TSI
Scottish property market set to see annual growth of 3% in 2016
The overall residential market in Scotland has shown continued growth, with an 8% annual increase in the number of residential transactions during the year ending in the first quarter of 2016. The market was supported by an increase in cash buyers and buy to let purchasers, boosted by increased levels of equity generated from core hotspots, particularly among older buyers, according to the latest analysis report from Savills. It also says that various Help to Buy schemes and the gently improving economy, leading to increased consumer confidence, are also combining to support the market. Market growth is continuing to spread out to locations that were lagging following the housing market downturn. These include West Lothian, East Ayrshire, North Lanarkshire and Glasgow City, where the annual growth in transactions was higher than the figure for Scotland as a whole. The report says that this is mainly due to an increase in house building, coupled with attainable house prices and improving transport links. Annual transactional growth in traditional hotspots and commuter locations, such as Renfrewshire, East Lothian and Midlothian, as well as the market hub of Edinburgh, also exceeded the figure for Scotland as a whole. Savills is forecasting annual growth of 3% in Scottish mainstream values by the end of 2016. ‘We expect values in city locations and core hotspots to outperform the figure for Scotland as a whole. Stricter lending conditions and a possible rise in mortgage rates could limit capacity for strong price growth and transactional growth. This is likely to keep exposure to risky mortgage debt under control,’ it explains. In the prime market Scotland’s Land and Buildings Transaction Tax (LBTT) continues to have a significant impact following its introduction in April 2015. Over the last 12 months, the prime market above £400,000 witnessed an overall shortfall in activity, mainly due to higher rates of taxation. However, since the end of 2015, the prime market has adjusted in the city hubs of Edinburgh and Glasgow. Furthermore, prime market strength is spreading from the hubs into traditional suburbs and commuter areas The number of prime second hand sales at £400,000 and above in Scotland fell annually by 14% to 3,131 during the year ending in the first quarter of 2016 as the market continues to adjust to higher rates of taxation. Despite this drop, prime activity was 13% higher than the five-year annual average of 2,762 sales. The prime market was led by the core city hotspots of Edinburgh and Glasgow. Prime activity in Stirlingshire and the Lothians region surrounding Edinburgh bucked the national trend, benefitting from relative affordability and improving transport links. Furthermore, demand for family homes in areas with top performing state schools remains buoyant. According to Savills Prime Residential Index, overall values in Scotland remained unchanged, with a slight 0.4% year on year increase at the end of March 2016. Further examination of the Savills Index shows a widening gap between overall property values in city and town… Continue reading
Developers call for land to be set aside in UK for Build to Rent
A group of developers and real estate investors have revealed a three point action plan which they say could see more than 250,000 extra homes built for rent. Called the Better Renting campaign, they have written to the housing minister saying that Build to Rent, where corporates build clusters of homes that are rented and not sold, could help the government deliver its pledge to build a million homes by 2020. The letter claims that traditional house builders are at full capacity and that support for corporate landlords could bring £50 billion of new money into the sector. The letter asks ministers to set aside an agreed proportion of public land for Build to Rent development. Councils and public land owners could generate long term rental income from buildings or land, allowing them to fund under pressure public services. The group also calls on the Chancellor George Osborne not to apply an additional 3% stamp duty charge to professional Build to Rent developments. Last December, he promised to only apply this to buy to let investors, but subsequently reversed this pledge. The group claims the move will dampen investor appetite to build more homes. It could deter further investment which could build more than 250,000 new homes. Finally, the campaign’s letter calls for recognition of Discount Market Rent (DMR) homes as an accepted form of affordable housing. This would allow developers to create subsidised rental homes as part of their development commitments, following successful use of the policy in the London boroughs of Ealing, Greenwich and Brent. A nationwide recognition would deliver more affordable housing. Signatories to the letter include Grainger Plc, Essential Living, LaSalle Investment Management, HUB, Fizzy Living, Real Star, Hermes Investment Management as well as Mishcon de Reya, a leading city law firm. ‘Until we face up to the fact that promoting home ownership at all costs will lead us nowhere, Britain will not overcome its housing shortage. The housing minister has been very supportive of Build to Rent, but what’s crucial is that the prime minister and chancellor recognise the contribution this could make to helping them keep their promises on building a million homes by 2020,’ said Martin Bellinger, chief operating officer at Essential Living. According to Helen Gordon, chief executive at Grainger Plc, pointed out that the form wants to invest in the Build to Rent sector. ‘Our vision is for a better rental market, underpinned by good value for money for our customers, supporting economic growth and housing supply,’ she said. ‘We are looking to invest hundreds of millions of pounds into new rental homes, designed specifically for the renting, which we will directly manage for many years to come. It is important that the Government does all it can to allow us and companies like us to build more homes,’ she added. Chris Taylor, head of private markets at Hermes Investment Management, explained that experience from the United States, Germany and Holland demonstrates the potential capacity… Continue reading
Property prices in Sydney saw a strong surge in May
Residential property prices in capital cities in Australia increased by 1.6% in May and are up by 5% year on year, the latest home value index shows The strong May numbers were largely the result of a surge in Sydney dwelling values which were up 3.1% over the month, according to the data from CoreLogic. Prices also increased strongly in Canberra with month on month growth of 2.5% and were up 1.6% in Melbourne and 2.2% in Hobart. Perth was the only city to record a fall with prices down 2.7%. The CoreLogic combined capitals index has recorded a 5% increase since the beginning of January and as a result has caused the annual trend in capital gains to rebound after conditions tapered since July last year. The annual rate of growth, which recorded a recent trough in December last year at 7.4%, has now rebounded back to 10% as of the end of May. After such a strong performance across the Sydney housing market, the annual rate of growth has moved substantially higher to reach 13.1% per annum after reaching a recent low point of 7.4% per annum growth over the 12 months ending March 2016. Despite Sydney’s bounce in the trend rate of growth, Melbourne’s housing market is still recording the highest annual rate of capital gain at 13.9%. Perth and Darwin remain the only markets to record an annual decline in home values. Perth dwelling values are down 4.2% over the past year and have recorded a peak to current fall of 6.7%. Similarly, Darwin dwelling values fell by 3.5% over the past year and are down 5.5% since peaking two years ago. The current growth cycle has been running for four years now, according to the index report. After capital city prices fell by 7.4% between October 2010 and May 2012, values have since risen by 36.6% over the growth cycle to date. The largest capital gains over the cycle to date have been in Sydney where dwelling values are 57.5% higher followed by Melbourne with a 39.4% capital gain since values started rising. The third strongest performance has been in Brisbane at 18.5%. The rebound in the rate of capital gain during 2016 is supported by other measurements in the market, the report points out. For example, auction clearance rates across the combined capital cities have remained stable and hovered around the high 60% to low 70% range since February this year. Sydney clearance rates remain firm, sitting at around the mid 70% mark over the past three weeks while Melbourne clearance rates now sit in the early 70% range. Continue reading
