3 billion of residential property.

The strong price growth across London in the past decade means that Watford, which surprisingly has the highest concentration of residential property value of any local authority beyond the capital, is preceded by 27 of London's 33 boroughs in a list of value per square kilometre.

'High housing density rather than high property prices propels Watford up the league table. That puts it ahead of more obvious candidates such as Oxford and Cambridge, where green space and the concentration of heritage assets mean much lower housing densities, but act as a magnet to those relocating from London,' chick pointed out.

She also explained that the key corresponding difference between Watford and Oxford and Cambridge is the level of net housing wealth they hold, with Watford carrying far more mortgage debt relative to the value of its housing at 28% compared to 16%.

Of the 10 areas with the highest concentrations of housing value beyond London, only the high value semi-suburban areas of Elmbridge and Epsom and Ewell have a housing density of less than 1,000 dwellings per square kilometre.

'Still they deliver substantially higher concentrations of residential value and net housing wealth than the centres of Manchester and Birmingham, which by comparison have been slow to benefit from the ripple effect out of London,' Chick added.

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Thomas Mason
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Prices in Australian cities up 0.5% in February, but growth is moderating

Prices in Australian cities up 0.5% in February, but growth is moderating

Image Property prices in Australia's capital cities increased by 0.5% in February and by 1.4% over the last three months, according to the latest index figures.

However the trend in annual growth has slowed over the last seven months from 11.1% to 7.6%, the CoreLogic RP Data home value index also shows.

Prices increased in all capital cities apart from Perth and Canberra were prices fell by 1.1% and 0.2% respectively and over the past three months they increased across all capitals except Sydney where they fell by 0.2%.

An examination of the data shows that the largest monthly increases in home values were recorded in the cities that have been underperforming over the growth cycle to date. In Hobart values were 2.9% higher, Adelaide up 1.9% and Brisbane up 1.8%.

The cities to record the greatest value rises over the past three months have been Hobart with growth of 8.5%, Melbourne up 3.8% and Brisbane up 2%.

According to CoreLogic RP Data head of research Tim Lawless, even though home values have trended lower over the year in Perth and Darwin, they have recorded value rises of 0.2% and 0.3% respectively over the past three months.

He also pointed out that while values are still increasing across most capital cities however, the results remain diverse. Sydney and Melbourne remain the strongest markets in trend terms, however, the gap is widening between the performances of Melbourne relative to Sydney.

Over the past 12 months, combined capital city home values have increased by 7.6%, with the annual rate of growth down from a recent peak of 11.1% recorded in July last year. Melbourne has maintained its number one growth position, with annual capital gains of 11.1%.

'Melbourne values appear to be holding reasonably firm since December last year with the annual rate of capital gain virtually level over the past three months,' Lawless explained.

Sydney's annual rate of growth has continued to moderate, having almost halved from its cyclical peak of 18.4% recorded in July last year to reach 9.5% growth over the past 12 months.

Lawless said that despite the slowing trend, Sydney remains the second best performing capital city over the past year but he pointed out that a few of the smaller cities where growth rates have recently accelerated may start to rival Sydney's position over the coming months.

'The trend in home value growth is showing signs of increasing in those markets that have previously underperformed. These include Brisbane, Adelaide, Hobart and Canberra. Affordability constraints aren't as apparent in these cities and rental yields haven't been compressed to the same extent as what they have in Melbourne or Sydney,' Lawless said.

'Home values increased in Brisbane by 5.5% over the past year, which is the fastest annual rate of value growth in a year. In Hobart, home values are 6.2% higher over the year, which is its fastest annual rate of home value growth since July 2010,' he added.

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Marta Kaczorowska
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Irish property prices dipped slightly in January but growth set to continue in 2016

Irish property prices dipped slightly in January but growth set to continue in 2016

Image Residential property prices in Ireland are up 7.6% year on year but fell by 0.5% in January, according to the latest index figures to be published.

The data from the Central Statistics Office shows that the annual growth of almost 8% compares with an increase of 6.6% in December and an increase of 15.5% recorded in the 12 months to January 2015.

Month on month, January's fall of 0.5% compares with an increase of 0.5% recorded in December and a decrease of 1.4% recorded in January of last year.

A breakdown of the figures shows that in Dublin property prices decreased by 1.2% in January and were 3.4% higher than a year ago. Dublin house prices decreased by 1.1% in the month and were 3.2% higher compared to a year earlier while apartment prices were 4.8% higher when compared with the same month of 2015.

Prices in the rest of Ireland rose by 0.1% in January compared with a decrease of 0.9% in January of last year. Prices were 11.4% higher than in January 2015.

But prices are still some way below their peaks in 2007. For example in Dublin prices are 34.9% lower than at their highest level in early 2007. Apartments in Dublin are 41.8% lower than they were in February 2007 while house prices are 36.8% lower than at their highest level in February 2007.

Prices in the rest of Ireland are 35.3% lower than their highest level in September 2007 and overall, the national index is 33.8% lower than its highest level in 2007.

