Investment
Prime property rents in Home Counties in UK fell at end of 2015
Rents in the prime country house market in the UK’s Home Counties fell by 0.3% in the final three months of 2015 but were up 4.3% year on year, the latest index data shows. It follows a 0.8% drop the previous quarter but overall higher stock levels have ensured greater flexibility from landlords on rents, tipping the balance in the favour of the tenant, according to the prime country index from Knight Frank. It points out that in 2015 landlords looked to keep void periods to a minimum and remain competitive while agents noted that the number of properties available to rent across the Home Counties has been steadily rising over the last year. The report reveals that an increasing number of owner occupiers have been entering the prime rental market as higher tax burdens are felt by potential buyers. The data also shows that that the number of individuals registering their interest in renting in the Home Counties between October and December was up by 10% year on year and the total number of viewings conducted was up by 22% over the same time. As ever demand from individuals relocating for work, both locally and from overseas, continued to form a significant proportion of the market in the fourth quarter with a number of move-ins scheduled for early 2016, especially in the prime commuter hotspots of Ascot, Cobham and Esher. In 2015, around 40% of Knight Frank tenants in the Home Counties were from overseas, led by Europeans who accounted for 14% of all tenancies agreed and North Americans who accounted for 13% of all tenancies agreed over the period. Demand has generally come from professional couples and families, looking for flats and small houses. In the super prime market, for properties above £15,000 per month, larger budget tenants have been less active. Continue reading
Parking spaces with new properties in London can cost an extra 13%
Less than a fifth of new build properties in London include a parking space in the purchase price, compared to 67% for other major cities, new research has found. And this may because they are unaffordable as a parking space with a new home in London adds to the price for a buyer, which can be up to 13% on the price of the property. However, it appears that restrictions from developers often mean only those purchasing two or more bedroom properties even have the option of buying a parking space. The research from Direct Line’s SELECT Premier Insurance suggests that developers are charging an average of 5% of a new property’s purchase price for an accompanying parking space. It gives as an example a parking bay to accompany a new build property in London’s Battersea was being sold for £65,000, some 13% of the property’s £500,000 listed purchase price. In London, researchers found parking spaces were only available and included in the purchase price of a new property 18% yet in major cities outside London including Leeds, Glasgow and Bristol, parking spaces were included in the purchase price of a new property 67% of the time. Restrictions on building parking spaces for new properties mean they have become a desirable commodity. In many cases, developers were found to impose controls even within new build developments, only allowing buyers of large or expensive properties to purchase a parking bay. A new wharf development in Hammersmith for example, only allows parking spaces to be purchased for properties valued at over £1.5 million, while developers in areas of London such as Stratford, Ealing, Greenwich, Elephant and Castle and Wembley Park are restricting spaces in new developments to those buying a property with at least two bedrooms. The same practice is also applied in cities such as Leeds and Nottingham. Where parking spaces cannot be purchased, some developers offer annual permits to rent out parking bays. Spaces in Brixton accompanying new build apartments costing £577,000 were available for just £104 a year, whereas in Bristol, a parking permit to accompany a £425,000 property was available for £1,400. There are huge variations even within cities, in Brighton’s Marina Village a permit for a £775,000 property clocked in at £250 while elsewhere in the City a space accompanying a £410,000 apartment costs £1,000 a year. ‘Restrictions on the number of parking spaces developers can build to accompany new properties make these slots a hot commodity carrying a premium price point. In many new developments, those purchasing studios or one bedroom homes are denied the opportunity to purchase a space as they are reserved for larger properties,’ said Nick Brabham, head of SELECT Premier Insurance. ‘As larger scale residential developments are built in urban city centres, traffic volumes will become an increasing issue and planners may restrict the construction of new parking bays even further, making it very difficult for homeowners with vehicles,’ he explained. Access… Continue reading
Sales in US up strongly, but aided by transaction carryover
Existing home sales in the United States increased again in December after seeing some months of dwindling transactions and were up 14.7% compared to November. But the data from the National Association of Realtors includes a carryover of delayed transactions from November into December as a result of the Know Before You Owe initiative. However the existing homes sales index shows a rise in sales in all four major regions, led by the South and West and transactions are now up 7.7% year on year. It means that 2015 was the best year of existing home sales at 5.26 million since 2006 when it was 6.48 million. ‘While the carryover of November's delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015,’ said Lawrence Yun, NAR chief economist. ‘Additionally, the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year,’ he added. Prices are also rising. The median existing home price for all housing types in December was $224,100, up 7.6% from December 2014, the 46th consecutive month of year on year gains. The data also shows that total housing inventory at the end of December dropped 12.3% to 1.79 million existing homes available for sale, and is now 3.8% lower than a year ago. Unsold inventory is at a 3.9 month supply at the current sales pace, down from 5.1 months in November and the lowest since January 2005 when it was 3.6 months. ‘Although some growth is expected, the housing market will struggle in 2016 to replicate last year's 7% increase in sales. In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas,’ Yun explained. The share of first time buyers was at 32% in December, matching the highest share since August, up from 30% in November and 29% a year ago. First time buyers in all of 2015 represented an average of 30%, up from 29% in both 2014 and 2013. A separate NAR survey from the NAR revealed that the annual share of first time buyers in 2015 was at its lowest level in nearly three decades. ‘First time buyers were for the most part held back once again in 2015 by rising rents and home prices, competition from vacation and investment buyers and supply shortages,’ said Yun. ‘While these headwinds show little signs of abating, the cumulative effect of strong job growth in recent years and young renters' overwhelming interest to own a home should lead to a modest uptick in first time buyer activity in 2016,’ he explained. All-cash sales were 24% of sales in December, down from 27% in November and are down from 26% a year ago. Individual… Continue reading
