Tag Archives: africa
Strong fundamentals mean UK property market set to see 3% growth overall in 2016
Strong market fundamentals remain in the UK’s regional residential property markets despite recent political events, most notably the decision to leave the European Union. The latest analysis from real estate firm CBRE suggests that UK house prices are expected to grow by an average of 3% this year with current growth of 5.1% across the country regarded as encouraging. The report says that the Outer Metropolitan area saw the strongest performance in the second quarter of 2016 with prices up 12.4% in June. London followed closely with 9.9% growth, whilst the North was the weakest performing region with prices down 1% year on year. It explains that with a period of uncertainty ahead, the UK remains in a strong position with high employment, low borrowing costs and weaker sterling which will help boost exports and although buyer sentiment is likely to remain cautious prices will continue to grow. ‘Despite some short term turmoil following the referendum, the UK still has otherwise very stable economic foundations. While the recovery in 2013 was largely driven by consumer spending, there are now encouraging signs of growth becoming more broad based and coming from multiple sectors,’ said Jennet Siebrits, head of residential research at CBRE. ‘London and the UK are still robust investment regions with a strong and established legal structure, favourable time zone, world class education system, and a durable, settled, democratic political structure. Despite the outcome of the EU referendum, our current forecasts remain broadly unchanged and we expect UK house prices to grow by an average of 3% this year,’ she added. Overall the report says that London’s land market remains highly price sensitive and underpinned by cautious sentiment, but activity remains driven by the capital’s acute supply/demand imbalance. In the South East, the residential land market continued at a strong pace in the second quarter of the year, driven by a number of successful converted office schemes and Permitted Development Rights opportunities. It is the South West supply/demand imbalance remains a key driver of price and rental growth, whilst the private rented sector dominates city markets. But in the Midlands Birmingham city centre dominates, with a reliance on office to residential conversions for the delivery of much needed housing stock. There are further new entrants to the market and Birmingham remains one of the key target cities for institutional investment, it adds. The trend of the last two quarters continues in the North, with modest house price rises driven by an emphasis on lower value £180 to £190 per square foot areas benefitting from the government’s Help to Buy schemes. It also points out that in Scotland, the sub-£500,000 housing market is performing well, whilst LBTT rates continues to impact the upper end of the market. Meanwhile, Scotland’s land market has seen prices generally increase off the back of an acute lack of supply. This is particularly evident in the prime regions of Edinburgh and East Lothian, where values are now pushing £1.2 million per… Continue reading
Landlord campaigners should know soon if tax challenge can go ahead
The legal campaign to overturn the proposed UK Government’s decision to phase out the tax relief that residential landlords can currently claim on their mortgages will know next month if its challenge can be taken further. There will be a hearing around the end of the month to determine whether or not there will be a judicial review of the move to reduce the tax relief from 2017 to 2020 until it meets the basic tax rate. Landlords and organisations have warned it could put off new landlords coming into the private rent sector and also hit existing landlords who will have little choice but to pass on the extra cost to their tenants in the form of higher rents. Landlord campaigners Steve Bolton and Chris Cooper said that they also have a meeting with the new housing minister Gavin Barwell on 09 September when the issue will be discussed. ‘We will obviously be raising our serious concerns about the impact, making him aware of our legal challenge and doing the best job we can to help him become a supporter of our cause within Government,’ they said. It is not the only tax change landlords have faced recently. Earlier this year a new 3% extra stamp duty was levied on the purchase of additional properties which included buy to let investments. The Scottish Association of Landlords (SAL) and the Residential Landlords Association (RLA) have both warned that these tax changes threaten to increase costs, making it easier for irresponsible landlords to provide sub-standard housing to tenants and threaten housing supply for those who believe renting is the most suitable option for them. The Scottish Association of Landlords (SAL), along with the Residential Landlords Association (RLA) south of the border, have launched a joint campaign to convince the new Chancellor of the Exchequer to reverse or amend tax changes in his Autumn Statement expected later this the year. They pointed out that a recent YouGov survey for the Council of Mortgage Lenders suggested that 34% of landlords will reduce their investment in the private rented sector as a consequence of these tax changes. Alongside this, the Scottish Government has introduced a 3% levy on the Land and Buildings Transaction Tax (LBTT) for those buying additional properties, including properties to rent out. ‘We know from our regular branch meetings around Scotland that landlords are already seeing increased costs as a result of tax changes. As well as impacting on individual landlords, we are concerned this could make it harder to tackle the current housing crisis by making it more difficult to attract much needed investment,’ said John Blackwood, SAL chief executive. ‘With the uncertain investment environment that has been created by the Brexit vote, at least in the short term, the last thing anyone in the housing sector needs is tax rises which will only make things worse,’ he explained. ‘Furthermore,… Continue reading
Researcher blames government not rich foreign buyers for UK housing crisis
Decades of planning policies that constrain the supply of houses and land and turn them into something like gold or artworks is to blame for the current housing crisis in the UK rather than foreign buyers, according to a new analysis. The problem is not foreign speculators buying luxury flats as an investment in London which then lie empty but that for more than 30 years not enough homes have been built, says Paul Cheshire, Professor Emeritus of economic geography at the London School of Economics. He also believes that homes that have been built have too often been in the wrong place or of the wrong type to meet demand. For example, twice as many houses were built in Doncaster and Barnsley in the five years to 2013 than in Oxford and Cambridge. It means that in northern cities more homes have been built that in the southern part of the country where the demand and population is greater. Pace has also not kept up to demand. According to his analysis from 1969 to 1989 over 4.3 million houses were built in England but from 1994 to 2012 there were fewer than 2.7 million. In 2009, the National Housing and Planning Advice Unit, which was set up as an independent technical source of advice in the wake of the Barker Reviews of housing supply and planning, estimated that to stabilise affordability, it would be necessary to build between 237,800 and 290,500 houses a year. On a conservative estimate, that implies building 260,000 houses a year, which over 19 years would mean a total of over 4.9 million. Taking the difference between actual building between 1969 and 1989 and the advice unit’s estimate of necessary annual building, this implies that between 1994 and 2012, building fell short of what was needed by between 1.6 and 2.3 million houses. ‘This is what explains the crisis of housing affordability. We have a longstanding and endemic crisis of housing supply and it is caused primarily by policies that intentionally constrain the supply of housing land. It is not surprising to find that house prices increased by a factor of 3.36 from the start of 1998 to late 2013 in Britain as a whole and by a factor of 4.24 over the same period in London,’ said Cheshire. He explained that it is a long standing problem as discounting inflation, house prices have gone up fivefold since 1955 but the price of the land needed to put houses on has increased in real terms by 15 fold over the same period. He also explained that in the UK houses are converted from places in which to live into the most important financial asset people have and the little land you can build them on becomes not just an input into house construction but a financial asset in its own right. ‘In other words, what policy is doing is turning houses and housing land into something like… Continue reading
