Tag Archives: real-estate
Asking prices already rising in some parts of the UK
Encouraged by last year's positive property market performance, sellers' asking prices are already rising quickly in London and the South East of England, according to the latest index report. Asking prices are up 0.8% overall in England in Wales in the last month. But the average annual growth fell to 7.1%. Prices are continuing to fall in the prime property market in London. The February asking price index from Home.co.uk also shows that price rises are on the up in East Anglia and the West Midlands and optimism also abounds post referendum in Scotland, where prices have jumped 1.9% in just one month. Not all regions, however, share the same upbeat sentiment. Prices are essentially static in the East Midlands, Wales and the North West, whilst in the North East, they dropped by 0.9% over the last month. Elsewhere, small price rises were observed in the West Midlands, Yorkshire and the South West at 0.7%, 0.2% and 0.2% respectively. The typical time on market for England and Wales is now 125 days, which is 18 days less than this time last year and the data also shows that supply of property for sale nationwide shows a significant uptick. Some 19% more properties were placed on the market this January than in January 2014. Greater London leads the way with a 51% increase in supply, ahead of the South East with growth of 28%, Scotland up 19% and East Anglia up 18%. According to Doug Shephard the firm’s director, high prices are encouraging potential vendors to commit. ‘Although there are clear signs that supply is beginning to outpace demand in London, as indicated by a rising median time on the market. Londoners may be attempting to cash in, but further supply will only serve to ensure a deeper correction in prices in the capital,’ he said. He pointed out that this year rising supply will make its presence felt in London and the South East, thereby placing downward pressure on prices. ‘These regions are much further on in the economic cycle than the northern regions, where price recovery remains as yet elusive. It is conceivable that we will witness a reversal of fortunes in the latter half of 2015 or beginning of 2016, wherein prices fall in Greater London at the same time as they finally rise in the North, as investors target better value regional markets,’ he explained. He believes that the best prospects for growth this year probably lie in Middle England in regions such as East Anglia, East Midlands, the South West, West Midlands and perhaps Yorkshire. ‘It may be argued that these regions are still in the throes of the recovery phase, as supply remains low and prices have not yet risen too far,’ he said. The worst growth prospects are most likely to be in prime central London, where an abundance of unsold stock is whittling away at property values. ‘For the time being, the mmminvestment outlook for… Continue reading
Affordability could put brakes on house price growth in London
Affordability constraints will limit house price growth in mainstream London over the next five years, according to a new analysis report. In London, the total value of housing rose by 20% or £247 billion in 2014 alone and by 61% or £563 billion over the past five years and this has huge consequences for Londoners, whose finances are being stretched further and further as house prices continue to rise at a disproportionate rate to the rest of the country.? According to the analysis by real estate firm Savills, this value gap simply cannot widen at this rate indefinitely, which is why the firm expects mainstream London to see just 10.4% growth over the next five years, compared to 19.3% across the UK as a whole. Katy Warrick, London development researcher at Savills, pointed out that mortgage regulation is one of the main constraining factors to further house price growth. ‘This new lending environment is one of loan to income caps, stress testing of borrowers’ affordability and capital repayment requirements. Coupled with fast moving house prices against a context of limited income growth, this means higher deposits are required,’ she said. ‘Jump forward five years and we expect that prices will grow just 10.4%, as fewer first time buyers will have been able to access home ownership for these reasons,’ she added. The analysis shows that at the end of the third quarter of 2013, a first time buyer household earning £53,000, the median in London according to the Council of Mortgage Lenders, could have afforded to buy a property worth £264,000 at 3.74 loan to income multiple with a 75% loan to value mortgage. This assumes they could raise the required £65,000 deposit. At prevailing interest rates servicing this mortgage would account for 21% of gross household income. ‘Over the course of 2014 incomes grew by 4%, and if we assume the same mortgage conditions as before our hypothetical buyer can now borrow £206,000 and afford a property worth £274,000. The amount they can afford has risen by 4%, but, as we have seen, house prices will have risen much more,’ explained Warrick. In this example, the £264,000 house is now worth £320,000, resulting in a funding shortfall of some £46,000. ‘The options for buyers are pretty stark; find a much bigger deposit, borrow more money at an even higher multiple of income, or buy a smaller property or one in a less expensive area. The first two options may not be possible, the last may not be desirable,’ she added. If the same example is taken into 2019, the property would be worth £353,000 while incomes will have risen by 22% according to Oxford Economics. Assuming loan to value ratios remain the same, the buyer could now obtain a property worth £324,000 with a £252,000 mortgage. This means that while the funding shortfall is reduced, it still sits at £29,000. ‘Even if that shortfall can be found, the costs of servicing the mortgage… Continue reading
Prime central London rental market set for a boost in 2015
Rental prices in the prime central London property market are set to grow 2.5% this year with the overall sector remaining robust despite uncertainty in the sales market, it is claimed. The latest data from Strutt & Parker and its retained economic advisors Volterra, show that there were 2,093 lets agreed in the sector in the final quarter of 2014, which although 18% below the five year quarterly average, is far above the level of lets seen in the 2007 peak. ‘In 2015, we hope to see a boost of activity levels and slow but steady growth in prime London lettings. The rental market is calling out for an injection of fresh stock which has started to come to the market, in particular refurbished lateral apartments,’ said Zoë Rose, head of London lettings at Strutt & Parker. ‘As investors continue to convert their assets into properties, we anticipate supply easing, with more properties coming to the rental market and the early signs are that this is already happening. We believe that this trend will continue all year as prime property owners place greater focus towards the rental option,’ she explained. She pointed that rentals were often seen as the last choice, simply a back-up option, which is why there was such a shortage of prime rental stock that came to the market last year. The next few months will determine whether this change is set to continue, with the bonus of giving the niche tenant greater choice in this elite rental sector of the market. She added that there were 12,000 rental transactions in prime central London in 2014, up from just over 10,000 five years ago. ‘So the market is in good shape when you look at historic figures. The number of people out there that enjoy the flexibility of renting at the high end definitely seems to be growing,’ she said. In the sales market, headwinds look set to continue into the first half of 2015, according to the firm. Whilst UK assets remain an attractive position at present, and this looks set to continue as the UK economy continues to grow, uncertainty over taxation change due to the looming election are placing considerable uncertainty on this market. ‘The prime central London sales market is feeling the full impact of buyer caution ahead of the Election, with the strongest activity at the very top end of the market above £5 million and at the other end below £2 million, where the financial impact of a potential mansion tax is less relevant, or indeed irrelevant,’ said Andrew Scott, head of London residential at Strutt & Parker. Continue reading
