Tag Archives: crisis
Landlords warned not to rely on good capital gains in UK buy to let sector
Landlords’ confidence in capital gains has almost trebled over the last two years, according to the leading landlord association in the UK. It has risen from 18% to 52% over the last two years but the survey by the National Landlords Association (NLA) also shows that 32% of landlords say they might not be able to meet their mortgage repayments if interest rates were to rise in the near future. Despite the survey findings the NLA is talking down capital gains prospects and has warned against relying on capital gains as a primary investment strategy. The warning comes after the Financial Times recently reported the estimated capital growth of private rented housing stock to be of £177 billion over just the last five years. ‘It certainly feels like a great time to be looking at buy to let a means of additional income but you cannot simply rely on the prospect of capital gains as an investment strategy,’ said Carolyn Uphill, NLA chairman. ‘A lot is being made of capital growth but landlords must remember they are in the business of providing homes for people. It’s a risky investment and the prospect of capital gains is only realised if and when the property is sold,’ she explained. ‘With house prices levelling off and inevitable rises to interest rates as the economy improves, anyone considering investing in buy to let should think carefully before taking the plunge. This means planning for the long term and looking to sustainable yields, not hoping for a windfall in capital appreciation,’ she added. The news comes as the NLA launches the second part of its latest campaign; Rent, Risk Resolve, which aims to highlight the potential risks of rising interest rates. To accompany the campaign the NLA has produced a guide on how to prepare for rising interest rates. Continue reading
House prices fell in most regions in France in 2014
House prices in regional France continued to fall in 2014, but there are considerable variations, according to figures from estate agents. The annual review from the FNAIM, the national association of French estate agents, says that house prices fell by an average of 1.5% in 2014, but with significant variations across the country. Picardy led the way with price rises of 3.5%, Lower Normandy saw prices rise by 1.2%, Poitou-Charentes by 1%, Languedoc-Roussillon by 0.9%, Auvergne by 0.8% and Brittany by 0.4%. Elsewhere prices fell, most notably by 5.3% in Nord pas de Calais, by 5.1% in Limousin, by 4.9% in Upper Normandy, by 4.8% in Franche Comte, and by 4.3% in Champagne Ardennes. Although overall the FNAIM report says that activity levels remained broadly the same as that for 2013 at around 720,000 sales, volumes were only maintained due to continued strong activity in the main cities and tourist areas of the country. In many smaller towns and rural areas sales were substantially down. The differences have also deepened between the best and worst properties, with buyers taking their time to find the right property. Properties with substantial defects or other unfavourable characteristics remained unsold. In addition, in the more expensive areas of the country it was smaller properties that sold over larger homes, one reason, it seems, why activity levels were maintained. While the FNAIM data is taken as the most reliable, other national agents have also published annual figures which all show prices falling on a national basis but which differ somewhat on a regional level. Century 21’s annual review put the average fall in property prices at 2.8%. The data shows only one region with rising prices, Limousin with growth of 3.7%. Everywhere else show falling prices, most notably a decline of 7.4% in Languedoc Roussillon, a fall of 7% in Lorraine and 6.7% in Poitou Charentes. According to the Laforet group of estate agents there was a fall of 3% in regional prices outside of Paris with prices down across the board led by a fall of 5.7% in Limousin, 5.4% in Picardy, 5% in Poitou Charentes and 4% in Midi Pyrenees. Such is the lack of alignment in the regional figures between the agents, the only conclusion that can be drawn is that the trend continues downwards. The notaires have yet to publish their analysis of 2014, but for the third quarter the average annualised national price fall was still under 1%. The FNAIM believes that prices will continue to fall this year. It is predicting average falls of between 2% to 3% in 2015 and this in similar to other predictions from individual chains of estate agents. It means that prices are on average at the same levels they were in 2007. But 2015 could see more overseas buyers coming back to the French market, especially as average interest rates are now around 2.5% with some firms predicting they could fall further to 2%, making it cheaper for… Continue reading
Price growth and new buyer demand declines in UK housing market
House price growth and new buyer demand in the UK both tailed off in December 2014 but stamp duty reforms are still expected to support market activity in the months ahead. Overall, the number of potential new house buyers dipped for the sixth consecutive month in December and price growth fell to its slowest pace since May 2013, the latest residential survey from the Royal Institution of Chartered Surveyors shows. Across the UK, 10% more surveyors saw the number of potential new buyers decrease in December and London saw the weakest demand, with 45% more surveyors reporting a decline in enquiries, the eighth consecutive monthly decline. The North of England and the South West saw strong rebounds in demand, albeit the underlying picture remains most upbeat in Northern Ireland and Scotland. Despite the slowdown, there is optimism that the stamp duty reforms will deliver a 2% to 5% boost in both sales and prices over the next 12 months, despite members in London expecting sales to decrease by between 5% and 10% and prices to decrease by 2% to 5%, with larger properties and/or those in prime areas expected to see the biggest price decreases. Nationally, as a result of the weaker trend in buyer interest, sales expectations slipped to a net balance of 21%,down from 27% in November, and just 11% more surveyors saw prices rise in December, rather than fall. The volume of agreed sales during December was little changed, while the average number of sales per chartered surveyor slipped to 19 compared to 21.2 in the preceding December. In the month that also saw mortgage approvals fall to their lowest in 18 months, December’s data showed that perceived Loan to Value ratios across properties for first time buyers and existing home owners remained stable at 84.9% and 77.6%, although they are lower compared with the early part of 2014 following the adoption of a more cautious approach to lending as a result of the introduction of the recommendations of the Mortgage Market Review. ‘The changes to stamp duty are expected to provide a timely boost to activity in the housing market across most of the country but there remain significant challenges particularly for first time buyers seeking to take an initial step onto the property ladder,’ said Simon Rubinsohn, RICS chief economist. ‘Critically, the stock of property on the market continues to hover close to historic lows with new instructions to agents falling in ten of the last twelve months. Indeed, there is a risk that with so little housing available any pick-up in demand could rapidly feed through into higher prices rather higher sales,’ he explained. He pointed out that the RICS lead indicators do provide some encouragement that the level of housebuilding will continue to increase over the course of this year but even with further growth, the volume of home starts will still fall well short of the number of new household being formed… Continue reading
