London
Property prices down in Cyprus, but decline is slowing
The residential property market in Cyprus is still struggling despite the island’s economy showing signs of stability in the third quarter of 2015, with sales volumes low. Across Cyprus house prices fell by 0.5% and apartment prices by 0.4%, according to the latest index from the Royal Institution of Chartered Surveyors (RICS). The biggest drop was in Famagusta where apartment prices fell by 1.2% and in Limassol where house prices fell by 3.2% while house prices were down 0.3% in Nicosia. However, the RICS index report points out that the rate at which prices are falling has slowed in most cities across Cyprus and there were few sales overall due to the prevailing economic conditions although the volume was higher year on year. In addition certain locations such as Paphos, Larnaca and Famagusta are showing signs of stability where the housing markets are progressively bottoming out. The RICS index also shows that on a quarterly basis rental values increased by 0.3% for apartments, 1.5% for houses and 2.6% for offices while retail units saw a fall of 1.1% and warehouses a fall of 0.1%. Compared to the third quarter of 2014, rents dropped by 1.5% for flats, 0.5% for houses, 4% for retail, 2.5% for warehouses, and 0.2% for offices. Areas that had dropped the most early on in the property cycle now nearing or at the trough and Paphos and Famagusta are showing some signs of price stability. Paphos is the only place with positive returns in all asset classes when compared to the third quarter of 2014. At the end of the third quarter of 2015 average gross yields stood at 3.9% for apartments, 2% for houses, 5.2% for retail, 4.3% for warehouses, and 4.5% for offices. The parallel reduction in capital values and rents is keeping investment yields relatively stable and at low levels compared to yields overseas, the RICS report says, adding that it suggests that there is still room for some re-pricing of capital values to take place, especially for properties in secondary locations. Meanwhile, the latest monthly data from the Department of Lands and Surveys, shows that sales increased across Cyprus apart from Larnaca where they fell by 1%. Sales in Nicosia were up 64%, in Paphos up 30%, in Limassol up 28% and in Famagusta up 4%. But it must be remembered that sales volumes are low. There was a total of 463 sales contracts recorded covering residential, commercial and building plots. However the Land Registry data also shows that during the first 10 months of the year sales are up 8% compared with the same period in 2014 with 3,993 transactions completed. Continue reading
Top end of prime central London property market still seeing low activity
Buyers in the prime central London property market are still cautious with the £5 million plus sector seeing particularly low activity levels, according to new research. There is an increasingly polarised market in this sector where growth is still being seen at the lower end and high end sales are limited in volume, according to the latest statistics covering the third quarter of 2015 from Strutt & Parker. ‘Whilst some commentators are predicting falls in values across the market, we believe these positions are being disproportionately impacted by the £5 million plus segment of the PCL market, which has experienced particularly low activity levels in 2015,’ said Stephanie McMahon, head of research at Strutt & Parker. A total of 720 properties were sold during the third quarter of 2015, a fall of 3.7% compared to the same period last year. Compared to the five year quarterly average, the total volume of transactions were 17% down and flats remain the preferred purchase, accounting for nearly 57% of . The research also shows that the downturn in price growth in 2015 has reduced the number of these properties entering the market as discretionary vendors are willing to wait for prices to recover. This is matched by increased buyer caution as Stamp Duty reforms, an accumulation of recent tax revisions aimed at high net worth property owners, and a strong pound, have discouraged foreign investors from entering the UK market. Overall, this has resulted in investors taking longer to make decisions and considering alternatives. These trends look set to continue for the remainder of 2015 with the ultra-prime segment likely to show zero and in some cases negative growth. However, sellers placing properties on the market that are sensibly priced and good quality will continue to do well. ‘Since the summer break, increasing activity in PCL shows that buyers and tenants are making the most of relative aligning of asking prices. There is no doubt that confidence is on the up and the considerable tax changes of the last few years are now being regarded as the new norm,’ said Charlie Willis, head of London residential at Strutt & Parker. The data also shows that there were 3,936 property lets agreed in PCL during the third quarter of 2015, which was just 1.9% below the five year quarterly average. Zoë Rose, head of London lettings at Strutt & Parker, explained that the PCL lettings market has experienced a slowdown, particularly affecting the three and four bedroom mid-market. ‘That said, demand for one and two bed properties from young professionals remains robust and uncompromising. Properties that are well presented continue to rent successfully,’ she added. ‘The prime London markets have slowed over the past 12 months with the spate of intervention from the government, combined with a strong pound. The coming year brings further uncertainty with the Mayoral election and lobbying around Brexit,’ McMahon pointed… Continue reading
High loan to value lending declining in overall UK mortgage market
The UK government’s Help to Buy scheme is boosting lending to first time buyers but high loan to value lending activity has fallen year on year, new data shows. Overall 95% LTV mortgage almost doubled under Help to Buy in the first 18 months of the scheme from January 2014 to June 2015 making up £3.43 of every £100 worth of mortgage lending, according to research from private mortgage insurer Genworth. This was up from £1.77 in the previous 18 months as more options have appeared for home owners with smaller deposits. However first time buyer and 95% LTV lending activity fell year on year in the second quarter of the year, marking the second quarterly decline in a row, the first time this has happened since 2010/2011 Total mortgage lending across the whole market grew by £48.2 billion which means that as the mortgage market has grown during this period, £12.24 of every extra £100 lent has been via 95% LTV mortgages. Genworth’s analysis shows that first time buyers account for almost £21 in every £100 lent during the first half of the Help to Buy 2 (HTB2) scheme compared with £19.33 in the previous 18 months. This compares with just £11.41 per £100 in 2007/2008 and highlights how the scheme has played an important role in encouraging first time buyer lending. The growth in 95% LTV is an encouraging sign for a sector that was hit hard by tightening credit conditions during the recession, exacerbating the challenges of raising a big enough deposit to buy a home. But the report suggests that concerns linger for long term health of the 95% LTV market. Both 95% LTV lending and first time buyer lending declined by value year on year during the second quarter of 2015 for a second successive quarter. This is the first time this has happened for two consecutive quarters since the lending drought from the fourth quarter of 2010 to the third quarter of 2011. It contrasts with the substantial growth achieved when Help to Buy was first introduced, and raises doubts about how well activity will fare when it is withdrawn at the end of 2016, particularly with expectations that historically low interest rates will finally start to rise next year, raising costs for borrowers. ‘There is no denying that Help to Buy has played an important part in revitalising the first time buyer and high LTV mortgage market following a significant lending drought. Some participating lenders are now moving towards launching non-HTB2 products, but it remains to be seen whether this will be enough to sustain the benefits of the scheme once it expires,’ said Simon Crone, vice president for mortgage insurance Europe at Genworth. ‘We are potentially facing a situation where the high LTV market could easily fall back into decline with the end of Help to Buy now just over a year away. Even… Continue reading
