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Rising demand and falling supply boosts recovery of Portuguese property market
Solid demand and falling supply is helping the recovery of the residential property market in Portugal as price rises are seen across all regions. However, new sales instructions have fallen at a time when demand is growing and there has been a modest upturn in rental values, according to the August 2015 RICS/Ci Portuguese Housing Market Survey. The report shows the imbalance between rising buyer enquiries and falling new sales listings continues to underpin a steady increase in house prices. Likewise, in the lettings market, solid tenant demand growth has pushed rents up marginally although a relatively flat trend is still projected in the near term. In the sales market, new buyer demand rose again month on month, with the pace of increase edging up gently relative to the previous month. At the same time, new instructions to sell dropped back modestly for the first time since December 2014. Despite the solid demand backdrop, sales volumes only recorded the most marginal of increases. Nevertheless, going forward, transactions are expected to pick up at a smart pace in the near term. The report explains that with demand outstripping supply, house prices continued to recover across all regions. What’s more, the latest data suggest the rate of house price inflation accelerated across each market during August. Overall, respondents to the survey remain confident that prices will rise further over the next quarter and the next 12 months. Indeed, over the year ahead, contributors forecast national prices will increase by around 3% and on average by roughly 5% per annum over the next five years. Meanwhile, the national confidence indicator, a composite indicator of three month sales and price expectations, rose to +32 from +28 previously, extending its run in positive territory into a twenty second consecutive month. In the lettings market, tenant demand increased sharply alongside a steep fall in new landlord instructions. Consequently, rents inched up again following last month’s marginal increase. Notwithstanding this, rents are expected to hold broadly stable in the near term, although expectations for future lettings market activity strengthened notably. ‘In August, the Algarve benefited from strong demand and price dynamics, showing greater improvement in the results compared to Lisbon and Oporto regions in some Algarve cities, there is already a lack of new houses to sell at a time when demand is expected to remain high,’ said Ricardo Guimarães, director of Ci. According to Simon Rubinsohn, Royal Institution of Chartered Surveyors chief economist, employment growth has been encouraging over the past year, driving an increasingly widespread revival in housing market activity. ‘Nonetheless, the labour market recovery still has a way to go and sustained progress is needed to underpin the residential property sector going forward,’ he added. Continue reading
Gap between house prices in London and major UK cities widens
The gap between house prices in London and other major regional cities in the UK is at its widest for 20 years, according to the latest house price index. Prices in London experienced 4.6% growth in the three months to August and a 10% increase in the last 12 months, according to the cities house price index from Hometrack Overall city level house price inflation is running at 8.3% up from 6.6% in May. A similar expansion has been recorded in sales volumes which has translated into higher prices across UK cities, the report says. The highest rate of growth is in Cambridge at 11.2% and lowest in Aberdeen where prices have fallen by 2% due to the weakness in the oil price affecting the demand for housing. Compared to a year ago house price inflation has increased in five cities led by Edinburgh and Glasgow where growth is running at 9% and 5.3% respectively ‘City level house prices continue to increase as demand for housing grows in the face of constrained supply,’ said Richard Donnell, director of research at Hometrack. ‘A changing mix of buyers is compounding the scarcity of housing for sale with rising numbers of first time buyers and investors buying property while having nothing to sell. Only a recovery in the number of moves amongst existing home owners or an increase in new supply will ease the current housing scarcity which seems unlikely in the near term,’ he pointed out. ‘The gap between house prices in London and other major regional cities is at its widest level for 20 years. This highlights a seemingly over valued London market, on a price/earnings basis, and the prospect of further price growth to come in the large regional UK cities,’ explained Donnell. ‘London’s price earnings ratio is at an all-time high while there remains value in most other regional cities. The pricing differential to London could well assist city regions attract new investment as the cost of housing starts to influence decision making for both households and businesses,’ he added. Continue reading
Average rent for newly let properties in England reach new record level
The average rent for a newly let property in England has increased by 3.8% in the last 12 months to £946 per calendar month, according to the latest index figures. In August the month on month average increase was 2.5% the data from one of the UK’s largest letting agents, Countrywide, shows and rent levels have reached their highest level since the index began. Annual growth in rent for new let properties was recorded in all regions except central London. The South West saw an increase of 7% and the Midlands and increase of 6.3%, the highest growth year on year. Overall some 45% of tenants renewing their tenancies had rent increases in August, the highest since the index began and in London and the South East more than half of tenants renewing faced higher rents, according to the analysis. The report explains that rents have been growing throughout 2015, driven by a lack of homes available to rent and high levels of tenant demand. The total number of homes advertised to let was down 8% in August compared to last year, whereas the number of registered applicants was up 4%. With fewer options available for tenants looking to move, those choosing to renew their tenancy are more likely to see their rent increase. However, they are still better off compared to those moving home. The average increase in rent of 2.5% for a renewing tenancy is still less than the annual increase in rent for newly let homes, the report points out. It also explained that rental growth remains well above CPI inflation, which slipped back to zero this month. The South West and Midlands saw rents rise faster than anywhere else in the country with growth of 7% and 6.3% respectively. Growth in newly let rents was seen in all regions except in Central London where rents decreased 1.4% year on year. Greater London, although still growing, has seen its rate of growth in rent halve since the start of the year. The South West has seen the highest rental growth in the UK since the start of the year. ‘Falling numbers of homes available to rent and increasing demand from tenants have been the defining features of rental market so far in 2015. Competition for rented homes has intensified and led to accelerating rent growth,’ said Johnny Morris, research director at Countrywide. Indeed, there are now nine tenants are registered for every home available to rent, up from 7.5 in August last year. ‘With pressure on rents and increased competition for homes on the market, the proportion of renewing tenancies seeing an increase in rent has grown. Faced with the choice of staying put or moving in a market with more competition and increasing rents, more tenants are choosing to accept a smaller increase in rent to extend their existing tenancy,’ Morris explained. ‘Rental price growth in the South of England, outside of London is being fuelled by an… Continue reading
