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Housing market confidence remains strong in the UK, latest sentiment index shows
Confidence in the UK housing market remains strong and the majority believe that property prices will be higher rather than lower in 12 months’ time. There has also been a small rise in positive selling sentiment in the final quarter of 2015 and a fall in the number who expect it to be a bad time to sell, according to the latest quarterly Halifax Housing Market Confidence Tracker index report. Despite declining steadily since last May, house price optimism in the final quarter of 2015 continued to show that a majority, +61 compared to +68 in May, think prices will keep rising with 13% believing they will be at least 10% higher. ‘Solid economic growth, rising real earnings and falls in already very low mortgage rates are all stimulating housing. At the same time, there is an increasingly acute imbalance between supply and demand, which is causing property prices to rise at a robust pace,’ said Craig McKinlay, Halifax mortgages director. ‘This situation, which is unlikely to reverse significantly in the short term, is reflected in the public’s continuing high levels of optimism regarding house price growth over the coming 12 months,’ he added. There has been a small rise in positive selling sentiment since last quarter, with 55% (+3) of people thinking the next 12 months will be a good time to sell. By contrast, there has been a drop in the proportion who expect it to be a bad time to sell, down three points in the same period, to 29% now. Positive buying sentiment has increased marginally, at 54% (+1), with negativity down two points to 31% while the proportion who think it would be a good time to buy and to sell property has risen to 39%, up three points on the previous quarter, while 15% of people think the next 12 months would be a bad time to do both. The proportion identifying rising property prices as a barrier to buying a property has risen to 37%, up six points on the previous quarter and the highest this figure has been since the survey’s inception, with average UK house prices now standing at £208,286 following a 10% increase during 2015. However, raising a deposit is still believed to be the main barrier to buying property, with 58% of people choosing this as a reason, up one point from last quarter). Job security is the number two reason, at 42%. Concerns about interest rate rises as a barrier have fallen, with only 11% of respondents mentioning this, down five points from last quarter. ‘Difficulties in raising a deposit, concerns about job security and high property prices remain the main barriers to people buying a home. The proportion identifying rising prices has risen to the highest in the survey’s history. The decline in affordability that this highlights is expected to dampen housing demand and property price growth over the medium term,’ said McKinlay. Half think mortgage interest rates will be higher in 12… Continue reading
Demand remains strong in all commercial property sectors in UK
Commercial property prices in the UK continue to rise as demand remains strong in all sectors according to the latest survey from the Royal Institution of Chartered Surveyors (RICS). UK Commercial Property is still seen as a safe haven for investors with rents and capital values set to continue rising despite macro concerns, the survey says. With businesses across the UK thriving and employment data still strong, the industrial sector has the greatest momentum in occupier demand. Some 43% more chartered surveyors are seeing a rise in demand for industrial space in the fourth quarter of 2015, compared to 29% more seeing a rise rather than fall in demand for offices and 26% more seeing a rise in demand for retail. As demand increases, supply has continued to decrease across the UK with the survey recording the eleventh consecutive quarterly drop in available space across the commercial property market. The survey report also says that development nationally has only increased marginally with anecdotal evidence suggesting that there is a lack of commercial construction activity in many locations. It also explains that a deepening skills crisis is playing a key role in inhibiting development. One notable exception to the low level of new build across the UK is in the London office sector, where development has risen sharply over the last three quarters and 34% more surveyors saw a rise rather than fall in office development starts in the quarter. In the face of continued demand and lack of supply, rent expectations for the next quarter are strongly positive across all sectors with 35% more chartered surveyors projecting a rise in rents across all sectors. Industrial space was again the strongest performer with 43% more surveyors envisaging a further rise rather than fall in rents. Looking at the investment market, buyer enquiries have risen in each sector albeit less than previously and the upward trend in foreign buyers has noticeably flattened. Notwithstanding this, capital values are forecast to rise further in all sectors of the market in both the near and longer term with prime office and industrial sectors most likely to outperform. Looking further forward, all sector rents are set to continue to rise both in the medium and longer term. Over the next 12 months, respondents are most confident of seeing rental increases in the prime industrial market with 87% more respondents foreseeing a rise as opposed to a fall. At the other end of the scale, secondary retail space exhibits the most modest reading on a sectoral comparison, but still posted a relatively healthy balance of +51% expecting rents to grow. Regionally price expectations are positive across the UK, with the strongest performers expected to be London and the East, however, 81% of respondents in the capital now view commercial real estate in central London to be overpriced, slightly up on the 77% who took this view in the third quarter survey. The report also points out that there… Continue reading
Modest house price growth expected in UK in first months of 2016
UK house prices increased by 0.3% in January and annual growth is broadly stable at 4.4%, according to the latest residential index to be published. This takes the average price to £196,829 but the monthly rate of increase slowed from 0.8% in December which was unseasonally high, the report from the Nationwide Building Society says. Robert Gardner, Nationwide's chief economist, pointed out that annual house price growth has remained in a fairly narrow range between 3% and 5% since the summer of 2015. This annual trend was maintained in January, with house prices up 4.4% over the year, broadly in line with the 4.5% increase recorded in December. ‘As we look ahead, the risks are skewed towards a modest acceleration in house price growth, at least at the national level. The labour market appears to have significant forward momentum,’ said Gardner. ‘Employment has continued to rise at a robust rate in recent months and, while the pace of earnings growth has slowed somewhat, in inflation adjusted terms regular wages continue to rise at a healthy pace,’ he added. He also pointed out that this trend expected to continue and with interest rates also likely to stay on hold for longer than previously anticipated, the demand for homes is likely to strengthen in the months ahead. ‘The concern remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability. Indeed, the market is already characterised by a shortage of stock, with the Royal Institute of Chartered Surveyors reporting that the number of properties on estate agents’ books remains close to all-time lows,’ Gardner added. Continue reading
