Tag Archives: crisis
Prime central London annual price growth at lowest since 2009
Annual price growth in prime central London fell to 2.8% in April, the lowest rate since November 2009 and is unlikely to change much this year, according to a new market analysis. Growth has been on a downwards trajectory in recent months ahead of the general election, but the Conservative Party victory suggests April is likely to mark the low point in the cycle, says the analysis report from Knight Frank. According to Tom Bill, head of London residential research at the firm, the principal effect on the prime London property market is that the election result has removed the prospect of a mansion tax on properties worth more than £2 million. ‘We believe this will lift transaction levels but the extent of any short term boost to prices is less clear cut. It will also be significant to note to what degree the opposition Labour Party moderates its policies around wealth creation and taxation and whether this reduces the rhetoric of the wider economic debate,’ said Bill. He believes that following the Conservative Party general election victory, several short term outcomes are likely. ‘First, numerous transactions put on hold pending the outcome of the vote will proceed as the risk of further property taxation appears less of an immediate threat. Other sales will progress simply because the election is over and a deeper sense of political uncertainty has receded,’ he explained. ‘As the logjam unblocks, it is likely to be accompanied by a hardening of expectations on the part of vendors over asking prices and some will expect prices to immediately rise as a direct consequence of the election result,’ said Bill. ‘In the short term, the impact on pricing is likely to be less marked than some expect due to the quantity of properties coming onto the market. Many vendors lined up sales for Monday 11 May, irrespective of the outcome of the election. Also this short term increase in supply is likely to exceed any uptick in demand. Activity in the prime London market has dampened in recent months as buyers and sellers factor in political risks but also as they digest measures like the stamp duty increase,’ he explained. ‘The market is in the final stages of absorbing these changes, meaning some buyers will still proceed with care. Furthermore, some prospective buyers will have signed rental contracts as they hedged their bets on the outcome of the election, meaning they are unable to act for several months,’ he added. Bill also pointed out that there is likely to be a short delay before a supply/demand equilibrium returns and a likely ‘expectation gap’ between asking prices and the prices that new and newly active buyers are prepared to pay. ‘However, price growth is likely to return more quickly in markets that have underperformed the prime central London average, including areas in Kensington and Chelsea where there has been low single digit annual growth in recent years,’ he said. Bill explained… Continue reading
Lending to first time buyers in the UK falling, latest CML data shows
First time buyer and house purchase lending in the UK has slowed, according to the latest figures from the Council of Mortgage Lenders. The figures show the full impact of new mortgage rules introduced a year ago and suggests that people are staying put for longer with mortgage pricing at record lows. The total number of loans advanced to first time buyers in March was up 20% compared to February but 5% down compared to March 2014. First time buyers borrowed £3.4 billion, which was up 21% on February and 3% up on March last year. Loans to home movers increased by 14% compared to February but was down 3% year on ear. These loans were worth £4.9 billion, up 17% on February and 7% compared to March 2014. Remortgage lending increased 19% month on month and 6% year on year. The value of these loans at £4.2 billion also increased month on month by 24% and was up 14% year on year compared to March 2014. Buy to let loans also increased month on month and year on year, up 12 compared to February and up 21% compared to March 2014. These loans were worth £2.7 billion, up 13% compared to February and up 35% on March 2014. The quarterly figures show how much lending has slowed. First time buyers took out 61,300 loans in the first quarter 2015, down 24% on the fourth quarter of 2014 and 11% down on the first quarter of 2014. They borrowed £9 billion, down 23% on the fourth quarter of 2014 and a year on year decrease of 5% compared to the first quarter of 2014. Home movers took out 70,400 loans, a decrease of 25% compared to the fourth quarter 2014 and a decrease of 11% year on year. These loans totalled £13.5 billion, down 22% on the previous quarter and 5% down year on year on the first quarter of 2014. Remortgage lending increased quarter on quarter with 75,400 loans advanced, up 3% on the fourth quarter 2014 but down 5% on the same quarter last year. The value of these loans at £11.8 billion also increased quarter on quarter by 6% and was up 2% year on year compared to quarter one of 2014. There were 52,300 buy to let loans advanced in the first quarter of 2015, down 3% on the previous quarter but up 15% on the same period in 2014. These loans were worth £7.8 billion in value, up 1% compared to the first quarter and up 28% on the first quarter of 2014. ‘It was a slow start to activity in the first couple of months of 2015 but the market started to get out of the dip in March, a trend that we think will continue as the year goes on,’ said Paul Smee, director general of the CML. ‘We will have to wait and see how the housing market reacts to the general election result and the… Continue reading
Home owners in Scotland’s Shetland Isles see top value growth since 2009
Home owners in the Shetland Isles in the far north of Scotland have seen the value of their property increase by £39,311 or 31% since the trough of the last housing market cycle in 2009, new research shows. The situation has been helped by the islands having the highest employment rate in Scotland, according to the research by the Bank of Scotland. Aberdeen City has the second highest house price increase in Scotland since 2009, with property prices going up 21% or £38,275, followed by Aberdeenshire with a 16% increase of £33,022. The report notes that both are amongst the five areas in Scotland with the highest levels of employment over recent years and says that there is a clear link between levels of employment and house price performance in recent years. Those areas with the highest average levels of employment since 2009 have, on average, recorded bigger house price gains. For example, the five local authority districts (LADs) with the highest employment have experienced average house price rises of 14% or £23,462, since 2009, compared with an increase of 2% for Scotland as a whole. The average house price in the 10 LADs that recorded the highest employment rate between 2009 and 2015 rose by £9,554 or 6%. However, looking further afield to the top 20 LADs, they have seen an average increase of only 2% or £2,617, which is in line with the average for Scotland. In stark contrast, those areas with the highest levels of unemployment, as measured by the claimant count, have typically underperformed the Scottish average. The 20 areas with the highest levels of unemployment have recorded an average house price fall of 8% or £11,252. The five areas with the highest unemployment rate have seen a 7% drop in the value of their homes. ‘There has been a very clear relationship between conditions in the Scottish jobs market and house price performance during the period since the housing market downturn between 2007 and 2009. Those areas with high levels of employment have tended to record above average house price growth. Areas with high unemployment levels have, on the other hand, typically underperformed,’ said Nitesh Patel, economist at the Bank of Scotland. ‘The past few years have underlined the importance of local economic health in determining house price behaviour. Other factors, however, are also key drivers of house price trends including the strength, or otherwise, of housing supply,’ added Patel. Continue reading