A lack of supply, particularly in Dublin has been pushing up prices, according to Alan McQuaid of Merrion Stockbrokers, and he expects price growth to be more modest over the next year or two.

Investec economist Philip O'Sullivan pointed out that the market has been affected by new mortgage lending rules from the Central Bank introduced in February 2015 which restrict lending multiples and loan to values and he expects prices to keep growing once the impact has lessened.

Demand is likely to strengthen and with supply increasing only slowly, prices are expected to pick up as the year progresses, although short term trends are likely to remain weak, according to Dermot O'Leary, chief economist with Goodbody Stockbrokers.

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Economic uncertainty caused by Brexit vote could affect UK property sales temporarily

Economic uncertainty caused by Brexit vote could affect UK property sales temporarily

Image Rising economic uncertainty over the UK's membership of the European Union in the run up to a referendum in June could affects sales of property, a new analysis suggests.

It will be a lack of clarity that could impact transactions as happened in the run up to the referendum on Scotland remaining a part of the UK in 2014, says the report from international real estate firm Knight Frank but whatever happens the real estate market should be benign.

It explains that both transaction volumes and development starts have seen healthy growth since David Cameron's 2013 referendum pledge, and again following the Conservative Party victory in May last year.

'Despite the resilience of the market to date, experience from the 2014 Scottish Referendum shows that we ought to expect a slowdown in housing market activity as we get closer to the poll date. The extent of this slowdown is, in reality, guesswork at the current time,' the report state.

'One issue we have seen develop in recent weeks is the weakening of the pound. This trend has potential implications for the central London market, where foreign home buyers are more active. If anything the weakening of the pound could provide a short-term boost to demand in the Capital,' it adds.

The analysis explains that there is no doubt that a clear 'remain' vote would remove immediate economic uncertainty and market activity might be expected to recover any lost ground relatively rapidly, this was certainly the experience in Scotland following their referendum.

However, the prevailing assumption is that a 'leave' vote would necessarily require a period of negotiation to settle the UK's new relationship with the EU. 'During this period it would be fair to assume that uncertainty would continue to influence investment decisions for businesses and individuals, particularly if the question of Scottish independence is raised again,' the report points out.

'While the speed and terms on which this new settlement is made remain unclear, one factor suggests there will be some urgency in the process. With the Irish economy so closely linked with the UK's the EU will be under pressure to ensure trade for Ireland is maintained. The UK's bargaining position may also be bolstered by pressure from other organisations and countries like China, with whom the country has strengthening trade ties,' it adds.

But it concludes that it is safe to assume the impact on the UK housing market should be relatively benign whatever the outcome. 'The mainstream UK housing market is primarily driven by domestic dynamics. An exit from the EU would not affect the demand/supply imbalance which is a key feature underpinning current housing market trends,' the report says.

'This imbalance is most noticeable in London and the South-East, where decades of undersupply contribute to the on-going need for a considerable uptick in construction activity,' it adds.

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Teresa Marecki
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Homes in commuter locations in Peterborough and Milton Keynes sell fastest in UK

Homes in commuter locations in Peterborough and Milton Keynes sell fastest in UK

Image Properties in Peterborough and Milton Keynes are selling faster than anywhere else in the UK, taking a median average of just 13 days for a sale to be agreed, new research shows.

A key factor is that both towns are considered an easy commute to London, as home buyers and property investors alike look to move out of the capital in search of better value, according to the research by Home.co.uk.

Bristol is another area where property sells fast with city having five out of the top 10 postal districts in the firm's property hotspot list of fastest selling location outside of Greater London.

This includes the BS2 postcode area, which is next to the city centre's university, suggesting that the buy to let market for student accommodation is a strong motivator for buyers in Bristol.

The continued interest in investing in student accommodation is also a factor in the Woodley area of Reading being named another property hotspot. In this area of the city, which is close to Reading University, it takes just 15 days to sell, in terms of the median average.

Suburban Glasgow is another property hotspot. Clarkston and Giffnock, which are both affluent areas to the south of the city centre, take two top 10 spots in terms of median average time to sell outside of Greater London.

Greater London's property hotspots are also dominated by suburban areas, showing heightened interest in commuter belt homes, the research report says. But while 10 areas outside of Greater London have a median average time to sell of 15 days or less, just two areas of the capital, Uxbridge and Sidcup, have such a quick turnaround.

This research shows that properties in the UB7 area of Uxbridge, near to Heathrow Airport, and the DA15 area of Sidcup take only 15 days to sell. Sidcup takes one further Greater London top ten property hotspot place, with nearby Dartford claiming two places and Bexley, which is also near to Sidcup, another spot.

The remaining top 10 places also show how popular such commuter belt districts are. Sutton has two postal code areas ranked among this elite group, while Romford and Kingston-upon-Thames claim the remaining places in terms of median average time on the market.

