Tag Archives: crisis
Latest mortgage research shows shift in investors’ choice of property type in UK
Real estate investors in the UK looking to expand their property portfolios are looking to do so with the purchase of more complex property types, new research has found. In particular 28% of those looking to expand said they were considering purchasing HMOs, up from just 10% six months ago, according to the latest report from Mortgages for Business. Commercial and semi-commercial property are also interesting of investors but those looking to purchase vanilla property has fallen slightly to 79% from 83% in November. David Whittaker, managing director at Mortgages for Business, pointed out that with higher yields it is no surprise that there has been a sizeable shift towards the more complex property types. ‘The interest in commercial and semi-commercial property may have also grown as these asset classes do not incur the Stamp Duty Surcharge imposed on residential property,’ he explained. The report also shows that the number of investors looking to expand their portfolio has dipped slightly to 41% from 46% in November 2015, probably due to the tax change announcement and the introduction of the 3% stamp duty surcharge. However, the good news is that an even smaller proportion, some 14%, plan to shrink their portfolios, down from 18% in November 2015. Despite an increase in investors keeping their portfolio size as it is now, 39% still plan to remortgage some of their properties in the next six months. ‘It is positive to see that fewer landlords are looking to sell property and shrink their portfolios and that a large proportion are still seeing the benefits of remortgaging,’ said Whittaker. ‘After the government’s tax crackdown on private landlords I can understand why investors are being more cautious about expansion. It will be interesting to see how long this cautious approach will last,’ he added. The research also shows that 30% of respondents said they owned a property in a limited company vehicle up from just 22% a year before. ‘We expect this figure to continue to rise in light of the pending tax changes which will peg relief on finance costs, including mortgage interest, to the basic rate of 20% to individual tax payers. Since the tax relief announcement we have seen a notable rise in limited company applications, which doesn’t show any sign of slowing down,’ Whittaker said. The survey found that 59% of those looking to expand their portfolios will need to refinance to raise the necessary funds, up marginally from 58% in November 2015. There was also a fall in the number of respondents who felt that lenders were not doing enough to support investors. The most common gripes felt by landlords were extremely similar to the responses given in November’s survey including wanting more lending options for limited companies, wanting the removal of upper age restrictions and wanting more of a human/common sense approach to underwriting. Continue reading
Development land prices fall in England apart from in key regional cities
Development land prices for greenfield land in England dipped in 2015, while prices in prime central London remained broadly flat, but urban brownfield site values, particularly in key regional cities, rose strongly during the year. After rising by 50% in the four years to September 2015, prime central London development land prices are starting to ease, falling by 2.7% over the last six months, according to the residential land development index from Knight Frank. It means that development land prices in the prime central London market has dipped for two quarters in a row while values for greenfield land overall in England are down for the fifth consecutive quarter. Greenfield development land values fell by 2.1% in the fourth quarter of 2015 and 4.9% year on year while prime central London land prices remained broadly flat in 2015. Urban development land prices, however, bucked the trend, rising by 2.5% in the final three months of 2015. The development land index, based on the valuations of actual development sites around the country, shows a multi speed land market. Prices of mainly brownfield land in key cities, including outer London, Manchester, Leeds, Birmingham and Bristol led the urban growth. A 2.5% increase in the final three months of the year took annual growth for urban development land sites to 11.9% and according to Grainne Gilmore, head of UK residential research at Knight Frank this reflects the highly regionalised nature of the housing market at present, with price performance in many key cities and commuter towns outperforming the wider average. ‘The price growth differential also reflects the strengthening appetite for land among developers and housebuilders in regional hubs. This demand has picked up significant momentum in the last 12 months, lagging the pick-up in demand seen in the wider greenfield market two years ago,’ she explained. She also pointed out that house builders active in the greenfield market have largely replenished their pipeline land supplies, although they are still active in the market for smaller, oven ready sites. ‘The length of the planning process means that taking on large speculative schemes is hard to balance against the cost of capital involved in doing so. At the same time, developers are operating in a period of higher build costs, and a key part of this is the difficulty in accessing skilled labour which still remains in short supply,’ Gilmore said. ‘On the other hand, better local economic growth in key regional cities, coupled with more buyer confidence has resulted in a resurgence of development, and this is reflected in competition for good brownfield sites,’ she added. Focusing on prime central London, the data shows that land prices dipped by 1.1% in the final quarter of the year, resulting in a marginal decline in prices of 0.2% over the course of the year. This echoes the slowing of price growth in this central area of London, with prime property prices rising by 1% over the year to the… Continue reading
Property prices in Sydney saw a strong surge in May
Residential property prices in capital cities in Australia increased by 1.6% in May and are up by 5% year on year, the latest home value index shows The strong May numbers were largely the result of a surge in Sydney dwelling values which were up 3.1% over the month, according to the data from CoreLogic. Prices also increased strongly in Canberra with month on month growth of 2.5% and were up 1.6% in Melbourne and 2.2% in Hobart. Perth was the only city to record a fall with prices down 2.7%. The CoreLogic combined capitals index has recorded a 5% increase since the beginning of January and as a result has caused the annual trend in capital gains to rebound after conditions tapered since July last year. The annual rate of growth, which recorded a recent trough in December last year at 7.4%, has now rebounded back to 10% as of the end of May. After such a strong performance across the Sydney housing market, the annual rate of growth has moved substantially higher to reach 13.1% per annum after reaching a recent low point of 7.4% per annum growth over the 12 months ending March 2016. Despite Sydney’s bounce in the trend rate of growth, Melbourne’s housing market is still recording the highest annual rate of capital gain at 13.9%. Perth and Darwin remain the only markets to record an annual decline in home values. Perth dwelling values are down 4.2% over the past year and have recorded a peak to current fall of 6.7%. Similarly, Darwin dwelling values fell by 3.5% over the past year and are down 5.5% since peaking two years ago. The current growth cycle has been running for four years now, according to the index report. After capital city prices fell by 7.4% between October 2010 and May 2012, values have since risen by 36.6% over the growth cycle to date. The largest capital gains over the cycle to date have been in Sydney where dwelling values are 57.5% higher followed by Melbourne with a 39.4% capital gain since values started rising. The third strongest performance has been in Brisbane at 18.5%. The rebound in the rate of capital gain during 2016 is supported by other measurements in the market, the report points out. For example, auction clearance rates across the combined capital cities have remained stable and hovered around the high 60% to low 70% range since February this year. Sydney clearance rates remain firm, sitting at around the mid 70% mark over the past three weeks while Melbourne clearance rates now sit in the early 70% range. Continue reading
