Uk
Economic uncertainty caused by Brexit vote could affect UK property sales temporarily
Rising economic uncertainty over the UK’s membership of the European Union in the run up to a referendum in June could affects sales of property, a new analysis suggests. It will be a lack of clarity that could impact transactions as happened in the run up to the referendum on Scotland remaining a part of the UK in 2014, says the report from international real estate firm Knight Frank but whatever happens the real estate market should be benign. It explains that both transaction volumes and development starts have seen healthy growth since David Cameron’s 2013 referendum pledge, and again following the Conservative Party victory in May last year. ‘Despite the resilience of the market to date, experience from the 2014 Scottish Referendum shows that we ought to expect a slowdown in housing market activity as we get closer to the poll date. The extent of this slowdown is, in reality, guesswork at the current time,’ the report state. ‘One issue we have seen develop in recent weeks is the weakening of the pound. This trend has potential implications for the central London market, where foreign home buyers are more active. If anything the weakening of the pound could provide a short-term boost to demand in the Capital,’ it adds. The analysis explains that there is no doubt that a clear ‘remain’ vote would remove immediate economic uncertainty and market activity might be expected to recover any lost ground relatively rapidly, this was certainly the experience in Scotland following their referendum. However, the prevailing assumption is that a ‘leave’ vote would necessarily require a period of negotiation to settle the UK’s new relationship with the EU. ‘During this period it would be fair to assume that uncertainty would continue to influence investment decisions for businesses and individuals, particularly if the question of Scottish independence is raised again,’ the report points out. ‘While the speed and terms on which this new settlement is made remain unclear, one factor suggests there will be some urgency in the process. With the Irish economy so closely linked with the UK’s the EU will be under pressure to ensure trade for Ireland is maintained. The UK’s bargaining position may also be bolstered by pressure from other organisations and countries like China, with whom the country has strengthening trade ties,’ it adds. But it concludes that it is safe to assume the impact on the UK housing market should be relatively benign whatever the outcome. ‘The mainstream UK housing market is primarily driven by domestic dynamics. An exit from the EU would not affect the demand/supply imbalance which is a key feature underpinning current housing market trends,’ the report says. ‘This imbalance is most noticeable in London and the South-East, where decades of undersupply contribute to the on-going need for a considerable uptick in construction activity,’ it adds. Continue reading
Irish property prices dipped slightly in January but growth set to continue in 2016
Residential property prices in Ireland are up 7.6% year on year but fell by 0.5% in January, according to the latest index figures to be published. The data from the Central Statistics Office shows that the annual growth of almost 8% compares with an increase of 6.6% in December and an increase of 15.5% recorded in the 12 months to January 2015. Month on month, January’s fall of 0.5% compares with an increase of 0.5% recorded in December and a decrease of 1.4% recorded in January of last year. A breakdown of the figures shows that in Dublin property prices decreased by 1.2% in January and were 3.4% higher than a year ago. Dublin house prices decreased by 1.1% in the month and were 3.2% higher compared to a year earlier while apartment prices were 4.8% higher when compared with the same month of 2015. Prices in the rest of Ireland rose by 0.1% in January compared with a decrease of 0.9% in January of last year. Prices were 11.4% higher than in January 2015. But prices are still some way below their peaks in 2007. For example in Dublin prices are 34.9% lower than at their highest level in early 2007. Apartments in Dublin are 41.8% lower than they were in February 2007 while house prices are 36.8% lower than at their highest level in February 2007. Prices in the rest of Ireland are 35.3% lower than their highest level in September 2007 and overall, the national index is 33.8% lower than its highest level in 2007. A lack of supply, particularly in Dublin has been pushing up prices, according to Alan McQuaid of Merrion Stockbrokers, and he expects price growth to be more modest over the next year or two. Investec economist Philip O’Sullivan pointed out that the market has been affected by new mortgage lending rules from the Central Bank introduced in February 2015 which restrict lending multiples and loan to values and he expects prices to keep growing once the impact has lessened. Demand is likely to strengthen and with supply increasing only slowly, prices are expected to pick up as the year progresses, although short term trends are likely to remain weak, according to Dermot O’Leary, chief economist with Goodbody Stockbrokers. Continue reading
Prime property country locations set to outperform London, new analysis suggests
Country locations are set to outperform London as the prime property markets enter the next stage of the housing cycle, according to a new analysis report. Stamp duty changes introduced in the 2014 autumn Statement have had a bigger impact than many forecast, the effect initially being masked by the uncertainty in the run up to the General Election, according to the report from property firm Savills. However, it points out that both the prime housing markets of London and the country have reacted relatively rationally to the changes. Indeed, small price falls were recorded in the higher value markets where the stamp duty liability has increased but by contrast, in the lower value prime markets where there is now a tax saving, values have continued to rise, albeit at a slower rate than in 2014. The challenges faced by the prime markets of late are reflected by the fact that the total value of housing stock in Kensington and Chelsea fell in 2015, though the loss of £693 million is dwarfed by the gains of £68 billion over the preceding 10 years, the report explains. Transaction levels, though undoubtedly lower than in 2014, have not collapsed as some would argue. Figures from the Land Registry indicate a 5 to 10% fall above £1 million across England and Wales. ‘While this suggests there is still a market for appropriately priced stock, it also means we are unlikely to see cuts to rates of stamp duty at the top end,’ said Sophie chick of Savills research team. ‘Indeed, in the 2015 autumn Statement, more stamp duty changes were announced for buyers of additional homes (second homes and buy to let) causing further small price falls in markets with high concentrations of such buyers in the last quarter of last year,’ she explained. Chick pointed out that to understand what lies ahead it is helpful to look back and identify what happened between 2002 and 2005 when the market was at a similar stage in the housing cycle. ‘In prime London, over the three and a half year period from June 2002, prices increased by just 5%. Currently, average values have seen no net growth since the first quarter of 2014, so if the market follows a similar trend we would expect prime London values to remain broadly flat through 2016 and most of 2017,’ she said. ‘Over the same period, prices in the prime country markets outperformed London with an average increase of 17%. We expect a similar trend this time round as the ripple effect took hold and more equity flows to the housing markets beyond London,’ she explained. The analysis shows that in terms of how residential value is concentrated, Kensington and Chelsea sits far ahead of any other borough or local authority across the UK, not just by virtue of high property prices but also the relative density of housing in the borough. The combination of the two means that on average in… Continue reading
