Tag Archives: crisis
Apartment and villa prices fall in Dubai at beginning of 2015
Residential property prices in Dubai fell by almost 4% in the first six weeks of this year with both apartments and villas seeing declines, the latest research shows. Prices for apartments fell by 3.7% and villas by 3% respectively, the latest report from Phidar Advisory shows. Sales increased by 1.7% in January, the data also shows. Price falls are outpacing rent declines, pushing yields up to 7% for apartments, the report shows, with the report pointing out that residential investment potential is at a five year low. However, the report notes that within this overall figure, apartment volumes were up almost 8% in January, while single family home volumes halved in January compared to the same period in 2014. Apartment lease rates remained stable with a nominal decrease of 0.5% while lease rates for single family homes decreased by 2.4%. ‘Our index indicates that the propensity for investing in Dubai real estate is at a five year low point. This is a first draft and we are developing more complex iterations integrating additional variables that influence capital flows,’ said Jesse Downs, managing director of Phidar Advisory. The report downgrades rent projections to softening and says that sale price declines will continue to outpace rent declines, allowing yields to gradually expand through 2015. ‘As long as general price deflation is averted, rent stability or softening can help control labour costs, which can facilitate business and economic growth. Ideally, this is paired with countercyclical monetary and fiscal policies to the real estate industry that facilitate economic diversification,’ explained Downs. The report also points out that, while the US dollar remains strong, demand for Dubai real estate will likely remain low and yields should continue to guide market trends. ‘Recent transaction volume contraction was caused by dwindling domestic and foreign demand,’ added Downs. Meanwhile, figures from the Dubai Land Department shows that Indians continue to top the list of expat property buyers in Dubai. Total investment by Indians in the realty market increased marginally to Dh18.123 billion from Dh18 billion in 2013. Br British expat buyers were next but the amount investment fell from Dh10.4 billion in 2013 to Dh9.318 billion in 2014. Pakistanis coming third on the list with property purchases worth Dh7.588 billion, down from Dh8.6 billion in 2013. Citizens of Gulf Cooperation Council (GCC) states bought property worth Dh32 billion through 7,186 investors in 2014. Overall there are more than 140 nationalities investing in the property market in Dubai with total real estate transactions amounting to Dh218 billion in 2014. Continue reading
Prime rental London market sees values continue to rise
Rental values in the prime central London property market continued their recovery in February, recording their twelfth consecutive month without a decline, the latest research shows. An increase of 0.2% matched the rise in January and took annual growth to 4%, which was the highest level in more than three years, according to the report from Knight Frank. It points out that as May’s general election approaches, there is a degree of uncertainty in the sales market that has dampened activity due to the potential of a ‘mansion tax’ on properties worth more than £2 million. ‘This has benefitted the lettings market to some extent as a small but growing number of buyers and vendors hedge their bets on the outcome of the election and move into the rentals market. However, the dominant mood in the prime central London lettings market in February was also one of caution as election campaigning gathered pace, which resulted in low stock levels in some areas,’ said Tom Bill, head of London residential research at Knight Frank. He pointed out that in higher value price brackets, the mood of caution has led some landlords and tenants to explore option to buy agreements where it is mutually beneficial. ‘Though not prevalent, there is anecdotal evidence to suggest tenants have explored the try before you buy option in order to hedge against short term political uncertainty, enabling them to initially rent and buy once there is greater clarity surrounding the outcome of the election,’ he added. A breakdown of the data shows that there is some variation in rental values. In Mayfair they have declined by 1.6% and in Islington by 1.2% in the year to February 2015. Chelsea has seen a 0.2% rise and Knightsbridge a 0.5% rise while in Notting Hill they increased by 1.5%. In Belgravia rental values were up 2.7%, in South Kensington by 6.1%, in Kensington7.8%, and in Hyde Park there was growth of 8%. While St Johns Wood and Marylebone saw the highest rises at 10.8% and 12.4% respectively. The report also says that despite the hesitancy, there are grounds for optimism, including the fact new tenant registrations, viewings and the number of tenancies agreed remain strong. The buoyancy of world stock markets in February is also likely to underpin demand. The performance of the prime central London rental index has broadly tracked global stock markets in recent years and the current record levels being set, including by the FTSE100, suggest the positive upwards momentum will continue. The recent strong performance is linked to indications from the Federal Reserve that it will not rush to raise interest rates, the low oil price and the agreement between Greece and the euro zone, among other factors. Continue reading
Rate of home ownership in England at lowest level for 30 years
After rising almost continuously over the course of the twentieth century, the rate of home ownership in England has been declining steadily since 2003, the annual housing survey shows. The report published by the Department of Communities and Local Government shows that in 2013/2014 home ownership fell from 65.2% to 63.3% and is now at its lowest rate for almost 30 years. Indeed it is some 8% below the all-time high of 70.9% in 2003 and among owner occupiers, the proportion of people owning their home outright overtook the proportion owning with a mortgage in 2013/2014. The data reveals a sharp decline in the proportion of younger people owing their own home, particular those aged 25 to 34 who are traditionally first time buyers who are vital to the housing ladder. But the number of this group owning their own home fell from 59% in 2004 to just 36% in 2014. Over the same period, the proportion renting, either privately or through a local authority or housing association, increased from 41% to 64%. For 16 to 24 year olds, the proportion renting increased from 76% to 91%. The increase has occurred in the private rental sector, which currently houses 19% of total households in England, the highest share since the 1960s. Indeed, over the last decade the number of privately rented households has nearly doubled to 4.4 million, while the percentage of households in social rental properties has declined from 18% to 17%. The survey suggests that 25% of people in social housing and 61% of those in the private rental sector expect to be able to buy their own home in future. However, this remains a longer term aspiration, with around half of renters expecting it to take five years or more to take their first steps into the housing market. The survey lays bare the generational divide in housing with older households continuing to benefit from the growth in home ownership and accumulation of equity in the second half of the 20th century, with younger households suffering from a lack of access to home ownership in the 21st, according to Lucian Cook, head of residential research at Savills. ‘We urgently need a co-ordinated, long term response to the housing crisis rather than short term populist policies that only address a few of the symptoms. A new government will need to front up to the need to provide a bigger, better private rented sector and find ways to encourage the recycling of existing housing wealth so younger households can get on and trade up the housing ladder,’ he said. Savills forecasts that number of private rented households will continue to rise, while levels of owner occupation will continue to slide as higher interest rates, greater mortgage regulation and an acute housing shortage further reduce access to mortgaged home ownership. The firm estimates that by the end of 2019 there will be more… Continue reading
