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Demand for UK farmland falls as supply rises, says RICS report
The supply of farmland in the UK increased sharply during the first half of 2015, as demand growth moderated, according to the latest report from the Royal Institution of Chartered Surveyors (RICS). An increase in the supply of commercial farmland, coupled with a tailing off in demand growth across many parts of the country, has resulted in a significant reduction in price growth expectations, the report says. Meanwhile, demand from lifestyle buyers continued to increase, and a net balance of 18% of respondents said that they expect the price of residential farmland to continue to rise over the year to come. During the first half of 2015, a net balance of 51% of respondents reported an increase in the supply of commercial farmland while demand for these blocks declined, albeit very modestly, for the first time since 2008. Scotland and the North East of England saw a reduction in demand not just for commercial but also residential farmland, while the results for South West and the East Midlands suggests demand is still edging upwards. Simon Rubinsohn said it is significant that the headline transaction based measure of farmland prices fell by 2.5% during the first six months of the year and by 1% over the course of the year to reach £9,692 per acre. Average rents also slipped during the first half of the year both for arable and pasture land, reflecting the weaker to many commodity markets. ‘We are seeing a considerable divergence in the outlook for commercial farmland compared to land with a significant residential component,’ Rubinsohn pointed out. Annual average arable land rents fell by 7% during the first half of the year and by 9.7% over the year, with anecdotal evidence suggesting the recent falls in commodity prices are the primary cause of this decline. ‘Despite this, the lifestyle market remains relatively strong across much of the country with the price of land with a large residential component generally expected to continue moving higher,’ said Rubinsohn. ‘Political uncertainly leading up to the general election is likely to have had some further impact on the results in the survey, however market conditions look set to remain challenging notwithstanding the outcome with the global economic environment set to remain a drag on commodity prices,’ he concluded. Continue reading
Paris could be the next city to attract more overseas property investment, it is suggested
Much has been said about London’s prime property market attracting foreign buyers but now Paris is being discussed as being just as interesting for overseas investors. Overseas investors are regarding Paris as having highly competitive real estate prices due to the weaker Euro, according to the latest report from property agents VINGT Paris. For example, using current exchange rates a UK investor could save up to 40% on the average Paris property, as the pound’s strength would see a €700,000 home cost £510,000. According to figures from the report, Paris is second only to London as Europe’s most attractive destination for Foreign Direct Investment (FDI), with 66.7% of Paris property currently owned by overseas investors. The firm believes that this is likely to increase further as UK property prices continue to rise and investment returns fall, coupled with a weakening Euro, which is currently at a seven year low against the pound and 12 year low against the dollar. The report suggests that Paris has always had an unmistakable allure, with its rich history, neoclassical architecture and Haussmannian style apartments retaining a global appeal. Susie Hollands, chief executive officer of VINGT Paris, believes that it is a good time to invest in property in the city. ‘Its culture, cuisine, reputation for intellectualism and abundance of beautiful homes make Paris a world class city, plus it has excellent international schools, a solid infrastructure and excellent transport network,’ she said. ‘The talk in the market over the past two to three years has been dominated by London, however, people forget that France is the world’s fifth largest economy and investors will always be attracted by the Paris property market’s incredible resilience,’ she pointed out. ‘Overseas investors have hedged against inflation by investing their liquid resources in tangible, prime Paris properties, so as London becomes increasingly unaffordable, Paris will be the winner. The potential returns in five to six years’ time will be worth it,’ she added. Since the global recession, overall property prices in Paris and London have consistently increased but growth in some part of London has been regarded as unsustainable and indeed prices in some locations are static or even falling. Comparing prices of London and Paris districts of similar stature, between 2007 and 2014, VINGT Paris found that prices in Paris’ 8th arrondissement rose by 21%, while in Knightsbridge they were up by 84% over the same period. Similarly, South Kensington saw a 67% price increase in the same seven year period, compared to 26% in Paris’ 6th arrondissement. The only area of comparatively similar growth in the period is Notting Hill with growth of 33% and Paris’ 3rd arrondissement at 35%. Comparing the per square foot prices of the same London and Paris districts, the report found that despite similar price growth, Notting Hill apartments were almost twice as expensive as those in the 3rd arrondissement. Similarly, prices in South Kensington were nearly two and a half times greater than the… Continue reading
New home building in the UK up by 15% year on year
There were over 131,000 new homes completed in the UK in the last 12 months, some 15% higher than in the previous year and the highest annual total since June 2009, the latest figures shows. Housing Minister Brandon Lewis welcomed the figures but promised that the rate of new building would keep rising to meet the government’s target of 275,000 per year by 2020 which he said would represent the fastest rate of building for 20 years. ‘This has provided a real boost to the UK’s construction industry and is delivering the homes that hard-working people rightly deserve. However, we know there is more to do,’ he said. Part of that will be to boost the number of starter homes for first time buyers and he pointed out that some £10 million has been made available to bring forward brownfield sites to build new home which will be available to young first time buyers at a 20% discount. The latest figures from the Office of National Statistics have shown that output in the construction industry increased by 2.7% in June compared to the same month last year. Work on private new housing between April and June rose by nearly 3.9% on the previous quarter. Lewis said that the government has also given local people the powers they need to drive forward housing development with the number of homes in locally led plans up by a quarter. Before March 2012 the average number of homes planned for by local authorities stood at 573 per year. But he explained that radical reforms put Local Plans and housing delivery at the heart of the planning system and this has helped expand the housing pipeline with those Local Plans published after the reforms containing on average 717 homes per year. Continue reading
