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Global economic outlook and general election impacting on UK property markets
A more challenging domestic and global economic outlook and political uncertainty in the lead up to next year’s general election are having an impact on property price growth in the UK. According to the latest analysis report from Knight Frank while the first interest rate rise for years is now expected in the second half of 2015, the UK economy is facing additional challenges from overseas. It points to the continued problems in the Eurozone, the withdrawal of quantitative easing in the United States and the fact that global economic growth has also slowed to a six month low. ‘It is a combination of these factors which prompted the Bank of England to push back its expectations of when the first base rate rise will occur. With a much more benign outlook for inflation, the markets are now pricing in a rise in October 2015, with the expectation that the base rate will still only be at 1% well into 2016,’ said Grainne Gilmore, head of UK residential research at Knight Frank. ‘As a result of the new outlook for interest rates, mortgage rates have receded again, which is good news for home buyers and those re-mortgaging their home. However there are also factors weighing on the mortgage market which are likely to feed through to slower activity, such as the new loan to income criteria from the Bank of England, as well as the new rules for mortgage applications under the Mortgage Market Review started in April this year,’ she pointed out. The analysis report also points out that UK house prices rose by 0.5% in October, with the annual rate of growth slowing to 9%. Prime central London house prices remained static in October, the first month in four years in which no growth was recorded. Annual growth in prime central London prices slowed to 6.5% and rents in the prime Home Counties market fell by 0.8% in the third quarter of the year but the annual rate of growth moved into positive territory at 0.1%. ‘Residential property price growth is slowing across the country, including prime central London where the political uncertainty in the run-up to the election, especially over a potential mansion tax, is tending to weigh on activity,’ added Gilmore. The report records that prime central London prices did not rise in October, but are up 6.5% year on year. But price growth in the prime central London market continues to moderate amid growing political uncertainty in the run-up to next year’s general election. ‘The election is primarily causing unease because of the property tax measures which depend on the outcome. Both Labour and the Liberal Democrats have pledged some sort of tax on higher value properties, whether a ‘mansion tax’ or a re-banding of council tax,’ explained Gilmore. ‘Ed Balls, the shadow chancellor, pledged that those in homes currently valued at £2 million to £3 million a year would not pay more than £250 a month, or £3,000 a year (after tax) as part… Continue reading
Drones allowing estate agents to give an extra dimension to property marketing
Estate agents are known for going that extra mile to get a sale and now they are set to embrace the very latest technology to make sure a property looks its very best. Savills is one real estate company that is leading the way in their use of drones and have explained how they are increasingly helping estate agents to market properties. It enables them to take airborne photographs and videos to help market properties. The firm says that drones, or unmanned aerial vehicles (UAVs), present a number of advantages over traditional aerial photography techniques. They’re are measurably much cheaper and can produce better quality video than helicopters. Also, with the necessary consents they can be flown almost anywhere unlike aerial masts which must be set up and positioned, and are limited in height. Additionally, many commercial drones are based on the open source Arduino platform, which allows savvy users to customise them to a specific purpose. Savills began using UAVs to market homes on a wider scale in 2012, having seen their potential to convey properties in 3D, and thereby bringing the property to life for potential buyers. To date, the company has used drones on many occasions, including for Donhead House in Wiltshire, and Lasborough Park and Bell’s Castle also in Gloucestershire. They have found that drone-captured video and photography can offer not only the dramatic details of a property, but a sense of place, something that can be difficult to capture using traditional techniques. ‘It’s not just about selling the house, it’s also about selling lifestyle and the wider area. A brochure would normally lead with images of the house and formal gardens, whereas a video can capture the whole,’ said Ed Sugden, director of Savills Country House Department. ‘It allows a potential buyer to look beyond the brochure, and allows us to convey a lot of information far more quickly and efficiently,’ he added. However, it is not as simple as letting the drone do all the work. There is an art to using drones as well as a science, and one common mistake is showing too much of the property’s roof. Savills advises taking video and photography from a 45 degree angle, which allows the property’s best attributes, including its grounds and architecture, to be captured in the most aesthetic way. The novelty of drone photography itself can also help to capture buyer interest, and encourage people to take it forward with a viewing. So far, this strategy has been working for Savills and their clients. For example, one property’s video has had over 7,000 visits from around the world, which must lead to more viewings and interest. However, as useful as they are, drones aren’t suitable for every situation. ‘If a particular house has a pig farm on one side, a pylon and a motorway on the other then an aerial overview is not the… Continue reading
UK home owners over 55 considering downsizing, research suggests
Some 41% of home owners in the UK over the age of 55 plan to sell their current property and many will downsize, according to new data. This is up from 38% six months ago according to the figures from the bi-annual Prudential Downsizing Index. The data shows that 75% of home owners over the age of 55 who are planning to sell, say they will downsize. The average amount of capital they hope to free-up as a result of these property sales is £87,600, up from £85,300 in May of this year. Of those expecting to release equity from downsizing, 45% will spend newly released cash on big ticket or luxury purchases like holidays, 48% say they will save or invest the money, while 40% will use the funds to boost their pension pots. Some 61% say having too much space is the main reason for downsizing, 58% want the convenience of running a smaller home, while 34% want to access the equity in their home. The data also shows that 22% plan to reduce the day to day costs of running a large home while 21% are prompted by changes in personal circumstances, including divorce or separation. The index suggests that many are looking for a change, with 35% of those who are planning to sell saying they will relocate to another town or city within the UK. ‘Our homes are often our most valuable assets, but also one of our greatest expenses. The financial benefits of downsizing, from both a cost-saving and releasing capital perspective, can be very enticing. But those who are considering it should exercise caution and be careful not to overestimate the level of funds they expect to receive,’ said Vince Smith-Hughes, retirement income expert at Prudential. ‘Freeing up cash as a result of selling your property may be appropriate for some, but it should never be seen as a substitute for saving for retirement. The best way to secure your desired standard of living in retirement is to save as much as possible from as early as possible and to seek professional financial advice on the best retirement income options available for your needs,’ he added. Separate analysis of data from The Census reveals that Cornwall, Arun and North Somerset are the most popular destinations for retirees to move to in England and Wales, for those aged 65 and over. Continue reading
