TSI
Rents in central London’s prime market down but activity is stronger
Rental values in the prime central London lettings market fell by 3.6% in the year to July 2016 but activity is stronger than last summer, the latest index shows. Values were down due to higher stock levels and a degree of uncertainty surrounding the European Union referendum result, according to the report from international real estate firm Knight Frank. Where the rental value is regarded by prospective tenants as being right properties are being taken up and the number of tenancies agreed in the three months to June rose 3% compared to 2015 and viewings increased 15.8%, the data from Knight Frank also shows While overall the number of new prospective tenants fell 6.8% over the same period, the number of tenancies started via Knight Frank’s corporate relocation service increased 72% in the same period but prime gross rental yields were flat at 3.1%. According to Tom Bill, head of London residential research at Knight Frank, there are parallels between the lettings and sales markets because the Brexit vote has reinforced the existent pricing trends rather alter market fundamentals. ‘Demand has been relatively flat since the start of the year due to uncertainty surrounding the state of the global economy, particularly in the financial services sector, which contributed towards a slowdown in rental value growth from its last peak of 4.2% in May 2015,’ he said. ‘This trend has been compounded by higher levels of supply as stock has moved across from the sales market, with more vendors becoming landlords due to weaker conditions in the prime sales markets,’ he pointed out. ‘In the three months to the end of June this year, the number of new rental properties placed on the market rose by 49% compared to the same period last year. As a result, landlords are reducing asking rents to prevent void periods and tenants are becoming more selective,’ he explained. Indeed, properties where the asking rent is perceived as too high are struggling to get viewings and Bill believes that the referendum result has simply reinforced this dynamic and landlords are increasingly taking a pragmatic approach to asking rents against the background of wider Brexit uncertainty and rising stock levels. He also pointed out that despite the three month decline in the number of new prospective tenants registering, the expectation is that rental volumes will continue to rise over the summer and into the autumn. ‘The uncertainty ahead of the Brexit vote could be an explanatory factor for weaker registrations, although early signs are positive with no significant announcements that companies are pulling back from relocating staff to London following the referendum,’ he added. Knight Frank also found that relocation budgets in many cases have risen due to the effects of a weaker Sterling, which means tenants are looking in higher-value areas and at higher value properties compared to last year. The number of new prospective tenants registering with a budget of £1,500 plus per week increased 11% in the three… Continue reading
UK house prices down by 1% month on month, too early to judge Brexit effect
House prices in the UK fell by 1% between June and July, taking the average price to £214,678, according to the latest index which also shows that overall growth is slowing. In the three months to July prices were 1.6% higher than in the preceding three months, above June’s 1.1% increase and similar to the rates recorded in April and May of 1.5% but it significantly lower than in February and March. The data from leading lender the Halifax, also shows that prices in the three months to July were 8.4% higher than in the same three months a year earlier, unchanged from June but the lowest since July 2015 when it was 7.8%. The month on month decline largely offset the 1.2% increase in June, but Martin Ellis, Halifax housing economist pointed out that month on month changes can be erratic and monthly falls often occur within an upward trend. He explained that it was the third monthly fall so far this year and was smaller than February’s decline of 1.5% and the quarter on quarter change is a more reliable indicator of the underlying trend. The number of first time buyers increased by an estimated 10% in the first six months of 2016 compared with the same period in 2015, according to the Halifax First Time Buyer Review. There were an estimated 154,200 first time buyers in the first half of 2016 compared with 140,500 in the same period last year. This was more than double the market low in the first half of 2009 when it was 72,700. Nonetheless, the number of first time buyers in the first half of 2016 was nearly a fifth lower than in 2006. ‘There are signs that house price growth is slowing with a deceleration in both the annual and quarterly rates of increase in the past few months. Nonetheless, the current rates remain robust. Overall, it remains too early to determine if there has been any impact on the housing market as a result of June’s EU referendum result,’ Ellis added. Alex Gosling, chief executive officer of online estate agents HouseSimple, also believes that too much should not be taken from the monthly figure. ‘There are so many factors at play right now, we're probably going to have to wait until September to get a clearer picture of how the housing market is coping with this headwind of political and economic uncertainty,’ he said. ‘Property transaction levels traditionally drop off during the summer months,’; he explained, adding that there have been a number of other factors impacting the housing market in recent months such as April stamp duty changes, the EU Referendum, and the cut in interest rates. ‘The Bank of England's decision to cut interest rates yesterday should definitely provide a stabilising effect on the economy. Whether that will be enough to inject the necessary confidence into the property market only time will tell. It will certainly provide a level of confidence… Continue reading
Research shows Olympic legacy has boosted house prices in east London
As the Rio 2016 Olympic Games get underway new research shows how house prices closest to the 2012 Olympic Park have increased three times faster than the national market. Homes closest to Olympic Park have seen more than 50% added to their value with prices up by £3,522 per month since the London Games ended in 2012. The research from Lloyds bank also shows that the majority of areas close to the main site have recorded price growth in excess of £100,000 since September 2012. Average property prices in the 14 postal districts in East London closest to the Queen Elizabeth Olympic Park have risen from £286,638 in September 2012 at the close of the Paralympic Games to £438,065 in March 2016, an increase of 53% or £151,427, equivalent to a monthly rise of £3,522. This is more than three times the rate of increase seen in England and Wales and nationally property values grew on average by 17% over the same period from £234,947 to £275,872. Price performance in the 14 East London areas has also outpaced London as a whole. Since September 2012 the average price in the capital has grown by 32% to an average price of £557,359. In the four years since the last Olympic Games, the average price in all but one of the 14 areas has risen by over £100,000. In cash terms the largest rise was seen in Shoreditch, where the average property price has grown by £245,330, followed by Dalston at £203,113, Homerton at £197,737 and Bethnal Green at £178,893. East Ham recorded the lowest rise in prices, a relatively modest increase of £83,566 in four years. ‘The last Olympics Games, held in London, was a great event which captured the world’s attention for a few weeks in 2012, but the longer term benefits of the Games are still being felt today, particularly for home owners in the areas close to the Olympic Park who have seen property prices outperform both the national and London markets,’ said Nitesh Patel, Lloyds Bank housing economist. ‘Since the Games closed in September 2012, regeneration in this part of the capital has seen significantly improved transport connections and facilities, which have helped attract businesses and households to the area and in turn boosted local property values,’ Patel added. In the 11 years since the Games were awarded to London in July 2015, the average property price in the 14 postal districts in East London closest to the Olympic Park has grown from £206,398 to £438,065 in March 2016 an increase of 112% or £231,667, which is equivalent to a monthly increase of £1,796. They have also outperformed the increase in England and Wales in this timescale as nationally property values grew on average by 48% over the same period from £185,783 in July 2005 to £275,872 in March 2016. In the past year, house prices in the 14 areas closest to the Olympic Park rose by 15%, from £379,663 in March… Continue reading
