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Lack of supply could hold back London property market, it is suggested
A limited drip feed of new homes to buy or rent and forthcoming tightening of mortgage lending criteria may hold back the resurgent residential market in London, it is claimed. Demand is still outstripping supply in both sales and lettings now that the political uncertainty of the past few months is over, according to research from London estate agency Chestertons. The firm’s latest prime residential sales report says that despite the uncertainty in the lead up to the general election at the beginning of May, the demand for new homes remained robust in the first three months of the year and continued to outstrip modestly improved supply. Demand for new-build homes from overseas also remained high. Prime central areas resales experienced a marginal return to capital value growth of up to 0.7% for the first time since the first quarter of 2014, although the north and east of the city, led by Canary Wharf, saw above average value growth of 1.4% in the first three months of the year. ‘We experienced a fairly subdued six months in the run-up towards the election, with fears of a mansion tax which could have wiped up to a quarter of a million pounds off the value of properties in the £2 million plus bracket had it been introduced, clearly having an impact on buyers in prime London markets,’ said Nick Barnes, Chestertons' head of research. ‘Furthermore investors, institutions and landlords were in many cases reviewing their holdings in the event of major changes to taxation and lettings regulation being brought in by a Labour led administration. The Conservatives' slim majority has calmed such fears and enquiries have been strong since the morning of 0 May, up by more than 15% on the pre-election period,’ he explained. But he pointed out that there are still challenges that need addressing if the upturn in confidence is to be sustained. ‘The first major challenge is to revitalise supply of good quality homes of all shapes and sizes into both the sales and lettings markets. Politicians at the national and local level must now step up to deliver more land for development, while finding new ways to incentivise house builders and easing the planning regulatory burden to get more homes into the system,’ said Barnes. ‘The raft of policies aimed at getting more people on to the housing ladder that the Tories pledged in their manifesto also have a key part to play, especially as anticipated tightening of mortgage lending criteria may actually make home ownership less accessible for many,’ he explained. ‘Any future rises in the base rate of interest will of course also have a significant impact, while the expiry of the mortgage guarantee portion of the Help to Buy scheme in early 2017 could also have a detrimental effect. Still more needs to be done to incentivise builders and developers. It will be interesting to see what the Chancellor George Osborne announces in his July Budget to… Continue reading
Pre-election jitters saw UK asking prices fall by 0.1% in May
There was an unseasonal drop in new seller asking prices in the UK in May, down by 0.1%, and the first fall in the month of May for five years, the latest index shows. This means that the average price of a home fell to £285,891 but prices are still up 2.5% compared to a year ago, although this annual rise is down from 4.7% in April, according to the latest date from Rightmove. The firm suggests that some sellers coming to market were forced to price more aggressively due to buyer uncertainty over the general election outcome so the fall was very much a short term one and asking prices are expected to bounce back again. ‘The unexpected outcome of a majority government has released the brakes on buyer confidence and activity, and will exert some upwards price pressure in the coming months,’ said Miles Shipside, Rightmove director and housing market analyst. He explained that the new government faces the long term challenge of delivering on an election promise to build 275,000 new affordable homes in the term of the current parliament. And he pointed out that the current shortage of suitable property for sale, meant that even the election uncertainty only caused prices to drop in three out of the 10 regions, London, which would have been hit hardest by mansion tax, the North East and Yorkshire and the Humber. He also warned that sellers who think they have the upper hand due to the lack of property for sale should be aware that a surge of new competition could be on the way, giving buyers some extra negotiating power. In the three months after the May 2010 election there was a 17% jump in the number of properties coming to market compared to the previous quarter. With a majority government in power and record spring traffic on Rightmove, early indications from estate agents suggest that the next quarter could see another surge in property coming to market. ‘Buyers should note that there is often a surge of property supply after an election, as those who have held off coming to market decide to take the plunge. Many potential sellers may have held back expecting a period of hung parliament uncertainty, but they could now decide to catch the late spring market,’ said Shipside. ‘ In a traditional tight stock market an increase in supply of available property and greater competition among sellers to attract buyers may moderate their price expectations and make them more open to an offer,’ he explained. ‘The previous election saw jumps in new seller numbers in all regions of the country, with London and Wales leading the way with over 20% more properties coming to market. There may be a window for buyers to act now in this late spring market before prices rise in the next few months,’ he added. Continue reading
Spanish property prices up 2.65% in first quarter of 2015
There is more good news for the Spanish property market with the latest data from the Property Registrar’s Association showing that prices increased by 2.65% in the first quarter of 2015. The PRA data also shows that residential home sales increased 9.05% to 90,534 transactions compared to the same period in 2014. The rise in sales was largely due to robust growth in the resale market, with 67,864 transactions. Quarter on quarter the price for resale sale properties increased by 1.88% but since the peak of the market property prices are still down 31%, according to the registrars’ data. ‘The quarterly figures are the highest in the last eight quarters, showing a clear change of tendency in the market that began in previous quarters,’ the PRA report said. It also pointed out that it is the second highest quarter for sales in the three years and the third highest in the last four years. It is also proving to be a popular time for buying in Spain and the weak euro is encouraging British buyers back into the market. According to estate agency HomeEspana there has been a rise in interest from British people looking to retire to the Costa Blanca. The favourable exchange rate means that in middle of May 2015 a €100,000 property in the Costa Blanca costs a UK buyer approximately £10,000 less than it did the same time in 2014. For expats receiving an income or pension from the UK, a stronger Pound increases their spending power in euros. ‘Since the start of the year, we've seen a definite uplift in British buyers, in particular those moving out here, compared to 2014, and many decide to buy during their first visit here,’ said Kieran Byrne, managing director of HomeEspaña. ‘The exchange rate is helping, but there is also a feeling that house prices have bottomed out, as revealed by recent statistics from both TINSA and Spain's Registrars that show prices have risen in coastal areas and larger cities since the start of the year,’ he explained. One couple who found their retirement home with the help of HomeEspaña during their first trip to the Costa Blanca are Stuart and Jennifer Flairclough from Kent who completed on a three bedroom townhouse at the end of March 2015. The couple plan to make the €143,315 property which overlooks the fairways at Villamartin Golf and also has views of the Mediterranean. ‘It will be our permanent home and because of its size, we'll be able to accommodate our family and friends when they come over to visit,’ said Jennifer Fairclough. ‘We'd been researching the possibility of buying a retirement home in Spain for 12 or so months. Although we've travelled extensively in Spain, we only knew the Costa Blanca area from internet research,’ she explained. The Faircloughs didn't need much convincing the Costa Blanca was the place for them and they found and secured their townhouse during their first trip there. ‘We viewed the property… Continue reading
