Tag Archives: real estate
Rent increases likely to be muted in the UK in 2015, it is predicted
Market conditions, combined with the likelihood of interest rate rises and uncertainty over the general election is likely to result in static or low rental increases in the UK in 2015, it is claimed. Rental rises are likely to be restricted by factors such as continued low disposable income, anticipated interest rate rises and a forecast of economic development in 2015 that is expected to be lower than this year, according to the forecast analysis from Belvoir Lettings. A review of the year shows that rents have not changed much since 2008. When the firm first started tracking rents in March 2008 they were £698 per month, fell to £678 in 2009 and fluctuated around this level until 2014 when they reached £691 per month. ‘On average, after seven years, Belvoir offices that have traded consistently have seen little or no growth in rents, albeit there have been falls and rises during this time. For the Belvoir group however, average rents have risen due to an increase in the number of new offices joining Belvoir in higher rental areas south of the Midlands,’ said Dorian Gonsalves, Belvoir's director of commercial and franchising. Rents for the whole group, including new offices, were £707 per month in 2008, recovering to £715 per month in 2012 and 2013, seeing an annual average of £735 per month year to date, a 4% rise for the group over the last seven years. Regionally, in England, rents vary from £570 in the East Midlands to nearly £1,500 per month in London. The majority of Belvoir offices in Scotland are either seeing rents flat or slightly falling outside of Edinburgh and Aberdeen, with rents ranging from £500 to just over £600. In Wales, rents have been relatively static since offices opened, with average rents varying from just over £500 to £700 per month. Belvoir's research shows that over the last seven years London rents are up around 20%, while the South East is up 7%, West Midlands 6% and Yorkshire up 3%. Rents in the South West are on a par and rents in East Anglia have nearly recovered. In contrast, rents in the East Midlands are still 5% lower while in the North West they are down by 4% versus 2008. Year on year, rents are up in most areas, reflecting the tightening of stock levels versus high demand and better economic performance, which helps tenants to afford to pay more rent. However, areas such as Yorkshire, the North West and East Midlands have seen a fall year on year, suggesting the North/South divide in England is impacting on rental performance. ‘From a sales and property price perspective, this year saw a continued recovery of the property market. However, price rises and recovery were driven largely by activity in the London and the South East, said Gonsalves. ‘After 18 months of rapid growth, the rise in London seems to have… Continue reading
House prices to rise by 3% in 2015 and rents by 2% says RICS
House prices in the UK will see an average increase of 3% in 2015 bolstered by recent changes to Stamp Duty, continuing demand and lack of supply of property, it is predicted. Rents are set to grow by 2% and sales are expected to increase, according to the annual housing market forecast from the Royal Institution of Chartered Surveyors (RICS). Across the UK, RICS expect all parts of the country to see modest price rises during 2015 with the South West, Wales and London set to experience the lowest rises with prices increasing by 2% and 0% respectively. Having outperformed in the early stages of the recovery, chartered surveyors reported London's housing market was 'pausing for breath' both in terms of pricing and activity towards the end of 2014. This does however mask significantly different behaviour across different parts of the capital and is reflected in the RICS forecast with the eastern boroughs and some other non-prime areas still likely to see more buoyant market conditions persist through 2015. The growth in rental demand softened in the early part of 2014 as the sales market began to recover across the UK, and potential purchasers took advantage of the Help to Buy scheme, the report says. However, enquiries to rent property have begun to pick-up once again and comfortably outstrip new supply of rental property from landlords. As a result RICS expects rents to continue pushing upwards over the next 12 months. Chartered surveyors are suggesting that the strongest rises are likely to be recorded in the South West and the North East of England. Rents in the capital are likely to rise broadly in line with the national average. The number of sales transactions should see a further increase during 2015, moving up to 1.25 million from 1.22 million in 2014. Although there are some concerns about mortgage availability in the wake of the Mortgage Market Review, a firm economy and stamp duty reform should underpin activity levels. The report points out that although this figure represents an improvement on the past few years, to put this in context, in 2006 total transactions stood well above at 1.67 million. Lack of supply to the housing market remains a running trend, and one that cannot be addressed fast enough. However, there are increasing levels of house building projects underway, and as a result, RICS forecast housing starts to rise to 155,000 in England during the year. This is compared to 125,000 in 2013 and only around 100,000 in 2012. While this is an encouraging trend, it is still insufficient to address the more rapid growth in population and will leave significant shortfalls in all tenures. The number of houses taken into possession are expected to have fallen in 2014 to around 23,000, the lowest since 2006. Given the current macroeconomic picture, RICS anticipates that this could decline to below 20,000 over the course of the next 12 months, particularly as around 90% of new loans… Continue reading
Property price growth in London now behind five other UK cities
Property growth in London now lags behind five other UK cities as the capital’s house price growth has dropped by two thirds in just three months. Edinburgh, Glasgow, Southampton, Bristol and Birmingham property markets have seen faster growth than London in the last quarter, according to the latest cities house price index from Hometrack. It also shows that while overall UK house prices have risen by 8.9% year on year, the rate of house price growth in the last quarter has slowed across 16 of the 20 cities. The firm is predicting house price growth of 2% in 2015. House price inflation in London at 0.5% was the same average growth as Manchester, Portsmouth. Some key cities saw price growth diminish, most notably Aberdeen down 0.4% and Cambridge down 0.2%. Other cities showed a pronounced slowdown in price growth such as Oxford seeing a quarterly rise of just 0.3%, Cardiff at 0.2% and Bournemouth at 0.1%. But Scottish cities bounced back with Edinburgh at 1.8% growth and Glasgow at 0.9%, both continuing to register above average rates of growth as demand feeds back into the market after the independence. However, house prices are above their 2007 peak in eight cities with London up 30.5%, Cambridge up 28.7% and Oxford up 21.9%, but these are also the markets starting to register the clearest slowdown. This translated to an average annual increase in London property values of £57,000, which is nearly four times the national average of £15,200 and almost twice the UK’s average income. Liverpool recorded the lowest increase in values with just £3,000 added to house prices in the last year. ‘The high growth cities over the last year are now recording the fastest slowdown and this is most pronounced in smaller cities such as Cambridge and Aberdeen. The Aberdeen economy is closely related to the health of the oil industry and a weakening oil price is impacting the housing market,’ said Richard Donnell, research director at Hometrack. ‘The slowdown in London, which we identified in, will act as a drag on the UK rate of house price growth over the next 12 months. The rate of growth in house prices is starting to lose momentum across other cities in southern England, while across the rest of the country modest levels of house price appreciation continue as prices rise off a low base,’ he explained. ‘Overall we expect modest UK house price growth of 2% in 2015, which is more in line with earnings growth. Significant pent-up demand has feed back into the market in the last two years pushing house prices higher in all cities but the underlying rate of growth is now slowing across the majority of markets,’ he pointed out. He also said that the introduction of mortgage market affordability tests in the middle of 2014 has reduced the overall impact of low mortgage rates on house prices. ‘A… Continue reading
