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Office rental growth hits record highs in South East of England
Vacancy rates across the South East of England office market are at their lowest since 2001, driving rental growth to hit record highs in towns across the region, new research shows. The M25 vacancy rate stood at 5.9% in the first three months of 2015 but this falls to 4.2% when only new and Grade A space is analysed, low by London, UK and global standards, says the data from the latest office leasing report from Knight Frank. It also shows that availability fell by 13% compared to a year ago, across all grades of stock, moving the market back towards the landlord’s favour. Following the re-election of a Conservative led Government and financial market rally, economic performance of the region is improving and there is an expectation of a further boost to demand, it points out. Strong investor demand and a lack of deliverable product is holding back stock volumes in the investment market, where we are seeing a hardening of yields across the spectrum, with investors increasingly factoring in likely rental growth during hold periods. Prime yields now stand at 5.00% NIY and the combination of weight of money and lack of product is expected to drive yields down further moving forward in 2015. ‘2015 has started positively supporting our view that take up in the M25 will be almost 30% ahead of 2014, and above the 10 year average,’ said Emma Goodford, head of national offices leasing team, Knight Frank. ‘Vacancy levels are heading towards crunch point in combination the market seeing rental growth across a growing number of key centres. In some cases rents are now at an all-time high- motivation for occupiers to identify and secure the best space now. The election has removed uncertainty and will drive demand,’ she added. According to Tim Smither, head of South East investment, Knight Frank, the investment market continues to strengthen, with prime yields standing at 5% NIY. ‘We expect this yield compression to continue for the rest of the year, driven by a combination of a lack of stock, significant levels of equity looking to be deployed and anticipated rental growth in most core markets,’ he said. Continue reading
More accessible lending for first time buyers in UK confirmed by latest data
There has been an increase in the UK to borrowers with smaller home deposits due to increased accessibility in lending and highly attractive mortgage rates, the latest mortgage market report suggests. Loans to borrowers with small deposits, typically first time buyers, saw a year on year increase in April of 7.3% and were up 6.4% month on month, according to the data from e.surv chartered surveyors. However, the number of house purchase approvals fell year on year, suggesting that higher LTV lending is helping to support total mortgage approval figures. In the total market, there were 1.9% fewer approvals for house purchase loans in April than there were last year: 62,035 loans, down from 63,236 in April 2014. As a proportion of total approvals, higher LTV lending now stands at 16.3%, compared to 15.5% in March and 14.9% in April last year. These gains come despite a poor start to the year, the report points out. ‘This revival of the bottom of the market is becoming ever more crucial and this showed in the recent election struggle, with all the main parties placing helping first time-buyers as one of the crucial components of their campaigns,’ said Richard Sexton, director of e.surv. ‘However, before concerns are raised regarding the increase in higher LTV lending, it’s worth putting these numbers in context. The number of higher LTV house purchase approvals is still only a quarter of what it was in 2007. This is a healthy upturn in higher LTV lending, not a symptom of any malady in the mortgage market,’ he explained. ‘Prime Minister David Cameron has outlined a plan to provide 200,000 cut price starter homes, alongside a commitment to unlocking brownfield land for building new homes. This is the kind of clear planning the property market needs and it is to be hoped that the proposals crystallise into real policies,’ he added. The data also shows that on a monthly basis, house purchase approvals increased 1.1% from March, when there were 61,341 house purchase loan approvals. Despite a small month on month drop in March, this is the latest piece of a clear trend of growth stretching back to December last year. Sexton pointed out that in the wake of mortgage reforms a year ago there were five consecutive months of dips. ‘We turned a corner at the start of this year, and lending is starting to find its feet again in the new regulatory landscape. This should be even more of a spur to the government to push forward their plans for home building, as a continual demand for home ownership places ever more pressure on Britain’s insufficient stock of homes,’ he said. The proportion of higher LTV lending has either increased or remained stable in most UK regions in April but Scotland saw just 12% of house purchase approvals for borrowers with smaller deposits in April, compared to 16% in March. At the other end of the spectrum, house… Continue reading
Demand for prime properties in London hotspots up 6% since February
Demand for properties in prime central London has increased by 6% since February with areas like Islington and Chiswick more popular than Kensington, new research suggests. The biggest increase in demand has been in Chiswick with a rise of 54%, followed by Islington up 30%, Belgravia up 22%, Knightsbridge up 21%, Mayfair up 8% and Chelsea up 1%. However 44% of areas are still in decline with Primrose Hill down 71%, St Johns Wood down 36%, Fitzrovia down 30%, Holland Park down 24% and Kensington down 16%, according to the property hotspots index from online estate agent eMoov. The index looks at demand for property over £2 million in 16 of London's most prestigious neighbourhoods, examining the total number of properties sold in comparison to those on sale. The latest figures show that the property freeze in prime central London has thawed ever so slightly since February, with the demand percentage rising by 6% on average. However, nearly half of the areas in question, 44%, have continued to decline substantially. The index report points out that although these areas would have been hit by a mansion tax, last week's election result will have restored confidence in buyers looking to buy at the top end of the market. Since eMoov's February index there has also been an increase of 5% in the number of properties over £2 million listed for sale, to the two major portals, Rightmove and Zoopla. This increase was driven for the most part by Fulham, Belsize Park, Notting Hill, Primrose Hill, Islington and Chiswick. Russell Quirk, chief executive of eMoov pointed out that uncertainty caused by the general election meant many potential buyers were waiting to see the outcome before committing to a property above £2 million. ‘We are already aware of a significant increase in buyer activity since the election. It is most likely this is going to translate into a more buoyant picture in the months to come,’ he added. Continue reading
