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House prices to rise by 3% in 2015 and rents by 2% says RICS
House prices in the UK will see an average increase of 3% in 2015 bolstered by recent changes to Stamp Duty, continuing demand and lack of supply of property, it is predicted. Rents are set to grow by 2% and sales are expected to increase, according to the annual housing market forecast from the Royal Institution of Chartered Surveyors (RICS). Across the UK, RICS expect all parts of the country to see modest price rises during 2015 with the South West, Wales and London set to experience the lowest rises with prices increasing by 2% and 0% respectively. Having outperformed in the early stages of the recovery, chartered surveyors reported London's housing market was 'pausing for breath' both in terms of pricing and activity towards the end of 2014. This does however mask significantly different behaviour across different parts of the capital and is reflected in the RICS forecast with the eastern boroughs and some other non-prime areas still likely to see more buoyant market conditions persist through 2015. The growth in rental demand softened in the early part of 2014 as the sales market began to recover across the UK, and potential purchasers took advantage of the Help to Buy scheme, the report says. However, enquiries to rent property have begun to pick-up once again and comfortably outstrip new supply of rental property from landlords. As a result RICS expects rents to continue pushing upwards over the next 12 months. Chartered surveyors are suggesting that the strongest rises are likely to be recorded in the South West and the North East of England. Rents in the capital are likely to rise broadly in line with the national average. The number of sales transactions should see a further increase during 2015, moving up to 1.25 million from 1.22 million in 2014. Although there are some concerns about mortgage availability in the wake of the Mortgage Market Review, a firm economy and stamp duty reform should underpin activity levels. The report points out that although this figure represents an improvement on the past few years, to put this in context, in 2006 total transactions stood well above at 1.67 million. Lack of supply to the housing market remains a running trend, and one that cannot be addressed fast enough. However, there are increasing levels of house building projects underway, and as a result, RICS forecast housing starts to rise to 155,000 in England during the year. This is compared to 125,000 in 2013 and only around 100,000 in 2012. While this is an encouraging trend, it is still insufficient to address the more rapid growth in population and will leave significant shortfalls in all tenures. The number of houses taken into possession are expected to have fallen in 2014 to around 23,000, the lowest since 2006. Given the current macroeconomic picture, RICS anticipates that this could decline to below 20,000 over the course of the next 12 months, particularly as around 90% of new loans… Continue reading
Rents in England and Wales down for first time in eight months
Residential rents across England and Wales fell to a new average of £768 per month in November, down 0.2% month on month, the latest index shows. It is the first time in eight months that rents have fallen on a monthly basis, according to the buy to let index from the UK’s largest lettings agent networks, Your Move and Reeds Rains. However, despite the month on month fall rents are 2% higher than a year ago, or £15 higher than November 2013. Also, the East of England, the East Midlands and London have actually posted new all-time record rents. The firm says that the fall follows the usual seasonal trend as landlords keen not to have vacant property over the colder months reduce rents to attract tenants. A breakdown of the figures show that five out of 10 regions have seen lower rents in November than in October with the South East seeing rents fall by 2.1% drop, the North West down 1.2% and the North East down 0.6%. By contrast, the East Midlands has defied the overall trend, seeing rents increase by 1.7% between October and November. This monthly change is four times faster than experienced in both London and the neighbouring East of England, both of which saw rents rise 0.4% on a monthly basis. Despite monthly dips, rents in eight out of 10 regions remain higher than in November 2013, with one other region seeing no significant change. Far above the overall average, three neighbouring regions stand out on an annual basis. Rents in the East of England have grown by 6.7% since November 2013. This is followed by 5.5% in the East Midlands and 3.9% in the West Midlands. At the other end of the spectrum, rents in the South West are now 0.2% lower than in November 2013, the only region to see a fall while the North West has seen zero rental inflation over the last twelve months. The index also shows that the gross rental yield on a typical rental property in England and Wales now stands at 5.1% as of November, the same as in October 2014, but a 0.3% drop from last year, when yields in November 2013 stood at 5.4%. However, alongside this stability, total returns improved in November. Taking into account price growth and void periods between tenants, but before costs such as mortgage repayments or maintenance, total annual returns on an average rental property are 12.8% over the 12 months to November. This compares to 12.7% over the 12 months ending October 2014. In absolute terms this means the average landlord in England and Wales has seen a return, before deductions such as mortgage payments and maintenance, of £21,512 over the last twelve months. Within this figure rental income makes up £8,305 while the average capital gain amounts to £13,207. ‘Property prices have shifted to a more… Continue reading
Property price growth in London now behind five other UK cities
Property growth in London now lags behind five other UK cities as the capital’s house price growth has dropped by two thirds in just three months. Edinburgh, Glasgow, Southampton, Bristol and Birmingham property markets have seen faster growth than London in the last quarter, according to the latest cities house price index from Hometrack. It also shows that while overall UK house prices have risen by 8.9% year on year, the rate of house price growth in the last quarter has slowed across 16 of the 20 cities. The firm is predicting house price growth of 2% in 2015. House price inflation in London at 0.5% was the same average growth as Manchester, Portsmouth. Some key cities saw price growth diminish, most notably Aberdeen down 0.4% and Cambridge down 0.2%. Other cities showed a pronounced slowdown in price growth such as Oxford seeing a quarterly rise of just 0.3%, Cardiff at 0.2% and Bournemouth at 0.1%. But Scottish cities bounced back with Edinburgh at 1.8% growth and Glasgow at 0.9%, both continuing to register above average rates of growth as demand feeds back into the market after the independence. However, house prices are above their 2007 peak in eight cities with London up 30.5%, Cambridge up 28.7% and Oxford up 21.9%, but these are also the markets starting to register the clearest slowdown. This translated to an average annual increase in London property values of £57,000, which is nearly four times the national average of £15,200 and almost twice the UK’s average income. Liverpool recorded the lowest increase in values with just £3,000 added to house prices in the last year. ‘The high growth cities over the last year are now recording the fastest slowdown and this is most pronounced in smaller cities such as Cambridge and Aberdeen. The Aberdeen economy is closely related to the health of the oil industry and a weakening oil price is impacting the housing market,’ said Richard Donnell, research director at Hometrack. ‘The slowdown in London, which we identified in, will act as a drag on the UK rate of house price growth over the next 12 months. The rate of growth in house prices is starting to lose momentum across other cities in southern England, while across the rest of the country modest levels of house price appreciation continue as prices rise off a low base,’ he explained. ‘Overall we expect modest UK house price growth of 2% in 2015, which is more in line with earnings growth. Significant pent-up demand has feed back into the market in the last two years pushing house prices higher in all cities but the underlying rate of growth is now slowing across the majority of markets,’ he pointed out. He also said that the introduction of mortgage market affordability tests in the middle of 2014 has reduced the overall impact of low mortgage rates on house prices. ‘A… Continue reading
