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A year of two halves for the prime central London lettings market
It has been a year of two halves in the lettings market in prime central London with the supply and demand pendulum swinging towards supply in the latter half of the year, according to a new report. In the first half of 2014 supply levels in the lettings market dipped with flats down by 14% and house supply down by 27%, year on year. As a result rental values in the second quarter of 2014 were 5.1% higher than they were in the same quarter of 2013, the data from agency W.A. Ellis shows. However, the second half of the year has seen supply levels increase, most noticeably in flats priced between £1,000 and £2,000 per week. The firm said this is due to a combination of factors including an increase in buy to let investors and a rise in the number of new developments coming onto the lettings market. According to Lucy Morton, director and head of agency, the one bedroom market has remained buoyant throughout the year, as is historically the case and the family house market peaked, as usual, in July thanks to families wishing to move on prior to summer holidays. ‘We have been successful in some substantial lettings in the super prime market, which has been active throughout the year, like the family home market, particularly during the spring and summer months,’ she said ‘In terms of meeting tenants rising levels of expectations presentation and decorative condition continue to be paramount across all areas of the market. We are seeing growing number of landlords making considerable investment in refurbishing their properties to gain an edge in a rental market that is growing fiercely competitive,’ she explained. The firm has now merged with JLL and as a result is now advising on the lettings potential of more and more new developments across the capital. Morton said that these new build developments are becoming increasingly sought after as the city and skyline are set to evolve over the coming years. ‘These developments offer an exciting variety of investment opportunities for both British and overseas investors. They also offer a modern and convenient way of living for prospective tenants who often register for specific schemes,’ she pointed out. An example is the Nine Elms regeneration project, which is the largest redevelopment project in London since Canary Wharf, and is the size of the entire West End. It has thousands of new homes, luxury penthouses, high end retail, hotels, entertainment centres, the American Embassy and an underground station. Morton predicts that the area will create a new hub for London over the next few years. Continue reading
Rest of UK expected to catch up with London and South East price growth in 2015
In 2015 UK regions outside of London and the South East of England will catch up on the property price growth that has topped the market this year, according to agents. The National Association of Estate Agents (NAEA) predicts that in 2015 London and the South East will show slower growth in terms of price. With stamp duty reforms now in place, agents are hoping for greater supply in the market nationwide as there's more encouragement for people to buy and sell houses. ‘Areas outside London and the South East, where the market has been slow in terms of volume and price, will hopefully catch up with London and the South East in the next year,’ said Mark Hayward, NAEA managing director. He pointed out that currently supply in terms of construction is too low to be able to meet housing market demands. ‘Although the number of new homes being built has risen, and the three main political parties have created large new build targets, the lack of capacity within the market means that the gap between supply and demand won’t close and we currently don’t have the resources to respond to the problem,’ he added. Agents also believe that the general election will cause uncertainty, whichever party is likely to come in to power and with the housing market being based solely on sentiment, any uncertainty may result in a temporary lull. However, Hayward said the general feeling is that this will have long lasting implications on the market. He also mentioned the expected interest rate rise next year. ‘At present it’s anticipated to rise in the latter part of 2015, and the Bank of England feels this will have little effect on current mortgage holders and first time buyers. However, our research among NAEA members suggests the impending rate rise will influence demand, with 70% of agents already reporting signs of demand dropping. It is likely that the imminent rate rise will continue to affect demand, as well as affordability,’ added Hayward. David Cox, managing director of the Association of Residential Letting Agents (ARLA), explained that supply is also low in the private rented sector. ‘Simply put, we need more houses. Demand continues to outstrip supply. As new homes come on to the market at one end from both foreign investors and landlords in London and South East who are buying up portfolios in the north of the country we’re also seeing accidental landlords leaving the sector at the other end,’ he said. ‘However, even… Continue reading
UK surveyors report a resurgence in remortgage activity
November saw a resurgence in remortgaging activity even as the rest of UK housing market cooled, according to the latest research from Connells Survey and Valuation. Remortgaging was the most robust sector of the housing market and performed well both on a monthly and annual basis. The total number of remortgaging valuations conducted in November increased by 10% compared to October, and by 3% compared to November last year. ‘Remortgaging is defying the rest of the market. With the base rate set to remain low well into 2015, it is clear that this is driving demand,’ said John Bagshaw, corporate services director of Connells Survey & Valuation. ‘Lenders continue to offer even more competitive mortgage rates, while many households are using this opportunity to remortgage and reduce their monthly payments,’ he added. By contrast, the total number of valuations for all purposes fell 5% on an annual basis. This is a considerable improvement from a steeper drop of 10% over the 12 months to October 2014. On a monthly basis property valuations remained static since October. According to the firm November saw a marked shift in sentiment with more lenders and borrowers opting for a tone of caution. ‘Regulatory changes continue to impact other sectors of the market, especially first time buyers with restrictions on lending. On the other hand, the low base rate has powered demand for remortgaging, and to a lesser extent, buy to let,’ explained Bagshaw. ‘While this year the total number of valuations fell by 5% compared to last year, this annual figure compares favourably with historic data and exceeds the number of valuations recorded in November 2012, 2011 and 2010. With so many variables in play it remains to be seen whether this points to a cooling market in 2015 or if this is part of the usual festive seasonal trend,’ he pointed out. Buy to let also performed well compared with the rest of the market. On a monthly basis, the number of buy to let valuations dipped 5% since October and by 1% compared to the previous November. The sector is supported by an array of low LTV products and lenders have become more focused on low risk borrowers, such as landlords who typically have lower LTVs and multiple streams of income, according to the firm. As a proportion, first time buyer valuations now make up under a third of total activity at 28%. In terms of numbers this area of the market was down the most on an annual basis with a fall of 11% and also dipped 7% compared to the previous month. The number of valuations for owner occupiers moving home saw the second fastest annual fall, down 9% compared to November last year. However, on a month on month basis this sector of the market saw no change. ‘Recent policy changes such as loan… Continue reading
