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UK house price growth slows as demand slips for fourth month in row says RICS
House price momentum in the UK continued to slow and new buyer demand tailed off in October, according to the latest Residential Market Survey from the Royal Institution of Chartered Surveyors. Nationally, new buyer demand slipped for the fourth consecutive month with London bearing the brunt of the decline, as 62% more surveyors reported a fall in new buyer demand across the capital. Meanwhile across the rest of the UK dipped to a net balance of -18%. As a result of the weaker trend in buyer interest, sales expectations are now at their lowest point since the beginning of the year and the picture regarding near term price expectations is not dissimilar. But Scotland and Northern Ireland have the most optimistic view on house prices in the run up to Christmas with net balances of 36% and 37% respectively. Meanwhile, stock coming onto the market remained virtually unchanged in October with a net balance of -2%, continuing the trend which has been in place for much of the past year. As a result, even with the dip in demand, much anecdotal evidence from surveyors points to an ongoing challenge in securing adequate new instructions. At a national level, the slowdown in buyer activity in the sales market stands in marked contrast to the lettings market, where tenant demand continues to grow strongly. Over the last quarter, this has particularly been the case in East Anglia, the north of England and Scotland and rent expectation remain generally firm with respondents' anticipating an increase of around 2.5% over the next twelve months across the whole of the country. ‘The flatter trend in the market is partly a reflection of potential buyers becoming a little more cautious about making a purchase as more stringent lending criteria has made it harder to access mortgage finance,’ said Simon Rubinsohn, RICS chief economist. ‘An increasing awareness of the approaching general election also appears to be contributing to the softer market if the responses to the latest survey are anything to go by. However, with new instructions still flat at a headline level as has been the case for most of the last year it seems implausible that the dip in demand will result in very much of a decline in house prices,’ he explained. ‘Meanwhile, demand to rent property is growing as the sales market slows and this, coupled with a drop in supply of new stock to let, is helping to underpin the rental outlook for landlords pretty much across the whole of the country,’ he added. Continue reading
French commercial real estate investment up 10% in third quarter
Investment volumes in the French commercial real estate market are set to exceed €15 billion, a 10% increase compared to the same period in 2013, according to the latest industry report. The latest research report from covering the third quarter of 2014 estimates that the year-end total investment volume for the French market will reach €21 billion, which is a 19% rise on the figure recorded at the end of 2013. Savills notes that these increased transaction volumes have been driven by larger transactions over €500 million with 2014 already seeing five deals in this bracket take place with none recorded above this figure in 2013. The volume of portfolio deals in France has also risen by 58% against the first three quarters of 2013. While other European cities, such as the UK, have seen investor demand move out to more regional cities, Savills research shows that investors in France continue to concentrate on Paris IDF, which has so far this year seen 67% of the national investment volume. When analysing specific market sectors, Savills found that offices continued to dominate accounting for 56% of the total investment volume in France so far this year. However, the firm highlights that the share of retail assets is growing and now accounts for 26% of the investment volume compared to 18% previously. The share of retail portfolio sales has also been boosted this year by the Carrefour acquisition of 57 shopping centres for €1.98 billion which is the biggest deal recorded this year. In terms of demand, Savills confirms that overseas investors have increased their appetite for commercial real estate in France accounting for 43% since the beginning of the year, which is an 8% increase on the same period in 2013. US equity funds have been particularly active with Lone Star acquiring Coeur Defense for €1.3 billion in what was the second largest transaction recorded this year. Savills notes that Middle Eastern investors were also prominent representing 9% of total investment transactions in France compared with 7% in 2013. ‘While we have seen an increase in appetite from overseas investors in France, it is important to note that this is mainly for big ticket and landmark buildings with domestic investors remaining far more active in terms of the number of overall deals done,’ said Boris Cappelle, director of investment at Savills France. Lydia Brissy, director of Savills European Research, expects international investors to continue to expand their activities in France, particularly Asian funds from China. ‘As a result of this more competitive market for prime assets, we predict that the prime office yields could harden by 20bps taking them to 3.6% by the end of the year,’ she explained. Continue reading
Average residential tenancy deposit in England and Wales up 11% year on year
The value of deposits for the average home tenancy in England and Wales has increased by 11% over the last year, according to the latest published data. They average amount protected by mydeposits now stands at £1,210 up £121 from this time last year and up 1% from the second quarter of 2014, the firm’s latest tenancy deposit digest shows. The figures also show a difference of £1,266 between the average cost of deposits in the most expensive and cheapest regions in England and Wales. London stays at the top of the most expensive average deposit paid by tenants around the UK in the third quarter of the year with £1,859 on average being spent in the capital, a 9.8% increase from this time last year. The research also shows a 5.6% quarterly increase in London while the cheapest region for average deposit is the same as the second quarter with Yorkshire and The Humber on average spending £593. The South East saw the greatest monetary increase in deposit values quarter on quarter with a rise of 20.3%, however the North East has witnessed a growth in average deposit of 37.7% which is the biggest proportional growth across England and Wales. The East Midlands and the North West are the only two regions not to have seen a quarterly rise while the East Midlands saw the biggest fall of 9.3% which is subsequently more than double the amount in the North West where deposits fell by 3.7%. Deposits in the South West have risen similar to that of London year on year at 19.3% which is the biggest proportional growth across all the regions over the 12 months. The East of England saw the only drop in deposit value and growth with a fall of 0.3%. Despite deposits in the East Midlands growing at a similar rate to London over the last 12 months, the average value of deposits is three times more in the capital reflecting the higher overall cost of living in London. ‘Since the start of Tenancy Deposit Protection in 2007 the cost of the average deposit has risen by around 40%, and much like the cost of rents, deposits continue to rise year on year,’ said Eddie Hooker, chief executive officer of mydeposits. ‘The deposit value is usually tagged to the rental cost of the property, typically between four to six weeks’ worth of rent, so the only real way to relieve some of the pressures on the rental market is to tackle the huge issue of undersupply of housing in the UK at present,’ he explained. ‘It will be one of the biggest challenges for the next elected government, so it’s concerning to see that not all political parties have ironed out the details of their housing manifesto pledges in build-up to next May’s general election,’ he added. Continue reading
