Tag Archives: shows
Private rental growth in UK centred in regional cities, new analysis suggests
The growth of the private rented sector in the UK continues and there is evidence that activity in this market is market is increasingly clustering in cities around the country. New data shows the proportion of those in the private rented sector living in urban areas has risen from 80% to 86% over the last decade, mostly accounted for by regional cities outside London. A new analysis of a range of data, including the most recent English Housing Survey, by real estate firm Knight Frank, suggests that this growth is set to continue. The firm has developed its PRS index, which reflected average yields, into a PRS Yield Guide, produced by Knight Frank consultancy agency and valuation teams which shows a slight tightening in yields for prime PRS deals in the second quarter across the Greater London market, as well as in many of the other key cities except Bristol and Glasgow. Meanwhile, it says that demand for rental property is being underpinned by affordability constraints in many parts of the sales market as well as increased hurdles in the mortgage market. There is also an increasing desire for property with flexible tenure, especially among young professionals, who want to live close to where they work. Tenants are also staying for longer with the English Housing Survey showing that the proportion of those living in rented accommodation reporting that they have lived in their current home for between two and four years rising to 24%, up from 20% a decade ago. Rents are rising across the country, reflecting an increase in wages as well as inflation. They rose by 2.5% in the year to the end of June but there are still wide regional variations in rental growth, just as there is a divergence in entry costs into these markets. The biggest increase in rents has been in Greater London with growth of 3.8% in the 12 months to the end of June, followed by the East of England up 2.6%, the South East up 2.5% and Scotland up 2.1%. In the same period rents have increased by 1.8% in the South West, by 1.7% in the Midlands and by 1.4% in Yorkshire and Humber. Meanwhile the growth over the same period in Wales was 0.8% and the North West and the North East both saw growth of 0.5%. The report also shows how institutional real estate investors are becoming increasingly active in the private rented sector in the regions over the last 12 months. It says they are attracted by the yields achievable and the strong occupier demand in regional centres. Of particular interest to institutions have been private rented sector schemes in Birmingham and Manchester, with a large amount of interest focussed on lot sizes ranging between £20million and £100 million. ‘The increasing entry of institutional investors into the market is a significant positive factor for the PRS, which should lead to an increase in the supply of good… Continue reading
UK home owners should factor in interest rate rise sooner rather than later
Home owners and those thinking of buying a home should budget for an interest rate rise after the Bank of England indicated that it expects to see interest rates rise sooner rather than later. But Banks of England governor Mark Carney refused to be drawn on whether this would be before the end of the year and indicated that it will depend on factors such as the state of the euro and what happens in Greece. Interest rates in the UK have been at a record low of 0.5% since March 2009 but Carney said that the time for an increase is ‘drawing closer’. He said that the decision would be determined by looking at economic data including wage growth, productivity and import figures. He also said that the increases, when they came, would be gradual and limited to a level below past averages and line with his previous forecasts of how rates will change. Experts are divided as to when the rise might happen. Andrew Burrell, head of forecasting at JLL, believes it is unlikely that rates will rise before the first quarter of next year. ‘Despite wage rises and a recovering UK, a muted inflation forecast and global economic headwinds mean that interest rates are likely to stay the same for a couple more quarters,’ he said. Barry Naisbitt, chief economist of Santander UK, also believes that economic uncertainties still exist to prevent an immediate rate rise and John McNeill, co-manager of the Kames Absolute Return Bond Global Fund, thinks it will not happen until 2016. Property buyers need to recognise that rates will move sooner rather than later, according to Nicholas Leeming, chairman of agents Jackson-Stops & Staff. ‘The decision to maintain interest rates at the current, historically low levels comes as no surprise. However Mark Carney has been careful to flag that interest rates will edge higher in the longer term as the economy continues to grow and inflationary pressure on wages increase,’ he said. ‘Property buyers should recognise that rates will move towards more sustainable, long term levels and so budget for higher mortgage costs accordingly. Vendors should be aware that any such increases will create resistance to overly high guide prices,’ he added. Steve Bolton, founder of Platinum Property Partners, pointed out that the UK housing market as a whole has enjoyed six years of historically low interest rates. He believes that those who have invested in buy to let property over this period have also benefitted from high levels of demand for private rental accommodation across the country. ‘This has meant that the return on investment for buy to let has been strong, with many investors also seeing an impressive growth in the value of their properties. But the announcement that the base rate could start to rise soon has implications for the housing market,’ he said. ‘On the one hand, more expensive mortgage rates will possibly put a dampener on demand for borrowing, but on… Continue reading
Ireland needs 21,000 new houses a year, but smaller homes are required
Demand for new housing In Ireland will continue to increase in accordance with population trends and a reduction in household sizes with 21,000 new homes needed per year for the next three years. Details from the National Housing Statement by the Housing Agency points out that the population is currently at its highest for 150 years at 4.5 million and demand for homes is high as a result. It also shows that affordability is an issue for those looking to buy in the greater Dublin area. Overall house prices have increased across the country with the median price nationally at €152,000, up from €140,000 in 2013. In Dublin it is €260,000, up from €220,000 in 2013. Rental prices have also increased, particularly for apartments. Nationally rents were 6.9% higher in the first quarter of 2015 compared with the same period in 2014 with growth of 9.6% in Dublin and 5.3% outside Dublin. Mortgage arrears and negative equity remain a serious concern, the report says, with a total of 110,366 mortgages in arrears at the end of 2014 but it adds that changes mean that smaller homes will be needed because household requirements have changed and the average household size has fallen dramatically. ‘Proportional household composition has changed and we see an increase in smaller households and a corresponding decrease in larger households. The average household size in the country has fallen significantly over the last nine years from an average of 3.04 in 2002 to 2.77 in 2011. Based on an assessment of regional trends, it has been calculated that it will fall further to 2.67 by 2018 so the majority of new housing will now accommodate fewer people,’ it says. Minister for State with responsibility for Housing, Paudie Coffey, said that the report provides a much needed analysis of the true picture of housing supply and demand in Ireland along with future projections, allowing for emerging imbalances to be identified and rectified at an early stage. ‘It contributes greatly to an overall understanding of housing needs in Ireland, ensuring that the most up to date and comprehensive data is available relating to current housing supply and emerging needs. Importantly, this data will help ensure policy responses are evidence based and needs led, as we endeavour to build sustainable communities for the present and future generations,’ he added. According to Conor Skehan, chairman of the Housing Agency, the data is now in place to ensure housing needs are met through a whole suite of initiatives which are underway including those addressing issues such as housing supply, housing land availability, and provision of social housing ‘Keeping those initiatives on target requires accurate data and progress reports on extent to which these needs are being met. This is the first of a series of annual reports to deliver a state of the nation picture of what housing needs are and how we are addressing housing supply,’ he explained. Continue reading
