TSI
UK residential property prices forecast for steady growth in next five years
House prices in the UK are expected to continue growing, with steady rises over the next five years across the country, the latest five year forecast shows. Cumulative growth in UK prices will total a little over 18% in the five years to the end of 2019, according to the latest forecast report from real estate firm Knight Frank. It says that while political risk for the prime London property market has fallen, affordability constraints will limit price growth in the near term, and predicts that overall UK rents and prime central London rents will rise 2.2% and 3.5% respectively in 2015. However, the risk that UK interest rates rise more rapidly than expected or that the global economy suffers a notable slowdown in activity remain the biggest risks to the UK housing market. It explains that the cumulative impact of recent and future reforms to Stamp Duty, mortgage interest relief for investors, Capital Gains Tax and IHT will take some time to work through the UK housing market. ‘Despite the pace of tax change, our view remains that it is interest rates and economic performance which will shape the outlook for prices and demand,’ the report adds. In the UK as a whole the forecast predicts house price growth of 3.5% for 2015, 2.5% next year, 3% in 2017, 4% in both 4.0% 2018 and 2019, to a cumulative 18.2% over five years. It also shows that while London saw growth of 17.8% in 2014 this is unlikely to be repeated with growth of 3.5%, 4%, 5%, 5.5% and 5.5% predicted. There is a similar pattern for the South East which saw growth of 10.6% last year, with the current forecast for 5% this year, 3% in 2016, 3.5% in 2017 and 5% for the two following years. The South West had growth of 8% in 2014 but this will fall to 4% this year, then 2.5%, 3%, 4.5% and the 4%. The prediction for East Anglia is 4.5% in 2015, followed by 3%, 3.5%, 4.5% and 5%, in the East Midlands the forecast is for 3.5%, 2%, 2.5% and then 4% in both 2018 and 2019 while in the West Midlands it is 3.5%, 2%, 2.5%, 4% and 4%. For the North East the forecast is even at 3% this year followed by 2% in 2016 and 2017, then 3% in 2018 and 3.5% in 2019. In the North West it is 3%, 1.5%, 2%, 3.5% and 3.5% while in Yorkshire and the Humber the forecast is for growth of 3% this year, 2% in both 2016 and 2017 then 3.5% in both 2018 and 2019. Wales saw annual price growth of just 1.4% in 2014 but this is expected to rise to 3% this year followed by 2% in 2016, 2.5% in 2017 and then 4% in both 2018 and 2019. Scotland is forecast to have growth of 3.5% this year, 2.5% in 2016, 3% in 2017 and then 4% in both… Continue reading
Annual house price growth varies across the UK, latest ONS index shows
Annual house price growth in the UK is going up and down according to region, varying between a fall of 0.6% to a rise of 9% year on year, according to the latest property index. Overall UK house prices increased by 5.7% in the year to June 2015, up from 5.6% in the year to May 2015, the data from the Office of National Statistics (ONS) shows. A breakdown of the figures shows the strongest annual growth was in Northern Ireland at 9% while the weakest was on Scotland with a dip of 0.6%. In England growth was 6.1% and in Wales it was 0.8%. It is the first annual fall in prices in Scotland since September 2013, down from 2.2%, and prices were also down from 2.7% in Wales, and down from 11% in Northern Ireland while in England the annual rise was up from 5.8%. Annual house price increases in England were driven by a 9.2% increase in the East and a 7.7% increase in the South East. But excluding London and the South East, UK house prices increased by 5.2% in the 12 months to June 2015. The ONS data also shows that on a seasonally adjusted basis, average house prices increased by 0.4% between May and June 2015. In June 2015, prices paid by first time buyers were 5.1% higher on average than in June 2014 while for existing owners, prices increased by 6% for the same period. Peter Rollings, chief executive officer of Marsh & Parsons, pointed out that price rises in London continue to be overpowered by the East and South East for the moment. ‘Costlier property taxes at the highest rungs of the market have forced London off the boil, and dampened the appetite in the market momentarily,’ he said. But he pointed out that there are signs that London buyers are starting to take on board increased stamp duty costs, and during the second quarter of the year the firm saw buyer registrations increase by 17% up against a supply boost of just 10%. ‘This fundamental imbalance will ensure price growth simmers on into the autumn, and in the Prime market we’ve already seen property values start to solidify again, recording the first quarterly rise since September 2014,’ he added. Rob Weaver, director of property for residential investment platform Property Partner, believes that prices will keep going upward due to the imbalance in the market. ‘Demand continues to outstrip supply and this, with the odd blip or dip aside, can only mean one thing for property values,’ he said. He also pointed out that average price growth on new builds has been almost double that of pre-owned properties over the past year. ‘It’s a worry as this implies people are paying more of a premium on new builds, which could be a symptom of foreign investors tending to do less market research. It’s rather like buying a new car, once you put the keys in and drive… Continue reading
July sees subdued valuation and survey activity in UK housing market
Housing market activity in the UK in July was more subdued than normal but is still up 57% compared to the same month in 2014, the latest survey and valuation research shows. However, overall valuation activity in July dipped 24% compared to June 2015, according to the report from Connells Survey & Valuation. But, according to John Bagshaw, the firm’s corporate services director, the housing market momentum is only getting stronger and the slight monthly wobble is more than outweighed by the annual growth across all sectors. ‘July has been a little more subdued than normal as the post-election feel good factor began to taper out. But, fundamentally, the high pace of annual growth demonstrates that the property market is strong. As wages continue to outstrip inflation, job security increases and interest rates remain at record lows, people young and old are feeling ever more confident about the property market. There’s every reason to feel very optimistic,’ he explained. The report also shows that the number of valuations for existing owner occupiers seeking to move home in July was down 33% compared to the previous month of June. However, yearly activity has climbed 48% on July 2014. Similarly, despite the number of first time buyer valuations slipping 25% on June 2015, year on year activity accelerated 40% compared to July last year but Bagshaw believes that home movers and first time buyers are in a strong position. ‘At first glance the monthly figures might suggest we’ve endured a slow July. However, this is mainly because home movers and first time buyers are most affected by housing market seasonality. These two groups possess neither the capital of most buy to let investors or the pre-existing property of remortgagors. First time buyers in particular tend to be more sensitive to headwinds,’ he pointed out. ‘Moreover, the yearly figures indicate that first time buyers are showing no real hesitancy in getting on the ladder. Government schemes such as Help to Buy, alongside local authorities attempting to drive up property development, are giving the home mover and first time buyer markets a vitality not seen for many years,’ he said. Meanwhile, valuations in July for buy to let investors and remortgagors increased on a year on year basis. Buy to let and remortgaging valuation activity grew 76% and 75% respectively, when compared to July 2014. However, on a monthly basis, July’s buy to let valuation activity fell back 21% on June, while remortgaging activity declined by 16% over the same period. ‘Remortgagors and those in the buy to let business have had an exceptional year’s stretch. Since the first glimmers of the economic recovery, remortgaging was the first sector to make up lost ground because it was viewed as the least risky by lenders and that momentum has obviously continued into this month. Meanwhile, the latest threats… Continue reading
