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UK house prices up in May but annual growth is slowing
House prices in the UK increased by 0.6% in May as a steady upward trend in values continued but there are signs that growth is slowing. Quarter on quarter prices were up 1.4%, slightly below April’s 1.5% but this was the lowest since November 2015 when it was also 1.4%, according to the latest index from lender the Halifax. Also, the May rise of 0.6% largely offset Aprils fall of 0.8% and Martin Ellis, Halifax housing economist pointed out that the quarterly figure is a more reliable indicator of the underlying trend in the housing market. Prices in the three months to May 2016 were 9.2% higher than the same three months in 2015 so the annual movement was the lowest it has been since last autumn. The index shows the average price now reaching £213,472. According to separate research from the Halifax property prices per square metre have risen by 432% in Greater London against a national average increase of 251% over the past two decades. Although London dominates the country's list of most expensive property locations on a per square metre basis several areas outside southern England fetch a higher property price per square metre than the national average of £2,216. These are Solihull, Leamington Spa, Altrincham Edinburgh and Harrogate. ‘Low interest rates, increasing employment and rising real earnings, continue to support housing demand. The strength of demand, combined with very low supply, is causing house prices to rise at a brisk pace in quarterly and annual terms,’ Ellis explained. ‘Increasing affordability issues, caused by a sustained period of higher than earnings house price growth, should curb housing demand and result in some slowdown in house price growth as the year progresses,’ he added. The figures are published at a time when demand is still outpacing supply, according to Ian Thomas, director of online property investment company LendInvest. ‘The resilience of house price growth is remarkable. Even now that the stamp duty stampede of the first quarter is behind us, and with the uncertainty of the European Union referendum result dampening activity, house prices are still holding up,’ he said. ‘There simply aren't enough houses being built. The latest disappointing house building data make this abundantly clear. The Government’s dream of one million new homes by 2020 simply isn’t realistic without a fundamental change of approach,’ he pointed out. ‘As a result, house prices will continue to rise. Investors will continue to enjoy great returns from putting their money into property, while aspiring home buyers face a tricky time getting the sums to add up in order to move up the housing ladder,’ he added. However, Rob Weaver, director of investments at property crowdfunding platform Property Partner, believes the slowdown in growth is quite dramatic. ‘The house price volatility around April’s stamp duty hike has made 2016 a difficult year to predict. But the yoyo effect looks like it’ll settle, at least until all the uncertainty over the EU referendum ends,’ he said. ‘Activity in… Continue reading
Miami property market normalising after years of record growth
After eight years of record or near record residential sales, the Miami real estate market is normalising with steady growth, according to various prominent local market experts. The fast sales growth of Miami middle market properties, the continued high percentage of all cash buyers, preconstruction condo inventory in the rapidly-growing Downtown Miami area and South Florida’s overall population and job increases are boosting the market, they told the recent Real State of the Miami Market event. According to Anthony Graziano, senior managing director of Integra Realty Resources, 2013 and 2014 were extremely strong for the Miami market for fundamental reasons, including pent-up demand. ‘When we look at our numbers today, we are getting back to normal. It’s okay that our market is not growing 15 to 20% every year. In fact, it’s a good thing. I want to grow 5% a year because at some point our wage growth can’t keep up,’ he told the meeting. The event hears that single family homes priced between $200,000 and $600,000 saw a 5.8% year in year increase in April, with the sector representing 63% of total Miami single family home sales. Existing condos priced between $150,000 and $300,000 saw a 2.7% rise in sales in April, representing 39.2% of total existing Miami condo home sales in April 2016. The audience also heard that Miami offers bargain prices compared to other world class cities and the lack of available land are also key factors in today’s market. For example, a 120 square meter condo in Miami-Fort Lauderdale-Miami Beach cost $149,900 on average, according to the National Association of Realtors NAR. Prices for the same condo in London would be $960,840, in Hong Kong $776,280 and in New York $1.6 million. It was also pointed out that the lack of Miami-Dade County available land means the value of local single family homes will rise and more residents will purchase multifamily units. Most Miami preconstruction condo developers require a 50% cash deposit on new units, one of the highest in the United States and significantly higher than the 20% required during the last real estate cycle. However, the experts said that the large all-cash deposits are a strong sign home buyers are committed and invested in the Miami market. The majority of new construction is happening in Downtown Miami, and developers are being cautious not to overbuild. About 85% of condos under construction in Downtown Miami are sold, according to Integra Realty Resources and the Miami Downtown Development Authority. Downtown Miami has about 7,200 units under construction, a 61.2% smaller inventory than the 18,500 units under construction in 2006. ‘The reason downtown Miami is important is because it is what is leading Miami in the marketplace. It’s our urban core. Downtown is the poster child of what is happening in the market,’ said Graziano. While noting preconstruction sales have normalised compared to the previous record activity, Graziano believes developers are taking a break and doing site plans before announcing future… Continue reading
Development land prices fall in England apart from in key regional cities
Development land prices for greenfield land in England dipped in 2015, while prices in prime central London remained broadly flat, but urban brownfield site values, particularly in key regional cities, rose strongly during the year. After rising by 50% in the four years to September 2015, prime central London development land prices are starting to ease, falling by 2.7% over the last six months, according to the residential land development index from Knight Frank. It means that development land prices in the prime central London market has dipped for two quarters in a row while values for greenfield land overall in England are down for the fifth consecutive quarter. Greenfield development land values fell by 2.1% in the fourth quarter of 2015 and 4.9% year on year while prime central London land prices remained broadly flat in 2015. Urban development land prices, however, bucked the trend, rising by 2.5% in the final three months of 2015. The development land index, based on the valuations of actual development sites around the country, shows a multi speed land market. Prices of mainly brownfield land in key cities, including outer London, Manchester, Leeds, Birmingham and Bristol led the urban growth. A 2.5% increase in the final three months of the year took annual growth for urban development land sites to 11.9% and according to Grainne Gilmore, head of UK residential research at Knight Frank this reflects the highly regionalised nature of the housing market at present, with price performance in many key cities and commuter towns outperforming the wider average. ‘The price growth differential also reflects the strengthening appetite for land among developers and housebuilders in regional hubs. This demand has picked up significant momentum in the last 12 months, lagging the pick-up in demand seen in the wider greenfield market two years ago,’ she explained. She also pointed out that house builders active in the greenfield market have largely replenished their pipeline land supplies, although they are still active in the market for smaller, oven ready sites. ‘The length of the planning process means that taking on large speculative schemes is hard to balance against the cost of capital involved in doing so. At the same time, developers are operating in a period of higher build costs, and a key part of this is the difficulty in accessing skilled labour which still remains in short supply,’ Gilmore said. ‘On the other hand, better local economic growth in key regional cities, coupled with more buyer confidence has resulted in a resurgence of development, and this is reflected in competition for good brownfield sites,’ she added. Focusing on prime central London, the data shows that land prices dipped by 1.1% in the final quarter of the year, resulting in a marginal decline in prices of 0.2% over the course of the year. This echoes the slowing of price growth in this central area of London, with prime property prices rising by 1% over the year to the… Continue reading
