TSI
Wealthy Chinese and Russian buyers return to top end London homes market
A lowering of asking prices at the top end of the London property market seems to have led to an increase in sales of home in the £10 million plus range. Between January and October this year, the number of such properties sold by international agent Knight Frank increased by a third compared to the same period last year and was 92% higher than in 2012. This comes at a time when there is speculation over the sustainability of price growth in prime central London and the prospect of a mansion tax after next May’s general election, which have both resulted in more subdued demand. However, a large contributing factor is that vendors, who are typically discretionary sellers, have lowered their asking prices by between 5% and 10% in order to achieve a sale, according to the firm. ‘Once buyers re-priced at a more realistic level and the gap between the expectations of the vendor and the buyer closed, it triggered a flurry of activity,’ said Tim Wright of Knight Frank’s Prime Central London team. In June and July this year, Knight Frank sold as many £10 million plus properties as during the previous four months combined. ‘There has been talk of a drop in the number of transactions in the market and a slowing of price growth but this is due to the lack of data in the public domain,’ said Richard Cutt of Knight Frank’s Prime Central London team. ‘In the last quarter there have been a large number of flats bought from plan, off market, which have moved prices up and in some cases quite significantly. These sales only become public on completion and would paint a different picture of the market if they were factored in today. An example of this is the success of British Land’s Clarges Mayfair development,’ he added. The higher number of transactions is also underpinned by strengthening demand in recent months, with Russian buyers re-emerging after a period of uncertainty and Chinese buyers increasingly active in the £10 million plus price bracket. ‘The Russians are back. After a period of uncertainty and instability, they appear to have more clarity on where they stand, which has given them the confidence to get back into the market,’ said Wright. In the six months to October, Russian buyers accounted for 21% of super prime sales compared to 13% over the preceding six month period. However, given the economic backdrop in Russia, there is a marked difference between those that hold assets in roubles and those in US dollars, which is curbing the buying power of some. This year also saw mainland Chinese buyers become active in the super-prime market for the first time, accounting for 3% of sales after negligible demand in previous years. ‘We are beginning to see some serious interest from ultra-high net worth mainland Chinese buyers. Interestingly, it seems to be houses rather than flats or investment properties. These are buyers who clearly intend to spend time living in London… Continue reading
UK house prices to rise between 3% and 5% next year, it is predicted
A further moderation in house price growth in the UK is likely next year and house prices nationally are expected to increase in a range of 3% to 5% in 2015. The prospect of higher interest rates at some point in the year and the deterioration in affordability over the past year are expected to be key factors curbing housing demand, according to the latest house price inflation report from the Halifax. But housing demand should be supported by solid economic growth, higher employment, still low mortgage rates and the first gain in ‘real’ earnings for several years, the report suggests. Halifax said it expects to see a more even regional pattern in house price growth during 2015. Global economic worries could reduce demand and activity at the top end of the London market in 2015. Further ahead, price growth is expected to rise broadly in line with income growth, as rising interest rates increase the affordability constraint on the market. Higher levels of house building should also limit upward house price pressure. ‘The fortunes of the housing market are closely tied to developments in the wider economy. The strengthening in the UK economy has contributed to higher housing demand over the past 18 to 24 months. There has been an increase in the number of buyers, fuelled by rising confidence and the improved cost and availability of credit. Higher demand, however, has not been matched by an increase in the number of sellers in the market, resulting in strong upward pressure on house prices in some parts of the UK,’ said Halifax’s housing economist, Martin Ellis. ‘The deterioration in housing affordability as a result of higher house prices, earnings growth that has been consistently below consumer price inflation until very recently and increased talk of an interest rate rise, appear to have combined to temper housing demand since the summer. Tighter mortgage rules may also have acted as a brake on activity. The weakening in housing demand has led to a modest easing in both price growth and sales,’ he explained. He pointed out that house prices in the three months to October were 0.8% higher than in the preceding three months. This was the third consecutive decline in the quarterly rate of increase and the smallest rise since December 2012. Annual price growth in the three months to October slowed to 8.8% from 9.6% in September. Activity has also declined with mortgage approvals in September falling for the third successive month to a 14 month low, whilst home sales are at their lowest level since October 2013. ‘There has been a slight easing in economic momentum during the second half of 2014, mainly reflecting global economic developments, particularly the slowdown in the euro zone. Despite slowing moderately, the pace of growth remains robust. Moreover, the UK economy has moved from a period of prolonged stagnation to growth at, or above, its long run trend over the past 18 months or so. Overall, UK economic activity is… Continue reading
New build completions in Scotland at their highest level in over three years
The number of new homes being built in Scotland is at its highest level for over three years, new official figures have shown. Across all sectors, 4,583 homes were completed in April to June this year, the highest quarterly figure since 2010, and 29% higher than in the same quarter last year. The latest completion figures also bring the Scottish Government closer to its target of delivering 20,000 homes for social rent by March 2016, with 80% of homes completed. ‘I welcome the fact that the number of new homes built across all sectors is at its highest level for over three years, and I am particularly pleased that we are nearing our target of delivering 20,000 homes for social rent by March 2016,’ said Housing Minister Margaret Burgess. ‘The Scottish Government’s investment in affordable housing, together with measures to support the industry and help people into home ownership, have undoubtedly helped to stimulate housing supply,’ she pointed out. ‘Making sure everyone in Scotland has access to good quality housing is a vital part of the Scottish Government’s drive to secure economic growth, promote social justice, strengthen communities and tackle inequality,’ she added. She explained that the government has delivered over 4,500 new council houses since 2009 and has acted to preserve Scotland’s social housing stock by abolishing the Right to Buy from 01 August 2016, which will protect up to 15,500 social houses from sale and safeguard social housing for future generations. ‘In addition, the supply of affordable housing continues to be a high priority for us, and we are now three quarters of the way towards our target of 30,000 affordable homes by March 2016. This commitment is underlined by our £1.7 billion investment in affordable housing over the current parliamentary term, which supports an estimated 8,000 jobs each year,’ Burgess added. Continue reading
