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Pace of rental growth in UK slowing
Rents across the UK continued to rise during June, but the first half of 2016 has been characterised by a slowing in the pace of rental increases, the latest rental index shows. Rents agreed on new tenancies across the UK, excluding London, increased by 3.5% in the second quarter to £773 per month compared to a year ago and by 3.9% to £1,575 in London over the same period. However, this is down compared to the UK wide figure for May which was 4.4% and 6.2% for London, according to the data from the June HomeLet rental index. Rents continue to rise in almost every area of the country, with 10 out of the 12 regions surveyed seeing an increase over the three months to the end of May. The index report says that the more modest rental increases seen in June are a continuation of a trend that has developed throughout the first half of the year, with rents rising across much of the UK each month, but at a slower pace than was the case throughout most of 2015. Last June rents were rising at an annual rate of 7.8% and 10.1% in London. The data suggests the private rental sector has responded to the needs and concerns of landlords and tenants alike during the first half of the year. Landlords were hit by higher stamp duty charges on purchases of new property in April, which led to a rush to complete transactions before then and a spike in the supply of rental property thereafter. Meanwhile, tenant demand for property has remained strong, particularly given rising house prices and squeezed mortgage availability, and projected growth in the UK’s population suggests this will continue, the report points out. It explains that official projections suggesting this growth will come from both the British born population and net migration. Nevertheless, the slowing in the pace of rental increases may reflect landlords’ recognition that an affordability ceiling is approaching. The outlook for the sector will depend in part on the fall-out from the UK’s decision to leave the European Union in June’s referendum. Some economists expect the referendum result to act as a brake on construction in the housing sector, which could exacerbate the current imbalance between demand and supply in the rental market. It is also possible that demand may increase as would be house buyers opt to wait and see how house prices are affected over the next 12 months and beyond. HomeLet’s data also suggests that the average length of a tenancy, as measured by how long tenants had occupied their previous rental property, has begun to come down over the past three months. The figures underline the important role that the private rental sector plays in providing a wide range of housing options to those who have not purchased a property. According to Martin Totty, chief executive… Continue reading
Property valuations increased in UK in June despite EU referendum
The pace of property valuations conducted in June 2016 in the UK increased both an annual basis and month on month, according to the latest research. The total number of valuations carried out in June rose by 4% compared to June 2015, and 24% compared to the previous month, the report covering the month of the European Union referendum from Connells Survey and Valuation shows. John Bagshaw, corporate services director of Connells Survey & Valuation, pointed out that the background to the figures is one of uncertainty and shock in the days after the UK decided to leave the EU, yet the property landscape appears surprisingly stable which he believes is encouraging. ‘Initial solidity from the post-Brexit housing market may not be enough to answer all the new legal and financial questions in light of the vote or to offset a likely blow to confidence on the near horizon. But this should bring such fears into perspective. Life will go on and the property market will continue to function,’ he said. Leading the June housing market, activity from first time buyers accelerated last month, making up for a considerable slowdown in buy to let valuations. Numbers taking their first step onto the property ladder rose 23% year on year, whereas buy to let valuations decreased by 40% over the same period. This is on the back of 27% month on month growth for first-time buyer valuations, ahead of the general seasonal pick-up in total activity while buy to let valuations increased by 17% since May, considerably slower than the overall picture. ‘First time buyers continue to drive activity in the housing market, an emerging trend since the start of the year and now reaching a new peak. Government schemes such as Help to Buy continue to be significant. But now a slowdown in the buy to let sector may be adding an extra short term boost for new buyers, as competition from landlords diminishes a little, easing the hunt for a home for sale,’ Bagshaw explained. Remortgaging has also seen a significant boost in valuation activity in June. The number of valuations carried out in June for those looking to remortgage rose by 18% on a 12 month basis and 19% month on month. Home movers were more cautious. Valuations for existing home-owners looking to move to a new property decreased by 7% on an annual basis since June 2015. However the number of such home owner valuations rose by 29% since May. ‘Home movers have once again had a stable month, and this section of the market has enjoyed the strongest seasonal acceleration from May. Meanwhile, remortgaging is the other major winner from a time of consistently low mortgage rates and a possibility of even lower borrowing costs over the summer,’ Bagshaw pointed out. ‘As seen in recent months many people are taking… Continue reading
Chinese emerge as enthusiastic buyers of property in the US
The volume of property sold to overseas buyers in the United States has declined slightly but Chinese people are buying more real estate, exceeding the amount of other top international buyers. Research from the National Association of Realtors suggest that waning economic growth in many countries and higher home prices along with a strengthening US dollar was responsible for the slight overall fall. However, the data, covering sales to overseas buyers between April 2015 and March 2016, reveals a significant fall in buying from non-resident foreigners. Sales to overseas buyers amounted to $102.6 billion of residential property, a 1.3% decline from the $103.9 billion of property purchased in the previous year’s survey. Overall, a total of 214,885 residential properties were bought by foreign buyers, up 2.8%, and properties were typically valued higher at $277,380 compared to the median price of all US existing home sales at $223,058. Lawrence Yun, NAR chief economist, said the figures highlight the tremendous appeal US real estate still has on many foreign nationals despite the price of property becoming less affordable. ‘Weaker economic growth throughout the world, devalued foreign currencies and financial market turbulence combined to present significant challenges for foreign buyers over the past year,’ he explained. ‘While these obstacles led to a cool down in sales from non-resident foreign buyers, the purchases by recent immigrant foreigners rose, resulting in the overall sales dollar volume still being the second highest since 2009,’ he pointed out. He also pointed out that overall foreigners, especially those from China, continue to see the US real estate as a solid investment opportunity and the country as an attractive place to visit and live. According to the survey, sales to non-resident foreign buyers pulled back by approximately $10 billion to the lowest dollar volume since 2013 when it was $35 billion. The decline was largely caused by the decrease in the share of non-resident foreign buyers to foreign residential buyers to 41%, down from the almost even split between the two in previous years. ‘Both the increase in US home prices, up 6% in March 2016 compared to one year ago, and the depreciating value of foreign currencies against the US dollar made buying property a lot pricier last year,’ said Yun. The research shows that at least eight countries, including China and Canada, saw double digit percent increases in the median sales price of a US existing home when measured in their country’s currency, led by Venezuela at 45% and Brazil at 24%. For the fourth year in a row, buyers from China exceeded all countries by dollar volume of sales at $27.3 billion, which was a slight decrease from last year’s survey at $28.6 billion, but over triple the total dollar volume of sales from Canadian buyers who were ranked second at $8.9 billion. Indeed, Chinese buyers purchased the most housing units for the second consecutive year at 29,195 but this was down from 34,327 in 2015, and also typically bought… Continue reading
