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Property price growth picks up pace across UK cities, latest index shows
Property price growth in key UK cities has picked up pace with annual growth running at 8.5%, up from 7.2%, according to the latest index from real estate analytics firm Hometrack. Growth over the last three months of 4.3% is at the fastest rate for 11 years, the data from the index, which covers 20 main cities, shows. The index report says that growing house price momentum is on the back of a 32% increase in sales volumes since April and a sustained catch-up in prices in cities outside southern England. There remains further upside for house prices in regional cities outside London, it adds, and city level price inflation remains on course to end the year at 10%. All cities with the exception of Aberdeen are registering house growth ahead of growth in average earnings which is currently 2.4%. The highest year on year growth is 10.9% in Cambridge followed by Oxford, London and Bristol. The lowest growth rate is in Aberdeen with a fall of 0.7% and the report suggests that the weakness in the oil price is impacting the local economy and demand for housing. Other cities with below average house price growth are Newcastle, Liverpool and Sheffield where annual growth is running between 2.5% and 4.5%. The report also says that there is room for further catch-up in house prices. Nine of the 20 cities still have average prices that are lower than 2007 levels although this gap is narrowing rapidly. The relative performance of house prices since 2007 remains wide and reflects different economic and demand side drivers of house prices. Average prices in London are 40% higher than in 2007 and 14% higher in Bristol. Cities such as Edinburgh and Glasgow have registered a resurgence in growth more recently post the Scottish referendum although average prices remain 2% and 11% below their peak. Looking ahead, the report says that low mortgage rates, economic growth and rising earnings will continue to stimulate demand and put an upward push on house prices across most cities. As an international city, London is out on its own setting new highs for prices and unaffordability. ‘How long this can be sustained is down to the prospects for the different segments of demand, specifically international buyers, domestic investors and domestic home owners,’ the report explains. ‘Overall we expect city level house price inflation to remain on course to end the year at 10% year on year,’ it concludes. Continue reading
Demand for UK farmland falls as supply rises, says RICS report
The supply of farmland in the UK increased sharply during the first half of 2015, as demand growth moderated, according to the latest report from the Royal Institution of Chartered Surveyors (RICS). An increase in the supply of commercial farmland, coupled with a tailing off in demand growth across many parts of the country, has resulted in a significant reduction in price growth expectations, the report says. Meanwhile, demand from lifestyle buyers continued to increase, and a net balance of 18% of respondents said that they expect the price of residential farmland to continue to rise over the year to come. During the first half of 2015, a net balance of 51% of respondents reported an increase in the supply of commercial farmland while demand for these blocks declined, albeit very modestly, for the first time since 2008. Scotland and the North East of England saw a reduction in demand not just for commercial but also residential farmland, while the results for South West and the East Midlands suggests demand is still edging upwards. Simon Rubinsohn said it is significant that the headline transaction based measure of farmland prices fell by 2.5% during the first six months of the year and by 1% over the course of the year to reach £9,692 per acre. Average rents also slipped during the first half of the year both for arable and pasture land, reflecting the weaker to many commodity markets. ‘We are seeing a considerable divergence in the outlook for commercial farmland compared to land with a significant residential component,’ Rubinsohn pointed out. Annual average arable land rents fell by 7% during the first half of the year and by 9.7% over the year, with anecdotal evidence suggesting the recent falls in commodity prices are the primary cause of this decline. ‘Despite this, the lifestyle market remains relatively strong across much of the country with the price of land with a large residential component generally expected to continue moving higher,’ said Rubinsohn. ‘Political uncertainly leading up to the general election is likely to have had some further impact on the results in the survey, however market conditions look set to remain challenging notwithstanding the outcome with the global economic environment set to remain a drag on commodity prices,’ he concluded. Continue reading
First time buying costs almost £700 a year less than renting, new research shows
The cost of buying a home for first time buyers in the UK is £670 a year lower than renting, according to new research by the Halifax. The average monthly costs associated with buying a three bedroom house in the UK for a first time buyer was £666 in June 2015, some 8% lower than the typical monthly rent paid on the same property type which was £722 a month. This is in contrast to June 2009, during the financial crisis, when the average cost of buying was 16% or £1,154 per year more than the average rent paid. Even though the average price paid by first time buyers for a three bedroom house is 25% higher than six years ago, the monthly costs of owning has come down as the average mortgage rate has fallen to 2.91% from 4.92%. Average rents have grown by 23% in the same period. In the past year, with the price of a typical first time buyer home rising by 8%, the difference between the cost of owning vs. the cost of renting has narrowed from £85 in 2014 to £56 in 2015, a fall of 34%. This is partly as a result of average monthly mortgage costs rising by £40 while average monthly rents have only increased by £8. The report also shows that first time buyers in London will have, in cash terms, experienced the largest benefit from buying rather than renting a home in the last year. The average monthly cost of £1,338 for those who have bought in London in 2015 compares to an average monthly rental price of £1,419, a saving of £81 a month or £973 over the year or 6%. The second largest difference is found in the South West where first time buyers were paying 9% less a month or £67 a month or £808 annually than the typical private tenant in the region. In the South East rental costs are marginally lower by 1% or £8 per month than buying, largely as a result of house price rises, but in all other regions buying costs are on average seven per cent lower than rental costs. According to figures from the Council of Mortgage Lenders, there were 136,100 first time buyers in the first six months of 2015. Compared with the same period in 2014, this represents a 9% fall in purchases, the first annual decrease on this basis since the first half of 2011. However, in context, with the exception of 2014, it is still the highest total for the first six months since 2009 and was 87% higher than in the first half of that year. Part of the reason for the slowdown is that supply remains restricted, with the stock of homes available for sale falling further to new record lows. ‘Looking at monthly costs, the combination of lower mortgage rates and declining rental value over the past six years has made it cheaper to buy than… Continue reading
