News
Sales up almost 5% in Scotland but prices down
Property sales in Scotland increased by almost 5% year on year in the second quarter of 2016 but prices have fallen by 2.3% over the same period, according to the latest official data to be published. Sales were up 4.9% to 25,760, the data from the Registers of Scotland shows, the highest volume of sales for this quarter since 2008/2009 with the average property price down to £164,326. A breakdown of the figures show that the highest percentage rise in volume of sales was recorded in Argyll and Bute, with an annual increase of 24.5% compared with the same quarter the previous year. Edinburgh City recorded the highest volume of sales at 3,178, a rise of 8.6%. The largest percentage fall in volume of sales was in Aberdeen City, which showed a drop of 19.5% to 1,063 residential sales compared to the same quarter last year. The highest percentage fall was recorded in West Dunbartonshire, with an average price of £105,859, a fall of 12.7% compared with the same quarter the previous year while East Renfrewshire recorded the highest average at £241,364, an increase of 11.7% compared with the same quarter the previous year, which was also the largest percentage rise of all the local authorities over the year. The total value of sales across Scotland registered in the quarter increased by 2.5% compared to the previous year to just over £4.2 billion. The City of Edinburgh was the largest market with sales of £745.7 million for the quarter, an increase of 7.1% on the previous year. South Ayrshire recorded the highest increase in value with sales of £92.2 million, an increase of 27.8% compared with the same quarter last year. Aberdeen City showed the largest decrease in market value, a decrease of 24.4% to £223.8 million compared to the same quarter last year. All property types showed a decrease in average house price in this quarter. Terraced properties showed the biggest decrease down 5.6% to £132,700. Detached, semidetached and flats saw decreases in average house prices of 3.7%, 0.8% and 4.0% respectively. With the exception of detached properties, all property types showed an increase in sales volumes with flats showing the biggest increase at 11.2%. The volume of sales of detached properties decreased by 3.4%. The rise in property sales in Scotland over the last quarter indicates that there is still confidence in the market, according to Michelle Grant, investment director of Grant Property. ‘From a price perspective we are surprised to see a decline. On the ground we are still seeing prime city centre properties in Glasgow and Edinburgh selling for between 10% to 20% over home report valuation,’ she added. Simon Brown, partner and head of residential sales at CKD Galbraith, believes that the Scottish property market has remained resilient to political and economic changes despite the uncertainty of Brexit. ‘As a firm we have not experience any negative effects or hesitancy from… Continue reading
Buy to let mortgage arrears in UK set to keep falling
Buy to let mortgage arrears in the UK are set to fall below 7,000 by the end of the year as landlords are confident and lenders have no reason to feel differently due to Brexit. The forecast from complex buy to let, commercial mortgage and short term finance lender Keystone, based on official data from the Council of Mortgage Lenders (CML), points out there has been no let-up in demand. Latest official estimates show 9,300 cases of buy to let mortgage arrears as of the first quarter of 2016, down from 10,300 the previous quarter and 11,300 in the first quarter of 2015. Keystone’s projections estimate that as of the second quarter of 2016 some 8,500 buy to let mortgages stand more than three months in arrears across the UK. This is expected to drop to 6,600 by the fourth quarter of 2016. ‘The referendum result was unexpected, the precise impact is unknown, and it is still rather early to tell what will happen. But we have seen no let-up in demand for buy to let mortgages and we don’t expect to see any change in the downward trend in buy to let arrears as a result. Landlords are confident and lenders have no reason to feel any differently,’ said David Whittaker, managing director of Keystone Property Finance. He pointed out that there are many landlords out there who still need finance, particularly professionals who are in the process of remortgaging to secure a solid five year fixed rate or selling their personally owned portfolios to their limited companies. ‘We have ensured Keystone has the funding lines in place to provide landlords with the solutions they need and in the four weeks since the vote we have forged ahead with our lending. We are increasing traction with brokers and investors. Optimism is the keyword here,’ he explained. In response to CP11/16, the consultation paper from the Prudential Regulation Authority (PRA) which proposed stricter underwriting standards for buy to let, Keystone has introduced separate stress tests for individual and limited company borrowers applying for products in the Classic Range. For individuals the new formula of 145% at pay rate or notional rate of 5.25%, whichever is higher, will be applied to term trackers and three year fixed rates. For borrowers choosing a five year fixed rate, the pay rate will be used. Stress tests for limited companies are to remain at 125% of pay rate or notional rate of 5.25%, whichever is higher, for term trackers and three year fixed rates. For limited company borrowers choosing five year fixed rates, the pay rate will be used. ‘We’ve also improved our criteria for landlords looking to finance larger multi-units. We’re accepting six flats in a block as standard and we’ll consider up to eight on a case by case basis. Keystone is tackling market changes head on,’ Whittaker added. Continue reading
Call for funding changes for more homes to rent in UK
New UK housing minister Gavin Barwell is being urged by property industry commentators to support the building of more new homes to rent by relaxing the rules around public funding in the sector. The appeal has been launched in response to an independent report published this week by the Centre for Economic and Business Research and commissioned by the National Housing Federation which predicts that the UK economy could contract by £145 million in the next 10 years if the rate of growth in new housing completions falls at the same rate as it did in 2008. Spokesmen for the National Housing Federation and the Chartered Institute of Housing argue that building more homes for rent or shared purchase would help keep housebuilding and the economy going in a time of economic austerity. Up to 300,000 units could be built by housing associations by 2020, according to the NHF, if funding is made available even in the face of economic uncertainty. CIH statistics show that during the last recession the number of homes built by non-profit housing associations increased by 22% between 2007 and 2009, while private development dropped by 37%. The call from the sector bodies for the government to redirect some of the current funding to allow construction of new housing association homes for rent is likely to be welcomed by would-be occupants, demand from whom currently outstrips supply. Reallocation of the central budget to allow housing associations to build more rental homes would also mitigate the negative effects of a general slowdown in the housebuilding sector, widely anticipated as a result of Brexit, according to James Howard, partner in Clarke Willmott LLP’s social housing development team. ‘A change in funding strategy to switch the balance to building more for rent than for sale should allow for a supply of new homes to continue despite the gap private sector housebuilders might leave behind,’ he said. According to Jonathan Hulley, Clarke Willmott’s head of housing and asset management, the Government’s flagship Starter Homes scheme would lead to the undermining of sales of more affordable shared ownership properties and fails to address the urgent need for more affordable homes to rent. ‘The social housing sector argues that housebuilding is needed now more than ever. People are in need, waiting lists are still growing, so the policy of building more homes for sale only needs to be revised and adapted to allow for the building of more homes for rent,’ he said. ‘There is also a worrying lack of capacity on the ground to deliver which needs to be addressed, and a question mark over what appetite there is for outright purchase of houses on large scale,’ he pointed out. ‘On the other hand the kind of shared ownership offered by housing associations puts… Continue reading
