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UK home owner confidence dips as mortgage concerns rise
Home owners in the UK are less confident about further house price growth in the next six months and many are concerned about getting a mortgage, new research shows. The housing market sentiment survey from Zoopla reveals that confidence has now fallen a 15 month low and it also found that 39% of respondents believe it is harder to get a mortgage than it was three months ago. Overall the survey found that the proportion of home owners expecting property prices in their area to increase over the next six months has fallen from 92% three months ago to 88%, the lowest level since July 2013. Home owners in the East of England are the most bullish about continued house price rises, with 91% expecting property values to increase over the next six months. The South West has seen the most significant drop in confidence over the past three months, with the proportion of home owners anticipating further price gains falling from 95% three months ago to 85% today. Following the implementation of stricter affordability criteria for borrowing, 39% of those homeowners surveyed stated that they thought it was more difficult to get a mortgage now than it was three months ago. ‘The property market signals are somewhat harder to decipher at the moment than they were a few months ago,’ said Lawrence Hall of Zoopla. ‘With the lengthier funding approval process following the Mortgage Market Review and fewer homeowners predicting that house prices will continue to rise in the short term, the coming months will be crucial to determine if the housing market recovery has stalled or simply paused for breath,’ he added. Continue reading
Developers struggling to meet demand for luxury homes in London
The number of luxury homes currently being planned or under construction in London hit a record high this year, with around £60 billion of properties currently due to be delivered over the next decade. This is a 20% increase on 2013. However, with significant capacity issues at every level of the capital’s construction industry, a huge proportion of these properties are unlikely to be built on time, according to a new report from EC Harris. It reveals that this year, the capital’s 10 year pipeline of high end property has grown by around a quarter to a record 25,000 homes. However, with developers and investors struggling to keep pace with seemingly insatiable buyer demand, up to half the new homes planned in the next five years could end up falling well behind schedule due to a lack of available contractors to deliver the required quality of work. ‘With the UK economy back on track and London deemed a safe haven for international property investors, it’s not surprising that demand for luxury homes is fuelling ever increasing development,’ said Mark Farmer, EC Harris head of residential. ‘Where we are starting to observe real problems, though, is in the construction process. There is simply not the capacity out there to meet demand and many projects will undoubtedly fall by the wayside or experience delivery difficulties due to sheer lack of resources,’ he explained. ‘Many developers and investors, when in a position to do so, are therefore looking to jump the queue and are paying premiums for construction so they can deliver on promises they have already made to their purchasers,’ he added. In terms of location, the South Bank is proving the most popular area of the capital for development, accounting for around a third of new projects. This is closely followed by Chelsea and Fulham and the City. The report points out that the appetite for high end residential property continues to reach well beyond the traditional West End heartland, with high profile developments such as One Blackfriars and Bishopsgate’s Heron Plaza demonstrating the spread into a much broader swathe of central London. Therefore, to avoid losing out on investment returns in the current strong sales market, some developers are being forced to pay premiums to contractors in order to secure their services. It concludes that this rush to market has provoked significant price inflation in the construction sector as developers seek to urgently get building work underway with the best available tradesmen and project delivery expertise. Continue reading
London prime rental market see strong demand, new research reveals
London’s prime rental markets of London saw annual growth of 1.4% on the back of strong demand for one and two bedroom flats over the past three months in particular, new research shows. Similar rental growth of 1.3% has been seen for prime properties in the commuter zone, however a significant value gap remains, with the average pound per square foot less than half of that in prime London, according to the report from Savills. In London, strong demand for smaller properties resulted in the highest quarterly rental growth in prime central London, prime North London and East of City locations, albeit from different tenant groups. ‘As is typical at this time of year, when the University year begins, wealthy international students drove the demand most evidently in prime central London due to the proximity of world class universities,’ said Lucian Cook, director of residential research as Savills. ‘In contrast, young professional sharers or couples are drawn to less expensive prime locations such as Canary Wharf, Wapping or Islington. This reflects the fact both areas provide easy access to the financial services centres of Canary Wharf and the City, as well as the emerging tech centres in East London,’ he pointed out. ‘As a result of a younger generation driving prime rental growth, landlords may have to be prepared to adapt to their changing requirements. Being able to compete with new build developments which provide on-site facilities such as a concierge will become increasingly important, particularly in PCL and in the East of City where our data shows the largest proportions of renters under the age of 29 choose to locate,’ he added. Among 30 to 60 year olds, Hampstead and St John's Wood in the North West and areas such as Fulham and Richmond in the South West have more appeal. Although rental growth here has been weaker over the past year than in the student/sharer markets, families continue to be attracted to the stock on offer and relative value for money achievable, particularly in the South West where the average pound per square foot is just £29, the lowest across all prime London. The research also shows that across London's commuter belt, the strongest annual growth was seen in the outer commuter zone, with average rents rising 2.5%. Cambridge, Farnham and Winchester, all particular favourites with families, saw the highest growth, due to their popularity for schooling and easy access to London. Regardless of location, since the peak of the prime rental market in 2008, three bed properties have seen the strongest growth with average rental values across the prime commuter zone 3% above their peak. However, over the past three months, one and two bed properties have seen the strongest growth, at 1.3%. This has been driven partly by young sharers unable to afford to buy, but the most significant factor is young professionals relocating for work as the economic recovery outside of London continues to strengthen. ‘As demand for rental properties continues to grow due to affordability… Continue reading
