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Property markets in north of England will get boost from investment announcements
Property markets in the north of England are set to benefit from hundreds of millions of pounds of new investment in rail and road networks announced by the UK government. As part of a continuing policy to create what is known as ‘the northern powerhouse’ the Chancellor George Osborne has announced funding of £60 million for a HS3, a high speed rail link between Leeds and Manchester to cut journey times between the two cities. He also announced £75million to explore options for an 18 mile Trans-Pennine road tunnel between Sheffield and Manchester which would be the longest road tunnel in Europe. Both projects are in the early phases of development and if they go ahead billions more will be invested in the region in the coming decades. Experts believe that prices and demand for property will rise and while this will be good news for those selling it also means that first time buyers will find it harder to get on the housing ladder if values increase. There could be a large influx of foreign buyers to the region, according to Jan Crosby, head of housing at KPMG, as connectivity across the region and with the wider UK is a significant tick on their wish list. ‘While property investors from the likes of Asia and the Middle East have been interested in the Government’s narrative around the Northern Powerhouse, they have been waiting for the words to be backed with action and financial commitment to improve the region’s infrastructure before making large scale investments,’ she explained. ‘The issue for these investors has been end user demand for property across the North as the scale of appetite simply isn’t as high for housing or for commercial property as they are used to in London or the South, because the ecosystem of infrastructure hasn’t been there to create an environment which attracts the end user in significant numbers,’ she pointed out. ‘However, with HS3, improved road links and a trans-Pennine tunnel all garnering the Chancellor’s support, occupier demand for homes and business in the surrounding areas will rise, which we can expect to attract international property investors looking to place their money outside of the capital’s heated market,’ she added. Graham Davidson, managing director of buy to let specialist, Sequre Property Investment, believes that the job creation that will come with the infrastructure projects will result in increased demand for property, providing a positive outlook for buy to let investors who are chasing returns that have been squeezed out of London and the South East. ‘Since the Northern Powerhouse agenda was first touted two years ago, our own business has seen a circa 30% rise in interest in northern property at a granular level with many millions being invested further up the chain at a global level in residential and commercial projects. The message is more clear than ever; the north is open for business,’ he said. The new routes across the Pennines and between Manchester… Continue reading
Residential property sales in Scotland reach eight year high
The Scottish residential property market has recorded is highest January home sales in eight years and average prices also rose, according to the latest index figures. Sales in the first month of 2016 increased by 24% year on year with the biggest surge in Midlothian with a rise of 38% with flats and terraced houses driving the growth, the Your Move data shows. Average Scottish house prices increased by 0.8% in January to £171, 079, up from 0.3% the previous month. The strongest growth was in Stirling where property values have jumped 13.5% over the past year. Christine Campbell, Your Move managing director in Scotland, pointed out that transactions in Scotland easily outpaced sales south of the border, as England and Wales only saw a 1% rise over the same time period. She explained that the surge in Scottish home purchases has been propelled by second home and buy to let buyers eager to avoid paying the 3% Land and Buildings Transaction Tax (LBTT) surcharge which is being introduced from 01 April. She pointed out that as this tax hike was only announced in December’s Scottish Budget, January’s surge in sales may only be the tip of the iceberg. She also explained that the growth in Midlothian has been aided by the lower rate of LBTT on the purchase of cheaper properties, with flat and terraced house sales accounting for the largest rise. This trend can also be seen in Glasgow, which narrowly beat Edinburgh to become the area with the highest absolute increase in sales. The only areas in Scotland which have seen a decline in sales from November to January, compared to the previous three months are Aberdeen City and Aberdeenshire. In Aberdeen City sales have fallen by 11% in this time period, as a result of the oil crisis and the large proportion of expensive detached homes in city which are hit hardest by the LBBT. ‘January marks the sixth consecutive month of year-on-year growth in house prices, as the market finds a sturdy footing, putting the shaky start to 2015 behind it. The boost in property values has been driven by improving economic conditions, with employment in Scotland at an all-time high,’ said Campbell. ‘However, this stability may be under threat if the effects of the impending LBTT surcharge mirror those seen with the introduction of the original tax. There could soon be a swift peak in prices as investors rush to buy before the surcharge comes into force, followed by a dip in home values after the implementation of the surcharge,’ she warned. She reckons that the 13.5% or £24,508 year on year price growth in Stirling has been fuelled by Stirling Council’s programme to build 210 new properties in the area, with an additional investment of £9 million planned for 2016. ‘A further boost was provided by the recent sales of two million pound homes in the countryside close to the city, possibly as… Continue reading
Buy to let lending grew in 2015 at expense of first time buyers
The rapid growth of the buy to let market in the UK during 2015 was at the expense of first time buyers despite Government initiatives to encourage home ownership, new research has found. The proportion of buy to let mortgage enquiries grew by 4.4% to 18.2% during 2015 compared with 2014, whereas the proportion of enquiries for first time buyers fell by 3.7% to 23.5%. According to price comparison website comparethemarket.com the inverse correlation indicates that the buy to let market has gained a chokehold over first time buyers, as many struggle to get out of rented accommodation and on to the housing ladder. January showed no signs of a reducing market, as the first month in 2016 showed year on year growth of over 16% and 62% increase compared to December, reinforcing the sentiment that the current buy to let market may be unsustainable. Evidence indicates that if the market continues in its current direction, the number of enquiries for buy to let mortgages will outstrip the number for first time buyer enquiries, which would be a blow to the Government’s home ownership drive. Overall the buy to let market saw growth during of over 23% in enquiries on the website in 2015 and the initial cut on tax relief also did little to reduce the swelling of the buy to let market as enquiries rose by 14% in the three months after the announcement made by the Chancellor at the Summer Budget, compared to the three months before. However, with the new stamp duty on buy-to-let properties, announced at the Autumn Statement, coming into effect this spring, many expect the market will finally dampen. Elsewhere, January proved to be a particularly buoyant month for the mortgage market as the number of enquiries rose by more than 8% compared to 2015. It seems that January is the time that consumers get their respective houses in order with a recent study by comparethemarket.com finding that 44% of consumers used the month to ‘sort out’ their finances. ‘The buy to let market has been subject to both extensive discussion and criticism over the past year with even the Bank of England’s Financial Policy Committee labelling it a risk to the UK’s financial stability,’ said Jody Baker, head of money for comparethemarket. ‘This data only reinforces the view that over the past year, families and others looking to get a foot on the housing ladder are being priced out by landlords. It was great to see the Government take action in the Autumn Statement but time will tell as to what the material impact will be on the market after 01 April,’ Baker added. Continue reading
