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Long term outlook for UK prime country market looking positive
The long term outlook for the UK’s prime country property market is positive, but the election result is unlikely to lead to significant price growth, according to a new analysis. The result of the General Election has marked an end to the uncertainty experienced in the UK prime markets in the run-up to polling day, when concerns about taxation and personal finances led to weaker demand at the start of 2015, the Knight Frank report points out. Indeed, it shows that annual price growth had slowed to 2.5% by March, down from 5.2% in the second quarter of 2014 but prices have risen by nearly 1% so far this year and by 2.5% annually. ‘We now expect there will be more positive trading conditions as buyers and vendors return to the market. Transactions, which had been put on hold pending the outcome of the vote or as a result of a wider sense of political uncertainty, will proceed,’ said Oliver Knight of the firm’s residential research unit. However, prices remain below peak levels, creating an opportunity for buyers and prime market activity has picked up over the last 12 months,’ the report also says. ‘With a Conservative Cabinet, the possibility of a mansion tax for properties valued at over £2 million has gone. Now, one of the key questions is what effect a more certain political environment will have on prices,’ explained Knight. ‘While the confidence engendered by political stability is expected to result in a rise in market activity, any expectations that prices will jump significantly as a direct result of the general election may be unrealistic. ‘Any market is based on supply and demand and the number of new properties coming to the market is expected to increase. This rise in supply, together with uncertainty as to the precise direction of fiscal policies of the new government is likely to mitigate significant price rises,’ he pointed out. ‘Additionally, higher purchase costs as a result of the increase in stamp duty announced in December need to be considered. As a result of that change, the up-front cost of buying a property valued at more than £937,500 has risen,’ he added. The report says that overall the long term outlook for the prime country market is positive as for now interest rates remain at record low levels, economic growth is steady and mortgage rates are competitive. ‘As the economy continues to improve the ripples of demand from London will strengthen. Popular commuter locations, within easy reach of the capital, are likely to be the biggest beneficiaries,’ said Knight. ‘There has already been an increase in the number of buyers looking to exploit the relative price gap that has opened up between London and regional prime markets and the expectation is that this will continue,’ he concluded. Continue reading
Modest price growth predicted for UK residential post general election
Continuity and stability has returned to the UK residential property market following a period of uncertainty where the threat of mansion tax amongst other measures caused a pause in activity. According to the latest market analysis from JLL the prime London market in particular breathed a sigh of relief as the prospect of mansion tax evaporated when the Conservative party won the general election last month and modest price growth is predicted in the short term. ‘Whilst in the six month run-up to the election the number of transactions recorded in some areas of the prime market cooled by a third. The question now is how strong the demand bounce will be and if we will return to the heady unsustainable rates of growth that fed the market in the 2009,’ said Adam Challis, head of residential research at JLL. The real estate advisory firm believes that whilst there will be a renewed level of demand in the prime central London market, underpinned by a more balanced supply backdrop, this will take some time to have an impact. ‘We have seen strength in activity resume in the prime central London market but we predict this to stabilise as the industry settles down and the new Government beds in,’ Challis explained. The report says that in central London new build activity, off-plan sales remained robust in the first half of 2015, with some sensitivity for high value property. Development activity has been shifting towards outer areas over the past 12 months, with annual starts up by 59.3% in contrast with central London, which is down by 43.2% over the year. Looking forward the firm believes that the focus needs to be on supply solutions that will tackle the real issue facing the UK housing market. ‘Policies to date have been about the demand-side solutions but Government needs to concentrate on policies that can drive a step change in supply solutions. Whilst these will take some time to bed-in and manifest themselves, they will be the solutions that ultimately provide the help where is it needed most,’ said Challis. JLL predicts that with five years’ worth of clear runway to aim at, it expects to see a continued rate of growth in housing market transactions that have been slowly gathering momentum since the Conservative majority victory on 08 May. The firm predicts that pricing is likely to remain under upward pressure, in line with a healthy, stable economic backdrop, real income growth, near term political risks subsiding and a sclerotic housing supply response will all play out. ‘Political risks are always present in residential markets. The UK needs a Government that actively seeks to provide certainty so that markets can behave efficiently for the benefit of the economy,’ Challis explained. However, the firm points out that with certainty and stability resuming, there are, however, three political changes that may create renewed tensions in the housing market; the European Union referendum, regional devolution driven by Scotland… Continue reading
London mayor opens up new homes planning guidance for consultation
The Mayor of London Boris Johnson has released updated planning guidance that aims to maximise the construction of quality homes in the city. Johnson regards this as a vital step in achieving the goal of building 49,000 houses a year in order to keep up with London's booming population but he wants quality to be as important as quantity. Interested parties are being invited to comment on the new guidance, which includes detail on building specifically for long term private rentals, the potential introduction of affordable housing targets in new areas, and more details on vacant building credits for developers. London's Deputy Mayor for Planning, Sir Edward Lister, said that the new Supplementary Planning Guidance will be vital in helping developers and boroughs understand how to achieve the Mayor's ambitious aims for housing in London. ‘Delivering the homes that London needs requires us to work together, so I would encourage anyone with an interest to let us know what they think,’ he added. The latest revision of the Mayor's Supplementary Planning Guidance for Housing builds on the Mayor's Plan to provide extra detail where needed, and is open for consultation until 07 August. It recognises that in the drive to increase housing capacity in London, quality is just as important as quantity and seeks to make sure that people have decent homes and enough space to live. The plan includes detail on the Mayor's policy to encourage an increase in developments designed specifically for long term private rentals, so-called build-to-rent. He says that done correctly, this could help meet specific population needs in certain urban centres. There is also more detail on the concept of applying fixed affordable housing targets in Housing Zones and Opportunity Areas, which will be the source of significant growth in housing supply in coming years. Advice for local boroughs is included on how to incorporate the Vacant Building Credit into their local planning policy to ensure the credit delivers the aim of the Government policy, which is to bring forward brownfield sites that otherwise wouldn't come forward for development. The credit allows the existing gross floor space to be credited towards affordable housing contributions. Continue reading
