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Irish house prices expected to continue rising in 2015
New mortgage rules and the recently announced quantitative easing programme will have a game changing impact on investor demand for residential property in Ireland, according to a new analysis. International property advisor Savills expects that house prices will continue to rise in 2015 due to an overall shortage of supply relative to demand. However, because compounding price growth over the last two years has raised baseline prices, the percentage rate of growth will be more moderate than before. The Irish Central Bank’s new mortgage rules will channel demand into the rented sector leading to further rental growth, according to John McCartney, director of research at Savills Dublin. He pointed out that this, and falling deposit yields due to quantitative easing, will attract investors despite the expiry of Capital Gains Tax Incentives last December. ‘By increasing the down payment that is needed to qualify for a mortgage, the Central Bank rules will inevitably lead to first time buyers spending longer in rented accommodation,’ he said. ‘This guarantees a stable platform of demand which will undoubtedly encourage landlords to invest. At the same time, investors will be driven into property by low returns on cash deposits, and these are being further depressed by quantitative easing,’ he added. He explained that while these factors will continue to attract large institutional investment into ‘multi-family’ residential blocks, they will also lead to continued buying activity by smaller retail investors. However, according to Graham Murray, director of residential at Savills, the profile of these investors is changing dramatically. ‘We are really seeing a changing of the guard. On one hand, the recovery in house prices has provided the opportunity for many of the accidental boom time investors to exit the market and, reflecting this, investors were our second biggest seller group last year,’ he said. ‘At the same time, there is a new breed of more professional, yield driven landlords flooding into the market. In fact this new generation of investors represented our biggest single group of buyers last year,’ he added. Contrary to the popular opinion, Savills believes that the Central Bank mortgage rules will do nothing to reduce the rate of house price growth and will only result in a change in the mix of buyers. ‘By diverting demand into the rented sector the new rules will lead to stronger rental growth. In time this will attract investors who will compete with everybody else to buy properties. Therefore the new measures will do nothing to soften house price growth by curtailing demand. They will simply increase the ratio of investors to first time buyers,’ said McCartney. Elsewhere in the report, Savills notes that declining affordability in Dublin, combined with demographic trends, will lead to increased demand and sharper house price growth in the commuter counties of Wicklow, Kildare and Meath. ‘Prices outside Dublin have been rising at an accelerating rate for the last nine months. This is set to continue as demand is… Continue reading
Number of new homes being built in the UK up 10% since 2013
New figures show a rise in the numbers of new homes being built across the UK, with starts now 10% above 2013 and at their highest annual total since 2007. Starts on new homes in 2014 totalled 137,010 overall and in London, starts in 2013 to 2014 were the highest since 2005 to 2006, according to the figures released by the Department of Communities and Local Government. Overall 700,000 new homes have been delivered since the end of 2009 and over 200,000 of which have been since the launch of the government’s flagship Help to Buy scheme. ‘We inherited a broken housing market in which builders couldn’t build, lenders wouldn’t lend and buyers couldn’t buy. We’ve done a lot to help get the housing industry back on its legs, but there’s more to do,’ said Housing Minister Brandon Lewis. ‘These figures show we’re on track and turning this around. Now, housebuilding levels are at their highest annual total since 2007, and first time buyers are getting on the property ladder in record numbers. This is thanks to our long term economic plan and efforts to tackle the deficit we inherited, which are keeping interest rates at their record low and mean now is the best time on record to take out a mortgage,’ he added. The department pointed out that the 2008 economic crash devastated the house building industry, bringing building levels to their lowest since the 1920s and leading to the loss of a quarter of a million jobs but the government has prioritised limited financial resources to house building as a key part of its long term economic plan. This includes helping people onto the housing ladder and over 77,000 households have become homeowners with a fraction of the deposit they would normally require thanks to the Help to Buy scheme, with developers building more as a direct result. According to Lewis, reforms to the planning system has put power back in the hands of local people to have a say over the future development of their area, meaning support for local house building has increased dramatically over the past six years, and permission was granted on 240,000 homes in the year to October. The figures also show that nearly 217,000 affordable homes have been delivered since 2010 and £19.5 billion public and private funding has already been invested in affordable house building, with plans for a further £38 billion which will help ensure a further 275,000 new affordable homes are provided between 2015 and 2020. Lewis also pointed to efforts to keep interest rates low and mortgages more affordable and said that the numbers of first time buyers are at a seven year high, with the Mortgage Advice Bureau recently reporting now as the best time on record to take out a mortgage. Continue reading
Oxford prime property market outperforms rest of UK
Rising demand from international buyers and others from London relocating to Oxford has contributed to price growth in the city’s prime property market, new research shows. Oxford is a key city outside of London and attracts people because of its internationally renowned university and research from real estate firm Knight Frank shows that last year it outperformed both the wider prime property market in the UK and in the South East. Prices increased by 1.8% between October and December 2014, taking the annual rise in values in the city to 6.1%. Demand for homes valued between £1 million and £2 million was especially strong. Knight Frank says that a key driver of Oxford’s property market performance has been demand for homes from buyers from outside of the city. Indeed, the proportion of property buyers from outside Oxford more than doubled in 2014 compared to the previous year, accounting for 52% of all Knight Frank sales in the city last year, compared to just 24% in 2013. Demand from Londoners relocating to Oxford rose significantly year on year, from 3% to 18%, with many such buyers looking to take advantage of the relative price difference that currently exists between house prices in the capital and in Oxford. The proportion of international buyers in the city also rose to 17% in 2014, up from 11% the previous year. Access to top performing schools, strong local employment, as well as improving transport links into London, including a new rail line between Oxford and London Marylebone which is due to open this summer , have helped boost high levels of demand in Oxford, according to the report. The number of potential new buyers registering their interest in purchasing a new home was 18% higher last year than 2013 and the number of property viewings in the city was 8% higher over the same time. ‘All of this helped contribute to an increase in the number of sales completed by Knight Frank in Oxford in 2014, with the total number of transactions last year 22% higher than in 2013 and 41% higher than in 2012,’ said Oliver Knight of the firm’s residential research team. ‘The market for properties valued between £1 million and £2 million is especially strong and accounted for nearly 50% of all sales in 2014, compared to 41% in 2013,’ he added. Continue reading
