TSI
Irish property prices on the rise again and now up 16.8% year on year
After two months of falling prices, property in Ireland is on the rise again with values up 0.9% across the country, according to the latest index. Residential property prices are now up 16.8% on an annual basis and in Dublin they are 22.8% higher than March 2014 after a 1.1% monthly rise. A breakdown of the figures from the Central Statistics Office shows that in Dublin house prices rose by 1% in March whilst apartment prices increased by 2.1%. However, a CSO spokesman pointed out that it should be noted that the sub-indices for apartments are based on low volumes of observed transactions and consequently suffer from greater volatility than other series. Outside of Dublin residential property prices rose by 0.7% in March and prices are up 10.7% compared with March 2014. Prices still need to catch up considerably before reaching anywhere near their peak levels of 2007. At national level prices were 38.2% lower than their peak level. Dublin house prices are 36.9% behind, apartment prices 42.2% lower than their peak and Dublin residential property prices overall were 38.7% lower than their highest level. Outside of Dublin residential property prices are still 41.5% lower than their highest level in 2007. However, the 16.8% overall year on year rise in property prices is the largest annual increase since the height of the property boom and confirms that the real estate market is heading in the right direction in a steady manner. According to Alan McQuaid from Merrion Stockbrokers the monthly declines in house prices in the first two months of 2015 were probably weather related, with the lack of supply the key driver of prices. ‘Although the tighter lending restrictions imposed by the Central Bank and the end of the Capital Gain Tax property purchase incentive scheme may weigh negatively to some degree, it appears that house price growth may be stronger in 2015 than we previously envisaged,’ he explained. He believes that the improving economy should sustain the house price recovery in the short term even with credit restrictions. Continue reading
Legal experts says major changes are needed to meet UK’s chronic housing shortage
Seismic changes are needed if any of the top political parties' housing targets in the UK are to be met in the short or long term, it is claimed. Planning permissions, regulatory requirements, funding, the economy and lack of skills have all added to the current housing shortage, according to Rosemary Edwards, partner and head of residential development with corporate solicitors Shulmans LLP, who has acted for many of the UK's top house builders for over two decades. ‘I have heard of many major house builders being accused of land banking but this is patently ridiculous. A house builder's business is entirely based on selling homes. If they can build them and sell them, why would they hold back?’ she said. In reality a house builder will struggle to sell more than say 40 houses a year on any one site, so natural market forces mean that a scheme of 200 houses may take five years to build out. Increased planning and regulatory hurdles have added time and cost, such as the new Community Infrastructure Levy, now effective in some districts, including Leeds. Staff shortages in local authority planning departments can also add to delays,’ she explained. She also pointed out that there is also the problem of mortgage finance. ‘We may say that we need 200,000 new houses or more each year, but not everyone who wants a house can afford one and mortgage eligibility criteria have tightened up considerably in recent years,’ added Edwards. According to Tim Halstead, Shulmans' managing partner and a nationally acknowledged authority on house building, while there's a great deal of talk about building on brownfield sites, doing so throws up as many problems as it supposedly solves. ‘Such sites often have several land owners, so you have to bring them all together or persuade the local authority to exercise compulsory purchase powers. That all takes time and of course you have to build houses, where people want to live which may not be on a former industrial site,’ he said. ‘There is often the added complication of expensive clean-up of contamination or increased costs arising say from digging out old foundations. Those costs can make schemes unviable without subsidy. As long ago as the 1980s we worked on a site in Hull that got a central government grant of £20 million but there just isn't that kind of money around right now,’ he added. Halstead also pointed to a chronic UK skills shortage being another factor in the low numbers of new houses being built. ‘Many skilled construction workers left the industry during the recession. You can't just click your fingers and bring in an endless supply of tradesmen to get new houses built,’ he explained. ‘House builders are now competing, more so than ever before, to recruit skilled labour and to maintain relationships with quality contractors and suppliers. That drives up costs and can cause delays,’ he added. Recent proposals include encouraging small and medium… Continue reading
Monthly landlord survey reveals effect of general election on private rented sector
Three quarters of letting agents are concerned that proposals for the creation of three year tenancies in England and Wales put forward in the run up to this week’s UK general election, a new report reveals. Members of the Association of Residential Letting Agents (ARLA) believe that the proposal put forward by the Labour party will see landlords exit the market and reduce supply. However, over a third of ARLA agents agree the Conservatives’ pledge to build 200,000 new starter homes will benefit the private rental sector the most. The report comes at a time when demand for rental accommodation was down in March, whilst supply rises. Some 72% of ARLA letting agents said three year tenancies, with a cap on rents will see landlords pull out the market, and lead to a decrease in the supply of rental property landlords in the North West and East Midlands most likely to pull out the market, with 84% of ARLA agents in these regions expressing concern. As well as seeing a reduction in landlords and therefore supply of rental housing, 74% believe the proposed three year tenancy agreements with rent controls and strict rules to make it more difficult to evict tenants will not actually benefit tenants at all, up from 69% in February. Meanwhile, 37% of ARLA agents agree that the Conservatives’ pledge to build 200,000 new starter homes offered at 20% discount to first time buyers would be best for the private rented sector. This will enable a segment of the current British renting population to get on the housing market, freeing up more properties for renting, helping to ease supply and demand. The March report also shows how the upcoming election is having an effect on the current levels of supply and demand for the private rented sector, as people hold out to see the outcome. Demand was down by 10% in March with just 36 house hunters recorded, down from 40 in February. Supply is heading in the other direction, with a rise in the number of properties managed per branch at 192 properties in March, up from 184 the previous month. Rents continue to increase for some, as 32% ARLA agents said that rents increased between February and March, the same increase as the previous month. ‘The vast majority of ARLA letting agents are worried that Labour’s proposed three year tenancies with strict caps on rents will only cause the gap between supply and demand to widen,’ said David Cox, managing director of ARLA. ‘Flexible tenancies are what makes the sector work, if this changes, some landlords will be forced to exit the market and tenants are likely to automatically incur rent hikes and feel driven to stay in agreements for longer before getting on the housing ladder; thus not freeing up rental properties for other tenants,’ he explained. ‘The proposals are aimed at reducing opportunities for landlords to raise rents and to create stability for tenants. However, Labour’s proposals aren’t… Continue reading
