Uk
Rising demand and falling supply boosts recovery of Portuguese property market
Solid demand and falling supply is helping the recovery of the residential property market in Portugal as price rises are seen across all regions. However, new sales instructions have fallen at a time when demand is growing and there has been a modest upturn in rental values, according to the August 2015 RICS/Ci Portuguese Housing Market Survey. The report shows the imbalance between rising buyer enquiries and falling new sales listings continues to underpin a steady increase in house prices. Likewise, in the lettings market, solid tenant demand growth has pushed rents up marginally although a relatively flat trend is still projected in the near term. In the sales market, new buyer demand rose again month on month, with the pace of increase edging up gently relative to the previous month. At the same time, new instructions to sell dropped back modestly for the first time since December 2014. Despite the solid demand backdrop, sales volumes only recorded the most marginal of increases. Nevertheless, going forward, transactions are expected to pick up at a smart pace in the near term. The report explains that with demand outstripping supply, house prices continued to recover across all regions. What’s more, the latest data suggest the rate of house price inflation accelerated across each market during August. Overall, respondents to the survey remain confident that prices will rise further over the next quarter and the next 12 months. Indeed, over the year ahead, contributors forecast national prices will increase by around 3% and on average by roughly 5% per annum over the next five years. Meanwhile, the national confidence indicator, a composite indicator of three month sales and price expectations, rose to +32 from +28 previously, extending its run in positive territory into a twenty second consecutive month. In the lettings market, tenant demand increased sharply alongside a steep fall in new landlord instructions. Consequently, rents inched up again following last month’s marginal increase. Notwithstanding this, rents are expected to hold broadly stable in the near term, although expectations for future lettings market activity strengthened notably. ‘In August, the Algarve benefited from strong demand and price dynamics, showing greater improvement in the results compared to Lisbon and Oporto regions in some Algarve cities, there is already a lack of new houses to sell at a time when demand is expected to remain high,’ said Ricardo Guimarães, director of Ci. According to Simon Rubinsohn, Royal Institution of Chartered Surveyors chief economist, employment growth has been encouraging over the past year, driving an increasingly widespread revival in housing market activity. ‘Nonetheless, the labour market recovery still has a way to go and sustained progress is needed to underpin the residential property sector going forward,’ he added. Continue reading
Most UK landlords won’t use pension freedoms to invest in property
The majority of landlords in the UK don’t plan to take advantage of pension freedoms to invest in property, according to new research. Of those with a pension in place, just 5% are planning on withdrawing a lump sum to invest or expand their portfolio, the research from the National Landlords Association (NLA) shows. It also found that 14% of landlords would consider using a lump sum to invest in further properties, while 11% said they didn’t have enough of a pension to withdraw a lump sum at all, 7% already had other plans for withdrawing a lump sum and 19% were undecided. The research from the NLA, which asked landlords about their plans at retirement, also found that 3% plan to sell up completely, 19% have no retirement provisions in place and 25% plan to sell at least some properties. On top of this some 61% plan to live off portfolio income at retirement and 34% are undecided and will assess the market when they reach retirement age. ‘There has been a lot of talk around pensions being used to invest in buy to let since the announcement on pension freedoms was made last year. While the changes may be attractive to those considering a move into buy to let, it’s clearly not that popular an option for landlords,’ said Carolyn Uphill, chairman of the NLA. ‘Those currently in the market already have an asset to use if they want to expand, their property, and therefore, depending on circumstance, will have the means to put a lump sum towards other investments or plans; that is if they want to withdraw it at all,’ she explained. ‘The NLA offers invaluable advice, guidance and support for both existing and new landlords to help ensure the smooth and successful running of a letting business. It would be advisable for anyone considering or already planning on using a lump sum from their pension for investment in buy to let to look into how the NLA can help,’ she added. Continue reading
Gap between house prices in London and major UK cities widens
The gap between house prices in London and other major regional cities in the UK is at its widest for 20 years, according to the latest house price index. Prices in London experienced 4.6% growth in the three months to August and a 10% increase in the last 12 months, according to the cities house price index from Hometrack Overall city level house price inflation is running at 8.3% up from 6.6% in May. A similar expansion has been recorded in sales volumes which has translated into higher prices across UK cities, the report says. The highest rate of growth is in Cambridge at 11.2% and lowest in Aberdeen where prices have fallen by 2% due to the weakness in the oil price affecting the demand for housing. Compared to a year ago house price inflation has increased in five cities led by Edinburgh and Glasgow where growth is running at 9% and 5.3% respectively ‘City level house prices continue to increase as demand for housing grows in the face of constrained supply,’ said Richard Donnell, director of research at Hometrack. ‘A changing mix of buyers is compounding the scarcity of housing for sale with rising numbers of first time buyers and investors buying property while having nothing to sell. Only a recovery in the number of moves amongst existing home owners or an increase in new supply will ease the current housing scarcity which seems unlikely in the near term,’ he pointed out. ‘The gap between house prices in London and other major regional cities is at its widest level for 20 years. This highlights a seemingly over valued London market, on a price/earnings basis, and the prospect of further price growth to come in the large regional UK cities,’ explained Donnell. ‘London’s price earnings ratio is at an all-time high while there remains value in most other regional cities. The pricing differential to London could well assist city regions attract new investment as the cost of housing starts to influence decision making for both households and businesses,’ he added. Continue reading
