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Central London office leasing bounces back after referendum vote
The amount of central London office space leased by businesses bounced back from a pre-referendum dip to reach 980,400 square feet in July, according to the latest research. This 24% above the level seen in June and the strongest monthly average since March this year, according to global real estate advisor CBRE. Appetite for London office space was validated by three deals over 50,000 square feet in July, including a major move by Wells Fargo for 220,700 square feet of space in the City of London. The report points out that this move has been widely seen as a vote of confidence from the banking and finance sector after the UK voted to leave the European Union. The sector accounted for 31% of take-up in July, followed by the business services sector at 22% and creative industries at 17%. However, July’s office take-up in central London remained below the 10 year average of 1.1 million square feet per month, but above trend leasing activity in the City and Southbank which CBRE says suggests that businesses still see London as an attractive place to locate. ‘Much has been said about the health of the London office market this year, but clearly demand for office space remains buoyant. Businesses are still confident about London’s significant advantages as a global business centre, even when the UK is outside the EU. This continued demand, mostly driven by key lease events, in a market with low supply, is maintaining headline rents at the same rate as in May and June,’ said Emma Crawford, head of London Leasing at CBRE. ‘Of course the jump in leasing activity is good news for the market, and whilst this is not universal across all sub-sectors of the London market, even with heightened economic and political uncertainty, longer term prospects remain promising,’ she added. The data also shows that available office space increased by 2% over the month to stand at 13.6 million square feet but remained 7% below the 10 year average, as secondhand, completed and pipeline space continues to enter the market. The development pipeline is strong, but much is pre-let, with 46% of the 5.1 million square feet of space expected to complete before the end of the year already pre-committed to occupiers. Office space under offer fell by 14% over the course of the month to stand at three million square feet as a number of large deals completed. This is 7% above the 10 year average of 2.8 million square feet which CBRE says is another indicator of strong demand. A separate CBRE report shows that rental values across the UK’s commercial property market were steady in July, while capital values fell by 3.3%. But it points out that the fall in capital values was widely expected and pulled year on year growth down to 0.4%. The report explains that heightened economic uncertainty, especially for financial services firms, hit offices in the City of London, shrinking capital values… Continue reading
Metro area home prices soar in US with first plus $1 million median value recorded
Home prices are continuing to rise in the United States with the median value for a single family home reaching more than $1 million in a metro location for the first time. The record prices was reached in San Jose, California, while the vast majority of metro areas seeing prices rise in the second quarter of 2016, the data from the National Association of Realtors shows. Overall the median existing single family home price increased in 83% of measured markets, with 148 out of 178 metropolitan statistical areas showing gains based on closed sales in the second quarter compared with the second quarter of 2015. Just 29 metros recorded lower median prices from a year earlier and 25 saw double digit increases. According to Lawrence Yun, NAR chief economist, a faster pace of home sales amidst languishing inventory levels has pushed home prices higher in most metro areas during the second quarter. ‘Steadily improving local job markets and mortgage rates teetering close to all-time lows brought buyers out in force in many large and middle tier cities,’ he said. ‘However, with homebuilding activity still failing to keep up with demand and not enough current homeowners putting their home up for sale, prices continued their strong ascent and in many markets at a rate well above income growth,’ he added. The national median existing single family home price in the second quarter was $240,700, up 4.9% from the second quarter of 2015, which was previously the peak quarterly median sales price. The median price during the first quarter of this year increased 6.1% from the first quarter of 2015. Total existing home sales, including single family and condos, rose 3.8% to a seasonally adjusted annual rate of 5.5 million in the second quarter from 5.3 million in the first quarter of this year and are 4.2% higher than the 5.28 million pace during the second quarter of 2015. ‘Primarily from repeat buyers moving up or trading down, existing sales increased each month last quarter and could’ve been even higher if not for a few speedbumps. Closings were slowed a bit by meagre supply levels and home prices in many areas that are still rising too fast,’ Yun explained. At the end of the second quarter, there were 2.12 million existing homes available for sale, which was below the 2.25 million homes for sale at the end of the second quarter in 2015. The average supply during the second quarter was 4.7 months, down from 5.1 months a year ago. According to Yun, without enough new construction being built, existing inventory seriously failed to keep up with the growing demand for buying. As a result, homes typically stayed on the market for around a month throughout the second quarter and over 40% of listings sold at or above list price, with June being the highest share since NAR began tracking in December 2012. Yun pointed out that many listings in… Continue reading
Mortgage arrears in UK at lowest level since records began 20 years ago
The number of mortgages in arrears in the UK continued to fall in the second quarter of this year and is now at its lowest level since records began more than 20 years ago, the latest data shows. At the end of June 2016 there were 92,500 mortgages in arrears of at least 2.5% of the balance, 0.84% of the total, down from 95,900 at the end of March, according to the figures from the Council of Mortgage Lenders (CML). The number of mortgages in arrears was 13.4% lower than a year ago, when the total stood at 106,800, and is now at its lowest level since the run of figures began in 1994. The number of properties taken into possession also fell in the second quarter, to 1,900, down from 2,100 in the first three months of the year. There was a decline in both the numbers of owner occupied and buy to let properties taken into possession. The CML says that if the present trend continues, the number of mortgaged property repossessions this year is on course to be the lowest since 1982 when there were 6.5 million mortgages, compared to 11.1 million today. A more detailed breakdown of the data shows that there was a fall in the number of borrowers in each band of arrears, apart from those owing more than 10% of the mortgage balance. The number in this category edged up from 23,500 to 23,700, the same number as at the end of last year. Ministry of Justice figures also continue to reflect a pattern in which the number of mortgage possessions is significantly lower than in the rental sector. Those figures showed, for example, that there were 42,729 rental evictions in England and Wales in 2015, compared to 5,592 mortgaged property repossessions, even though the rented sector accounts for only around one third of the housing stock. CML data also shows different patterns of arrears and possessions in the owner occupied and buy to let mortgage markets. As before, arrears rates are higher among owner occupiers than among buy to let landlords, while rates of possession are lower. The CML says that this is because lenders try to avoid repossession wherever possible to help owner occupiers recover from a temporary period of payment difficulty, but may move more quickly to protect their position on rental properties as tenants move out in the more commercial buy to let sector. ‘Another welcome reduction in arrears and possessions shows that borrowers are continuing to prioritise their mortgage commitments and that lenders remain committed to helping them through a period of temporary difficulty, wherever possible,’ said CML director general Paul Smee. ‘As ever, the key to success in dealing with any payment problems is to address them as soon as possible. Any borrowers anticipating difficulty in paying their mortgage should therefore speak to their lender at the earliest opportunity,’ he added. Meanwhile, new figures from the Finance and Leasing Association (FLA) show… Continue reading
