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Quarterly prime country house price growth slows
Concerns over the introduction of a mansion tax, an impending interest rate rise and tighter mortgage lending in the UK has meant that quarterly price growth in the country house market slowed to its lowest level in almost two years. Between June and September prime property values increased by just 0.3% in the third quarter of 2014 while annual growth also slowed, to 4.7%, according to the latest data from Knight Frank. Despite these concerns, there hasn’t been a noticeable impact on sales volumes and the total number of exchanges completed so far this year was 8.4% higher than the corresponding period last year. The rising number of exchanges suggests that underlying demand has remained strong, says the report. However, there are signs that this momentum is easing. While the number of property viewings was fairly steady during the three months to the end of September compared to the same period last year, the number of prospective buyers registering their interest in buying a prime country home fell by 9%. The report points out that anecdotal evidence would suggest that concerns surrounding the possible introduction of a mansion tax on properties worth more than £2 million after next May’s general election are becoming more widespread among both prospective buyers and vendors. ‘Any further property tax would come on top of the large contribution purchasers of high value property already make in the form of stamp duty. Data for the 2013/2014 tax year shows that across England and Wales over £1 billion of stamp duty revenue, of the total £6.4 billion annual tax take, was collected from the £2 million plus price bracket alone,’ says the report. Price growth over the last quarter was strongest in the South West, at 1%, followed by Yorkshire and the Humber. On an annual basis, prime homes in these areas have risen by 7.7% and 5.1% respectively. ‘Prime town and city markets across the UK have benefited from rising demand from those relocating from London and downsizers and price changes in urban locations have reflected this. Growth of 1.3% was seen in the three months to the end of September, while annual growth totalled 8.9%,’ the report adds. Continue reading
Prime central London rental values up for seventh month in a row
Rental values in prime central London rose for the seventh consecutive month in September, though at a slower rate than in recent months, the latest index shows. An increase of 0.2% took annual growth to 1.6%, which is the highest rate in two and a half years as the rental market in prime central London continues to recover, according to an analysis from real estate firm Knight Frank. The recovery, which began at the start of the year, comes as the UK economy returns to health after the financial crisis. Last month, the Office for National Statistics said the country’s economy was 2.7% larger in the second quarter of the year compared to its pre-crisis peak. It also revised its second-quarter growth figure higher to 0.9%. Similarly, the rental value index is fast approaching the pre-Lehman Brothers peak recorded in March 2008. Rental values fell before rising in 2011 to exceed that peak due to a supply squeeze but had been in decline since September 2011 until the start of this year due to the fragile UK economy. The number of new prospective tenants in September was 22% higher than the same month last year and the total for the first nine months of the year was 19% higher than the same period in 2013. Meanwhile, the high number of new tenancies agreed by Knight Frank in September meant the total in the first nine months of the year was 48% higher than 2013 while the number of tenancies commenced was up 55% over the same period. However. Tom Bill, head of London residential research at Knight Frank, the rentals market will also benefit as the uncertainty of next May’s general election dampens demand to some degree in the sales market. ‘While there is no marked trend of vendors deciding to become landlords and buyers becoming tenants, it is happening to some degree and there are increasing instances of properties being marketed to both the sales and rentals market,’ he said. He pointed out that annual growth for rental values in the £1,500 per week and above category was 1.9% while it was 0.9% for properties below that figure. Rental yields also continued their recovery in September, rising from 2.82% to 2.84%. ‘It is not high by historical standards but it was the largest monthly increase in more than three years,’ added Bill. Continue reading
RICS latest monthly survey confirms house price growth is slowing in the UK
House price growth in the UK has slowed back to levels last seen over a year ago as demand slips for the third month in a row, according to the latest monthly report from surveyors. The Royal Institution of Chartered Surveyors (RICS) says that house price momentum has slowed to June 2013 levels and greater caution appears to be being exercised across the UK housing market. Just a day ago the Halifax signalled a similar trend as its monthly index showed that UK house prices fell 0.6% in September and quarterly grow rates have also slowed. Nationally, according to RICS, new buyer demand slipped for the third consecutive month and in London, caution took a particular toll with prospective new buyer demand seeing its fifth consecutive monthly decline, a trend not seen since April 2012. In Scotland, the effects of the referendum on independence appeared particularly significant, with a net balance of 6% more surveyors reporting a drop in the number of interested buyers compared to a net balance of 49% seeing more interest in August. Meanwhile, stock coming onto the market remained virtually unchanged in September at a net balance of -1%, which led to a number of surveyors reporting a 'return to more sensible prices', as properties staying on the market for longer were now beginning to receive offers below asking price. Probably in response to political rhetoric around Mansion Tax, the survey showed a drop in 12 month member price expectations for larger properties of three and four or more bedrooms, which have fallen since the start of the year to 2.2% and is down from 3.8% at the start of the year for three bedroom properties and 2% for four or more bedroom properties, down from 3.5% at the start of the year. At a national level, the slowdown in buyer activity stands in contrast to the lettings market, where demand has continued to grow solidly across the majority of the UK, despite new instructions to let not keeping pace with the rise in tenant demand. However, despite market conditions, surveyor expectations for price growth over the coming three months remain positive with only surveyors in London expecting to see values decrease and prices across the rest of the UK still expected to rise by on average 2.1% over the year. ‘Demand and supply are looking a little more balanced, which is removing some of the upward pressure in prices, particularly in London,’ said Simon Rubinsohn, RICS chief economist. ‘This is a healthy development. Part of this is down to the Bank of England becoming more vocal about the risks, part of this is down to affordability, part of this is down to the new mortgage rules and part of this is down to expectations of higher interest rates,’ he explained. ‘However ideally, more supply should be coming onto the market, but with interest rates still at historically low levels and long term house price expectations positive, households are not under any real… Continue reading
