TSI
Prime central London rental values flat for second month in a row
Rental values in prime central London were flat for the second consecutive month in December as a seasonal year end slowdown and the impact of global economic uncertainty dampened demand. Though monthly growth slowed to zero by the end of the year, the annual increase in rental values was 3.3%, which was the highest rate in three years, the rental index from Knight Frank shows. It points out that annual growth has been climbing steadily since July as the UK economy improved and some buyers switched to the rental market while political uncertainty surrounds the outcome of the general election in May and the prospect of further property taxes remains. ‘However, while the UK’s economic indicators have improved, caution surrounded the world economy in the last quarter of the year, including falling oil prices and the economic outlook in China and the euro zone,’ said Tom Bill, head of London residential research at Knight Frank. ‘The result is that companies or individuals are more likely to postpone decision making while they wait for clarity,’ he added. The report points out that other factors affecting the market include the falling price of oil, events in Syria and Hong Kong, the Ebola outbreak and concerns the Federal Reserve in the United States was going to raise interest rates sooner than expected. ‘Despite this uncertain global economic and political backdrop, prime central London residential property remained a sound investment in 2014,’ said Bill. ‘Total returns, which include rental income and capital value growth, outperformed a series of other asset classes in the year to November, proving its resilience as an investment. For example, while commodity prices have fallen markedly, partly due to concerns over the Chinese economy, demand among Chinese tenants and buyers for prime central London property has increased, buoyed by its safe haven appeal,’ he explained. ‘This is underlined by the fact the number of Chinese tenants increased by almost fourfold in 2014 compared to 2013,’ he added. Continue reading
UK mortgage market sees lending fall off toward end of 2014
Lending trends to first time buyers, home movers and remortgaging in the UK have declined but there has been an annual rise in buy to let lending, according to the latest data from the Council of Mortgage Lenders. Lending to first time buyers fell 11% in November 2014 compared to the previous month and was down 3% on November 2013. By value, there was £3.8 billion advanced to first time buyers, 12% down on October but 6% up on November last year. Lending to home movers also declined month on month by 13% and by 10% on November 2013. By value, lending to movers totalled £5.4 billion, down 14% on October and 5% on November last year. Remortgage lending activity saw an 8% decline month on month and was 16% down on November 2013. The value of these loans at £3.6 billion was down 10% on the previous month and down 14% on November of the previous year. There were 17,700 buy to let loans in November, representing lending of £2.4 billion, a 10% decrease on the previous month, however, compared to November 2013, the number of loans increased 9% and the value of these loans went up 14%. Paul Smee, director general of the CML, said that the easing back of activity is not completely unexpected as there is usually a seasonal lending dip in the winter months, adding that the major industry changes and more restrained market sentiment have inevitably caused month to month fluctuations over the last 12 months. ‘Our forecasts are for gross lending to continue to grow over the next two years and this reflects our belief that there are more stable conditions in the market than a year ago,’ he explained. According to Steve Bolton, founder and chairman of Platinum Property Partners (PPP), significant increases in average house prices over the past year have made buy to let a very attractive investment prospect. He pointed out that recent research from Savills shows that property investors with buy to let assets have experienced capital appreciation of 17% over the last 12 months. ‘There are also positive signs for further growth in the buy to let market. Our recent research shows that two in five landlords plan to expand their portfolios this year and it is anticipated that the pension freedoms coming into play in April will encourage further buy to let investment,’ he said. ‘Rental demand shows no sign of slowing, as more than 8.5 million people in England now rent from a private landlord. But there is still a worrying imbalance between supply and demand. Landlords have a responsibility to look at ways of providing more rental accommodation that is of a high standard but also affordable,’ he explained. ‘Buy to let models such as Houses in Multiple Occupation (HMO) are an efficient way of making use of existing housing stock as well as providing quality accommodation at much lower costs, enabling… Continue reading
Scotland’s house prices dip after post referendum boost
Residential property prices in Scotland fell 0.1% in November, reversing October’s uplift in the wake of the independence referendum vote, the latest index shows. There was also a slowdown in annual growth to 4.3%, less than half the 10.6% yearly rise across England and Wales, according to the Your Move/Acadata index. It takes the average house price to £164,607 and sales were up 6% annually in November, however the data shows that a quarter of all activity was concentrated in Edinburgh and Glasgow. But prices in Midlothian have seen their highest annual jump, up 10% with this being put down to a 30% leap in local first time buyer sales. According to Christine Campbell, regional managing director of Your Move, the Scottish property market is only just starting to recalibrate after the temporary disruption of the referendum. ‘The immediate feel good factor following the vote led to an artificially upbeat October, but the dust is settling. Average house prices across Scotland dipped as normal business resumed and familiar market trends reappear,’ she explained. The data shows that overall, property values fell in over half of Scotland’s local authority areas in November and it means annual house price growth in Scotland is currently lagging well below the pace being set across England and Wales. ‘However the underlying upwards momentum is robust. Scottish property values have climbed a healthy 4.3% in the year to November, equal to £6,750 on average. In the last 12 months, fourth fifths of the nation’s local authorities have witnessed increases in house values,’ Campbell pointed out. ‘But the overwhelming majority of Scotland is experiencing annual property price growth in excess of inflation. The lion’s share of home owners are enjoying real tangible growth in the value of their home beyond the 1% Consumer Price Index rate of inflation,’ Campbell said. ‘For example, the highest annual leap in values was found in Midlothian, with prices soaring 10%, more than double the wider nationwide average. Here, prices have been driven up by a considerable 30% uplift in sales of flats and terraced properties in the past 12 months. This burst of activity has pushed the typical cost of a flat in the area to £120,000, up from £100,000 a year ago,’ she explained. She also pointed out that while prices may have slipped back on a monthly basis, activity is still making stable progress. ‘This has been the strongest November for sales in seven years, with transactions up 6% on 2013. As first time buyers continue to pour into the market, the most frequently purchased type of property in Scotland are flats, with sales of this type of property growing 9% year on year in the three months to November 2014,’ said Campbell. ‘Argyll and Bute saw the biggest monthly jump in prices, up 5.8% since October, and this was propelled by a 24% annual surge in sales in the three months to November 2014, including a 50% climb in flat transactions…. Continue reading
