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Prime central London rental market see increased demand
Interest in the prime central London rental market has intensified in recent months as buyers become cautious prior to the election, and regulations surrounding mortgage lending take hold, a new report suggests. The proportion of those living in private rented accommodation has risen in recent years and this is partly a reflection on affordability, with rents increasing by just 1.4% when the effects of inflation are removed, according to the analysis from Kay & Co. It found that Bayswater and Marylebone offer family homes at significantly lower prices than other prime London locations and says that a family living in these areas could save over £44,000 a year on a 2,500 square foot home. Overall the prime central London lettings market experienced a relatively strong year in 2014. Annual growth in average rents returned to positive territory, recording the highest increase in rental values since 2010. However, the level of demand for rental properties was more subdued than in 2013 but there was certainly more interest in the latter half of the year. This could have been a result of households who were in the market to purchase a home awaiting the outcome of the general election and lenders becoming more cautious, the report explains. Weekly rents achieved averaged £882 per week across prime central London in 2014, an annual rise of 7% and, compared to the 2008 peak in the sales market, average weekly rents were 11.9% higher in 2014. The average weekly rent in the fourth quarter of 2014 had risen to £904 per week for prime central London. In comparison, the neighbourhoods of Bayswater and Marylebone offer more affordable rental stock within prime central London, with weekly rents in 2014 averaging £676 and £789 per week respectively. The performance of the lettings market in prime central London, including Bayswater and Marylebone, vastly outperformed Greater London as a whole in 2014. Average rental values across the capital registered 2.4% growth over the year based on the revised index of private housing rental prices by the Office of National Statistics. A breakdown of performance by property type in 2014 shows that flats performed better than houses across prime central London in 2014 in terms of rental growth. Average weekly rents for flats increased by 7.8%, compared to 5% for houses. The number of properties let in prime central London fell by 5.4% in 2014 compared to the previous year. A quarterly breakdown, however, reveals that it was the start of the year that saw considerable reductions in the volumes of properties let and this became less severe as the year progressed. By the fourth quarter of 2014, the annual change in the number of lets had increased by 6.7%. This coincided with increased uncertainty regarding the outlook for capital values in the prime central London sales market. There was also a simultaneous and continuous increase in average rents achieved each quarter in… Continue reading
Asking prices rise across the UK apart from in Scotland
Asking prices have increased across England and Wales but not in Scotland, according to the latest index to be published. Prices rises increased by 0.9% overall in England and Wales during the last month but the average annual appreciation for England and Wales is down to 6.5%, the Home.co.uk index shows. The firm says that this reflects increasing demand across most of the UK and although Scottish prices nudged down slightly they remain 4.1% higher than last year. The data also shows that the typical time on market for England and Wales has improved considerably. At 88 days, this already matches last year's post-crisis low and looks set to fall further despite the slower Greater London market. Supply of property for sale in London has risen considerably over the course of the last year, up19%. Correspondingly, marketing times have increased and the typical marketing time is now 60 days which is 13 days longer than in April 2014. Despite this, prices continue to rise at a rate of 13% per annum. Supply rises in other regions are either small or negligible and this is stimulating great price growth, the index report says. Prices are higher in East England, where the typical time on market has fallen to a new post-crisis low of 64 days. East England, the South East, West Midlands and the South West all showed higher monthly price rises than Greater London this month. Further north, marketing times are also improving and prices are nudging up as spring increases the market momentum. Overall, the current mix-adjusted average asking price for England and Wales shows that properties on the market are valued 6.5% higher than they were in April 2014. Homes might be taking longer to sell this year than last, but London’s property values have soared to new all-time highs and this month’s rise takes the average home to over £500,000. Also, the mix adjusted average price has risen by 44% in just three years, which equates to an increase of around £150,000. However, the market dynamic in London is changing and the same vigour that yielded such price growth is moving out to the regions via the Home Counties, according to Doug Shephard, Home.co.uk director. ‘The immediate future looks rosy for all of the UK, but much of this growth is based on debt at historic low rates of interest. And the music won’t stop until it appears that the debt cannot be repaid, although that moment seems a long way off,’ he said. ‘Leveraged property investors can take comfort in the fact that the Bank of England doesn’t look keen on increasing interest rates any time soon. In fact, inflation is falling to new lows and the Bank ‘stands ready’ to cut IRs should this deflationary trend continue for too long. So, for the time being, the sky’s the limit,’ he added. Continue reading
Scottish country house prices moderate in first quarter of 2015
Prime country house prices in Scotland rose by 0.2% between January and March, a slightly more modest increase than the 1% growth seen in the final quarter of 2014, the latest data shows. Annual growth also slowed, to 1.2%. This compares to average growth of 2.1% in 2014, according to the latest index report from Knight Frank. Average prices remain 22% below the market peak in 2007 so a property valued at £1 million in 2007 would now be worth £780,000. However, there are regional variations in price growth across the prime market. Edinburgh leads from the front with a year on year price rise of 4.1%, followed by Central and Northern Scotland. However, while price growth at the top end of the market has slowed in the approach to the UK General Election, prime sales volumes in the first quarter of 2015 have increased. The firm says this can be attributed to the introduction of the new Land and Building Transaction Tax (LBTT) this month as both buyers and vendors in the prime market have looked to complete deals ahead of the introduction of the new levy. Under the new rules, 50% of buyers will not be liable to pay any tax on the purchase of a home. However, for homes valued above £333,000 the up-front cost of moving will increase. Knight Frank sales data shows the number of prime country homes changing hands between January and March, ahead of the implementation of the new levy, was 11% higher than during the first three months of 2014. The report suggests that the introduction of LBTT is likely to have a knock-on impact on sales at the top end of the market in the second quarter of the year. ‘However, we expect that in the medium term the market will adjust to the new system, underpinned by current favourable economic conditions,’ said Ran Morgan, head of Scottish residential sales. ‘In spite of higher levels of property tax, Scottish property continues to offer good value, especially when compared with London and southern England,’ he added. The data also shows that more than half of buyers in this property sector are from outside of Scotland. ‘Over the last year 57% of our buyers were from outside of Scotland, highlighting the global appeal of the country. This trend has continued in 2015, with individuals from Hong Kong, the United Arab Emirates and London all purchasing properties during the first three months of the year,’ explained Morgan. A breakdown of the figures shows that 31% were from other parts of the UK, on top of that 12% were from London, 5% were from the Middle East and 5% from Asia. Some 2% were from Europe and 2% from North America. Continue reading
