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Central London prices set for growth of 18% over five years
House prices in central London set to rise 18% in next five years and rents by 19.5% as market moves forward after the UK’s general election, it is claimed. The latest analysis says that unprecedented uncertainty surrounding last month's election saw a stifling of house price growth across London, with the rate of house price growth at less than 4%, compared to the 9.6% increase seen in 2014. The emergence of the capital as a political scapegoat, with potential rent caps and a mansion tax being discussed, contributed to the sense that London households would bear the brunt of any tax changes, it points out. However both issues have now subsided, following the surprise majority win by the Conservatives, according to international real estate consultants Cluttons. Despite this, the damage done to domestic and international buyers' confidence was reflected in a sharp tailing off in demand during the first quarter of 2015, with both vendors withdrawing properties and buyers adopting a wait and see approach. ‘There is no doubt that the results of the general election have helped to re-inject confidence into the market that had receded early on this year,’ said Cluttons' international research and business development manager, Faisal Durrani. ‘The outlook for the London housing market has stabilised, while buyers and vendors have returned to the market following a conspicuous absence of activity. Our outlook for the rest of the year is for increased stability in the market and a return to a more normal state of activity,’ he added. The report also says that despite the Mortgage Market Review (MMR) contributing to a 16% year on year dip in home purchase loans in greater London to March 2015, affordability appears to be improving slightly, with the average loan size dipping to 3.86 times annual income in the first quarter of 2015. Risks still remain on the international front however. ‘International risks such as the threat of another Scottish referendum, a disorderly Greek exit from the European Union and a potential Brexit mean that the market has moved from a situation of having several unknown unknowns to being left with a handful of known unknowns. A Brexit remains the biggest threat as the impact on the economy is the biggest unknown at this stage,’ Durrani explained. Cluttons forecasts modest central London house price growth in 2015 of between 2% and 3%, before accelerating to nearly 5% in 2016 and stabilising at around 4% per annum between 2017 and 2019. Cluttons expect this level of growth to deliver cumulative capital value appreciation of almost 18% over the next five years. The prospects for the prime central London rental market are stable, with average growth of 4% per annum forecast for the next five years. Cluttons explains that affordability and the desire to purchase remain key challenges for the capital's rental market and while supply levels are rising, the strong rate of job creation in London will help in absorption rates. ‘The more subdued growth forecast… Continue reading
Call for new legislation to create national property insulation standard in UK
All new and existing homes in the UK should have to meet national insulation standards with incentives such as a cut in stamp duty for properties that meet them, it is suggested. A new report from the Institution of Mechanical Engineers also calls for insulation installers to have to sign up to a certification scheme similar to Gas Safe registration. It wants the government to urgently introduce legislation for a national insulation programme to cover every UK home that would declare all building stock as ‘national infrastructure’ and provide incentives, such as a reduction in stamp duty, for homeowners to install insulation to national standards. For those who cannot afford to pay, a national scheme to cover the cost of work would be funded by general taxation and the report also calls for installers of energy demand reduction measures to be trained to meet a mandatory competence registration, similar to the CORGI certification / Gas Safe Register for gas installers. ‘The UK’s housing stock is some of the most poorly insulated in the developed world, largely because of the age of much of the countries domestic dwellings and the failure of successive governments to take the meaningful action required on energy efficiency measures,’ said Dr Tim Fox, lead author of the report and a fellow of the Institution of Mechanical Engineers. He pointed out that the amount of money and fuel that is wasted on heating poorly insulated homes is appalling. ‘The UK is facing a future of depleting UK gas reserves. It is clear that it is time for urgent action to improve energy efficiency in UK homes,’ said Fox. ‘Incentives could include schemes such as enabling sellers to offset the cost of upgrading their insulation to national standards against the stamp duty payable on the sale of the home,’ he added. He also want the government to recognise the importance of the installer community in achieving its energy security and decarbonisation goals for heat provision and introduce ‘free’ training alongside a new mandatory competence registration for installers of energy efficiency and sustainable supply systems. I According to the report, the UK’s current heat infrastructure evolved in response to the availability of abundant supplies of affordable North Sea gas but is no longer fit for purpose to meet the country’s future energy security challenges, social needs and decarbonisation aspirations. Continue reading
Research reveals differences of opinion on UK first time buyer market
There is a wide difference between prospective first time buyers and their parents with regards to their perception of the first time buyer market in the new UK. New research shows that while just 12% of parents believe it is ‘virtually impossible for first time buyers to obtain a mortgage’ this rises to 21% of actual prospective first time buyers. The Generation Rent Report from the Halifax Building Society shows that in recent years parents and renters were both more pessimistic about the first time buyer market. However, with improving economic conditions and an increasing number of first time buyers since then, both parents and prospective first time buyers have become more optimistic although more than a fifth of renters still believe it’s virtually impossible. Despite increased optimism from parents the report also found that first time buyers moving back in with Mum and Dad is a growing issue, and in 2015 some 28% of parents said their children moved back to their family home, compared to 24% in 2012. Looking at how parents have supported their children in buying their first home, it becomes apparent that direct parental contributions towards the costs of a mortgage have remained steady. While a contribution towards a deposit has remained the single largest type of contribution the numbers have remained steady. The only increase in the last four years has been those helping with the actual costs of moving house. Some 57% of parents who own a property reported to having contributed, or planning to contribute, towards their child’s deposit, compared with 24% of parents who rent. And 24% of parents who own said that they were, or plan to be a guarantor on a mortgage compared with just 7% of parents who rent. As parental help is evidently more important for the people who want to get on the property ladder, it is interesting to note that parents who own their own home are more likely to help their children than those who rent. This clearly emphasises the importance of property ownership for the prosperity of future generations. ‘The report shows a clear divide between parents and their children as regards optimism over getting on the housing ladder. In reality there are more mortgages available which require a 5% deposit and first time buyer numbers are increasing,’ said Craig McKinlay, Halifax mortgage director. ‘But whether it is giving their children a cash lump sum or providing a roof over their heads while they save, it is clear the bank of mum and dad will have a role to play in helping their children get on the property ladder for the foreseeable future,’ he added. Continue reading
