Tag Archives: london
Prime London property market likely to be subdued until after election in May
The mood of buyers and vendors alike in the prime London residential market is likely to remain subdued up until after the general election in May, it is claimed. Uncertainty surrounding a potential mansion tax, interest rates and the introduction of capital gains tax liability for non-resident owners are also contributing to the general market angst, according to the 2015 market forecast report from Chestertons. Moreover, a tightening mortgage regulatory environment with the European Mortgage Credit Directive due for implementation by 2016 and the Basel III requirements by 2019 on top of recent new UK rules, may see lenders become more cautious, the firm believes. Indeed, anecdotal evidence suggests that even high net worth individuals are experiencing more difficulty in having their mortgage applications processed despite the fact that exemptions from MMR requirements were given to those with a net annual income of at least £300,000 or a net worth of at least £3 million. The report points out that the UK economy, although forecast to slow this year, is nonetheless expected to remain one of the best performing among developed countries. Indeed, the HM Treasury panel of independent forecasters currently projects GDP growth of 2.6% compared to an estimated out turn of 3% in 2014, although it expects unemployment to reduce further. The panel also forecasts inflation will creep up, although much depends on the price of crude oil and household expenditure. For the time being, the possibility of deflation remains real. It also points out that pricing is likely to become more sensitive in the shorter term following the revision of Stamp Duty and the potential introduction of a mansion tax, and as buyers sense that they have the upper hand in a softening market. ‘Nonetheless, there are pockets of the market which should be active in 2015. Foreign investment driven purchases should remain robust especially in the new build sector which remains buoyant in terms of both buyer demand and price growth,’ the report says. ‘The UK should enhance its attraction as a safe haven for flight capital from a troubled Eurozone and countries with historic ties with Britain who are experiencing geo-political unrest, such as Egypt, Nigeria and other parts of west Africa. Moreover, various surveys indicate that UK buy to let landlords are keen to expand their portfolios while the attraction of property as a pension supplement for households in or approaching retirement continues to grow in popularity as evidenced by the increase in buy to let mortgage lending last year,’ it explains. ‘As we suggested in our previous report, the outcome of the election could have a considerable impact on the prime London residential market. We expect values to remain flat or see further slight reduction in the run-up to the election,’ it points out. ‘Thereafter, if a Conservative Government or a Conservative led coalition is returned the firm anticipates a gradual uplift in values over the remainder of the year. Otherwise, any combination of Labour/Liberal… Continue reading
Asking prices already rising in some parts of the UK
Encouraged by last year's positive property market performance, sellers' asking prices are already rising quickly in London and the South East of England, according to the latest index report. Asking prices are up 0.8% overall in England in Wales in the last month. But the average annual growth fell to 7.1%. Prices are continuing to fall in the prime property market in London. The February asking price index from Home.co.uk also shows that price rises are on the up in East Anglia and the West Midlands and optimism also abounds post referendum in Scotland, where prices have jumped 1.9% in just one month. Not all regions, however, share the same upbeat sentiment. Prices are essentially static in the East Midlands, Wales and the North West, whilst in the North East, they dropped by 0.9% over the last month. Elsewhere, small price rises were observed in the West Midlands, Yorkshire and the South West at 0.7%, 0.2% and 0.2% respectively. The typical time on market for England and Wales is now 125 days, which is 18 days less than this time last year and the data also shows that supply of property for sale nationwide shows a significant uptick. Some 19% more properties were placed on the market this January than in January 2014. Greater London leads the way with a 51% increase in supply, ahead of the South East with growth of 28%, Scotland up 19% and East Anglia up 18%. According to Doug Shephard the firm’s director, high prices are encouraging potential vendors to commit. ‘Although there are clear signs that supply is beginning to outpace demand in London, as indicated by a rising median time on the market. Londoners may be attempting to cash in, but further supply will only serve to ensure a deeper correction in prices in the capital,’ he said. He pointed out that this year rising supply will make its presence felt in London and the South East, thereby placing downward pressure on prices. ‘These regions are much further on in the economic cycle than the northern regions, where price recovery remains as yet elusive. It is conceivable that we will witness a reversal of fortunes in the latter half of 2015 or beginning of 2016, wherein prices fall in Greater London at the same time as they finally rise in the North, as investors target better value regional markets,’ he explained. He believes that the best prospects for growth this year probably lie in Middle England in regions such as East Anglia, East Midlands, the South West, West Midlands and perhaps Yorkshire. ‘It may be argued that these regions are still in the throes of the recovery phase, as supply remains low and prices have not yet risen too far,’ he said. The worst growth prospects are most likely to be in prime central London, where an abundance of unsold stock is whittling away at property values. ‘For the time being, the mmminvestment outlook for… Continue reading
Increasing demand and lack of supply hitting UK first time buyer market
The UK housing market is seeing increasing demand and limited supply and first time buyers are finding it increasingly difficult to get on the property market, according to a new analysis. Since 1980, there has been considerable fluctuation in the UK housing market and while house prices have been increasing, home ownership among younger age groups generally has declined. The analysis from the Office of National Statistics also shows that if the number of households in England grows to 24.3 million in 2021 as projected, this would be equivalent to an additional 221,000 households per year. Housing is therefore likely to remain an important topic in the future. Overall, the UK housing market comprises 27.8 million residential properties, the report says. Linked to income, wealth and availability of lending, the housing market is sensitive to the overall economic climate. On average house prices have increased by 6.9% per year since 1980 and the greatest annual increase in house prices was 25.6% in 1988. In 2013, the average price (mix adjusted) of a property in the UK stood at £242,000. There were seven years between 1980 and 2013 where, on average, UK house prices fell, the majority of which occurred during the recession of the early 1990s. The biggest drop, however, was 7.6% in 2009. The economic downturn in 2008 had a considerable impact on the UK housing market. The decline in house prices was accompanied by reduced mortgage availability and stricter lending criteria, and this is a major reason in the UK for the continuing low level of housing transactions. The number of property sales in the UK almost halved from a peak of 1.67 million in 2006 to 0.86 million in 2009. Since 2009, however, the number of sales has partially recovered, increasing to 1.07 million in 2013. The report points out that rising house prices could partially explain the decline in the number of first time buyers taking out a mortgage. Between 1980 and 2002, the number of mortgages agreed for first time buyers was averaging around 486,000 per year. However, in 2003 there was a 31% decline in the number of mortgages for first time buyers from 2002. It also shows that in 2008 saw a further 47% decrease from 2007 as the effects of the economic downturn impacted on the housing market. While some recovery in the numbers of first time buyers has been apparent in 2013/2014, the level remains below the average seen prior to 2003. The report says that the reduction in the numbers of first time buyers has subsequently had an impact on the age of home owners. In 1991, 67% of the 25 to 34 age group were home owners. By 2011/2012, this had declined to 43%. There were also reductions in home ownership over the same period for the 16 to 24 age group from 36% to 10% and for the 35 to 44 age group from 78% to 64%. By contrast, home ownership has increased among… Continue reading
