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Rents in England and Wales down for first time in eight months
Residential rents across England and Wales fell to a new average of £768 per month in November, down 0.2% month on month, the latest index shows. It is the first time in eight months that rents have fallen on a monthly basis, according to the buy to let index from the UK’s largest lettings agent networks, Your Move and Reeds Rains. However, despite the month on month fall rents are 2% higher than a year ago, or £15 higher than November 2013. Also, the East of England, the East Midlands and London have actually posted new all-time record rents. The firm says that the fall follows the usual seasonal trend as landlords keen not to have vacant property over the colder months reduce rents to attract tenants. A breakdown of the figures show that five out of 10 regions have seen lower rents in November than in October with the South East seeing rents fall by 2.1% drop, the North West down 1.2% and the North East down 0.6%. By contrast, the East Midlands has defied the overall trend, seeing rents increase by 1.7% between October and November. This monthly change is four times faster than experienced in both London and the neighbouring East of England, both of which saw rents rise 0.4% on a monthly basis. Despite monthly dips, rents in eight out of 10 regions remain higher than in November 2013, with one other region seeing no significant change. Far above the overall average, three neighbouring regions stand out on an annual basis. Rents in the East of England have grown by 6.7% since November 2013. This is followed by 5.5% in the East Midlands and 3.9% in the West Midlands. At the other end of the spectrum, rents in the South West are now 0.2% lower than in November 2013, the only region to see a fall while the North West has seen zero rental inflation over the last twelve months. The index also shows that the gross rental yield on a typical rental property in England and Wales now stands at 5.1% as of November, the same as in October 2014, but a 0.3% drop from last year, when yields in November 2013 stood at 5.4%. However, alongside this stability, total returns improved in November. Taking into account price growth and void periods between tenants, but before costs such as mortgage repayments or maintenance, total annual returns on an average rental property are 12.8% over the 12 months to November. This compares to 12.7% over the 12 months ending October 2014. In absolute terms this means the average landlord in England and Wales has seen a return, before deductions such as mortgage payments and maintenance, of £21,512 over the last twelve months. Within this figure rental income makes up £8,305 while the average capital gain amounts to £13,207. ‘Property prices have shifted to a more… Continue reading
Property price growth in London now behind five other UK cities
Property growth in London now lags behind five other UK cities as the capital’s house price growth has dropped by two thirds in just three months. Edinburgh, Glasgow, Southampton, Bristol and Birmingham property markets have seen faster growth than London in the last quarter, according to the latest cities house price index from Hometrack. It also shows that while overall UK house prices have risen by 8.9% year on year, the rate of house price growth in the last quarter has slowed across 16 of the 20 cities. The firm is predicting house price growth of 2% in 2015. House price inflation in London at 0.5% was the same average growth as Manchester, Portsmouth. Some key cities saw price growth diminish, most notably Aberdeen down 0.4% and Cambridge down 0.2%. Other cities showed a pronounced slowdown in price growth such as Oxford seeing a quarterly rise of just 0.3%, Cardiff at 0.2% and Bournemouth at 0.1%. But Scottish cities bounced back with Edinburgh at 1.8% growth and Glasgow at 0.9%, both continuing to register above average rates of growth as demand feeds back into the market after the independence. However, house prices are above their 2007 peak in eight cities with London up 30.5%, Cambridge up 28.7% and Oxford up 21.9%, but these are also the markets starting to register the clearest slowdown. This translated to an average annual increase in London property values of £57,000, which is nearly four times the national average of £15,200 and almost twice the UK’s average income. Liverpool recorded the lowest increase in values with just £3,000 added to house prices in the last year. ‘The high growth cities over the last year are now recording the fastest slowdown and this is most pronounced in smaller cities such as Cambridge and Aberdeen. The Aberdeen economy is closely related to the health of the oil industry and a weakening oil price is impacting the housing market,’ said Richard Donnell, research director at Hometrack. ‘The slowdown in London, which we identified in, will act as a drag on the UK rate of house price growth over the next 12 months. The rate of growth in house prices is starting to lose momentum across other cities in southern England, while across the rest of the country modest levels of house price appreciation continue as prices rise off a low base,’ he explained. ‘Overall we expect modest UK house price growth of 2% in 2015, which is more in line with earnings growth. Significant pent-up demand has feed back into the market in the last two years pushing house prices higher in all cities but the underlying rate of growth is now slowing across the majority of markets,’ he pointed out. He also said that the introduction of mortgage market affordability tests in the middle of 2014 has reduced the overall impact of low mortgage rates on house prices. ‘A… Continue reading
Rest of UK expected to catch up with London and South East price growth in 2015
In 2015 UK regions outside of London and the South East of England will catch up on the property price growth that has topped the market this year, according to agents. The National Association of Estate Agents (NAEA) predicts that in 2015 London and the South East will show slower growth in terms of price. With stamp duty reforms now in place, agents are hoping for greater supply in the market nationwide as there's more encouragement for people to buy and sell houses. ‘Areas outside London and the South East, where the market has been slow in terms of volume and price, will hopefully catch up with London and the South East in the next year,’ said Mark Hayward, NAEA managing director. He pointed out that currently supply in terms of construction is too low to be able to meet housing market demands. ‘Although the number of new homes being built has risen, and the three main political parties have created large new build targets, the lack of capacity within the market means that the gap between supply and demand won’t close and we currently don’t have the resources to respond to the problem,’ he added. Agents also believe that the general election will cause uncertainty, whichever party is likely to come in to power and with the housing market being based solely on sentiment, any uncertainty may result in a temporary lull. However, Hayward said the general feeling is that this will have long lasting implications on the market. He also mentioned the expected interest rate rise next year. ‘At present it’s anticipated to rise in the latter part of 2015, and the Bank of England feels this will have little effect on current mortgage holders and first time buyers. However, our research among NAEA members suggests the impending rate rise will influence demand, with 70% of agents already reporting signs of demand dropping. It is likely that the imminent rate rise will continue to affect demand, as well as affordability,’ added Hayward. David Cox, managing director of the Association of Residential Letting Agents (ARLA), explained that supply is also low in the private rented sector. ‘Simply put, we need more houses. Demand continues to outstrip supply. As new homes come on to the market at one end from both foreign investors and landlords in London and South East who are buying up portfolios in the north of the country we’re also seeing accidental landlords leaving the sector at the other end,’ he said. ‘However, even… Continue reading
