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New UK stamp duty rates subdue sentiment in high value home markets
Prime London house prices rose by an average of 2.6% in 2014, but for the first time since the credit crunch the UK’s prime regional markets marginally outperformed the capital with growth averaging 3.2%. According to the latest analysis from Savills 2014 was a year of two halves for the prime London residential market. Prices rose by 4.9% on average in the first half of the year and fell by a net figure of 2.2% in the second half, its prime London index shows. The firm says that the increased rates of stamp duty introduced by the Chancellor in his Autumn Statement resulted in an adjustment in values at the top end of the market, most notably in prime London and parts of its high value extended commuter belt. As a result, the average all prime London index where values average £2.6 million recorded a 2.6% fall in the final quarter of 2014. However, London’s prime markets up to £1 million and in the £1 million to £2 million range were less adversely affected by the stamp duty changes and would also be less affected by opposition proposals for a mansion tax. As a result, they saw annual price growth of 6% and 2.5% respectively. The greatest impact of the stamp duty increase was seen in the most valuable markets of prime central London, which have seen the strongest price growth in recent years. In these central markets, where prices average £4 million, values fell by 4.2% in the last quarter of the year, contributing to small falls of 1.3% year on year. ‘It will take time for the effect of the stamp duty changes on prices to become clear, early signs are that the additional cost is predominantly being borne by sellers through price adjustments at a level similar to the extra stamp duty,’ said Lucian Cook, Savills UK head of residential research. ‘Prices were easing before the Autumn Statement, so for the very top end of the market the stamp duty rise coincided with some of the froth coming off pricing earlier in the quarter. Our analysis suggests that even without the stamp duty changes, values were on track to soften by around 1% in this last quarter, in part due to general pre-election uncertainty around high value property taxation,’ he explained. Early indications are that the prime markets outside London have been less impacted by the new stamp duty rates and would also be less affected by further taxation in the form of a mansion tax. In the sub £1 million prime market across the UK, average prices rose by 4.6% in 2014, fuelled by particularly strong growth in the first six months of the year. These lower value prime markets, particularly those that are well-connected to London, are forecast to see the strongest growth over the next year and… Continue reading
UK property markets set to see slowing of growth in 2015 says CBRE
UK property sectors are set to continue to expand, in 2015 but the overall trend will be a slowing of growth to more sustainable levels, a new analysis suggests. Prime London markets will continue to grow in 2015, but confidence and investor interest will encourage growth in prime regional markets and secondary housing markets will fare better than in recent years, according to real estate advisor CBRE. It points out that in 2014, total returns to property averaged nearly 20% and in 2015, there will be a slowing of growth rates with average returns just under 13%. The general election in May will bring some uncertainty into property decision making but year on year there is expected to be significant rental growth for most sectors but a further improvement in yields as investment inflows continue into the UK market. Prospects for retail properties remain among the most uncertain, with few sure signs just yet that stable growth is returning to consumer spending, and cost pressures and distractions across the sector, particularly in grocery retailing, although in 2015 as in 2014, prime retail destinations will remain a safe bet, the report explains. Industrial property will continue to be attractive for investors due to a dearth of quality supply but price growth in the housing market will ease in 2015 to around 6% with transaction levels having peaked for the time being. ‘This has been a year of extraordinary expansion across the property sector and while this will continue into 2015, overall there will be a return to more sustainable levels of growth,’ said Miles Gibson, head of UK research, CBRE. ‘Rental growth will continue in all sectors and we expect investment yields to continue to improve as levels of capital flows into the UK market remain high. In terms of where growth, we forecast a ripple effect next year as property investors shift from London out to the regions,’ he explained. ‘Global economic factors, most notably the falling price of crude oil, in 2015 will benefit the UK. The likely effects of pushing down inflation and boosting consumer spending, means we should expect to see a knock on benefit for retailers which in turn could stimulate growth in the retail property sector,’ he added. ‘Although there positive signals for the property market, we recognise that there will be uncertainty caused by the imminent general election. The combination of these trends makes 2015 an intriguing prospect for property markets,’ he concluded. Continue reading
Auckland property market sees record sales, record prices and low listings
December’s residential property sales in Auckland were the strongest they have been for the final month of the year for the past decade, the latest data shows. Sales numbers were up significantly, prices reached all-time highs, and the number of available listings reaching an all-time low, according to independent agency Barfoot & Thompson. ‘It was our busiest December in the last 10 years with demand never being higher, or choice lower. Even though December was the shortest selling month of the year we sold 1,050 properties, our fourth busiest month of the year,’ said managing director Peter Thompson. He pointed out that sales in December were 28.5% higher than in December 2013 and the average sales price in December 2014 was $758,891, some $1,982 higher than November’s average price. The median price increased to $720,000 in December, which was $28,500 or 4.1% higher than November’s, and it is the first time the median price has moved above $700,000. ‘At the same time the number of properties on our books at the end of December was 2,500, our lowest number for any month end in the past 10 years. For us, this represents less than two months’ stock, and indicates that in the first quarter of this year, buyer choice will remain severely limited,’ explained Thompson. He believes that in part, December’s strong activity was a flow over from October and November, which were catch up months following a relatively low period of activity during September caused by the General Election. Although the year ended with record prices and sales activity, overall prices in 2014 rose slower than they did in 2013. The average price increased by 10.3 % in 2014, compared to 11.1% in 2013 while the median price increased by 11.1% compared to 12.7%. ‘The past two years of strong price growth is reflected in the significant change in sales volumes in both the higher and lower price segments of the market. In 2014 some 29.5% of all homes sold for under $500,000,’ said Thompson. ‘A year earlier, 38.6% of all sales were in this price category. The same trend is found at the top end of the market, with sales of homes in the $1 million and above category in 2014 representing 17.2% of all sales. A year earlier it was 12.4%,’ he added. Continue reading
