Investment
Prime central London sales down 14% year on year
Sales levels across the prime central London property market have fallen by 14% year on year from the third quarter of 2014 but the rate of change is slowing, according to a new report. The regular analysis report from W.A. Ellis points out that the annual rate of change is an improvement from the first quarter when transactions were falling at an annual rate 27%. It also shows that the average price paid per square foot across the prime central London sector now sits at £1,832 up by 1.4% over the third quarter of 2014. However, the very top of the market over £5 million has already witnessed the greatest correction in prices with flats and houses being sold for 11.5% less per square foot than in the third quarter of 2014. ‘It would appear that the bubble may already have burst in prime central London but the effect is not as decimating as reports from UBS and Deutsche bank suggest. The government’s intervention in December 2014 by raising Stamp Duty has indeed cooled the very top of the market and the continuous upward spiral has been halted,’ said Richard Barber, the firm’s director. He pointed out that 36% of all properties currently on the market across the sector are now being marketed at a lower price than they were originally listed at, with the average reduction in price being 8.5% of the original asking price. ‘Continuous capital growth in any market is an unrealistic expectation. However, we believe that the correction has already happened and the above statistics bear this out. Whilst there continues to be pessimistic outlooks on the market supported by strong economic arguments, market activity suggests a different story,’ Barber explained. ‘Affordability will undoubtedly remain the key issue within prime central London but news that the population of the UK is likely to grow by 4.4 million in the next 10 years, will undoubtedly impact on both the letting and sales market. This unprecedented level of population growth will prove to be a continuing factor within the supply and demand chain’ he added. Meanwhile, in the lettings sector the report says that the short term outlook for the rental market is looking positive as supply continues to outgrow demand over the next few years. Across Greater London, the firm predicts rental values will increase by 5% in the next year and by 21.7% over the next five years to the end of 2020. Within prime central London, the firm predicts a rise of 3.5% over the coming year, with a slightly more modest prediction of 15.9% over the next five years, which Lucy Morton, head of residential agency at JLL Kensington says still represents a very healthy growth in rental values. ‘This outlook is particularly pleasing given that rental growth over the past two to three years has been minimal… Continue reading
UK property prices set to rise by over 4% next year
Overall UK house prices are expected to tie by 4.1% in 2016 and by 20.3% cumulatively in the five years to the end of 2020, according to new research. However, as always national average performance disguises large regional variations that still characterise the UK market, the analysis report from international real estate firm Knight Frank shows. In the prime London and prime country markets higher transaction costs will continue to weigh on activity and price growth in 2016 as the market absorbs stamp duty, it points out and prime central London prices are forecast to rise by 2% in 2016 and by 20.5% cumulatively by 2020. Overall, values are growing more strongly in the South of England, particularly London and the South East, compared to slower growth in the North of England, Scotland and Wales. ‘These regional differences are unlikely to unwind significantly in 2016, although the improving economic and employment picture, especially in the regions, will underpin pricing,’ the report says. It also explains that interest rates continue to play a key role in the market. ‘While capital values will continue to be supported by ultra-low interest rates, the discussion has now turned to when, not if, the Bank of England will start to raise rates and markets are pricing in a rise in the second half of 2016,’ it adds. The report also points out that current ultra-low base rate, alongside an increased appetite for lending among banks, has led to record low mortgage rates, and mortgage lending has risen during 2015. The flip-side of this trend however, is that the best mortgage rates are generally only available to those who have access to sizeable deposits or equity. ‘While there are now more mortgage deals available to those with only a 5% deposit, a trend which will continue into 2016, the MMR mortgage rules mean that clinching a mortgage deal will continue to be challenging for some, especially for first time buyers,’ the report says. ‘Activity in the market has stabilised at around 100,000 transactions a month, although it is interesting to note that the cut in stamp duty for homes worth less than £1.1 million in December last year and the definitive general election result failed to produce an increase in activity. This was closely linked to a lack of stock on the market, particularly second hand stock,’ it adds. The analysis also looks at supply and demand and says that a lack of available homes to buy will likely continue to put a floor under pricing in 2016. ‘There is now even more emphasis on the delivery of new homes, and while levels of house building have picked up in recent years, the supply of new build dwellings is still far below Government targets,’ it points out. It also points out that the prime London property market faced a number of headwinds in 2015, led by the increase in stamp duty and higher transaction costs will continue to… Continue reading
World Heritage status boosts property values
Living near a world heritage site in the UK might mean putting up with a lot of tourists but it certainly helps property prices with new research showing homes in these locations are worth 27% more. Whereas the average UK home is valued at £284,127, properties in or near locations with World Heritage Status awarded by UNESCO status can carry a heftier price tag of £77,993, according to research from property portal Zoopla. The Orkney Islands are the UK’s most affordable World Heritage Site to buy a property near while homes near the Palace of Westminster and Westminster Abbey are the most expensive. Homes close to the Neolithic monuments in Orkney currently cost an average of £130,169, coming in at 178% less than the average house price near to a World Heritage Site in the UK at £362,120. UNESCO sites in Bradford and Liverpool are the least expensive urban sites. Saltaire, an industrial village from the second half of the 19th century within the city of Bradford is the most affordable urban site with a typical property here costing £155,868. Liverpool’s Maritime Mercantile City, includes the Albert Docks and the largest collection of Grade I-listed buildings anywhere in the UK, has a typical property price of £167,771. Zoopla analysis found the longer an area has enjoyed World Heritage Status, the higher the property values are, as the area reaps the economic benefits. The first 10 UK locations to be granted World Heritage Status between 1986 and 1987, including Bath, Stonehenge and Blenheim Palace, have an average value of £424,873, compared to just £274,611 for the locations chosen since 2000. In July of this year the Forth Bridge in Scotland became the UK’s latest World Heritage Site. Located between Edinburgh and Dunfermline, average homes in the area currently cost £202,011. The traditional World Heritage Sites in London are the most expensive to live near. Properties in the proximity of the Palace of Westminster and Westminster Abbey are comfortably the priciest heritage location in the country, with a typical value of £1,715,292. ‘Bradford and Liverpool offer fantastic opportunities for potential buyers to live in cities which have shaped world culture,’ said Lawrence Hall of Zoopla . ‘Britain’s World Heritage Sites have contributed massively to our history and our research shows that living near to one can add significantly to a property’s value. Looking at the most recent site to gain World Heritage Status, home owners near the Forth Bridge could expect to see property values increase in future, as the full benefits the award brings to the area begin to be felt,’ he added. Continue reading
