Tag Archives: crisis
Prime London property prices up 1.6% in second quarter of 2015
Values across London’s prime housing market grew by an average of 1.6% in the three months to the end of June, but remain 0.7% below where they were a year ago. Increased stamp duty rates and unsold stock levels restricted a bounce in property values after May’s general election, according to the latest analysis from real estate firm Savills. The report also says that buyer caution has been most evident at the top end of the market, with prices in the prime central London market barely showing any net house price growth over the quarter with a rise of just 0.3%. This means that house prices in this market are down by an average of 4.3% year on year. According to Lucian Cook, head of UK residential research at Savills, there was a feeling prior to the autumn statement last year that the prime markets of London were looking fully priced following a sustained period of growth. ‘The stamp duty increases introduced in December 2014 mean they now also looked fully taxed, despite mansion tax fears being confined to history,’ he explained, adding that this effect has not been confined to prime central London. Indeed, across the remainder of the prime London market homes worth over £2 million saw values fall by an average of 0.9% over the past year, despite rising by an average of 2.4% in the quarter. Across London, the market below £1 million, where buyers benefitted modestly from the stamp duty reform, recorded annual price growth, albeit of just 2.4%, as the mortgage market review continues to restrict the amount people can borrow, whether because of the stress testing of affordability or the income upon which this is judged. ‘In the early part of the year we could put buyer reluctance to commit down to political uncertainty pre-election. Only now is the dual effect of taxation at the top end of the prime market and mortgage regulation at entry level becoming clear,’ said Cook. ‘These constraints are keenly felt by buyers, while some sellers are clinging to expectations that values can keep on rising. That has created a gap in price expectations in parts of the market which is likely to hold back any recovery in transaction levels,’ he pointed out. ‘With those transactions having been suppressed prior to the election, it seems inevitable that high value sales will have peaked, at least in the short term, in 2014. That means current constraints on the market could have a negative on impact on stamp duty receipts from most expensive housing upon which the Treasury has become increasing reliant,’ he concluded. 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