'Our figures show that the really hot areas in the current property boom are now outside of the M25. These top sellers' markets are typically well to do districts where already premium prices are going through the roof, as buyers compete for the very limited supply of properties for sale,' said Doug Shephard, the firm's director.

Commercial property rents in London saw average growth of 8.5% in 2015

Commercial property rents in London saw average growth of 8.5% in 2015

Image Growth in commercial property rents across London fuelled average total return of 18.1% from investments in the capital during 2015, new research shows.

The London markets analysis report by Levy Real Estate and MSCI examined more than £30 billion of assets across 20 key submarkets and found that rental growth increased year on year from 7.8% in 2014 to an average uplift of 8.5% last year.

The strongest rental growth was registered by the Camden/King's Cross submarket where the continued success of the King's Cross Central development saw the prevailing level of rents grow on average by 17%.

High occupier demand and a lack of space in other submarkets is also driving rents, the report says, adding that Mayfair, for example, where the continued conversion of office property to residential has limited the supply of new space saw rental growth of 11.9% last year.

'The latest research shows a market which still has significant momentum. Returns are now increasingly being driven by a growth in rents and this suggests that London's commercial property investment sector can expect further sustainable growth in values,' said Levy Real Estate Investment Partner, Simon Heilpern

The progressive rents in and around King's Cross also meant that the Camden/King's Cross showed the highest total return for a single submarket of 27.3%. It was followed in the total return rankings by the Eastern Fringe at 24.7% and Marylebone and Euston at 23.1%.

Overall, Mayfair retained its position as the submarket with the most keenly valued property: the average equivalent yield for its property was just 3.7%. The area has also seen a continued conversion of office property to residential which has contributed to an upward shift in rents, the report points out.

The biggest inward yield shift during 2015 was in the Western Fringe locations of Clerkenwell, Smithfield and Farringdon where average equivalent yields moved in 80 basis points to 5.2%. However, the general picture is a slowing down in yield shift which illustrates the growing importance of rental growth.

'The London investment market had another good year in 2015, with strong returns on the back of healthy rental value growth across the commercial property market. As in 2014, fringe markets outperformed last year with locations such as Camden/King's Cross and the Eastern Fringe remaining attractive to both occupiers and investors,' said Colm Lauder, MSCI vice president.

'Pricing in the London market also strengthened further during the course of 2015, but the rate of yield compression has slowed as key market locations begin to reach record yield levels which question price fundamentals,' he explained.

'This has resulted in rental growth taking over as the main performance driver, as confident, and expansionary, businesses compete for space,' he added.

Prices in Australian cities up 0.5% in February, but growth is moderating

Prices in Australian cities up 0.5% in February, but growth is moderating

Image Property prices in Australia's capital cities increased by 0.5% in February and by 1.4% over the last three months, according to the latest index figures.

However the trend in annual growth has slowed over the last seven months from 11.1% to 7.6%, the CoreLogic RP Data home value index also shows.

Prices increased in all capital cities apart from Perth and Canberra were prices fell by 1.1% and 0.2% respectively and over the past three months they increased across all capitals except Sydney where they fell by 0.2%.

An examination of the data shows that the largest monthly increases in home values were recorded in the cities that have been underperforming over the growth cycle to date. In Hobart values were 2.9% higher, Adelaide up 1.9% and Brisbane up 1.8%.

The cities to record the greatest value rises over the past three months have been Hobart with growth of 8.5%, Melbourne up 3.8% and Brisbane up 2%.

According to CoreLogic RP Data head of research Tim Lawless, even though home values have trended lower over the year in Perth and Darwin, they have recorded value rises of 0.2% and 0.3% respectively over the past three months.

He also pointed out that while values are still increasing across most capital cities however, the results remain diverse. Sydney and Melbourne remain the strongest markets in trend terms, however, the gap is widening between the performances of Melbourne relative to Sydney.

Over the past 12 months, combined capital city home values have increased by 7.6%, with the annual rate of growth down from a recent peak of 11.1% recorded in July last year. Melbourne has maintained its number one growth position, with annual capital gains of 11.1%.

'Melbourne values appear to be holding reasonably firm since December last year with the annual rate of capital gain virtually level over the past three months,' Lawless explained.

Sydney's annual rate of growth has continued to moderate, having almost halved from its cyclical peak of 18.4% recorded in July last year to reach 9.5% growth over the past 12 months.

Lawless said that despite the slowing trend, Sydney remains the second best performing capital city over the past year but he pointed out that a few of the smaller cities where growth rates have recently accelerated may start to rival Sydney's position over the coming months.

'The trend in home value growth is showing signs of increasing in those markets that have previously underperformed. These include Brisbane, Adelaide, Hobart and Canberra. Affordability constraints aren't as apparent in these cities and rental yields haven't been compressed to the same extent as what they have in Melbourne or Sydney,' Lawless said.

'Home values increased in Brisbane by 5.5% over the past year, which is the fastest annual rate of value growth in a year. In Hobart, home values are 6.2% higher over the year, which is its fastest annual rate of home value growth since July 2010,' he added.