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Demand for prime rental properties in London set to continue in 2015
The strengthening London economy and the continued expansion of sectors such as technology and telecommunications will underpin demand for prime rental property in London, a new analysis suggests. This will also filter out into the wider commuter zone, though demand from the financial and business services sector is forecast to remain relatively subdued, according to a new report from real estate firm Savills. The firm is forecasting rental growth of 17% over the course of the next five years unless a mansion tax is introduced and levied on the owners of homes worth £2 million or more. The Labour party has said that if it wins the general election in May it will introduce such a tax. On the supply side, a more muted sales market in the run up to the election could result in more would-be sellers bringing stock to the rental market, according to Lucian Cook, director of residential research at Savills. ‘In the short term this is likely to continue to suppress rental growth. In addition, in certain locations on the fringes of prime London, where high levels of new build stock have been bought by overseas investors, we expect rents to come under pressure over a longer period,’ he said. ‘Beyond London we expect the preference for prime family housing in key commuter towns to continue, with existing demand supplemented by that from those relocating to these areas and temporarily renting before buying,’ Cook explained. ‘On the supply side, we believe a stronger sales market is also likely to reduce the impact of the accidental landlord over the medium term, causing a reduction in available rental stock at the top end of the market and supporting rental growth,’ he added. He also pointed out that the reform of the stamp duty system in December may impact on future investor behaviour. ‘Stamp duty costs will be lower for all acquisitions below £937,500. However, across Kensington and Chelsea the average stamp duty bill is expected to rise by over £40,000. This may drive investor demand to higher yielding, lower value parts of the market that equally are less likely to be affected by the continued political rhetoric around a mansion tax,’ said Cook. ‘The Autumn Statement also contained provisions to increase the levy on those long term UK residents who wish to retain their non-dom status. Though many will be home owners, this may impact on the budget of long-term renters,’ he explained. ‘A similar differential in rental performance was seen in the prime regional market. Smaller properties servicing core market demand have generally performed the most strongly, with one and two bedroom units delivering annual price growth ?of 4.3%, bringing total growth over the three years to 11.7%,’ he added. ‘By contrast, there has been a much thinner market for large properties at the top end, which continue to be price sensitive. Rental value for properties with six or more bedrooms rose by just 1.1% over the course of 2014, with… Continue reading
Gross mortgage lending in UK stalled in December, latest CML figures show
Gross mortgage lending in the UK reached £16.5 billion in December, unchanged month on month compared to November but down 1% compared to December 2013, the latest data shows. The figures from the Council of Mortgage Lenders also shows that the gross lending estimate for the fourth quarter of 2014 is £51.6 billion, down 8% on quarter three but up 1% on the fourth quarter of 2013. Overall, for 2014 the gross lending estimate is £205.6 billion, up 17% on 2013's £176 billion gross lending figure. ‘Housing market activity has been cooling and house price growth slowing in recent months, but 2014 was still the strongest year for mortgage lending since 2008,’ said CML chief economist Bob Pannell. ‘First time buyers were a key driver, helped by government initiatives such as Help to Buy. As a result, the number of first time buyers topped the 300,000 mark. While a far cry from the half million that we might regard as normal, this was the highest number of first time buyers since 2007,’ he pointed out. ‘Although lending remained muted in December, the previous monthly pace of decline in approvals appeared to moderate. So, alongside the big picture of a softer market, we are beginning to detect signs that underlying market conditions may be stabilising,’ he added. Adrian Gill, director of Your Move and Reeds Rains estate agents, said that while many places across the country have witnessed a recent lull in house price growth, the underlying sentiment in the market remains strong. ‘It will continue to carry the housing recovery further forwards, with unprecedented fundamentals for growth this year and 2014 will stand out as the best year for new buyers since the recession,’ he explained. ‘Towards the latter end of the year, demand was slightly spooked by the introduction of loan to income caps, but stamp duty reform provided some new comfort for prospective buyers. Along with the continued support of the Help to Buy scheme, aspiring home owners can more easily stomach the upfront costs of buying a home and save up for the necessary deposit,’ he added. Continue reading
Property prices in key UK cities up by 0.4% in December
House prices in key UK cities increased by 0.4% in December to an annual rate of 8.3% but the rate of growth plateaued and is set to slow further in 2015, according to the latest national index report. While the recovery in UK house prices is spreading, the gap between the best and worst performing cities has narrowed to its lowest level for 15 years, the index from Hometrack shows. There are now two distinct groups, cities that are accelerating off a low base after years of either static or falling prices and those that have enjoyed strong house price recovery over the last two years and where house prices are starting to slow on cooling demand and affordability constraints. Overall 11 cities registered growth in house price inflation over the second half of 2014, led by Edinburgh, Aberdeen and Glasgow where demand for housing has increased after the September independence vote. Newcastle, Leicester and Liverpool have also saw growth continue to rise off a low base in the second half of 2014 with house prices in these cities 9%, 2% and 15% below their 2007 levels. Oxford, London, Cambridge and Bristol have all registered a slowdown in the rate of growth over the second half of 2014 off a high, double digit base. Other cities registering a slowdown in the rate of growth include Bournemouth, Belfast and Leeds showing that slower house Slower growth in housing demand, tougher mortgage checks and affordability factors are behind the slowdown in these cities where house prices have bounced by as much as 55% from their 2009 lows in recent years, the report says. According to Richard Donnell, Hometrack director of research, house price growth at a city level looks set to converge further in the first half of 2015 as high growth markets continue to slow and lower growth markets start to see growth plateau. ‘Pent-up demand has fed back into the market in the last two years, supported by record low mortgage rates, but mortgage approvals have weakened in the last five months with a knock on impact on house price growth,’ he said. ‘Low mortgage rates are making housing look affordable but it is the willingness and ability of households to borrow, against the background of greater mortgage regulation, which will most influence the housing market in 2015,’ he added. Continue reading
