Uk
Index report shows Swiss property markets provided strong growth for investors in 2015
Switzerland’s property markets are currently providing strong growth for investors with the latest data showing total returns of 6.6% in 2015. This was up from 5.2% in 2014, which the index report from investment support tools firm MSCI says reflects continued strong growth in the Swiss properties sector. It also says that the strength of Swiss property market signals that the sector benefited from the Swiss National Bank’s (SNB) move last year to scrap the franc’s peg to the euro and lower interest rates. The figures showed that government bond yields and property yields both declined in 2015 from 2014, to -0.04 from 0.38%, and to 4.4% from 4.8%, respectively. The spread between the government yield bonds and property yields increased to 4.45% in 2015 from 4.4% the year before. The strong total return was fuelled by robust capital value growth, which rose to 2.4% from 1% in 2014. This capital value growth marks the second highest growth in the three, five and 10 year average. Residential properties remained the strongest sector in 2015, representing 47% of the measured universe in the index. Total return in this segment rose to 8.4% from 6.1% from the year before. The capital value growth in residential properties reached 4.1, marking the best performance since the index began. Moreover, office property returns recovered in 2015, achieving total return of 5.0%, compared to 4.2% in 2014. However, office property total returns remained below the five year average of 5.1%, and the 10 year average of 5.8%. Across the different sectors, rental growth weakened slightly. Net income return dropped to 4.1%, from 4.3% in 2014. ‘The Swiss property market enjoyed another robust year as the market continues to attract capital. The strong capital growth is a result of increased yield compression following investor demand. This is especially true for the major cities of Switzerland, such as Zurich, Bern, Basel or Geneva,’ said Justus Vollrath, MSCI executive director. ‘What’s particularly interesting is that the move by Swiss central bank to unpeg the Swiss franc and lower interest rates led to slight widening of spreads between government bond yields and property yields. This created an additional incentive for investors,’ he explained. ‘We also see that the residential market showed particular resilience and enjoyed exceptionally strong capital value growth,’ he added. Continue reading
Views sought on UK Government’s Starter Home regulation
The UK government is seeking views on regulations surrounding its flagship Starter Home programme in England and has issued a consultation document. Under the regulations, which will form part of the Housing and Planning Bill, the government plans to allow build to rent developers to build Starter Homes off-site. ‘We propose that private rented sector developments could contribute to starter home provision and the requirement should be met through an offsite contribution for delivery of starter homes,’ the consultation document says. Overall it proposes a new statutory framework for Starter Homes that will include a general duty on local planning authorities to promote the supply of Starter Homes when carrying out their planning functions. The Bill would include a clause that sets a Starter Home requirement which means that local planning authorities may only grant planning permission for residential developments if the Starter Homes requirement is met. There would be reporting arrangements to ensure local communities, and especially first time buyers, are aware of what action local planning authorities are taking to support the delivery of starter home; and powers for the Secretary of State to intervene if local planning authorities fail to carry out their functions related to Starter Homes. ‘We are taking forward ambitious measures to increase the supply of housing and improve prospects of home ownership for many. We aim to deliver one million new homes to boost housing supply significantly. We want to ensure young people are not denied that which their parents took for granted, the opportunity to buy their own home, settle down and enjoy the security that home ownership brings,’ said Housing and Planning Minister Brandon Lewis. ‘That is why we have committed to building 200,000 high quality Starter Homes exclusively for young first time buyers under 40, to be sold at a minimum of 20% below the open market value. We want to see Starter Homes built on housing sites across the country,’ he explained. ‘The Housing and Planning Bill sets out the statutory framework for the delivery of Starter Homes, and will be supported by changes to national planning policy,’ he pointed out. The Government has already announced a £2.3 billion funding package to support the delivery of up to 60,000 Starter Homes. Of this funding £1.2 billion will, in the first instance, be made available to remediate or assemble brownfield land to deliver at least 30,000 Starter Homes through the Starter Homes Land Fund. The technical consultation document seeks views on the details for the regulations to be made under powers contained in the Housing and Planning Bill, including options for the Starter Homes requirement on reasonably sized sites. ‘We want to hear views so the resulting regulations are feasible, proportionate and effective. I am confident that these reforms will help a generation of young people into home ownership,’ Lewis added. The British Property Federation has been calling for build to rent developments to be exempt from providing an on-site Starter Home provision throughout the… Continue reading
Nonstandard UK home borrowers now more likely to get a loan
More mortgage borrowers are seeing their applications for mortgage loans given the green light as new products emerge to support ‘non-standard’ circumstances, according to new research. Some 26% of brokers reported having no problems sourcing a mortgage for any type of borrower in the second half of 2015, the highest proportion in the post Mortgage Market Review (MMR) era, and a clear sign of improving lending conditions. According to the Intermediary Mortgage Lenders Association (IMLA) report it represents a significant jump from the proportion of brokers experiencing no problems both in the first half of 2015 when it was 15% and the second half of 2014 when it was 16%. However, some areas beyond the ‘mainstream’ mortgage market have been less well-served since 2008/2009, with new regulations introduced to govern lending criteria and fewer products on offer tailored to meet the needs of smaller and less mainstream consumer segments. This includes products to support borrowers seeking lending into retirement, products designed for borrowers with past adverse credit records, and those tailored for self-employed borrowers or those with irregular incomes. However, the IMLA’s research shows fewer brokers are now experiencing problems with sourcing a mortgage for clients in all of these areas, with the most significant improvement seen in sourcing loans for interest only borrowers. The proportion of brokers having difficulties helping this type of client has fallen 15 percentage points year on year to 39%. Similarly, the proportion of brokers unable to source a mortgage for ‘lending into retirement’ borrowers has dropped seven percentage points to 43%. The picture has also improved for self-employed borrowers, with just 40% of brokers reporting problems over the last six months, down six percentage points from a year ago. The most common circumstances where brokers were unable to source mortgages in the second half of 2015 continue to be adverse credit at 46%, lending into retirement at 43%, self-employed at 40% and interest only borrowers at 39% although in each case, the picture has improved. The report points out that these product types are becoming increasingly important, in context of the changing UK demographic. More first time buyers are taking out mortgages with longer terms to spread out their repayments, with 60% now opting for terms that last more than 25 years, meaning more borrowers could be left paying off their debt in retirement. Meanwhile the trend towards more working flexibility alongside sluggish wage growth has boosted self-employment levels in the UK, and 15% of the workforce are now self-employed. Looking ahead, both lenders and brokers identify first time buyers as the market area with the best overall growth prospects for 2016, ahead of other segments. However, when asked about the prospects for product availability, IMLA’s research suggests further improvements could be on their way for other borrower types. More than half of lenders forecast an improvement in mortgage availability for retirement borrowers, near prime borrowers, those who are self-employed or with irregular incomes, and interest… Continue reading
