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City of London office market sees strongest recovery on record
Rents for City of London offices have proved more resilient in recent years than during previous market downturns and recoveries, according to new research. The analysis from real estate firm Knight Franks indexed City of London office rents at 100 for the pre-downturn peaks recorded in the fourth quarter of 1989, the third quarter of 2001, and the fourth quarter of 2007. This showed that rents in the most recent downturn found a floor and moved into recovery far sooner than during the early 1990s and early 2000s downturns and overall the City office market has seen its strongest recovery on record. Also, the current recovery is proving to be far more enduring than that seen after the early 2000s downturn. Indeed that market cycle lasted just six years, with the arrival of the global financial crisis in late 2007, the report points out. It also explains that the outlook is good as it is over seven years on from the market peak for rents, and growth is still occurring, and expected to continue. ‘These figures demonstrate that the City office market has proved far more resilient in recent years than anyone would have imagined back in 2007 when the financial crisis began,’ said Bradley Baker, central London tenant representation partner at Knight Frank. ‘One of the keys to the City’s success has been its’ significant diversification away from an over-dependence on the financial sector in the past and instead embracing and attracting technology and media firms such as Saatchi & Saatchi, Amazon, Hachette and Uber,’ he explained. ‘Unlike previous downturns, the current recovery began within two years of the initial crash and has been sustained for over five years. This compares favourably to the 2001/2003 and 1989/1991 crashes which took over three and four years respectively to post a recovery, and even then they were short lived,’ he added. Continue reading
First time buyers need average earnings of £50,000 to buy a home
First time buyers in the UK need to earn on average of £50,000 a year to get on the property ladder, new research reveals. However, in 51 out of 65 cities, the average salary is below the minimum required to buy a flat, according to the study from comparison website GoCompare. The most affordable place to buy in the UK is Blackburn where a salary of £14,000 a year could be enough to buy a flat but a minimum household income of £140,000 a year is needed to buy a flat in London. In the capital a minimum of £275,000 is needed to buy a detached house where the average price is at £869,415 yet the median average salary in the capital is just £30,338. So Blackburn is almost 10 times cheaper than London. The median average salary in the Lancashire town is £18,444, making it one of the few places in the UK that are affordable. After Blackburn, the cheapest places to buy property are Hull, Blackpool, Grimsby and Stoke-on-Trent where a salary of just £15,000 could be enough to purchase a flat. Outside of London it is Brighton, Edinburgh, Bristol and Oxford which are the most costly. Minimum salaries to get on the property ladder in these cities are £60,000, £60,000, £58,000 and £54,000 respectively. ‘Although owning a home may be achievable in places like Blackburn and Sunderland, in other parts of the country the rapid rise in property value and a growing urban population is pricing many of the British public out of home ownership,’ said Ben Wilson, home insurance expert at GoCompare. ‘London’s high prices are well documented, but it’s in other parts of the south of England that the gap between average salary and average house price is at its most alarming, with places like Brighton requiring a minimum household income of £180,000 to afford a detached house,’ he added. Continue reading
UK home buyers unlikely to see mortgage costs rise in short term
Home buyers in the UK are set to see mortgage rates remain at historic lows for some time yet despite original forecasts that they might rise by the end of this year. The Bank of England has indicated that the current 0.5% base rate is likely to be around for some time yet with a rise not looking likely until well into 2016 or even 2017. Rates have now been this low for 80 months. But there are concerns that home buyers will get too used to low interest rates and this could backfire in the future when interest rates do rise. According to James Jones, head of Consumer Affairs at Experian, buyers need to work out what they can afford, and plan ahead for unforeseen costs that may make repaying debts harder over the years ahead. A survey of people who had failed to secure a mortgage last year suggests that many are failing to do the basic research needed to get proper control of their finances. Some 13% did not know how much money they have left over at the end of the month and 18% did not know what monthly repayments they could afford. The research also found that 14% did not have a big enough deposit for the property they wanted and 12% were unable to secure the size of mortgage they needed. Another piece of research has found that almost three quarters of home owners with interest only mortgages are worried they may not be able to repay their loan. Interest only deals mean borrowers pay the interest on the loan during the life of the mortgage and then must repay the capital when the mortgage term ends. Just 31% of those interest only borrowers questioned said they have a separate investment policy in place, such as an endowment or an ISA, to pay the capital, according to the research by mortgage broker Ocean Finance. While 16% said they plan to switch to a repayment mortgage before their current loan ends, 31% said they expect to have to sell their home to settle the outstanding capital. And a fifth of home owners said they don’t have a plan in place to repay the capital. ‘Interest only has become a time bomb because so many people took out the products to cut the cost of their mortgage, with no view of how they would repay the capital element. Borrowers who have an interest only mortgage with no repayment plan need to take action,’ said Gareth Shilton, Ocean’s spokesperson. ‘It’s advisable to seek advice on whether they can overpay on their current interest only deal, switch to a repayment mortgage, or use an ISA or pension to settle the capital payment,’ he added. Interest only mortgages became popular in the 1990s as a way for consumers to afford homes at a time when property prices were soaring. Lenders often agreed interest only loans without confirming borrowers could repay the capital owing… Continue reading
