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Oxford prime property market outperforms rest of UK
Rising demand from international buyers and others from London relocating to Oxford has contributed to price growth in the city’s prime property market, new research shows. Oxford is a key city outside of London and attracts people because of its internationally renowned university and research from real estate firm Knight Frank shows that last year it outperformed both the wider prime property market in the UK and in the South East. Prices increased by 1.8% between October and December 2014, taking the annual rise in values in the city to 6.1%. Demand for homes valued between £1 million and £2 million was especially strong. Knight Frank says that a key driver of Oxford’s property market performance has been demand for homes from buyers from outside of the city. Indeed, the proportion of property buyers from outside Oxford more than doubled in 2014 compared to the previous year, accounting for 52% of all Knight Frank sales in the city last year, compared to just 24% in 2013. Demand from Londoners relocating to Oxford rose significantly year on year, from 3% to 18%, with many such buyers looking to take advantage of the relative price difference that currently exists between house prices in the capital and in Oxford. The proportion of international buyers in the city also rose to 17% in 2014, up from 11% the previous year. Access to top performing schools, strong local employment, as well as improving transport links into London, including a new rail line between Oxford and London Marylebone which is due to open this summer , have helped boost high levels of demand in Oxford, according to the report. The number of potential new buyers registering their interest in purchasing a new home was 18% higher last year than 2013 and the number of property viewings in the city was 8% higher over the same time. ‘All of this helped contribute to an increase in the number of sales completed by Knight Frank in Oxford in 2014, with the total number of transactions last year 22% higher than in 2013 and 41% higher than in 2012,’ said Oliver Knight of the firm’s residential research team. ‘The market for properties valued between £1 million and £2 million is especially strong and accounted for nearly 50% of all sales in 2014, compared to 41% in 2013,’ he added. Continue reading
Record December for house prices in Scotland
Scottish house prices have increased by £6,700 in the last 12 months to hit a six year high, nearing the pre-recession peak, the latest index report shows. Prices in December increased by 0.3% and year on year price growth is up 4.2%, taking the average house price to £165,075, according to the Your Move Scotland house price index. Total home sales in 2014 were 11% higher than 2013, led by the first time buyer market and despite falling oil prices property values in Aberdeen have seen some of the strongest annual growth, up 10%. Indeed, average house prices in Aberdeenshire and the Shetland Islands both reached new records in December, while overall Scottish house prices reached a crescendo at the end of 2014, ending on a high note with an all-time record December. ‘After the brief unsteadying influence of the independence referendum, house price growth has firmly fallen back into a steady rhythm, and values climbed 0.3% in December,’ said Christine Campbell, regional managing director of Your Move. She pointed out that values have risen 4.2% or £6,688 in a year, taking them to the highest level seen since June 2008. Standing at £165,075 in December, this means the average house price in Scotland is now just £440 shy of the pre-recession peak, and households across the country are beginning to taste the fruits of the economic revival. ‘Speculation has been running wild as to the effect of plummeting oil prices on Aberdeen’s housing market. However, the city actually witnessed the biggest annual jump in house prices on mainland Scotland, up 10% in the past 12 months, equivalent to £20,438,’ explained Campbell. ‘Aberdeen is also holding its ground as one of the most expensive places to buy, and during December the city recorded the highest price paid for a property in Scotland throughout the whole of 2014, at £3million,’ she pointed out. ‘Growth is making its way beyond these urban economic centres though, and the Shetland Islands joins Aberdeenshire in setting a new record house price in December. Stronger activity at the bottom rungs of the ladder has pushed the average price for a terraced home in the Shetland Islands up from £106,000 in the fourth quarter of 2013 to £156,000 in the fourth quarter of 2014,’ she added. Demand from first time buyers means that at the lower end for affordable starter homes sector flats have become the most frequently purchased type of property in Scotland. Sales of flats between July and December 2014 have seen a 6% rise on the same period a year previously. Argyll and Bute saw the biggest year on year increase in transactions during the second half of the year, with flats sales up 28%. The data shows that overall, the total number of home sales in Scotland during 2014 was 11% up on 2013 but the majority of that progress was made in the busier first six months of the year, showing an increase of… Continue reading
UK private rented sector index shows marginal hardening in yields
Total returns from private rented sector investment grade blocks in the UK slipped towards the end of 2014, according to the latest sector index. This was the result of slightly more modest capital growth and a moderate slowdown in average rental growth across the six cities monitored by the Knight Frank index. The trend in capital growth reflects the wider market, with average pace of growth UK residential prices for owner occupied properties also easing from 11% annual growth in the summer to 7% at the end of the year. Average initial gross yields in London, Leeds, Bristol, Birmingham, Manchester and Glasgow were 6.3% in the fourth quarter of 2014, the index also shows. Overall, average total returns at 11.2% in the quarter and average capital growth was 6.5%, down from 7.3% in the second quarter of 2014. Gross yields ranged from 4.2% in central London to 8% in Leeds. ‘It is interesting to note, however, the shallower discounts on offer on institutional grade blocks, a reflection of the increasing interest in the PRS sector in some key city markets,’ said Grainne Gilmore, head of UK residential research at Knight Frank. The report shows that in the fourth quarter of 2013, the average discount on offer for purchase of whole sale block in Manchester was 13% but this has now fallen to 11%. Likewise, average discounts in Birmingham have fallen from 14% to 12% over the same period. The research also shows that the fundamentals for private rented sector investment blocks remained regionalised in 2014, with capital growth ranging from 3.2% in Bristol to 11.4% in outer London in the fourth quarter. Average rental growth was also spread over a wide range across the UK, not only by region but by type of property. Annual growth in rents in a typical ‘secondary block’ in London Zones three to six rose by 0.96%, while average prime blocks in Manchester saw annual rental growth of 2.99%. The regions also commanded the highest yields, with average gross initial yields in Birmingham of 7.9%, and Leeds of 8%. In contrast, yields were tightest in central London, at 4.2%. The research shows that over the past 12 months there has been a sustained increase in momentum within the PRS sector from both large institutional investors and smaller developers. ‘As the investment market becomes increasingly familiar with PRS fundamentals, we have witnessed a notable rise in capital injections within key regional centres such as Manchester,’ said Lucy Jones, head of investment lettings and management at Knight Frank. ‘Occupier demand for rental accommodation is strong in these locations, with good take up levels, low void periods and relatively high yields. Due diligence remains a prerequisite amongst investors, meaning that financial viability modelling for proposed schemes has never been more important,’ she explained. ‘We are also seeing divergence among clients about the type of approach they favour in terms of their investment. They may be planning to be hands on, which means we will… Continue reading
