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UK residential property prices showing steady growth, latest index shows
UK house prices increased by 3.3% in the second quarter of 2015 compared to the previous quarter taking the average price to £200,280, according to the latest property price index. It means that the quarterly rate of change has picked up following two successive falls and prices in the three months to June were 9.6% higher than in the same three months a year earlier, the data from the Halifax shows. This was higher than May’s 8.6% and the highest quarterly rise since September 2014 when it was 9.6%, and on a monthly basis prices increased 1.7% between May and June, the fourth consecutive monthly rise. The steady increase in prices comes as home sales remain steady. Data from HMRC shows UK home sales increased by 1% between April and May and sales in the three months from March to May were 0.5% higher than in the preceding three months, but were 4.2% lower than in the same period last year. According to Martin Ellis, Halifax housing economist, supply remains very tight with the stock of homes available for sale currently at record low levels. ‘This shortage has been a key factor maintaining house price growth at a robust pace so far in 2015,’ he explained. ‘Economic growth, higher employment, increasing real earnings growth and very low mortgage rates are all supporting housing demand with signs of a recent modest pick-up in demand,’ he added. Jonathan Samuels, chief executive officer of Dragonfly Property Finance, pointed out that there are a lot of mixed signals in the property market at the moment as the latest index from the Nationwide shows prices falling slightly. He also pointed out that while prices in London have slowed, house prices per square metre have risen by 45% since 2010, highlighting the extent of the growth in the capital in recent years. ‘With economic growth stronger than expected during the first quarter, a buoyant jobs market and people generally better off, you would expect the market to continue to improve throughout the rest of 2015, if at a more moderate rate compared to recent years,’ he said. There is also a potential effect from the current Euro crisis and how what happens in Greece could affect the UK property market. ‘We could see a flight away from equities into bricks and mortar, but at the same time if Europe as a whole is adversely affected then the UK economy will almost certainly suffer, too,’ he added. Thomas van Straubenzee of prime London prime property agency VanHan, is expecting to see an influx of enquiries from wealthy Europeans looking to move their assets off the Continent and into London as they seek to avoid the effects of the euro crisis. ‘We have seen interest from the Middle East and India pick up again, which is not surprising as we had noticed that these buyers were particularly affronted by the idea of a mansion tax. We do not see London… Continue reading
Fringe of prime emerging property markets in London expected to lead growth
Prime property prices in emerging locations in London showed a small rise of 1.3% in the second quarter of 2015 and are down slightly by 0.84% compared to the same period in 2014, new data shows. Demand in South West London continued to be driven by sales, mainly flats, below the £937,500 threshold, following changes to stamp duty at the end of 2014, according to the latest quarterly report from real estate firm Douglas and Gordon. In contrast, larger houses priced above £1.3 million in emerging prime were muted, compounded by the stamp duty issues and mortgage market concerns. In some areas, such as Battersea and Battersea Park, some prices were down 10% year on year. Clapham and Southfields led price increases in the sector, up 3.5% and 3.9% respectively. A weaker second half in 2014 means that for these areas prices have caught up to where they were 12 months ago. Rental growth was also strong, up 1.7% in the quarter, continuing the areas robust performance during a difficult year in the sales market. However, this growth is expected to slow once the sales market picks up. Overall total returns, capital and rental growth, remain attractive for professional investors in emerging prime and capital values are expected to climb 10% in the next 12 months. ‘Whereas there is some evidence of a post-election bounce, unsurprisingly many are taking their time to make decisions and a continuation of the anticipated bounce needs to be tempered with a dose of realism,’ said Ed Mead, the firm’s executive director. He expects the market for more expensive family homes to remain firm in the next 12 months due to the prospect of a mansion tax that affecting the market before the election now no longer there. But he pointed out that volumes are still very thin and the firm’s emerging prime index is only back to where it was 12 months ago. His prediction is for fringe areas to perform best as buyers search for new up and coming areas to buy in. Continue reading
UK landlords seeing rise in tenant demand, especially from families
Almost half of landlords in the UK are reporting an increased demand for rental properties which is expected to continue over the next 12 months. Some 43% have experienced a rise in tenant demand and it is being driven by young people and families, according to the latest research by specialist buy to let lender Paragon Mortgages. It also shows that 51% expect this level of growth to continue over the next 12 months with 47% renting to young couples, 43% to young singles and 42% to families with children. ‘It is no surprise that rental demand is steadily increasing. With continued stress on the housing stock driving prices up, tough affordability hurdles for would be buyers and a social rented sector under pressure as a result of renewed interest in right to buy, a steady increase in rental demand was practically inevitable,’ said John Heron, Managing Director of Paragon Mortgages. ‘It is important that landlords continue to expand the supply of rented property in order to maintain balance and so avoid unsustainable increases in rents. A healthy, competitive and innovative buy to let market is critical to this,’ he added. Meanwhile, separate research shows that more than half of tenants say they experienced problems with their rented homes over the past 12 months, ranging from poor maintenance to breaches of their contract. The biggest problem, for 15% of tenants, was their landlord’s failure to fix structural problems including damp, a leaking roof or rotten window frames, according to the research by mortgage and loans provider Ocean Finance. A further 13% of tenants suffered delays in repairing broken furniture, showers and washing machines. 14% of tenants faced unexpected increases in their rent, disputes over money deducted from their deposits and even early eviction when their landlord sold their property. Tenants in London, where more than 10 million people live in private rental accommodation, fared the worst, with 60% saying they experienced problems in the past 12 months. This was followed by those in the East Midlands and the rest of the South East region. Some 35% of tenants said even though they complained to the landlord or letting agent, the problems were not fixed. While 13% said they didn’t know who to turn to for advice, while 5% took matters into their own hands and refused to pay their rent until the landlord resolved the problem. ‘Landlords have an obligation to ensure that the properties they let are well maintained and safe for their tenants to live in. The research indicates that many tenants are renting sub-standard properties. It’s also concerning that people are facing mid-tenancy rent increases or have money unexpectedly taken from their deposits,’ said Gareth Shilton, a spokesman for Ocean Finance. ‘One of the problems may be a lack of clarity over whose responsibility it is to maintain different aspects of a property. Often the landlord believes the tenant is responsible for doing repairs that in fact they are obligated to make,’ he… Continue reading
