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UK sees highest gross home lending for May since 2008
Gross mortgage lending in the UK reached £18.2 billion in May, some 4% higher than April’s £17.6 billion and 14% higher than May 2015, the latest data shows. The figure from the Council of Mortgage Lenders, which represents the vast majority of home lenders in the UK, was the highest May figure since 2008 when gross lending reached £23.7 billion. CML senior economist Mohammad Jamei pointed out that, as expected, lending continued to be somewhat dampened in May, reflecting the earlier rush in the first quarter to beat the stamp duty change on second properties. ‘Looking ahead, there is likely to be considerable uncertainty as a result of the European Union referendum decision. We expect this to affect sentiment and reduce activity below levels that would otherwise be expected in the near term, as both buyers and sellers adopt a wait and see attitude until the dust begins to settle,’ he explained. ‘Market fundamentals underpinning house prices still look sound, and we do not expect significant house price falls, especially given the current supply demand imbalance,’ he added. According to Adam Tyler, chief executive officer of the National Association of Commercial Finance Brokers (NACFB), a wait and see attitude and increased caution is likely among buyers and sellers alike due to the referendum result. ‘Our own view mirrors that of the Council of Mortgage Lenders in that market fundamentals still look sound and the sharp imbalance between supply and demand will prevent a material decline in prices,’ he said. ‘Sentiment may have shifted dramatically over the past few days but the structural imbalance between supply and demand is as strong as ever. Demand naturally tapered off in the buy to let sector following the stamp duty surcharge but it may experience a bounce after Friday's referendum result,’ he explained. He also pointed out that current market, political and economic volatility could benefit buy to let as investors once again look to bricks and mortar as a safe investment and the fact that Bank Rate is now more likely to go down than up in the near term will provide further support to the property market. ‘Understandably, there's a lot of hysteria surrounding the trajectory of the property market but our own view is that the reality will prove to be relatively benign,’ he added. Continue reading
Should be business as usual for Brits buying property in the EU
British people seeking to buy a property in the European Union should not be downhearted by the referendum decision that the UK should leave, according to overseas real estate experts. Those who are looking to purchase a holiday home overseas, for example, are likely to see that owning a property in the EU will only be marginally more complex than it is currently, according to Andy Bridge, managing director of A Place in the Sun. He pointed out that citizens of the United States, Canada, Russia and many other nationalities own properties throughout Europe, so while it may become slightly more complex for British buyers than currently, they are not going to be prevented from owning property in Europe. Erna Low Property, French Alpine property specialists located in London and in the French ski resort of Les Arcs 1950, say that buyers must resist the urge to panic as there will be no change to buyers conditions and they state that right now buyers should focus on risk assessment and limitation of potential future damage. ‘We are sure that there will be no change in buying costs for those looking to buy property in France, and there are no planned changes in taxations for the income made from property rentals, as well as no difference in capital gain tax as since January 2015 a single rate was applied for EU and Non-EU members,’ said director Francois Marchand. ‘In time, UK residents might be limited regarding the amount of GBP investments and the amount of wealth that can be sent abroad when a new government is in. A safe investment risk strategy has always been to diversify your portfolio. It will make no difference for our clients investing in a French property whether they have bought, are planning to buy, or are currently in the process of buying a property in France. The mountains were there before EU existed, and will be there tomorrow to welcome any international property investors, part of the EU or not,’ he added. However, Alejandra Vanoli, managing director of Mallorca Sotheby's International Realty, believes that the real impact Brexit will have on European property markets will be hard to determine until the negotiations between the UK and the EU are finalised. ‘This of course will be most prevalent in the Spanish market due to the high concentration of British expats. However, these changes will undoubtedly need some time to take effect. Despite this, the Balearics are still a very attractive second home destination to British buyers due to our short flight time from the UK, secure lifestyle, warm climate and favourable legal framework for expats looking to invest in the property market,’ he said. One possible effect is that prices could rise in popular locations if real estate investors move away from the UK to other EU countries to buy property. Camille Letuve Partner of Athena Advisers said that some foreign investors might turn away from London… Continue reading
British rental prices up 2.5% year on year
Rents in Britain increased by 2.5% in the 12 months to May, down slightly from the 2.6% annual rise recorded in the previous month, the latest index figures show. Rental prices grew by 2.6% in England, 0.4 % in Scotland and were unchanged in Wales, the data from the Index of Private Housing Rental index published by the Office of National Statistics also shows. It means that a property that was rented for £500 a month in May 2015, which saw its rent increase by the Great Britain average rate, would be rented for £512.50 in May 2016. Rental prices for Great Britain excluding London grew by 2% in the same period and rental prices increased in all the English regions over the year to May 2016, with rental prices increasing the most in the South East at 3.4%, up from 3.1% in April 2016. This was followed by London at 3.3 but this was down from 3.7% in April 2016 and the East of England at 3.2%, up from 3.0%. Annual price increases had previously been stronger in London than the rest of England since November 2010. I The lowest annual rental price increases were in the North East at 0.8%, unchanged when compared to April 2016, the North West at 1.2%, up from 1.1% and Yorkshire and the Humber at 1.2%, down from 1.3% over the same period. The zero annual rate of change in Wales continues to be below that of England and the Great Britain average. Rental growth in Scotland has gradually slowed to 0.4% from a high of 2.1% in the year to June 2015. The IPHRP series for England starts in 2005. Private rental prices in England show three distinct periods: rental price increases from January 2005 until February 2009, rental price decreases from July 2009 to February 2010, and increasing rental prices from May 2010 onwards. When London is excluded, England shows a similar pattern but with slower rental price increases from around the end of 2010. Since January 2011 England rental prices have increased more than those of Wales and Scotland and since the beginning of 2012, English rental prices have shown annual increases ranging between 1.4% and 3% year on year, with May 2016 rental prices being 2.6% higher than May 2015 rental prices. Excluding London, England showed an increase of 2.3% for the same period. Looking at data from the UK House Price Index over a longer period shows residential house price growth has typically been stronger than rental price growth for a number of years, with an average 12 month rate of house price inflation of 5.7% between January 2013 and April 2016, compared with 2.1% for rental prices. Inflation in the rental market is likely to have been caused by demand in the market outpacing supply. Demand in the lettings market continues to strengthen, with RICS’ Residential Market Survey noting that tenant demand continued to grow robustly in May 2016. The strength… Continue reading
