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Demand for property under £1 million in London likely to remain strong
Demand for London property priced below £2 million is set to remain strong, with the city’s population forecast to grow by more than 100,000 every year for the next decade. As house prices grow across London, it will create new markets where properties cross the £1 million threshold, according to the latest analysis report from real estate firm Knight Frank. Data from the report shows that annual growth in London's prime market fell to 1.7% in August as changes to stamp duty dampened demand and the number of £1 million plus sales were down by 21% in the year to April 2015. It also shows that annual price growth in prime outer London fell to 3% in August and annual rental value growth decreased to 2.5% in prime central London and 1.2% in prime outer London due to jitters over China and high stock levels. However, there are new areas coming into the prime market. The report explains that new £1 million London neighbourhoods include Hammersmith, Maida Vale, Queen’s Park, Muswell Hill and Vauxhall. The analysis, based on postcode districts where at least 20% of sales have been above £1 million in at least one quarter since the start of 2014, shows that these areas have seen a transformation. Hammersmith (W6) had five such quarters since 2014, making it the area that has undergone the biggest transformation in terms of £1 million plus sales. Other areas include Maida Vale (W9), Queen’s Park (NW6), East Finchley (N2) and Muswell Hill (N10). Further south, Battersea (SW11) and Vauxhall (SW8) which have consolidated their positions as £1 million markets. 'Though it has been an unsettled 12 months, the sub£2 million market has been more immune to recent political and economic events, particularly as this price bracket sat beneath the threshold for the proposed mansion tax,' said Tom Bill, head of London residential research at Knight Frank. 'This market is more closely linked to domestic UK demand and the health of the country’s economy and it is easy to forget the fact the recovery has been stronger than many predicted, underlined by strong GDP data in July,' he pointed out. 'In a further recent sign of the improving outlook, cash bonuses in the 2014/2015 financial year were up 2.7% on the previous year and just 0.1% below their record level in 2007/2008. The result is that price growth below £1 million and between £1 million and £2 million has been stronger than the average in prime central London and prime outer London,' he added. The analysis shows that properties below £1 million grew 17.5% in prime central London and 21.3% in prime outer London in the two years to August 2015, compared to the respective averages of 9.5% and 15.1%. Between £1 million and £2 million, prices grew 15.7% in prime central London and 18.5% in prime outer London over the same period. Demand has also held up better for sub £2 million properties since December’s increase in stamp duty. There were 3.6% more viewings in the… Continue reading
UK report reveals the economic benefits of new home building
House builders in the UK are providing more than just homes with a new report revealing the extent of the benefits. The report from the Home Builders Federation, says that for example, in the South East of England where there is a shortage of new homes, last year some 22,470 homes were started by private house builders, the public sector and housing associations in the sector. But this is just the tip of the iceberg. Based on the findings of the report, the economic footprint of this house building meant that 96,621 jobs were supported, 899 graduates and apprentices positions were created, and 966,210 new trees or shrubs were planted. It also shows that £36,109,290 was contributed towards education in the area, £28,896,420 in extra council tax revenue was generated plus £224,700,000 in other tax contributions, and some £21,031,920 went towards new open spaces, community spaces or sports facilities, or enhancing existing resources through Local Authorities. On top of this 5,168 new affordable homes were built and payments of £497,553,210 were made to local authorities for further provision of new affordable homes. While house building is increasingly being recognised as a key driver of economic growth, there are still not enough new homes being built in the region, the report points out. In the South East, this manifests itself as a shortfall of 12,011 homes every year. If the region was to meet this need, the knock-on economic benefits would be 51,648 jobs created, 480 graduates and apprentices positions created, 516,482 trees and shrubs planted, and £19,301,998 going towards education in the area. There would be £15,446,403 in extra council tax revenue, £120,112,000 in extra tax contributions, £11,242,483 contributed to open spaces, community, sport and leisure facilities, 2,763 affordable homes built and payments of £265,964,002 to local authorities for further provision of new affordable homes. 'House building makes a huge, but largely hidden, social and economic contribution to the South East. And whilst housing output in the region has increased, we are still not delivering anywhere near what is needed' said Stewart Baseley, executive chairman at HBF. 'As well as delivering desperately needed new homes, increasing housing supply would deliver significant additional benefits for everyone living in the region. As well as providing desperately needed new homes, increasing house building would deliver massive additional benefits to communities across the land,' he explained. 'People often don't realise that the new community centre or school or football pitch has been paid for as a direct results of new homes. Ultimately, providing new homes for people also means better facilities for the wider community. These are the very things that turn a collection of houses into communities; brand new places where people want to live,' he added. Neal Hudson, associate director at real estate firm Savills, pointed out that house prices in the South East have risen by 17.3% over the last two years. 'However, the performance of markets within a region can vary substantially. These variations are determined by the economic, demographic and affordability profile of demand… Continue reading
UK housing market sees growth of second charge lending
Up to one in 10 remortgages or home owners seeking further advances in the UK could benefit from taking a second charge loan, it is claimed. Secured lending specialist V Loans believes that a combination of record low rates in the second charge market and the sector’s strong growth since 2011 highlights the benefits for customers and the opportunities for brokers. Customers who would potentially benefit include interest only borrowers, people facing early repayment charges, and people benefiting from lifetime trackers or low fixed rate mortgages who would lose deals by remortgaging, as well as those who may want more flexible terms for their further borrowing. Landlords could also be in line to benefit from increased competition in the buy to let second charge market, leading to significant pricing reductions, making second charge lending an attractive alternative to remortgaging allowing landlords to benefit from the increased equity within their current portfolio. The second charge market, which is on course to lend up to £750 million this year, has achieved year on year growth since 2011 against a background of a subdued remortgage market. Rates have dropped to all-time lows of 4.05% above base rate making the case for borrowers to take out a second charge without disturbing their existing mortgage arrangements. However V Loans estimates just 50% of advisers offer second charges to their clients, and is urging advisers to consider the benefits of second charge loans. 'Remortgaging or taking a further advance is not always in the client’s best interest and therefore it’s essential that all options are considered,' said Marie Grundy, managing director of V Loans. 'Interest only customers, those benefiting from lifetime trackers and low fixed rate deals or those who do not want to incur substantial early repayment charges by remortgaging, including landlords who wish to release trapped equity, could all stand to benefit from second charge finance,' she explained. 'The pending alignment of regulation for first and second charge markets will deliver huge opportunities and innovation to the market allowing advisers to provide better customer outcomes. Intermediaries should seriously consider including second charges within their scope of service ahead of the regulatory changes next year,' she added. Continue reading
