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Portuguese residential property market recovery ongoing
The residential real estate market in Portugal is seeing an ongoing steady recovery in prices, supported by rising demand and increasingly strong growth in sales activity, according to the latest index. While the lettings market has seen rents stable for a fourth month in succession following years of persistent decline, the index survey from the Royal Institution of Chartered Surveyors (RICS) and Confidencial Imobiliário shows. The data also shows that new buyer interest continued to rise at a firm pace across all regional markets, with growth particularly pronounced in Porto during June. But the market is still open to the weakness of the euro zone, particularly Greece. At the same time, newly agreed sales increased at the sharpest monthly pace since the survey was launched back in 2010, and have now risen continuously for around a year and a half. Going forward, sales expectations are pointing to further robust growth in the near term, even if the net balance eased slightly from the record high set in May. Given the sustained improvement in both enquiries and sales, prices continued to recover for a sixth month in succession, the index report explains. It also points out that the pace of house price growth accelerated a notch, driven primarily by the strong gains posted in Lisbon and looking ahead, near term price expectations continue to point to a stronger pick-up on the horizon. Over the next 12 months, respondents are now anticipating prices will rise by 2.7% at the national level. Again, the strongest recovery is anticipated to come in Lisbon and the Algarve at around 3%, while projections are for 2% growth in Porto. The national confidence indicator, an amalgamation of near term price and sales expectations, now stands at +36 equalling the third highest reading on record, despite easing compared to May’s exceptionally strong result. In the lettings market, solid growth in demand continues to be met with a decline in the number of new listings by landlords. As a result, rents remained more or less unchanged for a fourth consecutive month, while expectations suggest a further period of stability lies ahead. ‘It is important to see the Portuguese market’s resilience in the face of the uncertainty caused by the Greek crisis,’ said Ricardo Guimarães, Director of Ci. ‘Risks were highlighted by the agents but, nevertheless, activity indicators remained clearly positive, regarding both sales and prices. This was a critical test for the market, reinforcing its potential,’ he added. RICS chief economist, Simon Rubinsohn, believes that the recovery in sales market activity appears to be gathering momentum, driven by improving economic fundamentals and rising confidence. ‘However, significant risks remain within the euro area which could damage sentiment if a resolution is not found,’ he warned. Continue reading
UK property prices down slightly between June and July, says latest index
Residential property prices in the UK fell slightly by 0.6% between June and July and annual house price growth has slowed to 7.9%, according to the latest monthly index from the Halifax. It shows the fragility of the housing market recovery as different lenders show prices rising and falling, but only by marginal amounts so there is some stability in the housing market. Just a few days the Nationwide reported in its monthly index data that prices increased by 0.4% in July and annual property price growth edged up to 3.5%. Meanwhile one set of data said that prime property prices in central London are still falling and another showed a slight rise. Both the Halifax and the Nationwide show that the average home price is now nudging £200,000. Today’s data from the Halifax put it at £198,883. The Halifax index also shows that sales increased by 5% between May and June. Confidence in the outlook for house price growth remains substantially higher than at the beginning of 2015, according to Stephen Noakes, managing director of retail customer products at the Halifax. He believes that the market is robust, pointing out that house prices in the three months to July were 2.4% higher than in the previous quarter. However, this measure of the underlying rate of house price growth has eased and annual house price growth also declined, to 7.9% from 9.6% in June and is at its lowest since December 2014. ‘The underlying pace of house price growth remains robust notwithstanding the easing in July. Continuing economic recovery, earnings growth in excess of consumer price inflation and very low mortgage rates all underpin housing demand,’ said Noakes. ‘Supply is highly restricted with the stock of homes available for sale falling further to new record lows. This combination of well supported demand and tight supply is likely to ensure that house price growth remains relatively strong in the near term,’ he added. He also pointed out that the Halifax housing market confidence tracker shows that confidence in the outlook for house price growth hit its highest level in four years following the general election in May, but dropped back in June. Price Optimism (HPO) hit +68 in May 2015, and although it slipped back slightly in June to +64, it remains substantially higher than at the beginning of 2015 when it was +52. Jonathan Samuels, chief executive of Dragonfly Property Finance, pointed out that despite the fall in prices during July, house prices overall are still rising. ‘The dominant narrative within the UK property market continues to be weak supply and strong demand,’ he said. He explained that demand is strong because of mortgage rates being at record lows, more people in work, low inflation and a generally positive economic outlook, however, the increasing likelihood of an interest rate rise in the not too distant future has the potential to recalibrate demand and the market as a whole. ‘After so many years of 0.5% rates, even a… Continue reading
Small developers could be hindered by UK court ruling on affordable homes
The UK courts have delivered a blow to small residential developers, potentially making schemes of up to 10 homes economically unviable, according to legal experts. The decision, which concerns the exemption small residential developers have previously had from contributions towards affordable housing, will particularly affect urban residential development and small rural sites, according to law firm Coffin Mew. The exemption was introduced by the government to encourage residential developers to bring forward smaller housing schemes and to redevelop compact urban and rural spaces to help meet the chronic housing shortage. However, two local authorities, Reading and West Berkshire, have successfully challenged this exemption, arguing that it would have a negative effect on affordable housing numbers. ‘This decision is a major blow for smaller residential developers looking to bring forward schemes in urban environments,’ said Nick Leavey, partner and head of commercial property at law firm Coffin Mew. ‘The economic viability of small schemes is often on a knife edge, and this decision is likely to pull the rug from underneath those difficult to develop sites. It is also likely to have a negative effect on land values for future deals, exacerbating the housing crisis in the South East further. Nobody wins from this decision,’ he added. Meanwhile, real estate industry in the UK has seen an 11% growth in jobs due to the recovery in the property market. Jobsite Indeed research found that opportunities for trainee estate agents, quantity surveyors and property managers are among the top five. London, Manchester and Birmingham top the list for vacancies. Also, the number of people actively looking for careers in this industry has increased 10% since 2014, which the firm says suggests that job seekers are starting to realise the potential within this market. ‘The return of positive conditions in the UK housing market for both buyers and sellers, suggest it’s prime time for job seekers in this sector to take advantage of such opportunities,’ said Gerard Murnaghan, Indeed’s vice president for the EMEA region. Continue reading
