Uk
Prime property sales rise in Italy with prices up in areas popular with overseas buyers
The prime residential property market in Italy has turned a corner with viewings and sales increasing in 2015, new research shows. The weak euro and a growing realisation that prices are at, or close to, their floor has boosted buyer confidence, according to a new analysis from international real estate firm Knight Frank. Across key second home destinations price performance has converged with annual growth ranging from 2.1% in Venice) to a fall of 3% in Sardinia in 2015. The report says that market confidence is strengthening and residential sales increased by 7% in 2015 and the outlook is helped by the fact that Italy’s consumer confidence index is up 39% since its low in 2012. In 2015 the number of enquiries from buyers looking for an Italian property jumped 57% year on year and Tuscany continues to generate the most interest but Liguria and the Italian Lakes from Como to Maggiore are increasingly on buyers’ radar. The report also points out that in the last two years, the Euro has slipped from 0.83 to 0.73 against the pound and from 1.38 to 1.09 against the dollar providing British and US buyers with a strong buying incentive in Italy. A breakdown of the figures shows that in Venice prime property prices increased by 2.1% in 2015 and Dutch, Italian and French buyers are most numerous there, preferring waterside apartments. In Florence, another popular destination for overseas buyers, prices increased by 2% last year and the bulk of buyers are from the UK, Belgium and Canada while prices are also up, by 1.5%, in Liguria which is popular with buyers from Italy, Switzerland and Sweden. Prices increased by 0.2% in the Italian Lakes where all types of properties are sought after by buyers from Italy, the UK and Russia. Prices also increased by 0.3% in Rome with buyers from Italy, Germany and Russia. Elsewhere in places popular with overseas buyers prices fell in 2015, led by a decline of 3% in Sardinia with most buyers coming from Germany, Italy and the UK. They fell by 2% in Umbria which is popular with buyers from the United States, Germany and the UK. Prices fell by 1.9% in Milan where buyers from Italy, China and Egypt opt for apartments. Prices also fell by 1% in Tuscany with buyers from the UK, Germany and the Netherlands also looking for rustic renovations projects as well as apartments and houses. Looking ahead the firm expects prices to stay level. ‘We don’t see immediate rises or substantial drops on the horizon. What we are seeing is a return to the long term trusted locations,’ said Rupert Fawcett, head of Knight Frank’s Italian Department. He explained that at the market’s peak, buyers looked to regions such as Le Marche, and Abruzzo for greater value for money. With prices having dropped across the board since 2009 and now resting at about 30% below their peak, Chianti is back in favour, along with Lucca and… Continue reading
Average rents in Scotland up 2.3% year on year
Average rents in Scotland increased by 2.3% year on year in January but remained static month on month at £548, according to the latest index figures. However, the average figure is being distorted by high increases in some regions such as Edinburgh and the Lothians where rents were up by 6.4%, the buy to let index from lettings agent Your Move shows. Meanwhile, rents in the East of Scotland were 1.7% lower than a year ago and they fell by 0.2% year on year in Glasgow. The index also shows that slower house price growth is hampering landlord returns with a fall of 5.8% in the year to January but arrears have improved with 11.1% tenants late paying, the lowest level since July 2015. Previously, arrears surged over the autumn to reach a record high of 13.8% in October 2015, before beginning to improve. However, tenant’s finances remain in worse shape than 12 months ago. In January 2015 as little as 7.1% of all rent due was late. A breakdown of the figures show that in January 2016, rents in Edinburgh and the Lothians were 6.4% or £38 higher than a year ago, the fastest annual rent rise on record. This is nearly three times quicker than average rent growth across the whole of Scotland. On average, across Scotland as a whole rents climbed 2.3% in the 12 months to January 2016, equal to £12 in absolute terms. This is only slightly faster than 2.2% in the 12 months from December, though represents an annual acceleration compared to the 1.3% annual lift recorded in January 2015. ‘In different parts of Scotland, powerful interplays between supply and demand are shaping the regional rent patterns that are emerging. In popular cities like Edinburgh where the jobs market is hottest the competition to find homes means tenants have to act quickly. As a result, we’re seeing exceptional rent growth in some parts of the country while in others, lettings market activity is much calmer,’ said Brian Moran, lettings director at Your Move Scotland. ‘However there’s also another ingredient added to the mix now. The private rented sector is in a state of uncertainty, as landlords wait with baited breath while the Private Tenancies Bill progresses through the Scottish Parliament. Nervous landlords may be acting now before their hands are tied, and they lose control of the rent they can charge. This could have prevented a seasonal dip between January and December instead of the steady picture we have seen,’ he explained. ‘Encouragingly, the latest rent rises are underpinned by good news. We should also be looking at tenants’ bottom line. Arrears are falling which speaks volumes for affordability right now. With rents below their price peak, many tenants have been seizing the opportunity to move out of season, while good deals are available,’ he added. On a regional basis three of the five regions of… Continue reading
Maligned banking practice could help rebalance UK mortgage market, study suggests
Securitisation, where investors buy pools of debt from banks as secured assets, has enabled mortgage lenders in the UK to offer an increased number of lower risk, long term fixed rate mortgages, it is claimed. Securitisation was originally intended to free up funding for banks, allowing them to sell packages of mortgage loans and lend out the proceeds to more customers. Those loans could then be sold on, and the cycle could start again. The process was also intended to reduce risks for banks by spreading the ownership of mortgages and other loans among other investors but it came under scrutiny during the global economic downturn and used less frequently as a result. However, a new study of long term market trends by Dr Alla Koblyakova and Professor Michael White, of Nottingham Trent University’s Real Estate Economics and Investment Research Group, has found that 78% of mortgages sold as securities over a nine year period were held in longer term fixed rate contracts. ‘This is an important finding as it shows that securitisation not only increases liquidity in the market but has the potential to shift consumer mortgage choices toward long-term fixed rate mortgage debt,’ said Koblyakova. ‘In a market like the United Kingdom’s, where around 80% of residential mortgage debt is held in higher risk variable rate or short term fixed rate contracts, this is a very welcome finding,’ he claimed. ‘A high level of variable debt is seen as a source of economic instability. Policymakers may wish, therefore, to consider the potentially beneficial role that securitisation can play in helping balance the UK mortgage market,’ he added. According to the study variable rate and short term fixed rate mortgages are more risky for borrowers as they leave them more vulnerable to financial shocks, such as interest rate increases. By contrast, longer term fixed rate deals protect borrowers from such increases, but leave lenders more exposed to these risks. Koblyakova believes lenders may be more inclined to offer longer term fixed rate mortgages to borrowers when these mortgages are sold on as securities because this reduces the lenders’ exposure to risk. The study also found that variable rate mortgages were more profitable for lenders than long term fixed rate mortgages by as much as 1.6%. For every 1% of profit a mortgage lender makes from a variable rate mortgage, the market share of variable rate mortgages increases by 18%. This is despite the data also suggesting that consumers prefer to take out longer term fixed rate products. ‘According to this data, larger profit margins for variable rate mortgage products positively influences demand. These findings are very important, and should stand as a call for action for policymakers, as they show that UK households may be faced with greater payment shocks because of the strategies of lenders,’ Koblyakova concluded. White pointed out that the regulation… Continue reading
