Tag Archives: investment
Average rents in England and Wales fall almost 1%, down under £700 per month
Average rents across England and Wales fell by 0.9% in November but are up 4% compared to a year ago with London rents even higher with 8.9% growth year on year. This takes the average rent to £799 a month which means they have fallen below the psychologically important £800 mark, according to the latest buy to let index from Your Move and Reeds Rains. Average rents now stand at £799 per month. This follows a month-on-month fall of 1.2% – down from September’s all-time record high of £816. Despite month-on-month falls, rents have risen considerably over the course of the last twelve months. Across England & Wales annual rent rises stand at 4.0%, comparing November 2015 with November 2014. Taking into account CPI inflation of 0.1%, this leaves real-terms annual rent rises of 3.9%. Adrian Gill, director of estate agents Reeds Rains and Your Move, pointed out that while rents are cooling right now this could be different next year when the new 3% extra stamp duty becomes payable on buy to let properties as this could force rents upwards again. A breakdown of the figures shows that six out of 10 regions seen rents fall on a monthly basis, Wales has seen rents rise by 2.9%, the East Midlands by 1%, the West Midlands by 0.4% and Yorkshire and the Humber by 0.2%. On the back of this, both Yorkshire and the Humber and the East Midlands have seen fresh record rents of £554 and £610 respectively. By contrast southern regions have led the downturn in rents downwards. The South East saw rents fall by 3% month on month and they were down 2% in the South West and 1.2% in London. However, year on year rents are 8.9% higher in London and 8.4% in the East of England. They are also up 5.1% in the East Midlands. By contrast Wales has seen rents drop 3.8% in the space of 12 months and the South East is down 3.5%. The index also shows that the gross yield on a typical rental property in England and Wales, before taking into account factors such as void periods, dropped to 5% in November, down from 5.1% in October 2015. This is also higher than the 5.1% gross yield seen a year ago in November 2014. Accelerating property purchase prices have boosted landlords’ finances, despite suppressing rental yields. Taking into account both rental income and such capital growth, the average landlord in England and Wales has seen total returns of 10.9% over the 12 months ending November 2015, up from 10.4% in October 2015. In absolute terms this means that the average landlord in England and Wales has seen a return of £19,668, before any deductions such as property maintenance and mortgage payments. Of this, the average capital gain contributed £11,057 while rental income made up £8,611 over the… Continue reading
UK asking prices down 1.1% in December, lowest seasonal dip since 2006
The UK residential property market has experienced its lowest property price dip for the end of the year since 2006, according to the latest index figures. Traditionally prices fall off in the run up to the festive season but the data from Rightmove shows that asking prices fell 1.1% in December and it is forecasting price growth of 6% for 2016. It says that increasingly stretched affordability and extra stamp duty on the buy to let sector will be outweighed by stark imbalance between supply and demand. Indeed, buyer enquiries to agents since the beginning of October this year are up 37% but the number of properties coming to market was down 5% compared to the same period in 2014. Looking ahead demand is expected to increase further in more affordable cities such as Leeds, Edinburgh, Cardiff and Manchester as highly skilled workers may choose to leave London for buoyant city regions. The lower than expected fall in prices mean that the annual increase is almost £20,000 or 7.4%, taking the average asking price to £289,452. ‘Whilst a fall is the norm at this time of year, this is December’s best post financial crash performance, signalling another round of price rises in 2016. Despite the shortage of suitable stock in many parts of the market, demand for housing is on the up,’ said Miles Shipside, Rightmove director and housing market analyst. ‘Although the average price of property coming to market is already up by a hefty 7.4% compared to a year ago, Rightmove forecasts that prices will reach and breach new records next year,’ he added. He explained that whilst initiatives are in place to encourage developers to build more new homes to supplement the supply of existing ones coming to market, the lead times are long and developers face capacity constraints. ‘In the meantime strong demand is being further fuelled by the additional momentum and aspiration for home-ownership that schemes such as Help to Buy create. We therefore predict that the average asking price will be another £17,000 higher by the end of 2016,’ said shipside. An analysis of Rightmove data by Dr Alasdair Rae, of the University of Sheffield, suggests that there could be an exodus of highly skilled workers leaving London for more affordable yet vibrant cities such as Leeds, Edinburgh, Cardiff and Manchester. But this ripple effect won't reach all towns and cities and continued stagnation or price falls are likely in less sought after areas in the north and west of the country, especially if buy to let investor activity tails off. Rae suggests that as choosier buyers demand easier access to amenities to satisfy convenience and lifestyle demands, expect to see increased price divergence between the more buoyant large urban markets and smaller urban areas that can’t offer the same range of facilities. ‘2016 may be the year when many young urban professionals finally give up on the London market and consider long term career moves… Continue reading
CML figures shows dip in UK mortgage lending in November
Gross mortgage lending in the UK reached £19.9 billion in November, some 9% lower than October’s lending total of £21.9 billion, the latest data shows. But the figures from the Council of Mortgage Lenders also show that lending was still 23% higher than the £16.1 billion lent in November last year. CML economist Mohammad Jamei pointed out that lending is set to finish the year stronger than it started, with the pace of lending recovering over the summer months. ‘As we’ve said for the best part of 2015, lending continues to be supported by strong fundamentals, which are low inflation, strong wage growth, an improving labour market and competitive mortgage deals,’ he said. ‘Reflecting this recovery, we estimate lending this year to reach £214 billion, up from our earlier estimate of £209 billion. Looking ahead, upside potential appears limited as a result of affordability pressures and new supply challenges which will continue to weigh on activity,’ he added. Peter Rollings, chief executive of Marsh & Parsons, believes that a seasonal slowdown at the end of the year is to be expected although the strengthening economy and favourable lending conditions means that sales haven’t tailed off like they did last year. ‘The recent measures announced by the Government to build new homes and offer help to those looking to take their first step on the property ladder are welcome gestures, but it will be some time before this intervention is evident in the various monthly indices,’ he explained. ‘The powers that be also need to be careful of artificially stimulating the market at the bottom end while continuing to penalise those in the upper reaches,’ he added. Adrian Gill, director of Reeds Rains and Your Move estate agents, believes that mortgage lending has been good over the past year, with loan values showing a huge annual margin in November. ‘When we consider that many of these loans will have been agreed before the added impact of the Chancellor’s Autumn Statement housing announcements, it bodes well for early performance in 2016,’ he said. He pointed out that demand is high, remortgaging activity continues to pick up and first time buyers are benefitting from competitive mortgage rates while the buy to let market has been the most dynamic recently. ‘With a new stamp duty levy for second homes coming into play next April, there will only be a further rush to secure buy to let investment before the cost of completing a purchase rises,’ he said. But he also pointed out that this will pit landlords against first time buyers even more. ‘As the deadline creeps closer, we may see another trend emerge in the spring as canny buy to let investors seize the opportunity to sell up and profit from the triple whammy of impending tax changes, low supply of homes, and high demand. Demand is accelerating, and there will be jostling for a decreased number of properties available on the market. So it will… Continue reading
