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Latest index data confirms slowdown in price growth and sales in UK market
House prices in the UK are slowing both on a monthly and a quarterly basis, confirming the general decline in value growth, according to the latest index from the Halifax. In the August to October 2014 period prices were 0.8% higher than in the previous three months and this is the slowest quarterly rise since December 2012 when house prices grew by 0.7%. The sharp fall in the quarterly rate from 2.7% in September is largely explained by the 4% monthly rise in prices between April and May dropping out of the three month on three month calculation, according to Martin Ellis, Halifax housing economist. Prices in the three months to October were 8.8% higher than in the same three months a year earlier and based on this measure, annual house price growth has been slowing since the middle of summer after reaching a peak of 10.2% in July. The index data also shows that house prices fell by 0.4% between September and October, the fifth monthly decline in the past year. Home sales are also falling. They contracted for the seventh month in succession, falling to 97,450 in September, the lowest level since October 2013 when they were 95,640. Sales in September were 11% below their recent in peak in February 2014 at 109,530 according to HMRC, seasonally adjusted figures. At the same time mortgage approvals at a 14 month low. The volume of mortgage approvals for house purchases, a leading indicator of completed house sales, fell for the third consecutive month in September, to 61,300. Approvals have now fallen by 20% from 76,500 in January 2014 according to Bank of England seasonally adjusted figures. There are signs of an improved balance between supply and demand. Market conditions, as measured by the ratio of house sales to the stock of unsold properties, reported by the Royal Institution of Chartered Surveyors’ (RICS) monthly survey, eased for the second consecutive month in September as a result of lower sales, according to the latest data. This suggests that a better balance between supply and demand may be emerging. Ellis pointed out that the economy is continuing to grow at a healthy pace and employment is still rising and these factors should support housing demand over the coming months. ‘However, while the chances of an imminent interest rate hike may have receded, a recent Halifax survey found that many borrowers are concerned about the impact a rise could have on their monthly mortgage repayments over the next 12 months. This concern is likely to curb buying intentions,’ he added. It feels like the market has had a small stutter, according to Jonathan Hudson, of London west end agent Hudson Property. ‘While buyers are getting used to the new MMR ruling on mortgage affordability and while some have their eye on the general election in May, I would say these figures represent the mood in the market,’ he said. ‘People are still buying, but only sellers with a reason for moving are accepting… Continue reading
Industrial building driving UK construction growth, latest RICS survey shows
Industrial building is driving construction growth in the UK and the country’s office and industrial sector rents are expected to rise as their fastest rate since 1998 in the last quarter of 2014. Indeed, the UK has seen a sixth consecutive quarterly fall in office space availability nationwide with the decline at its fastest pace since the late 1990s according to the latest Commercial Market Survey from the Royal Institution of Chartered Surveyors (RICS). It also shows that the rise in transactions of commercial properties being sold with Permitted Development Rights (PDR) appears to be compounding the lack of availability, with two thirds of respondents to the survey suggesting that if PDR exemptions are not extended then availability of commercial properties will be impacted further. In London, 20% of respondents said PDR transactions had led to more than 10% of available commercial properties being earmarked for conversion into residential use and a net balance of 51% of surveyors reported a rise in demand for office, industrial and retail space. Across the whole of the UK, 32% more surveyors said availability across office, retail and industrial properties had fallen, while demand had risen to a net balance of 44%. RICS says it is significant that demand for industrial property grew on the previous quarter from a net balance of 49% in the second quarter to 56% in the third quarter and surveyors in London also saw a large rise in prospective overseas investors in the industrial sector of 73%. The picture across the UK appears increasingly upbeat, with the firmer tone spreading beyond the capital as the economic expansion gains greater traction. This is being reflected in rental expectations which are now in positive territory in all parts of the country in the office and industrial sectors. Retail remains something of a laggard with a flatter rental trend away from the more dynamic parts of the market. For the next 12 months a net balance of 71% surveyors are forecasting an increase in rent levels in London across all segments of the market, compared to 36% in the North of England. ‘The third quarter results provide further evidence that the economic expansion is becoming more broadly based with tenant demand for space picking up in all parts of the country and the need for landlords to provide inducements diminishing,’ said Simon Rubinsohn, RICS chief economist . ‘There are also now clear signs that investors are casting their nets wider in a bid to find better value in the market following the steep drop in yields on prime property in the capital,’ he added. He also pointed out that while permitted development rights is helping in a small way to boost much needed housing supply, the latest survey suggests that it is also having the unintended consequence of contributing towards a shortfall of office space in some parts of the country. ‘Feedback from members suggests that this is particularly marked in London and adding to the upward pressure on rents. Moreover, there is… Continue reading
Research reveals which home improvements yield best return on investment
The average home improvement in the UK would add a healthy 10% to the value of a home, based on home owner’s estimates, new research shows. This works out at just under £30,000 whilst the average return on investment was estimated to be 80%, based on the total amount spent by home owners, according a new home improvement index from peer to peer lending firm Zopa. The new research, which asks home owners who have recently taken out a home improvement loan across the UK how much value their renovation added to their property, shows that the top improvement is a conservatory costing an average of £5,300 and giving a 108% return on investment. Next is garden improvements costing an average of £4,550 giving an 88% return followed by exterior work costing an average of £6,000 with a return on investment of 75%. An extension is much more costly, averaging £19,750 but only offering a 71% return on investment while a new roof costs £4,150 with just 63% return and a loft costing an average of £24,600 but comes with a return of just 50%. Kitchen and bathrooms are often the rooms home owners want to change the most but they offer the least in terms of returns. A bathroom renovation costing an average of £4,900 is bottom with a return of just 48%, closely followed by a kitchen costing an average of £9,600 with a return of 49%. Some 82% of home owners said that despite improving their homes, they were not planning on selling soon. The firm says this suggests that the current housing market where price growth is slowing could be putting home owners off moving, and instead adapting their current homes to their situations. ‘With the latest housing market reports showing the market to be slowing down, home owners could add significant value by looking at ways to improve their current homes, rather than move,’ said Zopa chief executive officer Giles Andrews. ‘With record low rates on borrowing, home improvements can be a cost effective way to add value to your property for the long term,’ he added. Continue reading
