Investment
Over half of UK home owners think EU vote will affect property prices
The UK referendum on the country’s future in the European Union is still years away but already home owners think it will have an impact on property prices. Some 55% believe that leaving the EU will have an impact on house prices in the UK. Of these 34% think leaving the EU would actually strengthen the value of their home, with 21% believing it will lead to a decrease in their property price, according to the poll by eMoov. It is thought the economic impact of leaving the EU will be felt hardest in London, however some 52% of those surveyed in London think it will push up the price of their property, with just 23% thinking the opposite. When Britain first joined Europe in 1973, the average house prices was just £9,045. Despite a post legislative referendum in 1975, UK house prices continued to increase for another 16 years to 1989. During Britain’s tenure as a member of the EU the average UK house price has increased by more than 2,000%. Based on these figures, it would seem the EU has been good for the UK property market, but Britain’s future in Europe still remains uncertain. ‘The consequences of exiting the European Union stretch far beyond its effect to UK property prices, however homeowners across the nation are understandably apprehensive as to the impact it could have on their property price, as our research shows,’ said the firm’s chief executive officer Russell Quirk. Pro EU campaigners have forecast central London will be worst hit if Britain does choose to leave the EU. ‘We saw how pre-election uncertainty froze property demand in the prime central London market. The uncertainty of Britain’s future in the EU could result in a similar effect on a much larger scale, but 52% of home owners in London seem confident a Brexit will only strengthen the value of their home,’ he explained. ‘This said, post-election stability failed to revive the high end London market, so who’s to say the same won’t happen if we do come out of the EU,’ he concluded. Continue reading
Property prices in Australia up the most in Sydney and Melbourne
Property prices in Sydney and Melbourne continue to be the highest in Australia although the two cities are seeing growth ease slightly, the latest index shows. Prices increased by 0.3% in Sydney and 0.6% in Melbourne in October compared with a national average of 0.2%, according to the CoreLogic RP Data index. Overall prices increased by 1.4% quarter on quarter and are 10.1% higher year on year although the combined capitals index has been easing since July this year when the index was rising at 11.1% per annum. According to CoreLogic RP Data’s head of research, Tim Lawless, a range of factors are contributing to the slowdown. ‘It’s not just the fact that mortgage rates have recently risen outside of any lift in the cash rate. We are also seeing approximately a 30% premium on investment related mortgage rates, tighter lending standards and borrowers generally requiring a larger deposit,’ he said. ‘Gross rental yields at record lows and affordability constraints are acting as a further disincentive, particularly in Sydney where the median unit price is equal to, or higher than the median house price in every other capital city,’ he explained. ‘Additionally, new housing supply is moving through record levels which should help to ease the upwards trajectory of home values,’ he added. He pointed out that since the end of 2008, the Sydney housing market has recorded a cumulative capital gain of 77% while Melbourne values have moved a cumulative 66.6% higher over the same time frame. Based on the median selling price at the end of 2008, Sydney home owners have accrued approximately $316,000 in gains from the housing market compared with around $246,000 in Melbourne. ‘While the rate of growth is significant, it is important to remember that this growth is across two cycles. Dwelling values were broadly tracking backwards during both the 2008 calendar year and between late 2010 through to the middle of 2012,’ said Lawless. The only capital city where home owners have seen the value of their homes move lower since the end of 2008 is Hobart where the CoreLogic RP Data index is down 0.4% since the end of the global financial crisis. The weakest housing market conditions continue to be found in Darwin and Perth where values are down 3.7% and 3.6% respectively over the past 12 months. According to Lawless, the slowdown in resources related infrastructure spending has caused ripples of economic weakness that are likely to persist for some time. ‘Capital expenditure relating to the mining and resources sector has fallen substantially which means tougher labour conditions and little in the way of migration which has previously fuelled housing demand in these areas,’ he said. Continue reading
Demand for prime rental property in central London falls
Demand for rental property in central London’s prime market has fallen in recent months as global companies curb costs resulting in rental values falling in October. Rents in this sector were down 0.5% last month, the steepest decline in two years and annual rental value growth slowed to 1.5% after peaking at 4.2% in May. The data from the latest rental report from real estate firm Knight Frank also shows that the number of tenancies agreed in September was 12% lower than the same month in 2014 and average prime gross rental yields were flat at 2.95%. According to Tom Bill, head of London residential research at Knight Frank, it has been a year of two halves for the prime central London lettings market. Annual rental value growth peaked at 4.2% in May, the month of the general election, as demand transferred from the sales market. ‘The cause was uncertainty around property taxation and increased rates of stamp duty mean it remains a live issue, particularly in the super prime £5,000 plus per week price bracket. However, anxiety around the global economy has dampened demand since the summer,’ he said. ‘The uncertainty has centred on events in China, which has caused companies to curb relocation budgets and recruitment plans. The falling oil price has also impacted sentiment among energy companies,’ he added. He pointed out that advertising giant WPP, whose performance is a useful barometer of how much companies are either cutting costs or spending, said in October firms were feeling risk averse due to geo-political concerns. Rival Publicis said there had been an ‘unusually large’ number of clients postponing or cancelling campaigns. ‘Adding to the sense of a weaker global economy, speculation has grown that the European Central Bank is likely to extend or increase its quantitative easing programme in December in order to stimulate inflation. Against this backdrop, demand for prime rental property has slowed,’ Bill explained. The largest monthly drops were a fall of 2% in South Kensington and a decline of 1.2% in Chelsea, two areas where demand has been traditionally strong among financial services tenants. However, Bill also pointed out that despite these near term uncertainties, the UK economy is performing strongly and the longer term outlook is positive. ‘London will remain one of the most attractive places on earth to do business,’ he concluded. Continue reading
