Property News All The Latest Updates
Hi guys and welcome to our first property news blog of the month! As usual, we will be taking a look at the latest goings-on in the UK property market with five short stories. Today, we start our property news round-up by looking at Generation Y and their renting habits to focusing on Aegon’s research on homeowners and pensions. Missed our last round-up? If so, catch up here.
Millennials Like The Flexibility & Freedom of Renting
Recently, a study confirmed something that most 18 to 30-year-olds already know: they can’t buy houses and also something we are familiar here at The House crowd from conducting our own research. As The Independent’s Thea De Gallier points out : “Millennials are abandoning their dreams of home ownership,” declared a damning report that revealed home ownership in the UK has fallen to 63.8 per cent (for context, it was 70.8 per cent in 2003).”
So why is it so hard for millennials like myself to become a property owner? Firstly, the average house price in this country is just over £200,000, (almost 10 times the average wage!) Secondly other regions are playing catch-up with London’s astronomical prices which has left us no choice but to rent.
But is renting necessarily a bad thing? Today, Generation Y are known for their fast paced life style and are constantly on the move, renting is surely ideal for them.
Research can back this claim up, for example, Deloitte found out that 44 per cent of millennials want to leave their current jobs in the next two years, in addition, Econsultancy found that 69 per cent of all graduates thought freelancing was a more attractive option than long-term employment. (Stats taken from The Independent)
On the other side of the Atlantic, many commentators have mentioned that millennials simply don’t want to own a property. One source in particular views that millennials are “[thinking] differently about what it means to “own” something”.
I totally agree with the commentator as we are currently living in a sharing economy. Moreover, I completely side with De Gallier’s points in her article that we need a similar renting cap that is used in European cities such as Berlin. It’s fair to say the current system isn’t working for us even though some of us like to rent. We definitely need to seek alternatives – the likes of property crowdfunding could be one of those methods, which you can read more about here.
Why Are Fewer People Purchasing Properties in Greater Manchester?
BBC News reported yesterday that home ownership has fallen more sharply in Greater Manchester than anywhere else in England.
The biggest question on everyone’s lips is why? Financial Analyst Louise Cooper says the issue stems from house cost to wage ratios. She told the BBC that : “The average house price in England in 1986 was £38,000, today it is £226,000,” she said. “Over the same period the average salary has gone up two and half times.”
She adds : “The price of property compared to salaries has gone up hugely. Everyone says it is a London problem. It is not. Manchester is one of the worst.”
Our very own Frazer Fearnhead mentions in the BBC article that Manchester has a large student population and young professionals in the city prefer to rent.
Frazer believes that the Greater Manchester area mirrors the rest of the UK in the fact there are not enough houses being built, fuelling a demand that pushes up prices.
Read more on the issue here.
Investors Pull £1.4bn From UK Property Funds in Brexit Month
Retail investors withdrew £1.4bn from property funds in June, 6 per cent of the sector’s assets, as the Brexit vote sparked an exodus that forced some of the largest funds to halt trading. (FT.com, August, 2016)
Following to the leave the EU in late June, led to many moving money out of property funds which forced Standard Life’s UK Real Estate fund to suspend redemptions in early July.
Others followed suit, such as Aviva, M&G, Columbia Threadneedle, Henderson and Canada Life.
Senior analyst at the retail investment broker Hargreaves Lansdown, Laith Khalaf, told the FT : “The scale of the exodus from investment funds in June is quite extraordinary, with the Brexit vote eclipsing the financial crisis in terms of putting the frighteners on retail investors in the short term.”
At present, around £15bn of investors’ money remains trapped in suspended funds that lack enough liquid assets to meet redemption requests.
UK Construction Crashes At Fastest Pace Since Financial Crisis
Construction output in June has fallen at its fastest pace since the dark days of the financial crisis in 2009 according to a survey by Markit and the Chartered Institute of Procurement and Supply (Cips).
Purchasing Managers Index figures indicate that Slower demand has lead to a drop in purchasing activity for the first time in just over three years. The index dropped from 51.2 in May to 46.0 in June, with anything below 50 indicating a contraction, as The Independent’s Ben Chapman reports.
Despite having record house prices, it was revealed that the weakest performing sector was residential construction. In addition, commercial building work was also weak, as new projects did not start to replace those that were coming to completion.
The EU referendum has been linked to the slowdown as there are still many uncertainties. Senior economist at Markit, Tim Moore told The Independent : “Widespread delays to investment decisions and housing market jitters saw the UK construction sector experience its worst month for seven years in June.”
However, David Noble, chief executive officer at Cips mentioned that the only glimmer of light through the brickwork is the rate of decline was not as sharp as that experienced during the previous financial crisis.
A spokesperson for Home Builders Federation said recent figures should not be viewed in isolation and that long term trends for the sector were good.
Little Appetite For Using Property As Pension As Research Shows
Research conducted by Aegon revealed that majority of homeowners do not want to use their property wealth to fund retirement.
Their study showed 74% of homeowners would only use their home as a “last resort” to provide a retirement income or do not consider their home as a source of retirement income at all. (Professional Adviser, August, 2016)
Moreover, Aegon found out that more than half of the research respondents want to leave their home to their loved ones.
Only 3% of those surveyed said that they would sell their property and move in with family as a means of funding retirement. 21% of homeowners are hoping they can fall back on inheritance to assist them with their retirement plans.
What Are Your Thoughts?
Which of our chosen property stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.
In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it.