TSI
Prime central London property market sees second quarter of sales decline
The prime central London property market is seeing further adjustments with the latest figures showing that the overall value of properties transacted is down 21.1%. Properties under £2 million saw a decrease of 20.8%, while those in the £2 million to £5 million bracket went down by 27.1% in the third quarter of 2014 compared to the same period in 2013. The data from Strutt & Parker also shows that £5 million plus homes performed slightly better, but still saw a decline of 15.2%. A similar pattern emerged in terms of volume sales, which were down 26.8% overall, with all price bands seeing a reduction in the number of transactions. However, the firm points out that when looking back over the past five years, these statistics are not so concerning as the volume of transactions are actually up by 3.1% compared to the rolling five year quarterly average. Over the past five years, the £2 million to £5 million price bracket has seen a 20.9% increase, and the £5 million plus bracket is up by 19.6%. In contrast, the sub £2 million price bracket is marginally down by 2%. ‘Whilst total values transacted in central London are markedly down on this time last year, we must have a sense of perspective and accept that 2013 was an exceptional year. It is really not surprising that prices are stabilising after the dramatic price increases we saw over the past 12 months,’ said Stephanie McMahon, head of research at Strutt & Parker. ‘Sales volumes are also showing a slowdown and two quarters of data do suggest a trend of decline. This is as we predicted. We have seen these conditions before in the run up to a General Election when speculation mounts. It is a recognisable pattern and we do not believe it spells doom for the property market in the long term,’ she added. According Lulu Egerton, Partner at Strutt & Parker in Chelsea, there is no doubt that prime central London property is in the midst of a price correction. ‘Properties which are priced competitively and realistically are still selling and we are achieving good figures,’ she said. ‘After a spectacular year in 2013, asking prices had become inflated and they are now in a period of correction where prices are being adjusted down by around 5% to 10% as buyers become far more price sensitive,’ she added. Continue reading
UK property becoming increasingly important part of retirement planning
Property is becoming an increasingly important part of retirement planning in the UK with new figures showing a surge in the number of retirees using the wealth stored in their home to fund their retirement. The total value of equity release lending passed £1 billion in the first nine months of 2014 and reached a record quarterly amount in the third quarter of £375.5 million, according to the latest industry figures from the Equity Release Council. The data also shows that there were more than 5,500 new customers in the third quarter of the year, the most recorded in a single quarter for six years and the average amount of equity release lending also hit a new high. The amount lent for the first three quarter of 2014 at £1.02 billion is more than the entire year's lending totals for 2009 to 2012 and is already 95% of the total value of the market in 2013. The value of equity release lending in the third quarter was up by 15% on the previous quarter when it totalled £325.6 million, and up 32% year on year from £284.1 million in the third quarter of 2013. The 5,565 new customers in the third quarter of 2014 is the largest amount in a single quarter for almost six years when it reached 7,526 in the fourth quarter of 2008, a rise of 5% on the second quarter of 2014 and a 12% year on year increase. This brings the number of new customers to 15,624 in 2014 to date, putting the industry on track to see 20,000 new customers in total by the end of the year. The average value of equity release lending also broke new ground in the third quarter of 2014 by reaching £67,467, the largest amount on record and up by 9% since last quarter and up by 18% since the third quarter of 2013. The council said that the growth is being driven by the need for additional funds in retirement and by the boost that rising house prices have given to people's available equity. Lump sum and drawdown lifetime mortgages have continued their upward climb, with increases for both products in the third quarter of 2014. The value of lending via lump sum products rose 16% from the last quarter to £148.7 million while the value of drawdown lending rose by 15% to £225.7 million, demonstrating largely even growth across both product options. Lump sum plans accounted for 40% of the total market by value in the third quarter of 2014, while drawdown plans made up 60%. In contrast, for the same period last year 34% of equity release lending was via lump sum plans and 66% was drawdown. The council pointed out that this is a notable shift, potentially fuelled by the appeal of larger initial sums that allow customers to pay off lingering debts, such as outstanding mortgages, or to fund one-off expenses. While making up less than 1% of the market, home… Continue reading
Rent rises in Scotland cool off from August peak, latest index shows
Average rents in Scotland fell by 0.2% in September to £536 per month but they climbed to a new peak in Edinburgh, according to the latest buy to let index. Rents fell in four out of the five years and annual growth has now cooled to 2%, the Scotland Buy to Let Index from Your Move also shows. This comes after rents reached a record high in August and the monthly fall is the first for three months and the pace of growth could cool further with the latest LSL Landlord Survey finding that landlords expect rents to rise just 1.8% over the next 12 months. However, talk of tenancy reforms to cap rents seems widely out of touch with reality, according to Gordon Fowlis, regional managing director of Your Move, as rent rises are slowing on an annual basis and retreating back in line with the target rate of inflation. ‘The last time the Scottish government tinkered with lettings legislation, their good intentions didn’t filter down to the thousands of everyday renters on the ground. Indeed, the abolition of one off tenancy fees hoisted rent rises up to an artificial pace after years of stability,’ said Fowlis. ‘Now, adding more strings to the web of legislation encircling landlords may push them to cut loose altogether, as well as stop attracting new buy to let investment. In this way, rent controls will actually accelerate rent rises from the healthy trajectory they are currently on,’ he explained. ‘At a time when the country is facing an acute shortage of housing, and as the government is already increasing the tax burden on many home buyers with their Land and Buildings Transaction Tax (LBTT), putting a cork in supply will only sour tenant finances,’ he added. A breakdown of the figures shows that the biggest month on month drop was recorded in Glasgow and Clyde, with rents falling 0.9% between August and September. In the South rents dropped 0.8%, while rents in both the East and the Highlands and Islands are down 0.1% since August. The only region to experience growth on a monthly basis was Edinburgh and the Lothians. The average rent has risen £9 or 1.5% in the month to September, to reach a new record high of £611 per month. On an annual basis, rents are higher than a year ago across all but one region. Edinburgh and the Lothians have seen the biggest annual change, with average monthly rents increasing by 5% in the year ending September. This is followed by 3.8% annual growth in Glasgow and Clyde, with a £21 uplift taking the average rent to £570 a month. The South is the only region to experience a price fall in the year to September, with average monthly rents dropping 0.1%, As of September the gross yield on a typical rental property in Scotland stands at 4%. This represents a fall of 0.2% since September 2013, when the gross yield… Continue reading
