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Latest index confirms that UK house price growth continues to moderate
UK house prices in the three months to the end of November were 0.7% higher than in the previous three months, according to the latest quarterly figures from the Halifax. This quarterly rate was marginally down from 0.9% in the previous month and the data also shows that prices in the three months to November were 8.2% higher than in the same three months a year earlier. On this measure, annual house prices are now growing at their slowest rate since February and on a month on month basis they are up o.4% which reverses the 0.4% monthly decline recorded in October. However, home sales fell in October to 98,490, the first time they have been below 100,000 in 2014. Nonetheless, current estimates suggest that housing transactions in 2014 will total in excess of a million for the second consecutive year. This is the first time since 2006 and 2007 that home sales have exceeded a million in successive years, according to HMRC, seasonally adjusted figures. The index also points out that mortgage approvals continue to fall. The volume of mortgage approvals for house purchases, a leading indicator of completed house sales, fell in October, to 59,426, data from the Bank of England shows. Approvals have now fallen by 22% from 76,574 in January 2014. Private housing completions in the first three quarters of 2014 were 10% higher compared with the same period in 2013, at 68,930, according to the department of Communities and Local Government. It means that levels of house building remain well below those required to keep up with the pace of household formation, but these latest figures show signs of a revival. A continuation of this upward trend in house building would help to bring demand and supply into better balance, curbing upward pressure on house prices. ‘Receding buyer interest combined with a revival in private housing completions has brought supply and demand into better balance. These factors have in turn contributed to the easing in house price growth since the summer,’ said Martin Ellis, Halifax housing economist. ‘But housing demand continues to be supported by a strengthening economy, rising employment levels, still low mortgage rates and the first gain in real' earnings for several years,’ he explained. ‘We expect a further moderation in house price growth over the next year with prices nationally expected to increase in a range of 3% to 5% in 2015. The prospect of higher interest rates at some point in the year and the deterioration in affordability over the past year are expected to be key factors curbing housing demand,’ he pointed out. ‘Housing demand should be supported by solid economic growth, higher employment, still low mortgage rates and the first gain in real earnings for several years. We expect to see a more even regional pattern in house price growth during 2015,’ he added. Continue reading
Over half of UK landlords plan to expand their portfolios in 2015
Over half of landlords in the UK are looking to buy more property in 2015 and are feeling bullish about the new year, according to a new study. The optimism is fuelled by the growth in demand for rental property, falling rent arrears and rising rent prices during the last 12 months, says the research from online letting agent PropertyLetByUs. The survey also found that 50% of landlords have achieved yields of between 6% and 8%, 10% of landlords have achieved yields of over 8% and 40% of landlords have achieved yields of 4%, over the last 12 months. The firm says that rising property prices has meant that almost a third of landlords are enjoying sizeable equity in their property, with a loan to value ratio of between 30% and 40%. It also says that with booming tenant demand, it is no surprise that only a quarter of landlords are planning to cash in on rising property prices by selling some of the their buy to let properties in 2015. ‘Landlords have enjoyed good rental yields and increased asset values in 2014,’ said Jane Morris, managing director of PropertyLetByUs, adding that they have also experienced high levels of tenant demand, with just 3% reporting that it is declining, according to recent research from Paragon Mortgages. The study shows that overall, 41% of landlords surveyed said tenant demand was growing or booming and 51% said demand was stable. Home ownership has fallen to its lowest level for a quarter of a century and with property prices continuing to increase, tenant demand is set to grow during 2015 and beyond. ‘Over the last year, we have seen a surge in landlords across the UK using our website, particularly in the North, London and the South East. We have also seen a sharp rise in the website’s advertised properties, up by 50% since May 2014,’ explained Morris. Continue reading
International demand for prime central London property remains strong
While much has been written about the UK 2015 general election causing uncertainty in the central London prime property market, international demand remains strong, it is claimed. Independent property buying agency Black Brick says it has completed on a dozen separate transactions for investment clients in recent weeks, all with budgets below £2 million and in the past month it has also signed new clients from Brazil, Egypt, and Qatar with budgets from £2 million to £4 million. ‘We continue to see interest from a range of buyers, including both investors and owner occupiers. Other developments of note include a significant rise in Russian interest across both the rental and sales markets in recent weeks,’ said Camilla Dell, Black Brick managing partner. ‘The return of the Russians comes despite the collapse of the rouble against the pound. And while the sharp drop in the price of oil clearly has its own implications for net wealth in the Middle East, West Africa and Russia, the strength of the dollar does at least offer some compensation for potential buyers of prime central London property with US dollar assets,’ she explained. She also pointed out that Sterling's 9% drop against the so called 'greenback' and a fall of similar magnitude against the Chinese yuan since the middle of the year is giving buyers in these increasingly significant asset pools a welcome currency discount. ‘We expect Chinese buyers in particular to dominate the high end of the prime property market in central London in 2015. We also expect political concerns to continue to be a driver of overseas demand in 2015 and beyond,’ she added. However, for the domestic market, 2015 is likely to be a year of two very clearly defined halves split by the general election. ‘Should the Conservative party win the May 2015 election, we expect an extremely active London property market and the opportunity to drive a hard bargain with vendors will be significantly reduced if not lost all together. We believe the period between now and the general election may prove an attractive entry point to this property sector over the long term,’ said Dell. She does not expect a Labour victory to have a dramatic impact on London house prices, though some short term weakness in prices is likely. Hot spots for 2015 include Marylebone with its mix of high quality independent retailers and restaurants. Dell said that Marylebone has one of the best high streets in London and is conveniently located with elegant period housing stock and new developments. For investors the firm is tipping Maida Vale as one of the best areas in London to focus on in 2015. Overlooked by buyers in favour of neighbouring St John's Wood, Maida Vale looks extremely good value compared to its more expensive neighbours, according to Dell. She also pointed out that prices are still well below £1,500 per square foot and this is rare for an area with such excellent shops and transport links to central… Continue reading
