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Gap between house prices in London and major UK cities widens
The gap between house prices in London and other major regional cities in the UK is at its widest for 20 years, according to the latest house price index. Prices in London experienced 4.6% growth in the three months to August and a 10% increase in the last 12 months, according to the cities house price index from Hometrack Overall city level house price inflation is running at 8.3% up from 6.6% in May. A similar expansion has been recorded in sales volumes which has translated into higher prices across UK cities, the report says. The highest rate of growth is in Cambridge at 11.2% and lowest in Aberdeen where prices have fallen by 2% due to the weakness in the oil price affecting the demand for housing. Compared to a year ago house price inflation has increased in five cities led by Edinburgh and Glasgow where growth is running at 9% and 5.3% respectively ‘City level house prices continue to increase as demand for housing grows in the face of constrained supply,’ said Richard Donnell, director of research at Hometrack. ‘A changing mix of buyers is compounding the scarcity of housing for sale with rising numbers of first time buyers and investors buying property while having nothing to sell. Only a recovery in the number of moves amongst existing home owners or an increase in new supply will ease the current housing scarcity which seems unlikely in the near term,’ he pointed out. ‘The gap between house prices in London and other major regional cities is at its widest level for 20 years. This highlights a seemingly over valued London market, on a price/earnings basis, and the prospect of further price growth to come in the large regional UK cities,’ explained Donnell. ‘London’s price earnings ratio is at an all-time high while there remains value in most other regional cities. The pricing differential to London could well assist city regions attract new investment as the cost of housing starts to influence decision making for both households and businesses,’ he added. Continue reading
UK private rented market in a healthy state in third quarter of 2015, says new report
Landlords in the UK are preferring high demand property such as terraced houses and flats with the overall private rented sector in a health condition, according to a new trends report. On key indicators such as yields, void periods and tenant demand, the overall picture is one of steady growth, says the latest Private Rented Sector report from Paragon Mortgages covering the third quarter of 2015. The survey reveals that average yields have grown over the last three months from 6.3% to 6.4% and this growth is in line with steady growth observed throughout 2015. When asked about expected growth over the next 12 months, landlords expressed confidence that yields will remain stable and maintain current levels. On the supply side, void periods, the average period of time PRS properties spend unoccupied per annum, remain at historically low levels of just below 2.6 weeks. In conjunction with this, tenant demand is also healthy with more than half of landlords describing demand as ‘stable’ and more than 40% saying that demand is either ‘growing’ or ‘booming’. The prospects for expected demand are also positive, with more than half of landlords expecting demand to increase over the next 12 months, compared to 42% who expect it to remain stable. The survey also shows an increase in young families with children moving into the PRS, and a corresponding decrease in young couples and professionals. Despite this, demand for longer-term rental agreements remains relatively low. ‘The data is indicative of a market growing steadily and sustainably over the long term. With low void periods and steady tenant demand, which is expected to continue growing, yields remain on a gradual upward trend and landlords are confident they will continue to do so,’ said John Heron, the firm’s director of mortgages. ‘The data also reveals the changing demographic of those choosing to live in the PRS. This is reflected in the buying intentions of landlords which seem to be shifting slightly away from investing in multi-occupancy blocks, towards terraced housing, often more suited to young families,’ he added. The research also shows that average void periods, periods of time during which a PRS property is unoccupied, have dipped below 2.6 weeks per annum for the first time since 2002, down from a high of 3.4 weeks during 2010. Requests for longer term tenancies of two years or more remain low with 58% of respondents saying less than one in ten tenants ask for a longer tenancy. Overall some 43% of landlords surveyed indicated they are looking to invest in terraced houses, up from 38% in the previous quarter while the number of landlords seeking semi-detached properties has fallen from 38% to 27%. Continue reading
Research shows fewer homes being built on greenbelt in England
The number of new homes built within the greenbelt in England halves over the last 10 years after peaking in 2001, new research shows. Less than 100,000 have been built on these type of open spaces, which are meant to prevent urban sprawl into the countryside, since 1995, but most are in the area around London. The research from real estate firm Countrywide also shows that the 96,000 greenbelt land homes built in the last decade made up 3.5% of the 2.7 million homes built in England. However, demand for new homes and a shift in development southwards saw 48% of all greenbelt development occurring around London in 2014 while four areas, Blackpool, Gloucester, Burton and Morecambe, have seen no new house building at all since 2011. A breakdown of the figures shows that the number of new homes built on greenbelt each year has halved since the early 2000s, falling from a peak of 6,700 homes in 2001 to 3,248 in 2014. The trend started before the downturn too. Despite a 36% rise in the number of homes built in England between 2001 and 2007, the numbers built on greenbelt fell by 46%. Last year just 3,250 homes or 3% of all homes were built on greenbelt, down on 2013 and the long run average. Over the last five years development on greenbelt has increasingly been on land surrounding growing cities in southern England, which the firm says reflect the demand for housing and a wider trend of new home delivery concentrated in the South of England. In 2014 the 1,575 new homes built on London greenbelt, accounted for 48% of all greenbelt development in England, up from 38% a decade ago. London has also seen the most homes built on greenbelt since 1995 at 39,100. Local authorities can grant permission for development in the greenbelt in special circumstances where the benefit from development outweighs perceived harm to the greenbelt. While there is debate, and conflicting guidance about specifics, broadly these may include significant economic benefits, replacing buildings and in some instances housing or other social need. ‘While development is generally prohibited within the greenbelt a small number of homes are given permission to be built. Many of these development sites would be at odds with common perceptions of greenbelt. Rather than picturesque countryside being concreted over, these sites were either brownfield, infill schemes or unused land with little amenity value,’ said Johnny Morris, group research director at Countrywide. ‘Sustained pressure, particularly in the South, to get more homes built and government plans to take a tougher line on local authorities with out of date plans, will likely see more homes built on greenbelt in future years. Just returning to the rates of development on greenbelt seen in the early noughties would yield an extra 5,000 new homes a year,’ he explained. ‘Research by Countrywide published earlier in 2015 showed around the 80 railway stations in… Continue reading
