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Most UK regions see strong annual rental market growth
Nine out of 12 UK regions saw rental price rise in November compared to the same month last year, according to the latest rental index. However on a month on month basis there was the traditional autumn with nine out of 12 regions recording lower rental prices compared to October 2014, the findings from the Home Let index shows. It means that the average monthly private rent in the UK is £874 per month or £702 excluding London and Scotland saw strong rental price growth with an 8.7% increase in November 2014 compared to the previous month and 11.7% up on the same month last year. Overall the regions that have experienced the highest growth compared to this time last year include Scotland, Greater London, and the West Midlands, with rental prices 11.7%, 11% and 8.7% higher than this time last year, respectively. Regarding the autumn dip, with the exception of Scotland, the East Midlands and the South West all saw lower rental prices in November than in October. Scotland recorded a monthly increase in rental prices of 8.7% with the East Midlands and the South West recording monthly increases of 1.5% and 1.4% respectively. The index report says that the recent dip in prices reflects typical seasonal movement in the rental market and sits within the context of a market that remains strong. Annually, only three regions of the UK recorded lower rental prices in November 2014 compared to the same month last year. The North West dropped 3.6%, the North East fell by 2.5% and Wales was down 2%. ‘We see the autumn’s moderation in rental growth as broadly in line with the typical seasonal effect that often sees rental prices balance or even slip into reverse in many areas of the country at this time of year,’ said Martin Totty, chief executive officer of the Barbon Insurance Group of which Home Let is part. ‘The outlook for the private rented sector remains positive for several reasons, the pace of house building is unlikely to have a significant effect on the supply of property to buy or to rent in the short term, high house prices, and a mortgage market where lending criteria remains constrained, are combining to ensure that the demand from tenants needing rented accommodation remains strong,’ he explained. ‘In terms of seasonal highs we see Scotland bucking the trend of the rest of the country, the rapid growth in the Scottish rentals market reflects the strength of the economy north of the border, particularly in oil-rich Aberdeen, which has a thriving rentals sector, but also in other Scottish cities and throughout the country,’ he added. Continue reading
LTV lending falls as demand ebbs from bottom end of UK house market
Lending to higher Loan To Value borrowers in the UK has fallen 12% year on year with November seeing the smallest number since October 2013. Despite this the wider lending market is stabilising as house purchase approvals rise 2.8% in November, according to the latest Mortgage Monitor report from chartered surveyor firm e.surv. On a monthly basis, higher LTV approvals fell 6.8% from 8,854 in October. The November dip has compounded monthly falls in October of 18.3% and 5% in September meaning lending to higher LTV borrowers has dropped by 30.1% over the last three months. As a proportion of the market, higher LTV borrowers, typically first time buyers, continue to shrink from a five year peak of 17.8% in August 2014. Their share of total house purchase approvals also dropped in September by 17.7% and by 14.9% in October to hit a 10 month low in November of 13.5%. This comes as the number of first time buyer transactions shrank by 12.3% over the last three months according to the most recent First Time Buyer Opinion Barometer from Your Move and Reeds Rains. ‘Demand has ebbed from the bottom end of the market. After the summer flood of first time buyers, LTI caps introduced in October stemmed the flow of new borrowers into the mortgage market. The Bank introduced these caps against a backdrop of speculation about the market overheating. Now, this wintry cooling is a sign of their pre-emptive action taking effect,’ said Richard Sexton, director of e.surv chartered surveyors. ‘The Chancellor’s changes to stamp duty will make homes cheaper for first time buyers. This was clearly needed. It means that those first time buyers left high and dry by the old system are able to buy at last. Now that the cumbersome slab system has been replaced with a series of graduated rates, the goalposts have shifted for higher LTV home buyers. Whatever twists and turns the New Year takes, first time buyers can rest assured that more properties are now within their reach thanks to this long awaited reform,’ he explained. He also pointed out that in 2014 Help to Buy put capable home buyers in a stronger position to borrow. ‘This increased demand, but putting a finger on just one end of the scale simply inflamed the chronic issue of home shortages,’ he said. ‘The slowdown in higher LTV lending is due in part to the depletion of the UK’s stock of affordable housing. Suggestions in the Autumn Statement that the government will take direct charge of home provision, from the release of land to the building of new properties, will hopefully even the odds for stifled first time buyers,’ he added. Despite the slowdown in lending to higher LTV borrowers, total house purchase approvals grew to 61,108 in November, up 2.8% month on month from 59,426 in October. This uptick comes after a series of decreases, down 1.1% in July, a fall of 2.9% in… Continue reading
Western Australia has strongest residential property market in the country
Western Australia has the strongest residential building market in the country by a healthy margin, ahead of the Northern Territory and New South Wales, new data shows. The Australian Capital Territory took a tumble down the league table sliding from fourth to sixth and a recovery in Queensland is continuing, according to the latest bi-annual housing report from the Housing Industry Association. ‘Lower levels of activity in multi-unit segment drove the ACT decline, although there were also emerging signs of weakness in the ACT’s detached house building market,’ said Geordan Murray, HIA economist. ‘The recovery in Queensland continues to gather momentum. The analysis shows the improvements can be attributed to a boost in multi-unit home building. While Queensland still ranks as the second weakest jurisdiction nationally, the margin to the states sitting mid-table has narrowed markedly,’ he added. Overall, the report shows that Western Australia and New South Wales have caught up to Victoria in terms of historically high levels of new home building activity. However, activity in these states no longer appears to be rising. Murray said at this point in time, future growth hinges on the capacity of the Queensland market to sustain the recovery. Meanwhile, preliminary figures from the Australian Bureau of Statistic provide further evidence that the new home building upturn may have peaked earlier in 2014. During the September 2014 quarter, a total of $13.4 billion worth of work was done in the residential construction sector, a 1.6% decrease on the previous quarter, although it was 8.6% higher than a year earlier. Total work done on new dwelling construction fell by 1.8% during the quarter, but was still some 9.5% higher than the same period of the previous year. Renovations work done was unchanged during the September 2014 quarter and was 2.8% higher than a year earlier. ‘These figures provide further evidence that the upturn in new home building activity may have peaked during 2014. Australia needs to build about 180,000 homes per year over the longer term to meet its requirements,’ said HIA senior economist Shane Garrett. ‘We have only recently reached this threshold, and the fact that we are moving below it again bodes poorly for the country’s housing prospects. We also concerned to see that the renovations market has not made any headway over the most recent quarter. This is an area of residential construction that has endured a slump over the past few years,’ he explained. ‘We are in danger of falling behind in the quest to provide enough housing for future generations of Australians. Several factors act as major obstacles to the ensuring sufficient levels of new home building. It is vital that issues like land supply bottlenecks, planning delays and excessive taxation are dealt with as a matter of urgency,’ he added. Looking ahead, the ABS housing finance figures provide a positive signal for new home building activity in early 2015. While total lending to owner occupiers, excluding refinancing, eased by 1.4% in… Continue reading
