Property news from UK, Edinburgh and Vancouver...

By The Folks @PropTalk - August 5, 2015 No Comments

Below are some private home-related news reports that the wife and I have come across today, which may be of interest to those who have foreign property investment holdings or are looking to invest in these countries/cities.

Accelerated increase in UK home prices in July:  BBC News

The pace of increase in UK house prices accelerated in July, rising by 3.5% compared with a year earlier, according to the Nationwide.

The building society said that the annual change picked up from 3.3% a month earlier.

Property values rose by 0.4% in July compared with June, taking the cost of
the average home to £195,621.

Demand for housing remained "encouraging", the report said, but supply strength was "unclear".

Nationwide's chief economist Robert Gardner said: "The number of new homes under construction has started to pick up, albeit from historically low levels, and further increases are required if a sustainable recovery in the housing market is to be maintained over the longer term."

Mr Gardner said that the house price growth might be "stabilising close to the pace of earnings growth" which had historically been around 4% a year.

Estate agents and analysts point out that the market could be affected by a potential change in interest rates at the turn of the year.

"The one blot on the horizon is a potential interest rate rise, which may slow down the mainstream market as buyers become concerned that their mortgage will cost more," said Jonathan Adams, director of estate agency Napier Watt.

"Buyers often do not realise the impact of a rate rise until the first one actually happens."

Edinburgh home prices rise faster than rest of UK:  Edinburgh News

Home values across the Capital (Edinburgh) are growing faster than in any other British city – sparking warnings that properties are locked in a cycle of “hyper inflation” which will put them beyond the reach of families and first-time buyers.

Figures from property website Zoopla have revealed that Edinburgh prices have surged 8.2% since January – an average £20,465 increase since the start of the year.

The rise, which puts the Capital ahead of second-­placed Colchester in Essex, means the average home here has a price tag of just under £270,000 – seven-and-a-half times a typical salary in the city. 

Property experts said the jump provided evidence of the core strength of Edinburgh’s housing market and was partly down to a post-referendum confidence bounce after Scotland voted to stay in the UK.

But critics warned that the trend was a blow for residents struggling to get on the property ladder.

Councillor Gavin Corbett, Green economy spokesman, said: “It’s really bad news for Edinburgh as a city and for its economy.

“The problem of hyper house price inflation is a kick in the teeth for younger households looking to buy a first home and to that growing army of Edinburgh residents who rely on private landlords for a home.

“It’s also seriously bad news for the local economy because it traps capital in decades-old bricks and mortar rather than funding the kind of small business and social enterprise which are the basis of our real wealth.”

He added: “Far from being a cause for celebration, we should be looking at measures to ensure house prices are kept within reach of ordinary families.”

The latest jump in values comes after the Edinburgh Solicitors Property Centre (ESPC) revealed average prices in east central Scotland fell by half a per cent between April and June 2015 compared with the same period last year.

ESPC analysis indicated that this could be explained by the surge in higher-priced properties brought to market at the start of the year due to the introduction of the land and buildings transaction tax (LBTT).

Maria Botha Lopez, ESPC business analyst, said that, despite LBTT-related uncertainty, Edinburgh was continuing to see good growth.

“If we compare the first six months of this year with the same period last year, we see a 9% growth in property prices year on year,” she said. “There was a temporary effect of LBTT following its introduction on April 1, which drove up average selling prices, but looking at the first six months on the whole gives us a better chance of balancing out the LBTT effect.”

Lawrence Hall, of Zoopla, said: “The real winner here is Scotland. The surge in property values can, in part, be explained as a post-referendum bounce, as businesses and capital flood back to Scotland, after withholding investment during the volatile September referendum period.”

Vancouver rent hikes more swell than tsunami: Business Vancouver

Vancouverites love to complain about real estate prices whether they are buying or renting.

The latest “sky-is-falling” stories have been about a “rent increase tsunami” predicting huge rent increases because of the plummeting vacancy rate.

Yes, vacancy rates have dropped. But vacancy rates for rental apartments in Greater Vancouver have been close to or under 1% for a couple of years, said Robyn Adamache, principal market analyst with Canada Mortgage and Housing Corp. So this isn’t a huge change.

And while new stock from purpose-built rentals has been small (from 2009 to 2014 there were only 1,700 rental units built in Greater Vancouver), most rentals come from the secondary market such as suites in homes or condos that are rented out. And there were 13,000 of those added to the rental pool during 2009-14, Adamache said.

And during the past few years, rents have been pretty steady, keeping close to the maximum amount the province mandates for continuing tenants, Adamache said. This year that number is 2.5%.

So maybe the sky isn’t falling on renters. Nor is it necessarily going to crash onto homeowners.

A report out from TD Economics last week labelled Vancouver’s real estate market as a “cautionary yellow,” rather than low-risk green or high-risk red. One of the reasons: house prices in Vancouver, despite the 10% year-over-year growth in June, have actually increased on average about 2% to 3% per year over the past three to five years. In Toronto, home prices have increased on average about 6% to 6.5% over the past three to five years, making that city riskier than Vancouver. But still not that risky.

By contrast, the housing crash in Toronto and Vancouver in the early 1990s followed price gains in the 20% to 25% range, the report said. And during the five-year run-up to the 2008 housing crash in the United States, prices were climbing 14% annually in some of the most overheated cities.

So while rents are high and housing prices are ridiculous, the numbers tell a much calmer story.

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