Resicom – Holiday Investment – 04-21 – LB

US Property Sales to be Highest for 10 Years

Property sales in the USA are on track to outperform all years since 2006, buoyed by strong demand in the major cities where most of the 14 million jobs have been created since the financial recovery got underway in 2010.

Mortgage rates at a 3 year low and increasing demand from the new workers as well as increases in rental yield is fuelling demand, despite first time buyers struggling to get on the ladder, somewhat mirroring the situation in the UK.

The imbalance between supply and demand has seen US property prices show an increase of nearly 5 per cent year on year with near 4 percent less properties available compared to a year ago.

Regional price differences are appearing where property prices have risen the fastest, with the South and the West leading the way, though the NAR confidence index shows that general property buyer confidence is still strong.

Rents continue to rise reaching a seven year growth high last year, offering increasing yields for investors with no lack of available renters due to the rising employment generating demand for housing.

The property shortage is particularly noticeable on smaller and lower priced properties leading to a lack of first time buyers coming to the market.

This is seen as the only missing link to a full housing recovery, with college graduates, usually a strong supplier of first time property purchasers struggling to pay back student debt rather than saving towards a property, and held back by the lack of affordable properties available.

Senator Elizabeth Warren has urged Congress to pass the Bank on Students Emergency Loan Refinancing Act, allowing students to refinance their federal and private student loan debt at the same low rates already now offered to new borrowers in the federal student loan programme.

Mortgage defaults have dropped to almost as low as before the financial crisis and property prices continue to rise, particularly in the major cities where new workers are looking to get on the property ladder.

All of this alongside strong rental growth means that America is once again a good prospect for property investment offering capital appreciation as well as attractive rental yields.

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