Tag Archives: london
Political uncertainty over 2015 election hits central London prime property market
Demand in the prime central London residential property market has become more restrained against a backdrop of heightened uncertainty due to next year’s general election, according to a new analysis. Prices in this sector fell by 0.2% in November, which was the first drop since October 2010 and meant annual growth eased to 6.1%, the report from real estate firm Knight Frank shows. Discounting a minor dip in the second half of 2010 due to concerns over the euro zone, November marked the end of a run of growth that lasted five and a half years, during which time prices have increased by 73%. According to Tom Bill, Knight Frank’s head of London residential research, it is difficult to rank individual reasons for the decline in order of importance, but anecdotally they appear to include the looming UK general election, the proposals for a mansion tax and the impact of capital gains tax reform for non-residents. ‘The conclusion must be that prices have softened in prime central London due to the magnitude of the cumulative uncertainty rather than the quantifiable extent of the risks. However, short term or domestic risks don’t obscure London’s wider appeal,’ he said. ‘Whatever happens in 2015, for example, London will retain a competitive advantage versus New York, where residents are taxed on their global income. Neither should buyers overlook the long-term potential for price performance of prime central London property which, as the graph above shows, has been exceptionally strong through past elections,’ he added. The report also shows that price declines in November included a 2.3% fall in Notting Hill, due to weaker demand in the £5 million to £10 million price bracket, a family house market that is more reliant on domestic demand than other areas of central London. Elsewhere, prices in South Kensington fell 1.2%. Bill explained that although more buyers are adopting a wait and see approach to pricing, the most in-demand and well-priced properties are selling quickly. There were declines of less than 1% in Kensington, Islington and Marylebone, while prices were flat in the three golden postcodes of Belgravia, Knightsbridge and Mayfair. Continue reading
Annual rate of UK property price growth down for third month in a row
UK house prices increased by 0.3% in October but the annual pace of growth has slowed to 9%, according to the latest index from the Nationwide Building Society. It is the third month in a row when annual growth had moderated and according to Robert Gardner, Nationwide’s chief economist, housing market activity levels have remained relatively weak in recent months. He pointed out that the number of mortgages approved for house purchase in September was almost 20% below the level prevailing at the start of the year and 27% below the long term average. Similarly, housing market turnover rates are well below long term averages. For example, the number of mortgage transactions is currently equal to around 4% of the housing stock, well below the long run average of 6%. ‘There is something of a disconnection between the slowdown in the housing market in recent months and broader economic indicators, which have remained relatively upbeat. While cooling in the London market is a part of the story, this is unlikely to be main explanation for the slowdown,’ he said, adding that in the third quarter of the year 10 of the 13 UK regions saw the pace of annual price growth slow and two regions saw quarterly price declines. This comes against a background where the labour market has continued to improve, with employment rising strongly and the unemployment rate falling sharply in recent months. Moreover, indicators of consumer sentiment remain elevated, where healthy rates of retail sales growth and new car registrations also suggest that households are feeling more confident. ‘Affordability does not appear overly stretched, at least at the UK level, with first time buyers continuing to represent an unusually high proportion of mortgage activity and with typical mortgage payments as a share of average income close to the long run average,’ Gardner explained. ‘Historically low mortgage rates have helped to mitigate against the fact that house prices have been outstripping income growth. Forward looking indicators, such as new buyer enquiries point to further softness in the near term,’ he said. ‘However, if the economy and the labour market remain in good shape and mortgage rates do not rise sharply, activity is likely to pick up in the quarters ahead,’ Gardner added. According to Graham Davidson, managing director of Sequre Property Investment, the moderation has been felt most acutely in London where the rate of growth is beginning to slow thanks largely to more stringent lending criteria. ‘Another factor is a slowing in demand as many begin to look at property outside the capital due to its extortionate prices. The region is, however, still leading the way in terms of growth and house price rises,’ he said. ‘There is certainly an element of seasonality behind this slow down, but we feel that this decrease in the rate of growth could signal the start of a slowing property market. The impact of the Mortgage Market Review (MMR) should not be underestimated. As Nationwide reports, the… Continue reading
Highest level of house lending in Scotland since 2008, latest CML data shows
Home lending in Scotland remains driven primarily by lending for house purchase, with remortgage activity showing a year on year decline, according to the latest figures from the Council of Mortgage Lenders. In the third quarter of the year there were 7,500 first time buyer loans in Scotland, 1% down on the previous quarter, but 15% up on the same period in 2013. First time buyers in the period borrowed £810 million, up 1% on the previous quarter and 23% on the third quarter of 2013. This was the highest quarterly total lending value since the middle of 2008. At 8,900 loans, there were 2% more home mover loans in the third quarter than the second, and 7% more than in the same period of 2013. The value of home mover lending was £1.3 billion, up 4% on the second quarter and 12% up on the third quarter 2013. Remortgage lending in the quarter increased in Scotland compared to the previous quarter but declined compared to the same quarter in 2013. House purchase lending to home buyers increased quarter on quarter in Scotland totalling 16,400 loans, up 1% compared to the second quarter and the value of these loans totalled £2.1 billion, a rise of 3% on the second quarter. Compared to the third quarter of 2013, the number of loans increased by 11% and the value of lending by 16%. This was the highest quarterly volume and value of house purchase lending in Scotland since the second quarter of 2008. First time buyers borrowed more in this quarter than in any other since 2007 totalling £810 million, and was second in total number of loans only to the previous quarter with 7,500 loans. The data also shows that first time buyer affordability may have been a factor in this, with first time buyers typically borrowing 2.94 times their gross income, less than the 2.98 income multiple in the second quarter and less than the UK average of 3.41. The typical loan size for first time buyers was £98,307 in the third quarter, up from £95,000 in the previous quarter. The typical gross income of a first time buyer household was £33,516 compared to £32,273 in the second quarter. The relatively low level of interest rates saw first time buyers' payment burden remaining relatively low in the third quarter at 17.3% of gross income being spent to cover capital and interest payments, higher than 16.7% in the second quarter but a smaller proportion of income than the 19.6% UK average. Home movers borrowed more this quarter than any other quarter since the second quarter of 2008 totalling £1.3 billion. Home mover affordability changed fractionally, with home movers typically borrowing 2.62 times their gross income compared 2.69 in the second quarter and to 3.05 for the UK overall. The typical loan size for home movers was £130,000 in third quarter, up from £128,800 in the previous quarter. The typical gross household income of a home… Continue reading
