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Private rental growth in UK centred in regional cities, new analysis suggests
The growth of the private rented sector in the UK continues and there is evidence that activity in this market is market is increasingly clustering in cities around the country. New data shows the proportion of those in the private rented sector living in urban areas has risen from 80% to 86% over the last decade, mostly accounted for by regional cities outside London. A new analysis of a range of data, including the most recent English Housing Survey, by real estate firm Knight Frank, suggests that this growth is set to continue. The firm has developed its PRS index, which reflected average yields, into a PRS Yield Guide, produced by Knight Frank consultancy agency and valuation teams which shows a slight tightening in yields for prime PRS deals in the second quarter across the Greater London market, as well as in many of the other key cities except Bristol and Glasgow. Meanwhile, it says that demand for rental property is being underpinned by affordability constraints in many parts of the sales market as well as increased hurdles in the mortgage market. There is also an increasing desire for property with flexible tenure, especially among young professionals, who want to live close to where they work. Tenants are also staying for longer with the English Housing Survey showing that the proportion of those living in rented accommodation reporting that they have lived in their current home for between two and four years rising to 24%, up from 20% a decade ago. Rents are rising across the country, reflecting an increase in wages as well as inflation. They rose by 2.5% in the year to the end of June but there are still wide regional variations in rental growth, just as there is a divergence in entry costs into these markets. The biggest increase in rents has been in Greater London with growth of 3.8% in the 12 months to the end of June, followed by the East of England up 2.6%, the South East up 2.5% and Scotland up 2.1%. In the same period rents have increased by 1.8% in the South West, by 1.7% in the Midlands and by 1.4% in Yorkshire and Humber. Meanwhile the growth over the same period in Wales was 0.8% and the North West and the North East both saw growth of 0.5%. The report also shows how institutional real estate investors are becoming increasingly active in the private rented sector in the regions over the last 12 months. It says they are attracted by the yields achievable and the strong occupier demand in regional centres. Of particular interest to institutions have been private rented sector schemes in Birmingham and Manchester, with a large amount of interest focussed on lot sizes ranging between £20million and £100 million. ‘The increasing entry of institutional investors into the market is a significant positive factor for the PRS, which should lead to an increase in the supply of good… Continue reading
Foreign buyers boosting Spanish property market, especially on Costa del Sol
An increased number of foreign buyers is set to boost the residential property market in the Costa del Sol in Spain, one of the country’s most popular areas with overseas purchasers. A new market forecast report from Instituto de Practica Empresarial (IPE) business school, in collaboration with property company Mar Real Estate, suggests the market could grow by 10% in the area. It also says that the market is set to grow by between 5% and 7% in major cities such as Madrid and Barcelona and 3% in other cities. The IPE says that home prices on the Costa del Sol are already up 10% this year, and now represent 5% of all sales nationwide and if sales continue growing at their present trend, the property market in Málaga province will increase to 20% of the overall Spanish market. The growth is buoyed by foreign demand for holiday homes on the Costa del Sol and the IPE report suggests that surging sales will help reduce the glut of new homes on the coast. Indeed, the excess inventory of new homes is expected to fall by 50% this year. Luxury home sales, in particular, are coming back strongly on the Costa del Sol, according to the IPE report, driven by a better exchange rate in Pounds and Dollars, and the security and stability of Spain. Meanwhile, the latest report from property valuation firm Tinsa says that the Spanish property market is undergoing a widespread recovery. Average property prices fell by 2% year on year in July, the lowest rate of decline since May 2008 but this masks growth areas along the Mediterranean coast in particular with some areas seeing price growth of 2.8% year on year. The data shows that on the Mediterranean coast, where prices have fallen by an average of 47.6% since the economic downturn, the average price of a home has increased by 3.8% since the end of 2014. This is more than large cities and the Balearic and Canary Islands where average prices have risen by 0.2% and 0.9%, respectively. Tinsa data also shows that five of the top 10 most expensive property hotspots are located in the Balearic Islands but Alejandra Vanoli, managing director of Mallorca Sotheby’s International Realty, said that there are prices per square metre in these locations that far exceed Tinsa’s estimations. ‘It’s not unheard of to reach as high as €30,000 per square metre for the most desirable Port Andratx home. Demand is strong from some of the wealthiest individuals and families in Europe, the US and beyond,’ she explained. Tinsa figures also suggest that the Balearics weathered the storm of the Spanish property market price ‘correction’ more positively than the rest of the country. While the average drop in prices across the whole country stands at 42%, in the Balearic Islands most regions registered less than a 35% decline. Palma was also highlighted by Tinsa as property transactions increased by more… Continue reading
Average UK rents up 11.8% year on year, led by the South West and Scotland
The South West of England and Scotland saw rents increase faster than anywhere else in the UK over the three months to July 2015, according to the latest index. The average rent in the UK for new tenancies over the three months to July 2015 was £977 per month or £761 excluding Greater London, the data from the HomeLet index shows. Indeed, the average rent on a new tenancy in London now stands at £1,538 per month, 9.5% higher than a year ago and overall rent price increases are running ahead of inflation and house price growth. The index, which claims to provide the most up to date figures on UK rent prices, shows that rent price growth in the private rental sector is now extremely broad based with average rental values up in every region of the UK except the North West and are 11.8% higher when compared to the same period in 2014. Three regions of the UK have seen rent prices rise at a rate exceeding that of London in the three months to July 2015. In the South West of England rent prices on new tenancy agreements signed in the three months to July were 11.4% higher than in the same period of last year, in Scotland they increased 11.2% and in the South East of England there was growth of 10.3%. In London where, in cash terms, the average rent on new tenancies is more than twice as high as in the rest of the country, prices continue to rise. New tenancies signed over the three months to July came with rents that were 9.5% higher than in the same period of last year. ‘The index demonstrates just how broad based the rise in rent prices has now become, confirming that this is a UK wide trend. Regions which have long been associated with a buoyant rentals sector, such as London, continue to experience rising prices, but rents are also rising in many other parts of the country at similar rates,’ said Martin Totty, chief executive officer of Barbon Insurance Group, parent company of HomeLet. ‘The South West of England, for example, is benefitting from its popularity with those attracted to the area for lifestyle reasons, as well as the strong local economy in many of the towns and cities of the region,’ he pointed out. He explained that over the past few years, price trends in the rental market and house purchase market have been very similar. ‘However, across the first half of this year, house price growth has slowed whilst rental values have continued to increase, perhaps reflecting a change in the relative attractiveness of renting versus buying over this recent period,’ he said. With early signs of the cost of mortgage finance starting to edge up, it will be interesting to see if this recent trend continues or if the change in buy to let mortgage interest tax relief announced in the Summer… Continue reading
