Tag Archives: london
UK residential property market activity strong as valuations rise
Last month saw the strongest activity on record for property valuations in any month since 2007, up 36% on a monthly basis and annual growth of 42%, new data shows. After a 36% increase in activity on a monthly basis, the total number of valuations carried out in March 2015 has grown by 42% compared to March 2014. First time buyer activity increased by 33% in March compared with the previous month and was up 40% from the same month last year, according to the latest research from Connells Survey and Valuation. Activity on behalf of those further up the property ladder also saw rapid growth, but at a slower pace than for first time buyers. Valuations on behalf of established home movers picked up by 32% on a monthly basis and by 23% over the last 12 months. ‘New announcements like the Help to Buy ISA have combined with existing government schemes to boost interest from first time buyers. In the short term this is mainly about sentiment, but extra support has been consistently focused at this end of the market for years now, with a longer term impact too,’ said John Bagshaw, corporate services director of Connells Survey & Valuation. The data also shows that remortgaging in March has outperformed the overall housing market, posting 54% growth on an annual basis, following a 33% month on month rise and Bagshaw pointed out that record low interest rates are likely to stay for several more months. ‘Many households with a mortgage that seemed extremely competitive just a few years ago could find it in their interests to refinance, even to the security of a fixed rate. Such a recalibration of the mortgage market is working alongside a resurgent property purchase market to stoke demand for valuations,’ he explained. ‘Of course a little further ahead, there is still the prospect of interest rate rises. In fact deflation caused by a volatile oil price could make a turning point for interest rates more dramatic as and when this occurs. So there is no space for complacency although that isn’t stopping people looking for the best deals,’ he added. With by far the strongest monthly increase, buy to let activity in March was 54% stronger than in February. This takes the number of valuations carried out on behalf of buy to let landlords to levels 64% ahead of March 2014. The firm believes that landlords are responding to a pick-up in demand from tenants and a noticeable improvement in rental yields in some hotspots. It’s also possible this is another artefact of a booming jobs market, as people move to take up jobs. ‘Landlords are generally low LTV borrowers who tend to have reliable finances away from their property investments, so for lenders they offer a sound investment in a similar way to many… Continue reading
Economists forecast property price growth of just 1.5% in UK, fall in London
UK house prices will grow only by 1.5% in 2015 but they are set to fall by 3.6% in London before growing again but slowly over the next five years, according to economists. The report from the Centre for Economics and Business Research (Cebr) is an upward revision from its previous report in January when it forecast a fall of 0.6% in prices this year. It said that the impact of December’s stamp duty changes has been felt sooner than expected, with some buyers putting cash saved towards a deposit but while expectations have been revised up it is a more subdued outlook for London. The property market in the capital continues to show signs of cooling. Average house prices in London are expected to decline by 3.6% over 2015 but the report also points out that they increased by 17.4% in 2104. Cebr continues to expect London house prices to underperform the rest of the UK this year, following years of over performance. It points out that the strength of sterling against the euro, fears of a mansion tax and hefty new stamp duty rates on high value properties have all hit housing demand from overseas buyers. In 2015, for the first time since 2009, house price growth will be stronger outside the capital than in London itself. Leading indicators such as fewer new buyer enquiries and properties taking longer to sell already point to falling prices in the capital. Outside of the capital, the decline in overseas interest in UK property will be much less strongly felt. At the same time, most home buyers have benefited from December’s stamp duty changes as well as an improving labour market which has boosted consumer spending power. The YouGov/Cebr Household Economic Activity Tracker (HEAT) shows that consumer expectations for property price growth across the UK have been picking up in recent months after declining in October, something that is feeding through into rising consumer confidence in the run-up to the general election. ‘Outside of London, the outlook for house prices this year has improved after a few months when the market appeared to be coming off the boil. December’s stamp duty changes, as well as rising household incomes, are lifting prices in many parts of the UK,’ said Nina Skero, Cebr economist and main author of the report. ‘In London, however, we expect prices to decline by 3.6%, driven by a significant weakening at the prime end of the market. A potential mansion tax, reduced overseas interest and hefty new stamp duty rates have hit demand for high value property,’ he added. Continue reading
18 year comparison index shows UK buy to let outstripping other asset classes
Buy to let in the UK over the past 18 years has provided average returns that outstrip those of other major asset classes, new research shows. Every £1,000 invested in an average buy to let property purchased with a 75% loan to value (LTV) mortgage in the final quarter of 1996 would have been worth £14,897 by the final quarter of 2014, a compound annual return of 16.2%. The same investment in UK commercial property would have grown to £4,494, in gilts or UK government bonds to £3,329, in UK shares to £3,119 and in cash to £1,959, according to the research from buy to let lender Landbay. A buy to let purchaser buying entirely with cash would have seen each £1,000 invested grow to £5,071 by the end of 2014, a compound annual return of 9.4%. The report points out that 2014 was a good year for buy to let investors with property prices rising by an average 8.3% over the course of the year. The index shows that mortgaged landlords achieved average returns of 18.3% for the year, 81.9% of which was comprised on capital gains while the unmortgaged index achieved returns of 7.9%. The figures cover 18 years with a comparison from 1996 as this was the year the buy to let mortgage initiative was launched by the Association of Residential Letting Agents (ARLA) and buy to let mortgage lenders, opening residential rental property to ordinary investors. ‘The phenomenon of buy to let as an asset class only goes to underline the stable personal finances of landlords. The stability of returns shown in this paper underlines why this group of borrowers can be so attractive for lenders. In fact the history of buy to let can be viewed as a history of opportunity for those offering the financial backing to landlords,’ said John Goodall, chief executive of Landbay. ‘However, the bigger trend underlined here is the democratisation of such investments, which started a generation ago, and is far from complete. Buy to let itself is only one example of this shift. Now new models of peer to peer finance can give access to the returns involved in lending to such industries. Since 1996 ordinary investors have been able to be landlords, but now in 2015, ordinary investors can play the role of the bank,’ he explained. The report includes an updated 10 year projection for buy to let returns assuming house prices rise 4% a year, rents by 2% a year and mortgage rates rise to 5.5% by 2022. The projections suggest that every £1,000 invested at the end of last year using a 75% LTV mortgage would be worth £2,874 by the end of 2024, an average annual return of 11.1%. The corresponding annual return for an unmortgaged investor would be a more modest 6.1% but not far short of the rate of return from equities over the 1996 to 2014 period. ‘If these projections prove to be broadly… Continue reading
