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UK house prices up 1.8% in second quarter of 2016, but stagnant in London
UK house prices increased by 1.8% during the second quarter of 2016 and were up 8.5% compared to the same period a year earlier, according to the latest quarterly index data. This took the typical price of a standardised UK property to a record of £215,582 from £211,868 in the first quarter of 2016, the Halifax House Price Index administered by market shows. The data also shows that London house prices have increased more than double the UK average and nearly four times greater than in Northern Ireland despite stagnating in the second quarter of the year while prices in Scotland and Wales fell. Also, the annual increase of 8.5% during the second quarter was the lowest recorded since the third quarter of 2015 but house prices have now risen on a quarterly basis for 15 successive quarters, and prices are also up some 36.6% since the height of the financial crisis in the spring of 2009. But overall, considerable regional variations in terms of both house price inflation and standard house price levels continued into the second quarter of 2016. London, followed by the South East, remain by far the most expensive areas to purchase housing, with the average house price in the capital currently pushing close to £450,000. With the lowest prices in Northern Ireland at £119,000, the gap between the most expensive and cheapest regions is at a new record of just under £330,000. That said, in a sign that April’s stamp duty changes have perhaps taken some heat out of the London market, prices were unchanged in the second quarter following a 7.2% rise in the previous quarter, although they remained well up on a year earlier at 14.6%. Along with the South East with growth of 13.9%, house price inflation in London was the strongest seen in the UK. Outside of these two regions, no others recorded double digit house price rises with most registering considerable slowdowns compared to the previous quarter. In Scotland prices fell 1.6% and were down by 0.6% in Wales while the rate of growth in Northern Ireland fell sharply to just 3.5%. Moreover, house prices in Northern Ireland are still some 48% down on their peak seen in the second quarter of 2007. Indeed, in Wales prices remain close to 10% down on pre-financial crisis levels and Scotland some 6.4% down. Other regions currently recording house price levels below pre-financial crisis highs include the North down 6.9% and the North West down 2.5%. ‘The UK housing market showed signs of cooling in the spring, with the annual rate of inflation slowing to 8.5%. Although average prices moved 1.8% higher than the first quarter, only six of the 12 UK regions saw house prices rise in the three months to June, with prices falling in five regions and stagnating in London,’ said Chris Williamson, chief economist at Markit. ‘This is the first time that prices have failed to rise in London since late 2012. The… Continue reading
Decline in farmland values in England slows in second quarter of 2016
English farmland values fell by just 1.7% in the second quarter of 2016 compared with a drop of 3% during the first three months of the year, according to the latest index. The average value of English farmland is now £7,773 an acre, some 6% lower than the record high of £8,306 an acre from last September. But over five years it is up 26%, over 10 years up 160% and over 50 years some 4,763% higher. The Knight Frank Farmland index says this compares strongly with other asset classes and also says that demand remains despite the decision by the UK to leave the European Union. Indeed, the index data was collected after the historic referendum on 23 June. The report points out that in the last decade the top end of the residential market in central London, for example, has increased by 98% over the same period, although a post-Brexit scramble for safe haven assets has seen gold’s 10 year return hit almost 200%. ‘Given that agriculture is the biggest recipient of EU funds via the Common Agricultural Policy (CAP) so many UK farming businesses rely on farm subsidies to break even, it might have been expected that the Brexit vote would have had a bigger effect on prices,’ said Andrew Shirley, head of rural research at Knight Frank. ‘However, there are a number of reasons why this hasn’t happened. According to polls, a majority of farmers backed Brexit so the sector will not be unduly pessimistic following the referendum, he explained. ‘The slide in sterling has also had an immediate upward effect on wheat prices and will help livestock exports. Sterling’s loss also makes UK farmland better value for overseas investors. We have already received a number of enquiries from a wide ranging geographic spread of potential buyers attracted by this currency boost and also farmland’s safe haven status,’ he added. Shirley also pointed out that a new round of potential quantitative easing currently being mooted by a number of central banks could accentuate this trend. ‘Prices should remain steady for the rest of the year, but looking further forward it is harder to judge where they will head,’ he said. ‘Much will depend on the outcome of the UK’s trade negotiations with the EU and the rest of the world, as well as how the government decides to replace the CAP. If any of these changes render some farming businesses unsustainable we will likely see more land come to the market,’ he explained. ‘This could put downwards pressure on values, but it will also present opportunities for entrepreneurial businesses and investors, and demand should remain firm,’ he concluded. Continue reading
Shortage of supply pushing up house prices in Ireland
A nationwide supply shortage has fuelled a rise of over 2% in the price of the average house in the last three months in Ireland. The majority of counties in the country recorded price increases in the second quarter of 2016 with a lack of supply exacerbated by would be commuters moving further from Dublin as they look for more affordable homes. The Real Estate Alliance Average House Price Survey shows that the average three bed semi-detached home nationally now costs €195,361, an increase of over €4,000 or 2.18% since the end of March and up 4.49% compared to the same time last year. ‘We are seeing firms who are in business for 50 years who have never experienced such a low level of supply, and this is responsible for causing sharp increases in prices in some areas over the past three months,’ said REA chairman Michael O’Connor. While prices in Dublin city and county grew by 1.4% to €363,333 since March, competition for scarce housing below the Central Bank’s €220,000 deposit limit in both the inner and outer commuter areas is fuelling an inflationary market. Prices in the commuter counties of Cork and Galway have risen by €5,000 to €214,588, a rise of 2.4%, while those in the rest of the country have increased by over €3,000 to €128,768 or 2.75%. Three bed semi prices in Kilkenny city rose by €20,000 or 12.5% in the past three months, a figure that is entirely driven by record low supply, according to Michael Boyd of REA Boyds. ‘Our analysis of the Price Register tells us that there are 15 less units per month selling in the county than this time last year and that this is the lowest level since these records began,’ he said. ‘We are finding that demand is strong, mainly from loan approved returned emigrants or Eastern European buyers. We desperately need new building to start, especially as prices for quality stock are now well into viable levels for builders to commence,’ he added. The survey also shows that as the flight to another of the outer commuter counties continues, prices in Laois have risen by €10,000 or 8% in the past three months while prices in Kildare have remained static at €242,500 in the four main towns, due to a low supply of suitable housing stock, combined with a relatively higher price to neighbouring counties. In contrast, Meath has now broken the €200,000 barrier at €201,250 following a 3.21% growth in three months, as Dublin based commuters move out to houses they can afford under the Central Bank’s deposit guidelines. In Wicklow, prices in Blessington have risen from €240,000 to €265,000 in a three month period, a rise of 10.42%, with agent REA Murphys advising that there is a bubble in the three bed semi market. Prices in the county as a whole have gone up by 4.44% to €235,000 over the past three months. Louth continues to act as a microcosm of… Continue reading
