Find out what’s happening in the property investment arena both in the UK and internationally
Economic growth and market recovery potential put the US on top of the world
October 21, 2015Article by Charlotte Ashton
The US is on top of the world right now, according to the latest World Residential Investability Ranking from Savills. The report highlights the US’s economic growth and market recovery potential as the factors behind its current strength, with the country beating all other global destinations to the top spot of number one for residential investability.
Housing market recovery
Ray Withers, CEO of specialist property investment company Property Frontiers, has been involved in US real estate for over a decade. He was familiar with the market before the crash and during it, as well as now that it is on the way up again. He comments,
“Throughout the highs and lows of the US housing market’s performance over the past ten and more years, our researchers have remained at the forefront of knowledge regarding which areas have good investment potential and which ones are likely to generate strong returns. Market data like this is essential in enabling informed choices about buy-to-let hotspots. The US is a vast country and markets differ massively not only by state but also from city to city within each state. Sieving through the data is crucial in knowing where to invest for the best possibility of healthy, sustainable returns.”
The International Monetary Fund has projected growth of 2.5% during 2015 for the US. The Federal Reserve’s June 2015 Federal Open Market Committee has suggested a slightly more conservative estimate of between 1.8% and 2.0%, growing to between 2.4% and 2.7% in 2016. It is this growth potential that has contributed to the US taking the top spot in the Savills World Residential Investability Ranking, as well as the potential for the housing market.
The market is picking up pace, with 5.49 million properties sold in the year to June 2015 based on figures from the National Association of Realtors (NAR). Prices have risen by 3.3% nationally in the past year, according to Zillow, and by 5.8% in the year to July 2015 according to the Federal Housing Finance Agency.
Looking forward, different agencies are predicting different levels of house price rises overall for 2015. Barclays Bank believes prices will rise by between 3% and 4%; Zillow believes prices will rise by 4.4%; and CoreLogic believes they will reach between 5% and 6%. Despite the differing projections, the common thread is that all of the agencies are looking forward to prices continuing their upward trajectory.
Looking to the south
The southern United States are looking particularly exciting so far as buy-to-let opportunities go. While Census Bureau figures show that new home sales rose by 18.1% nationally during the year to June 2015, in the south they rose by 23.7%. Meanwhile the NAR has confirmed that 58.5% of all houses sold were in the south.
North Carolina and South Carolina are being hailed as the places to watch by Property Frontiers. The company already offers fully occupied apartments with dual income potential for investment from $48,671 at Chandler Oaks in South Carolina. Now it is tipped to be on the verge of launching another fully tenanted scheme just across the border in North Carolina, in the thriving metropolis of Charlotte.
According to CoreLogic’s July 2015 Home Price Index, South Carolina is one of only ten states to have experienced increased growth over the year, while North Carolina has achieved a new price peak. Both states are exciting due to their economic growth and market recovery potential – precisely the factors that have been flagged by Savills as making the US the world’s most investable location for residential property.