TSI
UK asking prices down apart from in Scotland, latest index shows
Asking prices have fallen across the UK apart from Scotland, month on month, according to the latest data from the Home.co.uk index, but are expected to growth by 7% in 2015. Prices fell 0.7% overall in England and Wales during the last month and that means annual growth dropped to 7.6% while Scotland saw asking prices go up by 0.3%. Looking at annual asking price growth, most of it was in London and the South. Indeed, Greater London experienced growth of 15.9% over the last 12 months. The data also shows that supply in the capital region has risen considerably since last year, up by 39%, and according to Doug Shephard, the firm’s director this will serve to attenuate price rises in 2015. ‘Looking ahead, we anticipate that 2015 will be a more consistent year for UK property prices than 2014,’ he said but pointed out that with the prime central London market showing signs of slowing down average prices are likely to rise less quickly next year. ‘Record low mortgage rates will stoke demand whilst record prices in London and the South East will encourage more potential vendors to cash in. Hence, both supply and demand is expected to rise, thereby increasing the volume of the sales market towards more normal levels,’ he explained. Prices are predicted to rise 7% overall in 2015 and most pronounced in the South, especially the South East and East Anglia, although the northern markets will continue to improve, albeit slowly. The report also suggests that price rises will be less pronounced in London than they were in 2014, rising by around 10% and the supply of property for sale will increase by around 25% over the course of 2015. ‘East Anglia and the South East look set to be the leading regional markets next year owing to their much improved marketing times. Supply of property for sale remains low historically in these regions and this will keep prices on an upward trajectory, although we do anticipate market volume to steadily increase over the course of 2015,’ said Shephard. ‘The East Midlands also looks primed for a good year ahead. We expect above average price growth and lower marketing times in 2015. Looking further afield, the North of England property market, hampered by employment problems and austerity measures, will continue to improve slowly, as will Wales,’ he pointed out. ‘Across in the South West and West Midlands, further market improvements are to be expected, but growth there is likely to be slightly lower than the national average,’ he added. However he also pointed out that these predictions are based on there being no change in interest rates. ‘Should there be even a small rise in the Bank of England base rate, market sentiment would be severely dampened. A more dramatic hike of 1% would likely bring down price growth to zero for 2015,’ he concluded. Continue reading
Lenders offering more deals to UK residential property developers, new survey finds
Lenders to residential developers in the UK are taking on more risk as property markets stabilise after the financial crash, a survey of more than 50 major institutions has found. The respondents, which include a mix of banks, institutional investors and private equity funds, are increasingly funding schemes outside London, plan to grow their loan books over the next year and are more open to planning risks and higher loan to value lending. The findings of Knight Frank’s latest survey marks another step on the return to a more liquid lending environment following the financial crisis, when banks retreated from the sector. It points out that the UK economy is tentatively returning to health and the prospect of a normalised interest rate environment. In September, the Office for National Statistics said the country’s economy was 2.7% larger in the second quarter of the year compared to its pre-crisis peak. ‘This was reflected in the number of lenders who intend to grow their loan books over the next year, with the figure rising to 78% in the third quarter of 2014 against 75% in the third quarter of 2013. Furthermore, the amount of respondents that would consider a scheme with planning risk increased to 60% from 50% last year,’ the report says. ‘However, there is no sign banks are returning to the years of higher risk lending that preceded the financial crash and they are joined by other lenders including hedge funds and other institutions that are attracted by relatively high returns in a world of low yielding assets,’ it adds. It points out that this increased competition has forced down the cost of debt. Indeed, some 36% of respondents said they had reduced their pricing as a result of this increased competition while more than a quarter said they were prepared to take on more planning risk or boost the loan to gross development value ratio. However, as more lenders enter the market following the retreat of the banks, some are struggling to lend in sufficient quantity or at the returns of about 13% that they envisaged. As a result, many so-called alternative lenders, who planned to offer higher yielding mezzanine finance, have been forced to provide senior debt. As these lines blur, with High Street increasingly open to mezzanine finance and specialist funds providing senior debt, and Peter MacAllan at Knight Frank Finance warned the lending market could not become much more crowded after the transformation it underwent following the financial crisis that brought a range of new entrants. ‘I have a feeling we are reaching saturation point. There are too many lenders chasing the same deals,’ he explained. The report also points out that the sustainability of house price inflation is a concern for lenders, particularly in London, despite recent signs of moderation. Some 83% said they would consider schemes in zone 1 of London while 89% said they would consider zone 2 and beyond. That compares to 97% who would consider schemes… Continue reading
Most UK regions see strong annual rental market growth
Nine out of 12 UK regions saw rental price rise in November compared to the same month last year, according to the latest rental index. However on a month on month basis there was the traditional autumn with nine out of 12 regions recording lower rental prices compared to October 2014, the findings from the Home Let index shows. It means that the average monthly private rent in the UK is £874 per month or £702 excluding London and Scotland saw strong rental price growth with an 8.7% increase in November 2014 compared to the previous month and 11.7% up on the same month last year. Overall the regions that have experienced the highest growth compared to this time last year include Scotland, Greater London, and the West Midlands, with rental prices 11.7%, 11% and 8.7% higher than this time last year, respectively. Regarding the autumn dip, with the exception of Scotland, the East Midlands and the South West all saw lower rental prices in November than in October. Scotland recorded a monthly increase in rental prices of 8.7% with the East Midlands and the South West recording monthly increases of 1.5% and 1.4% respectively. The index report says that the recent dip in prices reflects typical seasonal movement in the rental market and sits within the context of a market that remains strong. Annually, only three regions of the UK recorded lower rental prices in November 2014 compared to the same month last year. The North West dropped 3.6%, the North East fell by 2.5% and Wales was down 2%. ‘We see the autumn’s moderation in rental growth as broadly in line with the typical seasonal effect that often sees rental prices balance or even slip into reverse in many areas of the country at this time of year,’ said Martin Totty, chief executive officer of the Barbon Insurance Group of which Home Let is part. ‘The outlook for the private rented sector remains positive for several reasons, the pace of house building is unlikely to have a significant effect on the supply of property to buy or to rent in the short term, high house prices, and a mortgage market where lending criteria remains constrained, are combining to ensure that the demand from tenants needing rented accommodation remains strong,’ he explained. ‘In terms of seasonal highs we see Scotland bucking the trend of the rest of the country, the rapid growth in the Scottish rentals market reflects the strength of the economy north of the border, particularly in oil-rich Aberdeen, which has a thriving rentals sector, but also in other Scottish cities and throughout the country,’ he added. Continue reading
