Tag Archives: real estate
Central London prime property market set to be subdued into the autumn
Subdued activity levels in the prime central London property market are likely to continue until the autumn as buyers and sellers digest recent tax changes, a new analysis suggests. Annual growth was flat at 2%, down from 7.9% in July 2014, according to the latest prime central London sales index from real estate firm Knight Frank. Furthermore, while total sales volumes in England and Wales fell 11%, the number of £2 million plus deals in London was down by 25% in the first quarter of 2015. A breakdown of the figures for price growth in the year to July 2015 shows the biggest rise was seen in the City and Fringe with growth of 6.6%, followed by Islington at 5.8%, Mayfair at 3.6%, Southbank at 3.4% and Marylebone at 3.2%. South Kensington saw prices rise by 1.9%, St Johns Wood saw growth of 1.5%, Hyde Park 1.2% and Belgravia 1%. Price growth fell by 3.8% in Notting Hill, was down by 1.2% in both Knightsbridge and Chelsea and down 1.8% in Kensington. ‘In the period between the general election and the summer holiday, buyers in London have taken stock of new market conditions and appear less inclined to rush into making decisions,’ said Tom Bill, head of London residential research at Knight Frank. ‘A succession of tax changes has contributed towards low single digit annual growth, meaning buyers and sellers are more prepared to sit on the side lines until later this year, unafraid of missing out on the imminent return of stronger growth,’ he explained. ‘More discretionary buyers are waiting to see how readily recent policy changes will be absorbed. While there seems to be some short-term hesitation around recent alterations to non-dom legislation, it is December’s rise in stamp duty which appears to have had the single biggest dampening effect on demand as buyers digest the reforms,’ he pointed out. ‘Despite the strong underlying economy, the number of tax changes, which have a particularly strong impact on London, means the market is undergoing a period of readjustment,’ he added. The report explains that last December’s rise in stamp duty for properties worth more than £1.1 million appears to have contributed to more subdued activity. Indeed, London accounted for 13% of transactions across England and Wales in the first quarter of this year, but contributed 46.9% of stamp duty revenue, up from 43.4% in the same period in 2014 under the old stamp duty system. Meanwhile, properties worth in excess of £1 million in London accounted for 1% of deals in England and Wales but the revenue contribution increased to 25.8% from 19.8% last year. Overall stamp duty in England and Wales is down in the first quarter, as the government predicted, though it expects house price inflation to help make up any short fall in coming years. Continue reading
Lower end US homes just 10% below 2006 and outperform middle market sector
Lower priced houses in the United States have been outperforming the middle priced market and are now only 10% below their peak values of 2006, a new analysis shows. Middle tier homes, typically selling between $120,000 and $345,000, are the worst performing segment with current price levels 24.8% below 2006 peak levels, according to a new report from real estate firm Clear Capital. It says that this vast difference in market recovery underscores the continued challenges the majority of home owners face, despite a quicker recovery in both the bottom and top segments of the market. Regionally, there was a small uptick in quarterly gains in both the West and Midwest, between 0.3% to 0.1%, while the Northeast and South remained unchanged over the quarter, at 0.2% and 0.8%, respectively. These minimal changes reinforce housing’s continued moderation and suggest the initial thrust of the home buying season is starting to wane, according to Alex Villacorta, vice president of research and analytics at Clear Capital. He pointed out that disparity still exists at the local market level. The Northeast reports the widest gap in price performance between the top and bottom performing areas with Pittsburgh seeing growth of 14.1% year and year and Providence down 14.1%. At the national level, the data through July shows a 0.1% increase in quarterly gains, from 0.6% in June to 0.7% in July. ‘While this minor increase, a carry-over from spring’s performance, is expected as we enter the thick of summer’s peak demand cycle, it reflects the overall contraction from spring’s initial surge,’ said Villacorta. ‘Through the first half of 2015, we observed a housing recovery that is normalising after an impressive price surge from the trough of the market. After more than two years of a pretty remarkable upward swing, the housing market’s correction to the correction has given way to more normal rates of growth,’ he explained. ‘What we now know, however, is that this correctionary period has not treated all markets, nor segments within markets, the same. In the present environment, micro analysis is key. In particular, our latest data exposed a mid-tier lag. This segment is still way behind both the top and bottom of the market in terms of recovery over the last nine years,’ he pointed out. Indeed, the analysis of the change in home prices since the summer of 2006 shows that the middle tier has lagged behind both the upper end and lower ends of the market by a surprisingly wide margin. At 24.8% below its peak level, the middle tier is more than double that of the lower tier. Villacorta said that the lower tier was both hit and buffered by high levels of distressed activity which, in recent years, has sparked investor activity driven in large part by the accelerated demand in the rental sector. And, the top tier has benefited from a segment of the market that is more resilient to the current economic climate. ‘The middle… Continue reading
Survey suggests UK tenants concerned about rent rises due to change of tax regime
Tenants in the UK are concerned about rent rises resulting from the recent decision by the Chancellor of the Exchequer to scrap mortgage tax relief for private sector residential landlords. New research shows that some 38% of tenants are feeling uncertain as to how the cuts will affect them and over 50% are calling for greater rent control measures to be introduced. Indeed 35% of tenants say that they would move to a different property in the event of a rent increase, according to the research from comparison website Makeitcheaper. A breakdown of the survey findings show that just 20% of tenants would stay in their current housing, one in 10 said they would be forced to seek council housing and 17% would be more motivated to buy their own property. These results show that landlords may run a high risk of losing tenants by increasing rent, around 80%, as many would be simply unable to afford a price hike. There are certain rules around rent price increases that landlords must adhere to. For example, landlords cannot raise prices in a fixed term tenancy prior to the end date, without the tenant's agreement. But, even with these precedents in place, there's a good chance that tensions between landlord and tenant could grow in the event of price rises. However, the latest landlord research by buy to let lender Paragon Mortgages has revealed that 75% of landlords are confident their tenants will not get into more difficulty in the next 12 months as rental arrears will remain stable. The lender’s PRS Trends Survey results for the second quarter showed a 4% increase in those landlords who felt tenant rental arrears would remain stable, the third successive improvement. The proportion of landlords reporting an expected increase remained low and unchanged from the previous quarter at 8% whilst those landlords expecting a decline in arrears was 6%. The survey also revealed that 17% of landlords are planning to purchase additional rental properties over the summer quarter. There was little movement in the most popular property types landlords are looking to buy, with terraced properties and semi-detached houses topping the list at 38%, followed by 35% looking to buy apartments. ‘Landlords continue to experience strong tenant demand and are keen to add to their portfolios. The positive signals being picked up elsewhere around the economy also seem to have flowed through to the PRS with landlords experiencing low arrears and low, stable voids,’ said John Heron, director of Paragon Mortgages. Continue reading
