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EU future uncertainty hitting prime central London sales and lettings
Sales and lettings in the prime central London property market have been hit by uncertainty over the UK’s position in the European Union ahead of the referendum vote on 23 June. After a period of increased activity, as buyers rushed to beat the April stamp duty deadline, the prime central London area is experiencing a subdued time, according to a new report from estate agency WA Ellis. ‘April saw the government collect a record of nearly £1.2 billion in stamp duty, as landlords rushed to beat higher stamp duty rates on second properties. These national figures are reflected by transaction levels within prime central London which have halved since March,’ said Richard Barber, director at WA Ellis. He believes that various apocalyptic visions of what may or may not happen if the UK voted to leave the EU have continued to confound the electorate over the last two months. ‘As a result, it would appear that buying a new property has been put on hold by the majority of potential purchasers until the future of the UK is determined,’ he added. Landlords in prime central London are being hit hard by the uncertainty, according to Lucy Morton, head of agency at WA Ellis and JLL, with rents being adversely affected. ‘There are reports of recruitment freezes across the city and firms delaying relocating staff to London to see what awaits the UK post referendum. This, of course, has had an impact on prices, and the unprecedented surplus of stock has put further downward pressure on the rental market,’ she explained. ‘With this in mind, we have been advising landlords to reduce rents, and this has yielded positive results with enquiry levels up, and a substantial increase in lettings being agreed. In this sort of market, minimising vacant periods is more important than waiting for a slightly premium rental offer,’ she pointed out. ‘For example, over the course of a year, a 5% higher rental offer is negated if it means that a property stays vacant for an extra two and half weeks. As always our message is clear: accurate pricing and pristine presentation should be a landlord’s main consideration in volatile market conditions,’ she added. Continue reading
UK house prices up in May but annual growth is slowing
House prices in the UK increased by 0.6% in May as a steady upward trend in values continued but there are signs that growth is slowing. Quarter on quarter prices were up 1.4%, slightly below April’s 1.5% but this was the lowest since November 2015 when it was also 1.4%, according to the latest index from lender the Halifax. Also, the May rise of 0.6% largely offset Aprils fall of 0.8% and Martin Ellis, Halifax housing economist pointed out that the quarterly figure is a more reliable indicator of the underlying trend in the housing market. Prices in the three months to May 2016 were 9.2% higher than the same three months in 2015 so the annual movement was the lowest it has been since last autumn. The index shows the average price now reaching £213,472. According to separate research from the Halifax property prices per square metre have risen by 432% in Greater London against a national average increase of 251% over the past two decades. Although London dominates the country's list of most expensive property locations on a per square metre basis several areas outside southern England fetch a higher property price per square metre than the national average of £2,216. These are Solihull, Leamington Spa, Altrincham Edinburgh and Harrogate. ‘Low interest rates, increasing employment and rising real earnings, continue to support housing demand. The strength of demand, combined with very low supply, is causing house prices to rise at a brisk pace in quarterly and annual terms,’ Ellis explained. ‘Increasing affordability issues, caused by a sustained period of higher than earnings house price growth, should curb housing demand and result in some slowdown in house price growth as the year progresses,’ he added. The figures are published at a time when demand is still outpacing supply, according to Ian Thomas, director of online property investment company LendInvest. ‘The resilience of house price growth is remarkable. Even now that the stamp duty stampede of the first quarter is behind us, and with the uncertainty of the European Union referendum result dampening activity, house prices are still holding up,’ he said. ‘There simply aren't enough houses being built. The latest disappointing house building data make this abundantly clear. The Government’s dream of one million new homes by 2020 simply isn’t realistic without a fundamental change of approach,’ he pointed out. ‘As a result, house prices will continue to rise. Investors will continue to enjoy great returns from putting their money into property, while aspiring home buyers face a tricky time getting the sums to add up in order to move up the housing ladder,’ he added. However, Rob Weaver, director of investments at property crowdfunding platform Property Partner, believes the slowdown in growth is quite dramatic. ‘The house price volatility around April’s stamp duty hike has made 2016 a difficult year to predict. But the yoyo effect looks like it’ll settle, at least until all the uncertainty over the EU referendum ends,’ he said. ‘Activity in… Continue reading
Scottish property market set to see annual growth of 3% in 2016
The overall residential market in Scotland has shown continued growth, with an 8% annual increase in the number of residential transactions during the year ending in the first quarter of 2016. The market was supported by an increase in cash buyers and buy to let purchasers, boosted by increased levels of equity generated from core hotspots, particularly among older buyers, according to the latest analysis report from Savills. It also says that various Help to Buy schemes and the gently improving economy, leading to increased consumer confidence, are also combining to support the market. Market growth is continuing to spread out to locations that were lagging following the housing market downturn. These include West Lothian, East Ayrshire, North Lanarkshire and Glasgow City, where the annual growth in transactions was higher than the figure for Scotland as a whole. The report says that this is mainly due to an increase in house building, coupled with attainable house prices and improving transport links. Annual transactional growth in traditional hotspots and commuter locations, such as Renfrewshire, East Lothian and Midlothian, as well as the market hub of Edinburgh, also exceeded the figure for Scotland as a whole. Savills is forecasting annual growth of 3% in Scottish mainstream values by the end of 2016. ‘We expect values in city locations and core hotspots to outperform the figure for Scotland as a whole. Stricter lending conditions and a possible rise in mortgage rates could limit capacity for strong price growth and transactional growth. This is likely to keep exposure to risky mortgage debt under control,’ it explains. In the prime market Scotland’s Land and Buildings Transaction Tax (LBTT) continues to have a significant impact following its introduction in April 2015. Over the last 12 months, the prime market above £400,000 witnessed an overall shortfall in activity, mainly due to higher rates of taxation. However, since the end of 2015, the prime market has adjusted in the city hubs of Edinburgh and Glasgow. Furthermore, prime market strength is spreading from the hubs into traditional suburbs and commuter areas The number of prime second hand sales at £400,000 and above in Scotland fell annually by 14% to 3,131 during the year ending in the first quarter of 2016 as the market continues to adjust to higher rates of taxation. Despite this drop, prime activity was 13% higher than the five-year annual average of 2,762 sales. The prime market was led by the core city hotspots of Edinburgh and Glasgow. Prime activity in Stirlingshire and the Lothians region surrounding Edinburgh bucked the national trend, benefitting from relative affordability and improving transport links. Furthermore, demand for family homes in areas with top performing state schools remains buoyant. According to Savills Prime Residential Index, overall values in Scotland remained unchanged, with a slight 0.4% year on year increase at the end of March 2016. Further examination of the Savills Index shows a widening gap between overall property values in city and town… Continue reading
