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England and Wales see fastest annual residential rent rises since May 2013
Average residential rents in England and Wales increased by 3.1% year on year to stand at £766 in February 2015, the fastest annual rise since May 2013. The latest buy to let index from estate agents Your Move and Reeds Rains also shows that the East of England recorded a 10.2% annual rent rise, the strongest growth of any region in over five years. The overall annual boost follows a monthly uplift of 0.4% in February 2015, a £3 increase which comes after a series of monthly drops in January of 0.6%, a fall of 0.1% in December 2014 and a fall of 0.2% in November. In real terms, average residential rents in England and Wales now stand at £766, compared to £763 in January 2015 and £743 in February last year. The index also shows that tenant finances are worse with 7.6% of all rent in arrears in February 2015, compared to 6.9% a year ago and returns for landlords have stabilised with total returns up to 11.5% over the last 12 months. According to Adrian Gill, director of Reeds Rains and Your Move, the rental sector is carrying the weight of the housing crisis. ‘More homes are needed to house an ever growing population. The supply simply isn’t there. The result is that landlords are catering to those who can’t afford to buy as well as those who choose renting for the flexibility it offers them such as workers moving into new jobs, or people wanting to get a feel for an area before committing to property ownership and setting down roots,’ he explained. ‘House prices rising out of reach for people at the lower end of the market makes increasing demand in the private rented sector inevitable. A serious and substantial commitment to new builds is the only way to bring supply in line with demand,’ he added. A regional breakdown of the figures shows that tents in the East of England have rocketed up to £787 in February 2015 compared to £714 a year ago. It forms the latest link in a chain of accelerating annual rent rises for the East stretching back to July last year. London saw the second highest annual rise with rents resting 4.9% above levels in February 2014. The North West saw rents down 0.3% and in the North East they were down 0.4%, the only regions to see a year on year drop in rents, while prices in the West Midlands and South West remained stable compared to last year. On a monthly basis, the South West took the lead with a 1.7% increase in rental prices, closely followed by Wales up 1.2% and the West Midlands up 0.9%. Although rents in the East of England saw a more modest 0.7% boost, it is the only region to have experienced monthly rises for 10 consecutive months, contributing to its dominant position in… Continue reading
UK property markets likely to see more capital growth in 2015, but at slower rate
UK property markets are likely to see continued capital value growth in 2015, especially in prime sectors, but perhaps at a slower late, according to an outlook analysis report. Strong capital value growth was undoubtedly the key theme of 2014 and growth across all sectors was stronger than forecast at the beginning of the year, according to the spotlight report from Savills. Growth could be slower in 2015 and the general election in May will definitely have some effect on sentiment, though in the agricultural and commercial sectors the firm expects the effects to be relatively muted. In the residential markets the threat of a mansion tax, combined with the Mortgage Market Review introduced in 2014 could lead to a more sustained hiatus in capital value growth in 2015. ‘Generally we expect that the macroeconomic story for the UK will remain benign, with base rates remaining unchanged until early 2016, and the combination of low oil prices and recovering incomes giving a boost to the UK consumer,’ the report says. ‘The high returns that will be thrown off by all property sectors in the UK will continue to attract attention, and we expect that UK real estate will continue to deliver high returns in comparison to other asset classes,’ it explains. ‘This will mean that domestic and international demand for prime and good secondary assets will be strong, though we expect to see more focus on supply and demand fundamentals in 2015, rather than just the potential for yield shift,’ it adds. As far as the residential outlook is concerned the report suggests that returns will be less driven by yield shift in 2015, with the best performance coming from understanding where local markets and sectors are in the rental cycle. Following a year of strong mainstream house price growth in 2014 that ran well ahead of the economic recovery, Savills expects much more subdued price growth in 2015. This is particularly the case in London, which has now outperformed the rest of the UK for over nine years and where correspondingly, affordability is likely to look increasingly stretched as interest rates rise. ‘In addition, the mortgage market review is likely to restrict the amount which people are able to borrow. In turn, this is likely to restrict mortgaged buyers' ability to get on or trade up the housing ladder, thereby continuing to drive demand into the private rented sector and underpinning rental growth,’ the report says. ‘The ongoing debate around the taxation of high value property is likely to mean a relatively muted prime market in the run up to the election. While the mainstream market may receive a one off fillip from the stamp duty changes in the 2014 Autumn Statement, prime markets that are bearing an increased tax burden will also have to contend with political rhetoric regarding a potential mansion tax, even though the medium term prospects remain positive,’ the report adds. In the agricultural perspective, Savills expects further growth in UK… Continue reading
Steady property sales and price market forecast for Canada this year
Residential real estate prices in Canada are expected to remain stable this year while sales will vary considerably on a regional basis, according to the latest forecast report from the Canadian Real Estate Association (CREA). National sales are now projected to reach 475,700 units in 2015, representing an annual decline of 1.1% which would place annual activity slightly above but still broadly in line with its 10 year average. British Columbia is projected to post the largest annual increase in activity in 2015 at 4.9% followed closely by Nova Scotia at 3.7% Quebec at 2.5%, New Brunswick also at 2.5%, Ontario at 1% and Prince Edward Island at 1.4%. These numbers represent upward revisions to CREA’s previous forecast. Alberta is expected to post the largest annual decline in sales this year at 19.2% although the trend for activity is expected to begin recovering from a weak start to the year as consumer confidence recovers. Sales are also forecast to decline on an annual basis in Saskatchewan by 11.2% and in Manitoba by 1.3%. The national average home price is now forecast to rise by 2% to $416,200 in 2015. Only British Columbia at 3.4% and Ontario at 2.5% are forecast to see gains in excess of the national increase. Prices are projected to remain largely stable elsewhere, with increases or decreases of around 1% or less this year. The exception is Alberta, where average price is forecast to fall by 3.4%, reflecting a pullback in sales for luxury properties compared to homes in more affordable price segments. In 2016, national sales activity is forecast to reach 482,700 units, representing an annual increase of 1.7%. Much of the annual increase reflects an anticipated recovery for sales activity in Alberta and Saskatchewan in line with expected economic improvement in those provinces. Strengthening economic prospects are expected to result in improving sales activity in other provinces where sales have struggled, keeping prices more affordable amid ample supply. Meanwhile, anticipated mortgage rate increases are expected to keep activity in check in markets where homes are already less affordable and prices have continued rising. The national average price is forecast to rise by a further 1.9% to $424,100 in 2016. Given an ongoing shortage of supply for single family homes in and around the Greater Toronto Area, price growth in 2016 is forecast to be strongest in Ontario at 2.5% and Alberta at 2.4%. Gains of around 2% are forecast for British Columbia and Manitoba, and around 1% for Saskatchewan and Quebec. Average home price in the Atlantic region is forecast to hold steady in 2016. Continue reading
