Tag Archives: autumn
Development land prices in England and Wales down 0.9% in second quarter of 2015
The average price of greenfield land in England and Wales fell by just under 1% between April and June, according to the latest sector index. The 0.9% fall was a more moderate decline than the 1.8% fall recorded in the first quarter and it takes the annual fall in prices to 2.4%, the residential development land index from Knight Frank shows. However, the market remains localised. Development land prices in prime central London, for example, are up by 0.9% in the second quarter of the year and up 12.1% on an annual basis. Prices have returned to levels last seen in Autumn 2013. The firm’s index report says that prices reflect the fact that house builders have had access to relatively higher levels of consented land in the last few years because of the National Planning Policy Framework which has allowed them to top up their supply of land. As a result, house builders and developers are more selective about the sites they are now choosing to buy. There is a shortage of supply of consented greenfield land in some areas of the Home Counties due to the planning system for example, and a resulting premium for the sites that do come on the market. The report says that in central London there is still good demand for development land, although buyers are applying more detailed criteria before making offers, with a bigger consideration being paid to build cost inflation. ‘The sales market has returned to more normal conditions, along with absorption rates, and this is being reflected in a slowing in the growth of development land prices,’ said Gráinne Gilmore head of UK residential research at Knight Frank. ‘While there are also signs that build cost inflation, which has risen sharply over the last 18 months, is now levelling off, developers are still having to factor these higher costs into their offers. In addition, house builders are generally maintaining their margins, and this is weighing on land prices,’ she explained. ‘However there is still strong competition in areas which are considered to have real opportunity for growth, these include areas in outer London, and particularly for sites where completed units can be delivered for less than £1,000 per square foot,’ she added. Continue reading
UK buy to let tax change will restrict lending in the short term, says new report
The restriction of mortgage interest relief for UK buy to let landlords will, in the short term, curb lending in the sector, which currently makes up 15% to 16% of mortgage lending, according to a new analysis. At the same time, 2015 is on track to become the best year for buy to let mortgage deal issuance since the credit crunch, says the special report from Moody's Investors Service. ‘The government's decision to restrict buy to let mortgage interest relief reflects a willingness to put investors and owner-occupied borrowers on a more level playing field, given that the latter cannot claim tax relief on their mortgages,’ said Moody’s analyst Emily Rombeau. ‘First time buyers' affordability has declined, as they struggle to get on to the property ladder. Affordability constraints and demographic changes have increased the share of privately rented housing and this sector's evolution has strongly contributed to the rapid growth of the buy to let sector in recent years,’ she explained. ‘Repeat issuers and new players will support a robust pipeline of buy to let RMBS deals this year. Issuance for this segment has accounted for 25.6% of total UK RMBS issuance so far this year, up from 10.2% in 2014,’ she added. Over the coming months, Moody's forecasts that reduced demand for buy to let properties will soften UK house price growth. Moody's forecasts that UK house prices will nonetheless rise by up to 5% in 2015, albeit at a slower pace than in 2014. ‘Notwithstanding the softening in house price growth, the risk of an immediate house price decrease is limited given the housing shortage and the economic recovery,’ Rombeau pointed out. According to the Moody's report, the buy to let market has grown at a steady pace since early 2010, accounting for 16.8% of total gross mortgage lending and 25.3% of total house purchases as of the first quarter of 2015. Buy t let gross lending volumes have substantially increased, rising to £7.6 billion in the first quarter of 2015 from £2 billion in the first quarter of 2010. Paragon, the UK's largest buy to let specialist, has accounted for around 40% of buy to let issuance since the financial crisis, with a total of nine transactions collectively worth £3.2 billion, the report says. Mortgages also entered the buy to let securitisation sphere this year; the recently established specialist lender has already completed two buy to let transactions for a total amount of £426 million since January 2015. Moody's research says that, while UK house prices increased by 3.5% in the first half of 2015, according to data from the Nationwide, most regions, except for Northern Ireland and Yorkshire and Humberside experienced a further slowdown in annual price growth in the second quarter of 2015. The monthly year on year growth in UK house prices gradually declined to 3.3% from 11.8% in the 12 months to June 2015. David Whittaker, managing director of Mortgages for Business, said that… Continue reading
Prime property prices in prime central London up for first time since Sept 2014
Prime property prices in central London increased slightly, up by 0.8% in the second quarter of 2015, the first rise since September 2014, according to the latest index. Pimlico has seen the strongest growth in the last year with values up 5% or £66,000 compared with the second quarter of 2014, the data from estate agent Marsh & Parsons. The second quarter has also seen a 17% rise in demand for property in this sector but at the same time supply increased by only 10% while overall 42% of sales are now made by investors, a rise of 8% year on year. At the same time, there has been an upswing in foreign buyers who accounted for 34% of all sales in the second quarter of the year, up from 30% in the second quarter of 2014 although then firm says this has much to do with European buyers of all nationalities coming to live and work in London. Overall property in this sector costs 27% more per square foot than across London as a whole with the average square foot of property in central locations such as Holland Park, Notting Hill or Kensington and Chelsea valued at £1,516, some 27% higher than the capital wide average. In contrast, overall in Prime London, the typical price per square foot stands at £1,192. ‘The excellent capital appreciation and secure nature of property in prestigious central addresses of Kensington, Chelsea and Holland Park have long made them appealing particularly to the investor and it’s encouraging that we’ve seen such a rise recently,’ said Peter Rollings, chief executive officer of Marsh & Parsons. ‘Investors are a good gauge of the overall health of the London market. If there was any cause for concern about the future property market, investors would be upping sticks and moving elsewhere,’ he explained. ‘But that fact they are still putting down roots in the capital shows how fertile current conditions are. While there may not be much action to see at the moment, prices are still growing, and the foundations for fruitful capital returns are strong,’ he added. He also pointed out that price growth turned a corner and started to improve again with a 0.8% quarterly rise compared to a 0.6% drop in the first quarter of the year. Outer Prime areas of the capital have seen the strongest resurgence in price growth, experiencing 1% growth. However, house price growth in this sector is still much slower than last year, and on an annual basis, values have dipped across the prime London property market. Rollings said that it is important to place this into a longer term context, and since June 2013 the value of the average prime London home has increased by 12.1%. In terms of property type, family sized homes have experienced the biggest rise in price with four bed properties across prime London appreciating by 1.3%… Continue reading
