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House price growth in UK cities continues to fall, latest index shows
The rate of house price inflation in UK cities continues to slow with growth of 10% in the 12 months to February compared to 11.6% six months ago, the latest data shows. But there is considerable regional variation with house price growth ranging from 3.6% in Newcastle to 12.9% in London, according to the Cities House Price Index from residential analysts Hometrack. The highest growth cities in the last quarter were Glasgow and Liverpool, but average values remain 13% and 15% below their 2007 peak. While house price growth in high value cities such as London, Oxford and Cambridge continues to slow, lower value cities registered a sharp uplift in transaction volumes in 2014 as demand for housing grows, which suggests there is substance to the recent pick-up in house price growth. Rising transaction volumes are an important precursor to house price inflation. The 15% to 35% uplift in transactions in 2014 indicates the most significant recovery in house market activity in cities outside of the South East of England since 2007. Belfast, Leeds, Liverpool and Cardiff all registered a 20% to 39% growth in sales volumes in 2014 compared to the average for the previous five years. Rising demand and increased market activity have resulted in increased house price inflation, which is running at between 5% and 8%. In contrast, double digit house price to earnings ratios in the higher value cities in the South East of England are impacting demand. Growth in housing transactions in 2014 compared to their five year average was well below average. Sales volumes were down in all the high growth cities over 2014 compared to 2013, specifically falling 13% in Cambridge, 7% in Aberdeen, 2% in Oxford and 1% in London. Lower sales volumes are feeding into a slower rate of house price growth in these cities, the index report says. It also says that falling sales volumes combined with a general slowdown in activity in the run up to the general election are resulting in lower mortgage approvals for home purchase. Home owners using a mortgage to buy a home accounted for two thirds of sales in 2014 according to analysis by Hometrack. The remaining third of sales were to cash buyers or those borrowing with a buy to let mortgage, groups who are not subject to mortgage affordability tests. ‘Transactions are a lead indicator for house prices. The acceleration in house price growth in London in the last two years was preceded by three years of rising transactions,’ said Richard Donnell, director of research at Hometrack. ‘A similar pattern is being registered in the cities outside the south of England, as pent-up demand returns to the market supported by low mortgage rates and an improving economic outlook,’ he explained. ‘While the pick-up in activity is welcome news, housing sales in 2014 are still 38% lower than the level seen in 2007 and 10%… Continue reading
UK residential landlords see lowest void periods for 13 years
The average annual void period for residential landlords in the UK has dropped to its lowest level since 2002, new research shows. Indeed, the average void period, which is the length of time between rental property tenancies, reported in the first quarter of 2015 was just 2.4 weeks, the lowest since the Paragon Mortgages survey began. In the last quarter of 2014 the average void period was 2.6 weeks, and comparing the first quarter of this year against the first quarter 2014, the length of time a landlord has experienced a void has fallen by 14% from 2.8 weeks. Landlords have been reporting low or falling void periods since 2013, with only a slight fluctuation in the middle 2013 when the average climbed marginally to three weeks. ‘Void periods have been consistently low for some time, which is not unexpected when you also look at what landlords are telling us about the level of demand from tenants,’ said John Heron, director of mortgages at the specialist buy to let mortgage lender. The survey also found that in the first quarter of 2015 some 42% of landlords said in their view tenant demand was either growing or booming and 54% felt demand was stable. ‘The housing market is currently experiencing a shift, with more people choosing to live in the private rented sector. This is supported by the figures released this month by the English Housing Survey which show 4.4 million households are now privately rented, compared with 3.9 million households in the social rented sector. This change in housing dynamics appears to be a continuing and long term trend,’ added Heron. Continue reading
Prime property market in Dubai sees sales fall
Dubai luxury home prices remain relatively resilient despite a drop-off in sales activity, according to the latest analysis of the Emirate’s residential real estate market. Sales in Dubai’s prime segment, comprising properties worth over AED10 million, hit the lowest level since the end of 2012 in the final three months of 2014, the research document from international real estate firm Knight Frank shows. Despite this however, Knight Frank’s prime residential price index saw a relatively modest fall in the three months to December of 1.2% quarter on quarter, the second consecutive quarterly fall. Indeed an examination of the data shows that these two declines nearly reversed the increases seen in the first half of last year, leaving values just 0.3% higher year on year in the fourth quarter of 2014. Despite the lower level of transactional activity however, the nationalities investing in real estate in Dubai remained diverse. Data from the Dubai Land Department (DLD) shows that, in 2014, more than 140 nationalities bought property in the Emirate. A breakdown of the figures shows that Indians remained the top foreign property investors, spending around AED18.1 billion, while the British and Pakistanis invested AED9.3 billion and AED7.6 billion, respectively. Overall though, the Emiratis spending AED 22.8 billion were the leading real estate investors, accounting for approximately 21% of the total spent last year. Between 2013 and 2014 Indians and Saudis increased their levels of real estate investment in Dubai while the British and Pakistanis, as well as the aggregate of the remaining GCC countries, spent 1% to 12% less. The total level of real estate investment from all other countries also fell in 2014, by almost 5% year on year. An assessment of web traffic to KnightFrank.ae’s website shows that around 44% of the total viewings in 2014 originated from the UAE. But the report points out that a significant proportion of these will have been expats. What’s more, another 18% of those clicking through to Knight Frank’s UAE website were doing so from the UK, while 7% were from India and 4% from the United States. As a proportion of the total, the level of web traffic from Russia also fell year on year in 2014 however, this did not come as a surprise since the rouble has nearly halved against the US dollar, to which the UAE dirham is pegged, since July, making it significantly more expensive for this nationality to buy property in Dubai. Finally, the strengthening of the US dollar and the weakness of the euro also means that demand from European buyers has also begun to wane, in turn adding further downward pressure on residential property prices in Dubai. Continue reading
