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Rents up 1.5% in UK, but growth is slowing across the country
Rents in London fell by 0.5% in July compared to the same month in 2015 as growth in the lettings market in the city stalled, but they increased across the UK by 1.5%, the latest index shows. However, a breakdown of the figures from the Countrywide Lettings Index shows that rental growth slowed across every region of the country and the drop in London was the first annual fall in rents for six years. In July the average rent in the UK was £951 a month, up 1.5% on last year, but rising half as fast as in July 2015. Rents fell by 2% in Wales, by 1% in Scotland and by 1.1% in the South East of England but in the North of England and the Midlands, the rate of rental growth hit the highest level for two years. The highest rents are in Central London at an average of £2,638, up 2.1% year on year, followed by Greater London at £1,280 and the South East at £1,173. In the East of England they are £963, up 3.8%, in the South West £856, up 3.3%, in the Midlands £703, up 4.8%, in the North of England £694, up 4.7%, in Scotland £689, down 1% and in Wales £671, down 2%%. The report points out that while tenant demand has increased nationally, the volume of homes coming onto the rental market has slowed or in some cases reversed rental growth. In July there were 23% more homes available to rent in the UK than at the same time last year, while the capital saw a rise of a third. Some of this increase has been driven by purchases rushed through to beat the stamp duty deadline, however the number of homes available to rent has continued to rise in recent months, particularly in London and the South East. An increase in the number of homes on the market has meant less deals are agreed above asking rents. In July 2015 16% of tenants paid over the asking rent to secure a home compared to 7% in July 2016. In London the fall was larger, 11% of homes let for more than the asking price in July, down from 32% in July 2015. ‘The large rise in numbers of homes available to rent has certainly slowed rental growth, even with tenant numbers increasing. Stock levels were already running higher than usual due to investors bringing forward purchases in the rush to beat the stamp duty deadline in April,’ said Johnny Morris, director of research at Countrywide. ‘Added to that, uncertainty in the sales market in the run up to, and after the European Union Referendum has caused more discretionary sellers to turn to the rental market. While rental price growth has slowed, current market dynamics are likely to accelerate the growth of renting. It seems that with more stock and demand from tenants we will… Continue reading
Asking prices down across many parts of the UK, latest index data shows
Asking prices in London continue to fall, down 1.2% month on month, with values also down across other parts of the UK, the latest index shows. Prices fell in four English regions and Scotland, taking the overall mix-adjusted average asking price drop to 0.1% since last month and the number of properties reduced in price hit a 45 month high, according to the latest index from Home.co.uk. This means that the average annualised rate of home price appreciation for England and Wales slipped further to 5.3% and the total stock of property on the market edged up again and is just 0.5% less than in August last year. Indeed, supply of property increased sharply in key regions with supply up 27% in London, up 19% in the East of England and also up 19% in the South East. The report says that these increases will only serve to worsen the market conditions, especially in Greater London. It suggest that low confidence among sellers has triggered a spate of price cutting, the magnitude of which we have not seen since October 2012. This meant that asking prices slipped in the South East by a further 0.2% during the last month. Scottish asking prices also slipped for a second consecutive month, by 0.5%. A breakdown of the figures show that asking prices increased the most in the North East with a rise of 1%, followed by the West Midlands up 0.8%, the East of England up 0.6%, the South West up 0.5%, Wales up 0.3% and the North West up 0.1%. There is a significant risk that falling prices and uncertainly over Brexit in London and the South East will trigger a stampede to market, causing a major market slump, the report also says. ‘Overall, the current mix-adjusted average asking price for England and Wales is now 5.3% higher than it was in August 2015, and we anticipate that this figure will trend towards 0% over the coming months,’ said Doug Shephard, director at Home.co.uk. ‘Last month was simply too early to fully appreciate the Brexit fallout for UK property. This month we are seeing significant market changes but not all to the downside. Whilst the London market is looking rather panicky with falls being accentuated by Brexit worries, there are several strongly performing regions that remain unaffected so far,’ he explained. ‘While it is clear that the referendum result certainly unnerved many investors, it is also clear that they are not all running for the exit at once. We will be keeping a particularly close eye on the London market over the next month, watching whether or not the surge in new listings becomes a stampede. Such a panic would inevitably lead to a home price crash in the region and stress mortgage lenders to the limit or beyond,’ he pointed out. He believes that the decision by the Bank of England to take interest rates even lower to a record low of… Continue reading
House prices in Slough and Reading set to benefit most from London’s Crossrail project
House prices in the commuter towns of Slough and Reading have so far benefitted the most from the new Crossrail project that will join central London to routes west and east of the city when it opens in 2019, new research shows. House prices in these two locations have increased by 39% and 33% respectively since April 2014, compared with the regional average of 22%, according to the research from UK home lender the Nationwide. The railway line, to be known as the Elizabeth Line, will stretch from Reading and Heathrow in the west to Shenfield and Abbey Wood in the east, meaning that 40 stations will connect town in Berkshire and Essex to major hubs in London including the City and Canary Wharf as well as Heathrow airport. According to the research commuter towns' property markets are likely to benefit most from the introduction of Crossrail as Greater London stations are already well integrated, with good transport links around the capital, and thus house prices in these areas are unlikely to benefit substantially from marginal improvements in transport links. The strong rate of house price growth in Slough and Reading has been driven by robust demand for properties and a rise in transactions. Following the announcement that the project would go ahead, the number of homes sold in the three months to August 2014 was up 24% year on year in Wokingham, versus an average increase of 16% in the region as a whole in the same period. The research explains that eastern branches of the line do not extend as far out of Greater London as the western section, only reaching Brentwood and Shenfield outside of the capital and this may help to explain why the positive Crossrail effect apparent in the west is slightly more muted in the eastern section. House prices in the borough of Brentwood, which also includes Shenfield, have increased by 43% since the May 2010 government pledge of completion, compared with a regional average in the East of England of 36%. Over the last two years Brentwood house prices have risen broadly in line with the regional average at 24% versus 23%. The report suggests that lower rate of price growth, compared with western areas, may be due to the area already having good transport links to both The City and the Docklands, via Stratford, through Greater Anglia services and also the Shenfield metro now operated by TfL Rail. ‘Slough has been much maligned for many years. However, our research into the effect of the new Elizabeth Line on house prices in the town suggests that this may be unfair and that Slough, in fact, may be a more desirable place to live than people might imagine,’ said Andrew Harvey, senior economic analyst at Nationwide. He pointed out that the analysis suggests that the Crossrail project has provided a significant uplift to prices on the western section of the line to Berkshire. Slough, in particular, has… Continue reading
