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Property prices up modestly in UK in May but now likely to see fall due to Brexit
Residential property prices in the UK saw modest growth in May but central London experienced a fall in values, according to the latest market survey report. UK house prices are now expected to experience a short term drop for the first time since 2012, according to the monthly report from the Royal Institution of Chartered Surveyors (RICS). House prices in central London are already falling, according to the survey with 35% more property professionals reporting that prices had fallen rather than risen over the past month. While prices are continuing to climb modestly across the rest of the UK, this trend looks set to fade, with 10% more respondents predicting that prices would fall rather than rise over the coming three months. This is the first time that a fall in prices has been predicted since 2012. London and East Anglia are expected to be worst hit with 43% and 33% of respondents saying that prices will fall over the next quarter. ‘Sadly, for the many young people looking to enter the property market, it is unlikely that we are seeing the emergence of a more affordable market,’ said Simon Rubinsohn, RICS chief economist. ‘Instead, it appears to me that what we are looking at is a short term drop caused by the uncertainty resulting from the EU referendum coupled by a slowdown following the rush to get into the market ahead of the tax change on the purchase of investment properties,’ he explained. ‘Certainly, that’s the story we are hearing from our members. There is not at this point a sense that a fundamental shift is taking place in the market,’ he added. The market report also shows that buyer demand fell across the UK for the second consecutive month and at the fastest pace since 2008, with 33% more property professionals saying that demand decreased last month. The survey revealed that in the longer term, while house prices are thought likely to regain momentum, rents look set to outpace them, with UK rents predicted to increase by 4.7% year on year for the next five years, compared to house price increases of 4.1%. The number of agreed sales also fell for the second consecutive month with a net balance of 22% of respondents reporting a fall rather than a rise in activity. Continue reading
Housing market demand rises in UK, but falls in London
Demand for homes in the UK has increased by 3% since the first quarter of the year but in London it is a different picture with demand falling by 2%, the latest research shows. Overall, national demand now stands at 40% but it 39% in London but excluding London the demand has grown by 8% since the first three months of the year, according to the hot spot index from eMoov. Despite demand cooling in London the borough of Bexley remains the hottest spot in the UK for property demand at 71%, but this has fallen by 7% since the start of the year. Bristol remains the hottest spot outside of London with demand at 69%, followed by Bedford at 67%, Aylesbury and Medway both at 64%, and Ipswich, Sutton and Watford all at 61%. Both Cambridge and Milton Keynes are no longer in the top 10, replace by Northampton and Coventry at 64% and 58% respectively. While in Scotland Edinburgh is top with 54% and Glasgow at 48%. In Wales Cardiff is at 48% and Swansea 27%. In London some locations are seeing growth with Kingston Upon Thames seeing demand rise to 59% and Southwark 47%, the first and second largest increases across the UK respectively. There has also been a resurgence for property demand across the North East. Stockton-on-Tees at 47%, North Tyneside at 46%, Gateshead at 42%, Durham at 37% and Newcastle at 32% have recorded some of the biggest increases in property demand since the first quarter of 2016. The coldest spot for demand is the London borough of Westminster at 12% along with Kensington and Chelsea, with Hammersmith and Fulham at 17% and Camden at 20%. Aberdeen is also in the bottom group at 13%. ‘The changes to stamp duty tax brackets for those looking to secure a second home or buy-to-let property seem to have hit the London market harder than the rest of the UK. Despite London tending to drive the UK market as a whole, it would seem for once, it has taken a back seat whilst the rest of the UK has enjoyed upward growth on the first quarter of this year,’ said Russell Quirk, chief executive of eMoov. ‘That said national demand is still lower than the levels seen at the back end of last year and the big decider on which way it goes now will be Britain's choice to leave the European Union. There has been a lot of talk about the consequence of this vote on the UK property market with many forecasting a detrimental impact on house prices. We don't believe this to be the case and I'm certain that our third quarter index will show a further increase in property demand across the nation,’ he added. Continue reading
Weekly rents across Australian capital cities down by 0.4% in June
Weekly rents in capital cities in Australia fell by 0.4% in June and annually they are now 0.6% lower, the latest rented property index shows. However, while a majority of capitals saw a drop in rental rates over the month, on an annual basis, half of Australia’s capital cities actually recorded a rise in rents. These included Sydney up 0.4%, Melbourne up 1.7%, Hobart up 4.6% and Canberra up 1.9%. This takes the combined capital city rental rates to $487 a week for houses and $469 a week for units, the data from the CoreLogic June Rent Review report shows. According to CoreLogic research analyst Cameron Kusher, the large rental falls in Perth of 8.6% and Darwin at 16.2% have pulled the combined capital average lower, with rents also down by 0.3% in Brisbane and by 0.4% in Adelaide. ‘It is anticipated that the weakness in the rental market will persist and where on an annual basis, we will see rents fall even further over coming months,’ he said. At a combined capital city level, gross rental yields were recorded at 3.2% for houses in June 2016 and at 4.1% for units, each of which are sitting at record low levels. ‘A year ago, gross rental yields were recorded at 3.5% for houses and 4.4% for units across the combined capitals, indicating a fairly sharp compression of yields over the year,’ Kusher pointed out. ‘It’s also likely that we’ll see yields compress further over the coming months. However, this will be dependent on growth in home values as well as the direction of rental rates. As a result, capital growth, which has slowed from its peak, will continue to be a much more important factor for property investors than rental returns,’ he added. He explained that changes to rental market may have repercussions for older stock, particularly units as tenants look to move into newer dwellings and making it harder for owners of older units with fewer amenities to compete with better located and facilitated new unit stock, particularly if there is little pricing differential. The factors forcing rental rates lower include the lowest wages growth on record, relatively high levels of housing investment following record highs recently, historically high levels of new construction, most of which are units which are more than twice as likely to be rented, and the slowing of population growth which creates less overall demand for housing. ‘The combination of all these factors means that landlords have little scope to increase rents. There are reports that some landlords are having to reduce rents in certain areas in order to maintain their renters,’ Kusher added. Continue reading
