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Shortage of property for sale keeping UK prices high, latest index data suggests
House prices in UK in the three months to April were 2.2% higher than in the preceding three months, according to the latest data from the Halifax. This particular measure of the underlying rate of house price growth fell for the first time in 2015 following three successive rises. But house prices increased by 1.6% between March and April. In contrast, annual house price growth increased slightly, from 8.1% in March to 8.5% but, nonetheless, the annual rate remains in the narrow range of 8% to 9% where it has been since the start of 2015 and is below last July’s peak of 10.2%. ‘Housing demand is being supported by a number of factors including economic improvement, rising employment and low mortgage rates. At the same time, supply remains very tight with a general shortage of properties available for sale,’ said Halifax housing economist Martin Ellis. ‘This combination has kept house price inflation steady in recent months with prices increasing by 2.2% to 2.6% on a quarterly basis and at an annual rate of 8% to 9%,’ he added. He pointed out that house prices are continuing to increase more quickly than average earnings despite the return to real earnings growth over the past few months. ‘The resulting rise in the level of house prices in relation to earnings should constrain house price growth and activity over the remainder of the year,’ he said. Ellis is predicting that the annual rate of house price growth is forecast to end the year at somewhere between 3% and 5%. The Halifax report points out that home sales were unchanged in March at 101,000 and were also static between the final three months of 2014 and the first quarter of 2015, but were 6% lower than in the first three months of 2014. Mortgage approvals have risen on a quarterly basis. The volume of mortgage approvals for house purchases, a leading indicator of completed house sales, fell slightly in March following three consecutive rises. Nonetheless, approvals during the first quarter of 2015 were 2.8% higher than in the final quarter of 2014. Supply remains tight. New instructions fell in March continuing the recent downward trend with declines in seven of the past eight months. This fall in instructions has contributed to the supply of homes on the market remaining low. Continue reading
Election result hailed as positive for UK commercial property markets
The UK general election result should be positive for the country’s commercial property markets but the landslide in favour of the SNP in Scotland could result in uncertainty north of the border, according to experts. If the SNP push for another referendum on independence then uncertainty could creep into the markets north of the border, it is suggested. And a referendum on the UK’s position within the European Union could add to that. ‘There is good reason to now suppose the UK economy, that appeared to slow in the run-up to the election, can now resume a strengthening recovery. This will be good news for both the commercial leasing and investment markets,’ said James Roberts, chief economist of real estate firm Knight Frank. He believes there remains a great deal of political uncertainty that will influence but not derail the property market. ‘Firstly, the SNP’s overwhelming victory has put the existence of the Union back on the political agenda. Last year there was a brief slowdown in activity in the Scottish market in the run-up to the referendum, which may be replicated in a future poll. This comes with the caveat that some investors actually saw last year’s referendum as an opportunity to buy,’ he explained. ‘Secondly, a Conservative majority increases the chances of a referendum on European Union membership. If the prospect of Scottish independence caused a market slowdown, the idea of the UK leaving the EU will surely do the same, probably on a greater scale. Either a Tory backbench rebellion against the Bill or a vote sooner rather than later may be the best outcome,’ he pointed out. ‘Thirdly, the UK’s deficit remains large. If the financial markets suspect that not enough is being done to balance the books, sterling could fall in value. This will initially make UK commercial property look attractive to overseas money, but inflationary pressures would increase and bring closer the day that interest rates rise,’ he added. Over the next five years, the firm believes that this climate of political uncertainty will at times cause market confidence to drain away temporarily. ‘Some investors may decide to wait until after an upcoming referendum before buying; some occupiers might shelve expansion plans because a sudden fall or rise in sterling hits profits,’ said Roberts. ‘In short, we should expect the odd air pocket ahead, but overall the election outcome was probably much better for commercial property than one would have expected,’ he concluded. Miles Gibson, head of UK research at CBRE, also pointed out that the overall economic outlook remains favourable for markets. ‘Strong employment, low inflation, low interest rates and high levels of inward investment all bode well for the property sector,’ he said. But he believes that there remains, however, a question mark over EU membership, something ‘which bothers most of our clients immensely as they feel investment would suffer if we were to leave the EU’. The firm believes… Continue reading
Spanish property markets such as Marbella see recovery, new analysis shows
After seven years of stagnation the property market in Spain is experiencing an uptick in sales and prices have reached bottom, according to a new analysis report. With the Spanish economy improving, unemployment falling, tax revenue growing and a more stable banking system, lending figures are on the rise, says the analysis from Diana Morales Properties, an associate of international real estate firm Knight Frank. It points out that the typical mortgage lending rate dropped from 4.21% to 3.29% over the course of 2014 and this has fed through to buyer confidence. Andalucía and the Canary Islands have seen some of the strongest surges in mortgage lending, up 25% and 26% respectively month on month, compared to the national average of 14.2%. This renewed confidence and interest in Spanish real estate is most evident in Madrid and Barcelona where capital flows into both cities’ commercial markets topped €2.7 billion in 2014, the analysis says. It also points out that the return of large US investment funds has been notable but not just in Spain’s main cities. ‘The acquisition of Sotogrande by US based Cerberus and developments to the east and west of Marbella by other US funds, as well as the purchase of Monte Mayor golf club by Russian investors hint at the extent to which the recovery is gaining traction,’ it says. Marbella, a popular area with overseas buyers is building on a property market recovery that began in 2013 despite Spanish buyers failing to return in any significant number in 2014 and the Ukraine crisis impacting on the number of Russian buyers. There was strong demand from an increasingly diversified client base of Scandinavian, Benelux, French, Arabian and Moroccan buyers which added to the record tourist numbers lending a certain buoyancy to the local economy. Marbella and its surrounding municipalities of Estepona and Benahavis together recorded a 27.7% increase in property sales in 2014 compared with a year earlier. Marbella, however, outperformed its neighbours, by experiencing an 89% jump in property sales between 2008 and 2014 according to Spain’s Ministry of Public Works. Benahavis and Estepona, by comparison, recorded rises of 62.3% and 22.8% respectively over the same period. It also reveals that the amount of time properties spend on the market is dropping if realistically priced, while in some prime beachfront locations there is even a shortage of available homes, complete with waiting lists for specific property types. The analysis says that new bank repossessions remain and this has prompted the return of new construction that remains for the moment primarily focused on individual villas and small to medium sized developments of apartments and villa communities. Continue reading
