Uk
Residential rental stock falls in UK
The supply of rental housing stock on letting agents’ books in the UK fell in March, to the lowest level since the start of last year, the latest data shows. Demand also dropped in March, according to the March private rental sector report from the Association of Residential Letting Agents (ARLA). ARLA agents had 33 prospective tenants registered per branch on average, down 11% from 37 in February. This stands below the figure recorded in March last year when agents registered 36 on average. Supply has also fallen year on year. In March 2015, the average number of properties managed per branch was 192, which is down 12 per cent this year with just 169 rental properties managed per branch, the lowest level since records began in January 2015. It’s a brighter picture in Scotland, where agents had on average 273 properties on their books, and Yorkshire and Humberside, where 207 properties were recorded on average per branch. In London however, agents had just 122 properties on their books per branch. In March 65% of ARLA agents predicted that current and prospective buy to let landlords will walk away from the market following the April stamp duty changes, causing a decrease in the supply of rental properties. Rent costs rose in March for 32% of tenants and 61% of ARLA members fear they will increase further as a result of the changes, a growing sentiment since last month when 57% of agents agreed on this. ‘We don’t expect falling supply to stop here. The recent stamp duty changes are very likely to cause supply to decrease even further, as landlords withdraw from the market,’ said David Cox, ARLA managing director. ‘Not only do our agents predict that rent costs will increase further, but rental homes may also face a decline in quality over time, as landlords struggle to keep up with maintenance costs alongside the higher stamp duty charge,’ he explained. ‘Whilst landlords adjust to the increase in costs we can expect to see one of three outcomes prevailing in the buy to let market: landlords absorbing the cost and taking the hit; landlords withdrawing from the market causing supply to fall; or landlords regaining those costs through hiking rents. Next month we can start to assess the damage,’ he added. Continue reading
US pending home sales up for 19 months in a row
Pending home sales in the United States increased slightly in March for the second consecutive month and reached their highest level in almost a year, according to the latest index. The Pending Home Sales Index from the National Association of Realtors, a forward looking indicator based on contract signings, increased by 1.4% in March and is now 1.4% above March 2015. It means that after the slight gain, the index has increased year on year for 19 consecutive months and is at its highest reading since May 2015 and Lawrence Yun, NAR chief economist, said it signals a solid beginning to the spring buying season. ‘Despite supply deficiencies in plenty of areas, contract activity was fairly strong in a majority of markets in March. This spring’s surprisingly low mortgage rates are easing some of the affordability pressures potential buyers are experiencing and are taking away some of the sting from home prices that are still rising too fast and above wage growth,’ he explained. He also pointed out that in the short term, the healthy labour market and favourable borrowing costs should lead to sustained buyer demand and a durable pace of sales. However, Yun he believes that the consequences from a failure to construct more single family homes in recent years are starting to impact some top job producing markets, where endless supply shortages continue to limit choices for buyers and are driving up prices beyond what a growing share of households can comfortably afford. ‘Demand is starting to weaken in some areas, particularly in the West, where the median home price has risen an astonishing 38% in the past three years. As a result, pending sales in the region have now declined in four of the last five months and are lower than one year ago for the third month in a row. Closed sales in the region in March were also below last year’s pace,’ Yun said. A breakdown of the figures show that the index in the Northeast increased 3.2% and is now 18.4% above a year ago while in the Midwest the index inched up 0.2% but is now 4% above March 2015. Pending home sales in the South rose 3% but are still 0.6% lower than last March and the index in the West declined 1.8% in March and is now 7.9% below a year ago. Continue reading
Rents in UK edging upward in first quarter of 2016
Rents in the UK, excluding London, increased by 0.8% in the first quarter of 2016 and are 3.9% higher than the first quarter of 2015, the latest index data shows. In Greater London they increased by 1.3% quarter on quarter and are 1.6% higher than a year ago, according to the figures from Rightmove. This takes the average rent in Greater London to £2,021 and in the rest of the UK to £761. The figures also show that rents have seen growth in 2016 compared to a quarterly decline of 1% in London and 0.8% elsewhere in the fourth quarter of 2015. After Greater London the North West was the strongest performing region in the first three months of the year with a rise of 1.1% with the South East and the East of England both falling by 0.1%, though the East of England’s annual increase of 5.9% still sees it outstrip all other regions. The top five growth areas outside of Greater London year on year were Harpenden, Luton, Rushden, Corby and Salford with rents up 14.3%, 12.8%, 12.7% 12.6% and 11.7% respectively, taking averages to £1,217, £828, £619, £585 and £797. The Rightmove data also shows that interest in buy to let properties fell in March, with new purchases from buy to let investors down 27% compared to the same month last year. This reversed the upward trend between December and February which saw a 24% year on year increase in buy to let enquiries. This was probably due to the looming April change in stamp duty which saw a new 3% rate levied on buy to let properties and second homes. ‘This waning of interest definitely seems to predict a slowdown in the buy to let market, but what’s not yet clear is if this will only turn out to be a short term pause. It could be that some investors are waiting until the tax changes have some time to bed in before they review their business and continue to make purchases,’ said Sam Mitchell, Rightmove’s head of lettings . ‘If this removes some of the competition for smaller properties then it could spell good news for many first time buyers with a deposit ready as they may find now is the ideal time to make a move,’ he added. The report suggests that buy to let investors not deterred by the tax changes and looking for the best yields could consider buying in areas in the north such as Durham and Merseyside. The top four locations for best yields are all in these counties, with Peterlee in Durham highest at 9.1%, followed by Bootle in Merseyside at 8.6%. In third place is the neighbouring town of Birkenhead offering a yield of 7.8% and fourth is Stanley in Durham at 7.7%. ‘These areas where you can buy a two bed property for around £60,000 to £70,000 seem to offer a sound investment as long as the demand is there from… Continue reading
