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UK mortgage activity has reached a plateau, latest data suggests
Lending for homes in the UK has reached a plateau with concerns about interest rate rises affecting activity, according to the latest figures. The Council of Mortgage Lenders estimates that gross mortgage lending reached £17.8 billion in September, some 1% lower than August but 10% higher than September last year when it was £16.2 billion. Gross mortgage lending for the third quarter of this year was therefore an estimated £55.5 billion, an 8% increase from the second quarter of this year, and a 13% increase on the third quarter of 2013 when it was £49.2 billion. ‘Uncertainty over when we will see the first increase in UK base rates is exacerbated by weaker growth prospects in several major economies, including the Eurozone,’ said CML chief economist Bob Pannell. ‘Recent indicators and policy actions corroborate our view of a gentle easing in market conditions. There is growing evidence that mortgage lending activity, and the housing market, are sitting on a plateau,’ he added. Meanwhile, the latest figures from the Bank of England show that mortgage approvals by all UK resident mortgage lenders for house purchase picked up in June, before easing back slightly in August. The average monthly net lending flow by UK resident mortgage lenders was £2.3 billion in the three months to August, broadly unchanged compared to the previous three months. The data also shows that total gross secured lending in the three months to August increased compared to the previous period. The Bank report says that in recent discussions, most of the major UK lenders reported that operational issues associated with the implementation of the Mortgage Market Review had pushed down on approvals over the summer, but had now largely dissipated. It amounts to a natural ebb and flow, according to Peter Rollings, chief executive officer of Marsh & Parsons. ‘After a strong surge at the start of the year, house price growth is easing to more natural levels, and as a result, overall mortgage lending dipped in the month to September. But the stream of lending has not dried up, and the mortgage market has negotiated the new criteria of the Mortgage Market Review around the introduction of tighter affordability checks and more rigorous regulation in the spring,’ he said. ‘Confidence is still buoyant, kept afloat by the growing pool of available properties on the market and some outstanding mortgage products coming to the market since the indication from the Bank of England that interest rates would stay lower for longer,’ he explained. ‘Trading conditions are considerably less turbulent than they were a few months ago, and buyers and sellers alike are enjoying the less frenetic pace, increased choice and the calmer pace of competition, and this is already leading to a more active fourth quarter of the year. The only obstacles that could disrupt the course of the recovery are additional interventions in the mortgage market or premature withdrawal of schemes like Help to Buy, which could sink first-time buyer aspirations and stall progress… Continue reading
Average rental prices down across much of the UK in September
Rental price growth across the UK continued to ease in September, with twice as many regions in the UK seeing rental price falls than those recording an increase in rental prices, the latest figures show. Overall eight regions saw rental prices fall, taking the average monthly price, excluding London to £728 while in London it is now £1,466, according to the September 2014 HomeLet Rental Index. The index, which is described as the largest monthly survey of private tenants in the UK, has shown a modest cooling in the rental market for the second month in a row, with UK regions such as Greater London, the South East, South West and East Anglia, that have recently reported large month on month price increases, moving to slower growth and a greater proportion of regions reporting negative price movement. In September only four regions recorded rental price growth. In Greater London there was a rise of 0.1%, the West Midlands up 1.2%, the South West up 2% and Northern Ireland up 4.2%. This is 50% fewer than the number of regions reporting growth in August where six regions delivered rental price growth and six recorded falls. While the annual data still points to a rental market averaging largely positive growth, this month’s data has shown the number of UK regions recording annual negative rental growth doubling from two to four. Scotland, Wales, the North East of England and the East Midlands now show rental prices are lower now than a year ago. ‘There can be an element of seasonality to the rental market with September often recording marginally lower average prices than other months, perhaps due to the number of student letting agreements being signed at this time of year,’ said Martin Totty, chief executive officer of the Barbon Insurance Group of which HomeLet is a part. ‘However, with this month’s data being the second consecutive month of slower rental price growth, and house prices indices indicating a slowing of house price growth, which could suggest movement to a period of more settled rental prices, even in previously booming markets such as London and the South East,’ he added. A breakdown of the figures show that in Greater London rental prices have increased to £1,466, a monthly rise of 0.1% and an annual rise of 9.6%. In the South East prices fell month on month by 0.1% to an average of £908 but are up 7.2% year on year. The South West saw average rental prices rise by 2% month on month to £868 and are up 8.1% year on year while in the West Midlands they increased by 1.2% month on month to £656 and are up 8.3% year on year. In East Anglia average rents fell 1.4% month on month to £826 but are 11.3% above a year ago while in the East Midlands they fell 1.2% month on month to £585 and are 1.2% down year… Continue reading
Madrid set to outperform other European office property markets
There has been good news for the residential market in Spain with sales steadily increasing and now the country’s commercial property market, particularly in Madrid, is striding ahead. Over the next couple of years, Madrid is forecast to be one of the best performing European office markets, after staging a strong recovery, according to the latest analysis from Knight Frank. This change reflects the much improved economic backdrop, providing occupiers and investors with renewed confidence and optimism. Historically, the Madrid office market has correlated closely with corporate performance and employment levels. Prime rents reached their floor in 2013 and increased by 14% in the first half of 2014, to currently stand at €28 per square meter per month. Office investment has risen sharply, with volumes amounting to €700 million in the first half of 2014, compared with €400 million for the whole of 2013. The report points out that there has been limited development over recent years, which has helped to stabilise the vacancy rate at 11.5%. With limited development in the pipeline, a shortage of good quality stock is expected in the medium term, which is expected to lead to further rental growth. An increasing number of companies are looking at relocating; having delayed their expansion plans throughout the recession which adds weight to the view that increasing demand will further boost take-up over the coming months. At a recent investor breakfast hosted by Knight Frank, a live opinion poll of the 200 attendees showed that Spain was year’s top target country for investment, chosen by 26% of the audience, knocking the UK off the top spot. Knight Frank says this is unsurprising given the strength of the rebound currently being seen in the Spanish market. However, the UK and Germany again featured strongly on investors’ radars, gaining 25.3% and 19.2% of votes respectively. ‘Overall office vacancy stands at 11.5%, however, Grade A supply in Madrid’s centre stands at just 2%. This, coupled with a 25% increase of take up year on year, will lead to significant rental growth in the capital,’ said Humphrey White, head of commercial, Knight Frank Madrid. ‘We are also seeing a polarisation of the office market as tenants become more demanding, leading to a flight to quality, the best within the CBD dramatically outperforming others in the immediate surroundings,’ he added. According to Darren Yates, global head of capital markets research, Knight Frank, as 2015 approaches, the combination of a more active occupier market, limited development pipeline and low rents offers a realistic prospect of strong rental growth. ‘In turn, this will further increase Madrid’s appeal to investors, leading to yield compression and enhanced growth in capital values. The investment case for Spanish property is compelling,’ he said. Continue reading
