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Big rise in new rental properties advertised in run up to additional homes tax hike
The rush to beat the April additional homes stamp duty deadline in the UK saw a big rise in new rental properties being listed in the week of the tax hike, research has found. Some 20.6% more properties were being advertised compared to the previous week in more than 90 towns and cities across the country, according to a study from property crowdfunding platform Property Partner. The research looked at the number of new rental properties being advertised between 28 March and 03 April and compared it to the period of 21 March to 27 March. In 85% of the locations there was an increase in the number of new rental listings over the past week compared to the previous week and in many areas, there was a significant increase in new rental properties advertised. Telford in the West Midlands, for example, saw rental listings up almost 160% in the week of the stamp duty deadline, compared to the previous week, and in Stevenage new adverts almost doubled. While five out of the top 10 areas in terms of a rise in rental properties being advertised, were in the North of England. Of the major cities, London saw new rental property listings up 19.4% between 28 March and 03 April, compared to the previous week. While, in Manchester and Birmingham, new rental ads were up 28.7% and 49.9% respectively The following table shows the UK towns and cities that saw the biggest increase in new rental property listings between 28th March and 3rd April, compared to the previous week, 21st March to 27th March. ‘Inevitably there was a final rush by investors to complete on property purchases ahead of the 01 April stamp duty surcharge deadline. More rental properties on the market is good news for tenants, but sadly this looks like a temporary blip,’ said Dan Gandesha, the firm’s chief executive officer. ‘The savings landlords have made may turn into losses further down the line. Future cuts to mortgage interest tax relief and likely interest rate rises, could wipe out profits and force many landlords to sell up,’ he explained. He believes that in the longer term it is likely that the supply of rented properties will fall and rents increase and the most important issue is to build more homes for tenants as well as buyers. ‘The Government has changed the whole structure of the UK buy to let market and made it less attractive and viable for amateur landlords. Once the dust has settled on the stamp duty hike, anyone looking to invest in residential property would be wise to consider alternatives to traditional buy to let, which do away with the hassle, expense and tax implications,’ added Gandesha. Continue reading
Low mortgage rates and strong demand benefitting US home builders
Low mortgage rates and strong demand should create a positive outlook for home builders in the United States but a serious labour shortage could hold them back. During the 2009 recession nearly a quarter of construction workers lost their jobs as the housing market collapsed and there is evidence that a number of labourers are not returning, leaving remaining construction workers overstretched, says an analysis report from Hermes Investment Management. It explains that this lack of qualified labour causes two fundamental problems for the industry. First, the completion rate struggles to keep pace with demand, which is on the rise in the US, and secondly margins shrink as workers command much higher pay. However, one of the most fundamental challenges facing US home builders is a reduction in first time buyer demand. The report suggests that mounting student debts, lagging wage inflation, scarce financing and lifestyle preferences weigh on the desire to buy a first home. ‘While demand for housing is generally rising in the US, the lack of younger buyers could permanently or semi-permanently remove a key driver of demand,’ said analyst Andrey Kuznetsov. He pointed out that 49% of 25 year olds lived with their parents in 2013, some 20% higher than in 1999, dramatically reducing the aggregate number of households even without adding those choosing or having to rent. ‘While overall demand still outstrips supply, this gradual cultural shift is removing some pipeline demand,’ added Kuznetsov. The report also explains that housing market trends specific to certain US states can also work against home builders. Demand for housing in certain parts of Texas, such as Houston, started deteriorating after the oil price dramatically declined in late 2014 and continued to fall throughout the last year. This initially affected more expensive properties, but is now also impacting lower priced homes. In California, where international buyers are usually a significant presence in the market, the stronger US dollar and weakness in buyers’ home economies are deterrents. Additionally, the volatility in equity markets could slow the demand from employees of the historically buoyant tech sector in the state. Home builders with above average exposure to these markets are increasingly at risk. However, it adds that short housing supply and low mortgage rates, the average 30 year loan charges 3.65% interest, suggest that fundamentals for the sector are strong. ‘However, in an environment where build times are lengthening, margins are under pressure, demand from first time buyers is declining and certain regional risks are increasing, we think there is more risk to the downside. Furthermore, the sector is trading at a relatively expensive level compared to others, supporting our negative view,’ said Kuznetsov. Continue reading
Demand for UK property fell by 5% in first quarter of 2016
Property demand across the UK as a whole fell by 5% in the first quarter of 2016 to 39% overall but demand is still up 9% compared to the same period in 2015. London’s outer boroughs and commuter belt continue to outperform the rest of the country where property demand is concerned, according to the hot stop index from estate agent eMoov. With demand at 72%, the London Borough of Bexley remains the hottest spot in the UK once again while Bristol at 68% climbs from third to second and Bedford at 66% was up four places to third. Cambridge and Watford, both at 62%, remain in the top 10 but have dropped down the rankings and outside the top five while Medway at 63% and Milton Keynes at 61% appear in the top 10 at fifth and ninth. Aylesbury at 63% also returns to the top 10 in sixth for the first time since the start of 2015. With demand currently at 65% Ipswich is placed in the top 10 for the first time to take fourth place and the report suggests that a direct commute into Liverpool Street of just over an hour is making the town more popular with London workers searching further afield for affordable property. Aberdeen with demand at 15% is one of the lowest cities on the list but it has seen a 50% increase over the last quarter so that property demand has returned to the same level as this time last year and the city is now off the bottom spot. At 27% Durham is the second biggest climber over the last three months and has also seen the biggest increase in demand over the last year across the whole UK at 90%. Second biggest climber year on year is North Lanarkshire in Scotland with a 67% growth in demand, followed by Barnet up 57%, Sandwell up 56%, Bolton up 45%, Gloucester up 42% and Manchester up 40%. Aberdeen’s shift up the table means it is now only the fifth coldest spot in the UK. Now at the bottom are the London boroughs of Westminster and Kensington and Chelsea, both at 12%. ‘It is interesting to see that despite the rush ahead of April’s stamp duty deadline, the UK market as a whole has cooled during the first half of the year. Although it’s undoubtedly a seasonal influence due to the festive period, it would seem that those looking to push through a second home or buy to let purchase, didn’t have the overall demand impact that many thought they would,’ said the firm’s chief executive officer Russell Quirk. Continue reading
