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Rents in England and Wales see fastest annual growth since 2010
Residential rents across England and Wales have increased by 4.6% compared to April last year, the fastest annual rise since November 2010, new data shows. Rents are also at a new all-time record in absolute terms with the average rent at £774 the most expensive rental prices on record, according to the latest buy to let index from Your Move and Reeds Rains. The index data also shows that on a monthly basis, rents grew by 0.8% between March to April, the fastest month on month growth since September. Growth is fuelled by a fundamental shortage of housing and renewed wage growth, according to Adrian Gill, director of estate agents Reeds Rains and Your Move. ‘Economic progress has brought about a slow but steady stream of household earnings and employment, the most basic requirements for rent rises and these modest improvements have driven rents up at record speed. People have more money in their pockets, but we’re in danger of seeing that recovery squandered away on a housing shortage,’ he said. A regional breakdown of the figures shows that in the East of England, rents are not just increasing but accelerating on an annual basis. Compared to April last year, rents grew by 12.5%, up from 12% annual growth in March 2015 and 10.2% over the 12 months to February 2015. London comes in second for annual rent rises with a 7.8% increase since April 2014. Again this represents an acceleration compared to 5% annual rent rises in March and 4.9% in February. After London, Yorkshire and the Humber comes in third with a 2.2% annual rent rise. On the other hand rents in Wales are actually 2.8% lower than they were in April last year. On a similar note, rents in the North East have fallen back 0.8% on last April’s figures while rents in the East Midlands have edged down 0.2% over the last 12 months. Looking at monthly rent rises, London is dominant. From March to April, London’s rents increased by 2.3%. The South West came in second, with rents up just 1.1% over the last month, closely followed by the West Midlands with a 1% increase between March and April. By contrast, rents in Wales fell 1.8% on a monthly basis. Similarly, rents in both the North West and North East of England fell by 1.4% between March and April. ‘The East of England has witnessed rapid growth in property purchase prices, and rental prices have taken a similar course, albeit even faster. Away from the East, London is the real figurehead for the housing dilemma. Rent rises tend to follow wage-growth, so it’s no surprise to see this clustered around the South,’ said Gill. ‘However, this could change if demand for jobs and homes in northern England starts to catch up with supply in a similar way…. Continue reading
Signs of mortgage market in UK recovering, says CML
Home lending appears to be on the brink of recovery after a dip due to new mortgage rules, the latest gross lending data from the Council of Mortgage Lenders suggests. The CML April estimate for total gross lending is £16 billion, 1% down on the previous month and 4% lower than the £16.7 billion of lending last April. But according to Mohammad Jamei, CML economist, lending appears to be in the throes of an incipient recovery even although lending in April was fractionally down on the previous month and year as this comes after a stronger March. ‘Overall, we now seem to be on the cusp of a modest lending recovery. Household finances are generally improving as earnings growth continues to outstrip inflation, and mortgages are being offered at extremely competitive rates. As a result, we expect to see stronger lending in future months,’ he said. Paul Smith, chief executive officer of haart estate agent, believes that the mortgage market is in rude health and despite the doom and gloom in the election run-up, consumers have been undeterred by the prevailing uncertainty. ‘Mortgage lending is still down on April 2014 but 2014 was an exceptional year where property prices and demand were speeding along beyond all expectation and an application of the brakes is no bad thing,’ he said. ‘Lower, but still strong, house price growth and levels of demand that aren’t dominating the headlines, is actually good for overall sentiment and both buyer and seller confidence. With the new majority government bedding in and the continued advantageous economic climate and government support for consumers, we expect mortgage lending to be on an upward trajectory for the rest of this year,’ he added. John Eastgate, sales and marketing director of OneSavings Bank, said that there is no doubt that pre-election jitters took their toll on borrower demand in April ‘But the mortgage market hardly ground to a halt. Mortgage rates remain near historic lows, and this continues to drive underlying activity,’ he pointed out. ‘On top of this, we have seen deflation take hold, pushing back the prospect of a hike in interest rates. Combined with improving earnings, this will boost the borrowers' budgets. With the new government now in situ, any lingering uncertainty has been put to bed, and sentiment has undergone a palpable bounce,’ he explained. ‘There are already signs that mortgage activity is on the increase, with big ticket purchases returning, and the market expects positive momentum to build as the year progresses. Yes, affordable mortgages for those with the smallest deposits remain thin on the ground, holding back first time buyer levels, but an increasingly buoyant buy to let market will support total lending in 2015,’ he added. Continue reading
Prime central London annual price growth at lowest since 2009
Annual price growth in prime central London fell to 2.8% in April, the lowest rate since November 2009 and is unlikely to change much this year, according to a new market analysis. Growth has been on a downwards trajectory in recent months ahead of the general election, but the Conservative Party victory suggests April is likely to mark the low point in the cycle, says the analysis report from Knight Frank. According to Tom Bill, head of London residential research at the firm, the principal effect on the prime London property market is that the election result has removed the prospect of a mansion tax on properties worth more than £2 million. ‘We believe this will lift transaction levels but the extent of any short term boost to prices is less clear cut. It will also be significant to note to what degree the opposition Labour Party moderates its policies around wealth creation and taxation and whether this reduces the rhetoric of the wider economic debate,’ said Bill. He believes that following the Conservative Party general election victory, several short term outcomes are likely. ‘First, numerous transactions put on hold pending the outcome of the vote will proceed as the risk of further property taxation appears less of an immediate threat. Other sales will progress simply because the election is over and a deeper sense of political uncertainty has receded,’ he explained. ‘As the logjam unblocks, it is likely to be accompanied by a hardening of expectations on the part of vendors over asking prices and some will expect prices to immediately rise as a direct consequence of the election result,’ said Bill. ‘In the short term, the impact on pricing is likely to be less marked than some expect due to the quantity of properties coming onto the market. Many vendors lined up sales for Monday 11 May, irrespective of the outcome of the election. Also this short term increase in supply is likely to exceed any uptick in demand. Activity in the prime London market has dampened in recent months as buyers and sellers factor in political risks but also as they digest measures like the stamp duty increase,’ he explained. ‘The market is in the final stages of absorbing these changes, meaning some buyers will still proceed with care. Furthermore, some prospective buyers will have signed rental contracts as they hedged their bets on the outcome of the election, meaning they are unable to act for several months,’ he added. Bill also pointed out that there is likely to be a short delay before a supply/demand equilibrium returns and a likely ‘expectation gap’ between asking prices and the prices that new and newly active buyers are prepared to pay. ‘However, price growth is likely to return more quickly in markets that have underperformed the prime central London average, including areas in Kensington and Chelsea where there has been low single digit annual growth in recent years,’ he said. Bill explained… Continue reading
