British Property Market Vs USA Property Market
i. British property market
Following the introduction of buy to lent stamp duty charges, the property market in the UK increased in 2016. Average house prices rose by 5.3%. However, the highest price rises were recorded around London, where prices increased by 11.9%. Recently, the property market has recorded an increasing trend. This can be proved by the housing transactions and Mortgage approvals that have been noticed in the recent months. The additional tax liabilities and stamp charges expected have made people purchase houses currently.
Risks UK property market faces
The 3% increase in stamp charges is expected to raise prices of the houses to let. This is because property owners have to dig deep into their pockets to meet the purchase prices.
The anti-money laundering steps likely to be implemented on foreign property owners may not work well with foreign investors. This should worry property buyers since a big portion of London property is owned by foreign investors purchasing via companies.
The extension of right to buy at discounted prices for over one million Housing Association tenants will definitely lead to a decline in housing prices
UK house prices are boosted by:
- Strong immigration and population growth especially in London
- Low-interest rates due to expansion of money supply through “quantitative easing”
- The boom experienced in the city of London
- Weak construction activity which has forced people to opt for purchasing
ii. US property market
The US market property remains strong even after five years of price growth. Demand and construction activities are still on the top notch. So far, the price has risen by 6.2%. House Price hikes have been noticeable in the 20 major cities of the U.S. in 2016 the mountain region was the leading with a price increase of 8% followed by the pacific region with 7%.
- In 2017, the sale price of new homes rose by 12%. Demanding for new houses has been increasing. For instance. Sale for new single-family apartments increased by 12%.
- Construction is still far below the peak: Despite recording 8.7% completion of housing units, this is far below the peak that was recorded in 2005. However, the inventory remains tight. The latest home inventory stood at 1.65 million units as at December 2016. It was the lowest ever recorded since tracking of housing supply began.
- Foreclosures continue to fall: Due to increasing employment levels, the foreclosures and delinquency trends are on the right track. The delinquency rate for single-family residential mortgages dropped from 5.09% to 4.15.
Home sale surge: home sales increased to 5.45 million units in 2016, which was a 3.8% increase from the previous year.
Increase in mortgage interest rates: the mortgage interest rates are on a rise.
- The average interest rates on a 30 year fixed mortgage rose from 3.66% to 4.17%
- Average rates for a 15-year mortgage increased from 2.96% to 3.88%
- Average rates for 5-year adjustable mortgage rates increased from 2.83% to 3.2%.
Despite the rise in the mortgage rates, the mortgage market expanded slightly in 2017
- Increasing rents are a sign of a health economic system in the U. S
