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New analysis suggests Brexit vote is affecting prime central London lettings market
The lettings market in prime central London has weakened rental as tenants capitalise on the current economic uncertainty including the upcoming referendum on the future of the UK in the European Union. The latest analysis report from specialist residential investor advisors London Central Portfolio (LCP) says that the rental market is reflecting a slowdown as a result of economic strains. It shows that whilst new lets have seen consistently positive rental upticks over the last five consecutive quarters, averaging a 5.5% increase overall, the market is beginning to subdue, according to the published statistics. Against a backdrop of falling stock markets, a collapse in oil prices and Brexit uncertainty, new lets have achieved just a 0.3% increase over the last quarter. This has been exacerbated by the predictably quieter Easter and May bank holiday period. The analysis, however, shows that re-lets are showing a significantly weaker picture, with a 1.2% fall in rents over the last quarter, following a fairly static picture over the course of the year. The report says that this is due to applicants being attracted to brand new properties, without any sign of previous use, coupled with a significant uptick in rental stock available. This has increased by 26.7% from 23,039 to 29,198 in the last three months, attributable to a reduction in transactions in the sales market which has led to more properties being available for rent. ‘The overall suppression in rents reflects a market dynamic which was conspicuous during the credit crunch, as tenants capitalise on economic uncertainty to leverage up their bargaining power. This has been compounded by companies cutting their relocation budgets in the face of global instability and, in some cases, delaying relocations in the run up the EU referendum,’ said Naomi Heaton, chief executive officer of London Central Portfolio. ‘In light of the current market conditions, landlords may need to be more flexible to accommodate the higher negotiating power of applicants and to prevent void periods which may erode any increase in rent ultimately achieved. For as long as this cycle lasts, landlords also may need to be more open to remedial and upgrade works between tenancies,’ she explained. ‘A slowdown in the re-let market has been compensated by continued positive renewal increases by tenants in situ. With Landlords often able to achieve contractual rental increases, above that which can be achieved in the open market, average rental growth of 3.3% in the last quarter has been seen in contrast to the softer market elsewhere,’ she added. The report also points out that despite the somewhat gloomy picture generally, corporate belt tightening means that small one and two bedroom properties are reinforcing their position as the hardest working sector of the market. Appetite for these mainstream rental properties remains strong, with void periods down to just 23 days on average. For these properties, the area around Marylebone, Fitzrovia… Continue reading
Latest index figures show Spanish property prices are stable, but rents down
Average residential property prices in Spain have remained stable, rising 0.1% in April compared to a year ago, according to the latest index data to be published. But the April increase is more moderate than the year on year growth recorded in March and February at 0.8% and 2.1% respectively, the data from real estate appraisal firm Tinsa shows. However the figures also show that between January and April, house prices have accumulated an average increase of 1.9% and compared to the peak of the market in 2007 they are down 41.1%, a level similar to the summer of 2003. A breakdown of the figures show that the biggest year on year price increase was on the Mediterranean Coast with growth of 4.4%. Prices in metropolitan regions were unchanged year on year and in large cities they were down 0.2%. The Balearic Islands and the Canary Islands, where prices have been rising, saw a fall of 0.4% and the other municipalities group recorded a fall of 0.9% but this group had the biggest increase in prices between January and April at 3.8%. Another set of figures show that compared with the end of 2015 prices are up more substantially, with growth of 3.8% in other municipalities in the first quarter of 2016, up 2.9% in the Balearic and Canary Islands, up 2.7% on the Mediterranean coast, up 1.1% in metropolitan areas and up 0.7% in large cities. While prices are down overall by 41.1% comparted to the peak of the market, this decline varies according to location. It is down 30.6% in the Balearic and Canary Islands, down 35.8% in other municipalities, down 46.7% on the Mediterranean coast, down 45% in large cities and down 44.4% in metropolitan areas. Separate figures from the National Statistics Institute show that average rents in Spain were down 0.1% in April year on year. It means that rents have now fallen for 37 months in a row. But the latest decline is more moderate than the 0.2% recorded in March while for the first four months of the year rents are up 0.1% and there is regional variations. Rents in Galicia increased by 0.4%, were up 0.3% in the Balearic Islands, up 0.2% in Navarre, Murcia, Andalucia, Catalonia and Melilla, but were unchanged in Cantabria. But a number of regions saw declines, including a fall of 1.9% in La Rioja, down 0.6% in Castilla-La Mancha, Castilla y León, Extremadura and the Basque Country. Madrid record rental fall of 0.5%, while rents were down 0.3% in Asturias, by 0.2% in Aragón and Ceuta and by 0.1% in Valencia and the Canary Islands. Continue reading
Property slowdown a myth for majority of London, new research shows
Price growth at the top end of the London residential property market has slowed but the majority of the city is seeing real estate values grow. Across most of the city property prices are up 8.2% year on year but for the top quarter prices are down by 2.4% year on year and 0.6% quarter on quarter, according to the latest report from Stirling Ackroyd. A breakdown of the figures shows that the traditional top quarter accounts for two thirds of Greater London’s postcode districts experiencing price falls with Kensington High Street seeing prices fall by 11.8%. This is followed by Notting Hill with a decline of 10% and Hampstead but areas such as Soho’s W1, Sutton and Tottenham are now driving London property price growth instead. By contrast, if London’s old luxury postcodes are excluded, the remaining three quarters of the capital saw a 2% rise over the same period, or annualised house price growth of 8.2% for the overwhelming majority of London’s neighbourhoods. Across the board, house prices in the capital rose by 1.6% in the fourth quarter of 2015, with the average London property now worth £533,000. As a broad average this translates to a 6.6% annualised growth rate for the whole of Greater London. Out of a total 272 postcode districts in the capital, 47 saw local drops in average property values. However 32 of these districts fall within London’s traditional prime top quarter of the property market. Within the top quarter of London’s property market, a given postcode has a roughly 50:50 chance of hosting falling house prices whereas for the rest of the capital a given postal district has a 93% probability of price rises. ‘London’s hugely diverse property market is undergoing a serious readjustment, with the traditional old heart of prime London under pressure from many fronts; from a low global oil price and China’s economic slowdown, to stamp duty reform and international fears of Brexit,’ said Andrew Bridges, managing director of Stirling Ackroyd. ‘Yet for most of London’s communities, these factors affecting luxury buyers are less important. There are still too few new homes coming onto the majority of the market compared to demand from a growing population and the majority of the London market is still in tune with, and restrained, by those fundamentals. Anyone who thinks that London property is synonymous with international jet setters is only looking at a very small part of what London has to offer,’ he explained. He also pointed out that there is also an outwards wave of interest, away from the old peaks of property prices. ‘Within the wider spread of London home buyers, a growing band of increasingly affluent people can no longer afford the most overcrowded traditional areas of London,’ he said. ‘This demographic of professionals are redefining the map of the capital’s up and coming locations. New, dynamic parts of London are emerging further east, driven by a… Continue reading
