Investment
Gazumping falls overall in the UK residential property market
Despite a shortage of supply in the UK property market, the number of UK buyers being gazumped has dropped over the last 10 months, new research shows. The practice, where a buyer makes a higher offer for a house than someone whose offer has already been accepted by the seller and thus succeed in acquiring the property, has fallen by 40% since October 2014, according to a survey by online estate agent eMoov. A year ago some 22% of all home owners had been gazumped during their property purchase, however this has now reduced to 13%, particularly in Brighton which is no longer the gazumping hot spot with a fall of 68% in the practice. Gazumping is also down in London by 46% with just 17% of buyers in London having experienced gazumping first hand. The firm suggests that this could be because prices and demand have levelled out. Sheffield is named as the new gazumping capital of the UK. Some 29% of buyers in the city have been gazumped when looking to purchase a property, an increase of 25% over the last 10 months. The firm says that since December 2014, Sheffield has seen a steady increase in demand, up by 35% overall and this is almost certainly the main contributing factor to the increase in gazumping, as desperate buyers scramble to get a foot on the ladder by any means possible. Plymouth has also seen an increase in gazumping of 31% which coincides with a strong uplift in property demand in the area since the end of last year with growth of 27%. Newcastle is the only other UK city to see an increase in gazumping during this time frame, with 16% of buyers being gazumped, a rise of 12%. Other cities where gazumping is still more prevalent despite a drop are Birmingham at 17%, Leeds at 16%, Manchester at 15%, Nottingham and Bristol both at 12% and Brighton at 11%. At just 2%, Southampton had the lowest rate of gazumping in the UK. Continue reading
Property price growth picks up pace across UK cities, latest index shows
Property price growth in key UK cities has picked up pace with annual growth running at 8.5%, up from 7.2%, according to the latest index from real estate analytics firm Hometrack. Growth over the last three months of 4.3% is at the fastest rate for 11 years, the data from the index, which covers 20 main cities, shows. The index report says that growing house price momentum is on the back of a 32% increase in sales volumes since April and a sustained catch-up in prices in cities outside southern England. There remains further upside for house prices in regional cities outside London, it adds, and city level price inflation remains on course to end the year at 10%. All cities with the exception of Aberdeen are registering house growth ahead of growth in average earnings which is currently 2.4%. The highest year on year growth is 10.9% in Cambridge followed by Oxford, London and Bristol. The lowest growth rate is in Aberdeen with a fall of 0.7% and the report suggests that the weakness in the oil price is impacting the local economy and demand for housing. Other cities with below average house price growth are Newcastle, Liverpool and Sheffield where annual growth is running between 2.5% and 4.5%. The report also says that there is room for further catch-up in house prices. Nine of the 20 cities still have average prices that are lower than 2007 levels although this gap is narrowing rapidly. The relative performance of house prices since 2007 remains wide and reflects different economic and demand side drivers of house prices. Average prices in London are 40% higher than in 2007 and 14% higher in Bristol. Cities such as Edinburgh and Glasgow have registered a resurgence in growth more recently post the Scottish referendum although average prices remain 2% and 11% below their peak. Looking ahead, the report says that low mortgage rates, economic growth and rising earnings will continue to stimulate demand and put an upward push on house prices across most cities. As an international city, London is out on its own setting new highs for prices and unaffordability. ‘How long this can be sustained is down to the prospects for the different segments of demand, specifically international buyers, domestic investors and domestic home owners,’ the report explains. ‘Overall we expect city level house price inflation to remain on course to end the year at 10% year on year,’ it concludes. Continue reading
Demand for UK farmland falls as supply rises, says RICS report
The supply of farmland in the UK increased sharply during the first half of 2015, as demand growth moderated, according to the latest report from the Royal Institution of Chartered Surveyors (RICS). An increase in the supply of commercial farmland, coupled with a tailing off in demand growth across many parts of the country, has resulted in a significant reduction in price growth expectations, the report says. Meanwhile, demand from lifestyle buyers continued to increase, and a net balance of 18% of respondents said that they expect the price of residential farmland to continue to rise over the year to come. During the first half of 2015, a net balance of 51% of respondents reported an increase in the supply of commercial farmland while demand for these blocks declined, albeit very modestly, for the first time since 2008. Scotland and the North East of England saw a reduction in demand not just for commercial but also residential farmland, while the results for South West and the East Midlands suggests demand is still edging upwards. Simon Rubinsohn said it is significant that the headline transaction based measure of farmland prices fell by 2.5% during the first six months of the year and by 1% over the course of the year to reach £9,692 per acre. Average rents also slipped during the first half of the year both for arable and pasture land, reflecting the weaker to many commodity markets. ‘We are seeing a considerable divergence in the outlook for commercial farmland compared to land with a significant residential component,’ Rubinsohn pointed out. Annual average arable land rents fell by 7% during the first half of the year and by 9.7% over the year, with anecdotal evidence suggesting the recent falls in commodity prices are the primary cause of this decline. ‘Despite this, the lifestyle market remains relatively strong across much of the country with the price of land with a large residential component generally expected to continue moving higher,’ said Rubinsohn. ‘Political uncertainly leading up to the general election is likely to have had some further impact on the results in the survey, however market conditions look set to remain challenging notwithstanding the outcome with the global economic environment set to remain a drag on commodity prices,’ he concluded. Continue reading
