Taylor Scott International
House prices in UK down 0.3% in February
UK house prices fell by 0.3% in February, taking the average price of a home to £192,372, according to the latest index from the Halifax. It means that annual prices growth is now 8.3% and on a quarterly basis from December to February home prices have increased by 2.6% compared to the previous three month period. The quarterly rate of change increased for the second successive month but it remains below the rates recorded between July and September 2014. The three monthly rate increased despite a small monthly fall in February due to robust rises in both December and January. Prices in the three months to February were 8.3% higher than in the same three months a year earlier. This was a little lower than January’s annual increase of 8.5% and significantly below the peak of 10.2% in July 2014. The decline between January and February, partly offset January’s 1.9% rise. Martin Ellis, Halifax housing economist, pointed out that annual price growth eased from 8.5% in January to 8.3%, and is comfortably below last July’s peak of 10.2%. ‘The firming in price growth shown by the recent pick up in the three month on three month comparison and indications of a modest rise in activity are likely to be due to a boost to housing demand as a result of increases in real earnings and spending power, further recent falls in mortgage rates and stamp duty changes,’ he explained. ‘The supply of both new and second hand homes available for sale remains low, another factor that is likely to be supporting house prices. Supply remains tight despite house building in England increasing for the second consecutive year in 2014 and a recent rise in the number of properties coming on to the market,’ he added. Continue reading
Specialist lending set to see growth among UK home buyers
Specialist lending is predicted be one of the key battlegrounds in the mortgage market over the next two years in the UK with new lenders launching and High Street providers targeting the sector. A new survey has four the nearly two thirds of brokers expect new specialist lenders to open for business while another 13% of intermediaries believe High Street lenders will wake up to the potential for growth and offer specialist services. Around 60% of brokers believe specialists will take a bigger share of the mortgage market over the next two years. The scale of demand is underlined by brokers’ views as around half believe that 20% or more of their clients would benefit from applying to a specialist lender. In the past year two out of five brokers say 20% or more of their clients have had difficulties proving their income. However high rates in comparison to the ultra-low deals offered by High Street lenders are seen as the most significant barrier to the expansion of the specialist market and 52% of brokers highlighted rates as the major issue ahead of 47% who say regulation will be the main brake on growth in the specialist market. Indeed, some 32% say clients lack of understanding of the specialist market could also constrain growth. However, just 15% of brokers say their own lack of understanding of specialist options will hurt the market. ‘Industry figures show that intermediary market share is increasing and we expect the significance of the specialist market to grow,’ said Steve Griffiths, head of sales and distribution at Kensington. ‘Our experience over 20 years shows that homebuyers and remortgage clients do not all fit High Street criteria and while they will be entirely creditworthy may have issues with proving income which applies to the self employed and also those in full time jobs,’ he explained. ‘The focus on rates is important but there is also a real need for advice and individual underwriting which is why Kensington will be investing in providing support brokers to help them identify and place specialist cases,’ he added. The research also shows that around 37% of brokers believe the specialist lending market will be constrained by a lack of capacity to lend. However just 22% believe reputational issues will hit growth. Continue reading
Institutional investors being priced out of London market, index suggests
Yield compression, foreign investment and a lack of supply have led to institutional investors being priced out of the London market, according to the latest IPD UK Annual Residential Property Index. The UK as a whole saw a total return of 13.5% in 2014, putting extra strain on investors hoping to enter the market, particularly in London. The strongest districts for overall returns were to be found outside of prime central London, with returns in inner London and outer London the highest in the UK, driven largely by capital growth. The Index results show that the net yield in central London has fallen to 1.8%, its lowest level since the start of the index, and the first time that the figure has fallen below 2%. Across the UK the net income yield has fallen to 2.4% across all residential market lets. ‘If you invested in London residential at some point during the last 10 years, the chances are that you’re laughing all the way to the bank,’ said Mark Weedon, vice president and head of alternatives at MSCI. ‘However, if you are looking to put money into the sector now, our data shows that investors seeking income will find themselves’ priced out by foreign investors and owner occupiers when trying to buy existing stock in London,’ he explained. ‘There is now a de facto exclusion loan on central London for most institutional investors, at a time when concern over access to housing has seldom been higher,’ he added. Inner London delivered total returns of 24.4% in 2014 with a comparatively small rise in rental values of 3.1%, while outer London saw returns rise to 21.1% and rental growth of 3%. Central London (zone 1) returns slipped to 9.8% from 14.7% in 2013, while rents also increased by 4.8% in this area. Outside of the capital, the South West and Midlands performed the strongest, returning 9.7%. Northern England and Scotland also saw an improvement in returns to 3.5%, the first time returns have entered positive territory in those areas since 2007. This area also experienced a rise in rental growth from 1.5% to 2.4%, the only region outside of London to see this. Comparatively, commercial real estate returned 17.8% in 2014 according to the IPD UK Annual Property Index. Bonds and equities returned 11.8% and 0.5% respectively. ‘It is clear that market forces not related to the underlying rent generating capability of residential property are affecting values and that this is pricing large investors seeking long term stable income out of the London market,’ said Weedon. ‘It is no surprise that investors are now considering building to let which will enable them to achieve a decent percentage income return in areas of high employment and strong owner occupier demand,’ he added. The IPD UK Annual Residential Property Index is based upon properties let on modern residential leases, primarily assured short hold tenancies, the index now has 14 years of historical data. The index… Continue reading
