Tag Archives: crisis
Demand for homes in central London property market picks up
Buyer demand in the residential real estate market in central London picked up during the early months of 2015, according to a new report. The market is still busy below £1 million but has quietened between £1.5 million and £5 million as Stamp Duty changes and the possibility of a mansion tax take their toll, says the analysis from real estate firm JLL. However, underlying demand is still strong and the fundamentals remain the same and an excess of demand over available supply, which continues to support the market. The report also points out that development activity continues to rise with 26,500 units now under construction, a 23% increase during the second half of last year and a 41% rise throughout the course of 2014. The majority of units underway are in outer core locations where there was a 34% increase in the second half of last year with core markets seeing a more modest increment of 8%. The number of units starts during the second half of last year, at 8,700, was a 45% increase compared with the first half of 2014. According to JLL although the general election is now just a month away it has been impacting the central London sales market since 2014. For example, Labour's mansion tax proposal is affecting the market above £1.5 million as people adopt a wait and see attitude. ‘The general election does not seem to have deterred London's developers. The number of units underway has increased significantly over the past couple of years and the election is not halting this,’ said Neil Chegwidden, director in the residential research team at JLL. ‘It is also interesting to see that London's developers believe that the outcome of the general election is more important to their businesses than the Mayoral election next year. So it is good news that new supply is on the rise, but we continue to fall short of London's targets and it will be intriguing to see what impact a new government might have on this vital issue,’ he added. The report also looks at the legacy of the 2012 Olympic Games on the east of London and says that 10 years on from the successful bid the East Village already has its first residents and construction is underway at Chobham Manor, one of five neighbourhoods within the Park. It also says that this part of London has a wealth of development and regeneration potential that reaches far beyond the sphere of influence of the Olympic Park and the raised profile of the area is encouraging developers to bring schemes to the market. Construction levels have escalated in recent years. At the end of 2013 there were just 2,900 private residential units under construction, now there are 6,600, a 125% increase. A quarter of all new residential units under construction are in East London led by the 6,800 units at Queen Elizabeth Park and the close to 6,500 units at Stratford City… Continue reading
US pending home sales reach highest level since June 2013
Pending home sales in the United States in February increased to their highest level since June 2013, according to the latest figures from the National Association of Realtors. Sizeable gains in the Midwest and West offset smaller declines in the Northeast and South and overall demand is increasing as the residential real estate market moves into the spring buying seasons. The NAR pending homes sales index, which is a forward looking indicator based on contract signings, rose 3.1% to 106.9 in February from a slight downward revision of 103.7 in January and is now 12% above February 2014. Indeed, the index is at its highest level since June 2013 when it was 109.4, and has increased year on year for six consecutive months and. It is also above 100, considered an average level of activity, for the tenth consecutive month. ‘Pending sales showed solid gains last month, driven by a steadily improving labour market, mortgage rates hovering around 4% and the likelihood of more renters looking to hedge against increasing rents,’ said NAR chief economist Lawrence Yun. ‘These factors bode well for the prospect of an uptick in sales in coming months. However, the underlying obstacle, especially for first time buyers, continues to be the depressed level of homes available for sale,’ he added. According to NAR’s monthly confidence index the percent share of first time buyers increased slightly for the first time in February since November 2014, up to 29% from 28% in January. ‘Several markets remain highly-competitive due to supply pressures, and real estate agents are reporting severe shortages of move-in ready and available properties in lower price ranges. The return of first time buyers this year will depend on how quickly inventory shows up in the market,’ Yun explained. The PHSI in the Northeast fell 2.3% in February, but is 4.1% above a year ago. In the Midwest the index leaped 11.6% and is now 13.8% above February 2014. Pending home sales in the South decreased 1.4% but is still 10.8% above last February. The index in the West climbed 6.6%, the highest since June 2013, and is now 18.3% above a year ago. Total existing homes sales in 2015 are forecast to be around 5.25 million, an increase of 6.4% from 2014. The national median existing home price for all of this year is expected to increase around 5.6%. In 2014 existing home sales declined 2.9% and prices rose 5.7%. Continue reading
Research reveals lack of knowledge on returns and finance in buy to let
Almost a quarter of buy to let investors in the UK residential property market don’t keep track of the returns on their property portfolio, it is claimed. There is also considerable landlord confusion about the most accurate way of assessing their buy to let finances, according to new research from specialist firm Platinum Property Partners. It found that 23% of UK landlords do not measure the return on their buy to let investments at all and this means that £300 billion of investment in the sector is left unmonitored, leaving UK landlords unaware of the current or ongoing health of their property portfolio. Landlords owning Houses in Multiple Occupation (HMOs) for young professionals and key workers are the most likely to measure their portfolio, with 95% tracking the profitability of their property portfolios in some way. But landlords who let out holiday homes are least likely to assess the returns on their investment with 33% failing to measure the financial performance of their rental properties. Not only is there a significant failure among UK landlords to measure buy to let returns, but there is also a worrying lack of consensus about the most effective way to measure the performance of property portfolios, the firm says. Return on Investment is considered the most effective way to measure the performance of all investments, including property. For buy to let it is the only method to take into account gross profit, the cost of the property (including fees and refurbishment) and capital gain. Return on equity uses a similar calculation so can also be considered an effective measurement, according to the firm. However, just 21% of buy to let investors measure the performance of their investment using these methods and 56% of property investors use a less effective method to calculate the profitability of their portfolio, which means that £700 billion of buy to let investment is at risk of not being monitored accurately. The research suggests that not only are landlords using ineffective methods to calculate the performance of their property portfolio, but the vast majority do not fully understand the key financial terms. Just 24% of landlords understood the term ‘Return on Investment’. When asked to select the correct definition, 56% failed to do so while 20% were not sure. Landlords letting out flats were the least savvy about this type of financial measurement, with only 8% able to define this term correctly. Overall some 26% could accurately define ‘Gross Yield’ and the research found that landlords of HMOs for working tenants and holiday homes are the most clued up about the meaning of this term at 38% and 42% respectively. The research also found that just 12% knew what is meant by ‘Gross Profit’, with 73% of landlords incorrectly identifying the definition. Landlords with holiday homes were the most familiar with this measure with 25% understanding the term. However, even among those investors who correctly understand financial terms, there was no… Continue reading
