Tag Archives: crisis
Private rented sector in UK seeing rapid growth, new tenant survey reveals
The private rented sector is continuing its rapid growth across the UK and is now well established as the second biggest form of tenure after home ownership, new research shows. It has overtaken the social rented sector and large scale investment into the private rented sector (PRS) by funds and other institutions is set to treble over the next five years boosting growth further, according to the new tenant survey from real estate firm Knight Frank. The Tenant Survey carried out by YouGov on behalf of Knight Frank estimating that total investment will rise to £50 billion over the next five years and large scale investors are operating an average gross to net yield of 26% for new Build to Rent developments. It also shows that some 53% of tenants favour a six month or one year tenancy for rented accommodation and 52% said living close to work or their place of study is a key priority while 30% said the main reason for moving between rented properties was to ‘upgrade’ to a nicer or larger property. The survey found that 38% of tenants have lived in five or more rental properties and while the majority of respondents had moved within a mile of their previous property, some 19% had moved more than 60 miles, indicating a relocation for work or study, highlighting the flexibility of PRS as a tenure. Some 24% of Londoners are prepared to pay 50% as a maximum amount of their gross annual income on rent, up from 22% last year and a quarter of those living in the PRS do not want to, or don’t know if they want to buy a home in the future. Of those that express a desire to eventually buy a home using a mortgage, less than half are currently saving towards a deposit. Also, a quarter of those living in the private rented sector live alone, while 34% live in a couple without children. Some 43% of 18 to 24 years olds share with other adults in a flat share. Grainne Gilmore, head of UK residential research at Knight Frank, pointed out that the private rented sector is continuing to grow in size, with around 5.4 million, or 20% of households now being let out to private tenants. ‘There has been a generational shift in the private rented sector. More households are now living in rented accommodation for longer, and while housing affordability is certainly a factor here, rented accommodation is also becoming an established flexible form of tenure, an attribute welcomed especially among younger workers,’ she explained. Indeed, this was confirmed in last year’s Tenant Survey, with 38% of under 35s saying they didn’t want a mortgage or that renting suited their lifestyle, rising to 49% for those aged under 25. The number of under 45s living in the sector has more than doubled, to nearly 3.1 million over the last decade, and those aged 25 to 34… Continue reading
Average house prices in UK continued to rise in May, latest ONS index shows
Average house prices in the UK increased by 8.1% in the year to May 2016, unchanged from the previous month and continuing a run of strong growth seen since the end of 2013. The data from the Office of National Statistics (ONS) also shows that the average UK house price was £211,000 in May 2016, some £16,000 higher than in May 2015 and £2,400 higher than April 2016. The ONS report says that the main contribution to the increase in UK house prices came from England where they increased by 8.9% over the year to May 2016, with the average price in England now £227,000. Wales saw house prices increase by 3.6% over the latest 12 months to stand at £143,000. In Scotland, the average price increased by 4.0% over the year to stand at £141,000 and the average price in Northern Ireland is currently £118,000. On a regional basis, London continues to be the region with the highest average house price at £472,000, followed by the South East and the East of England, which stand at £306,000 and £265,000 respectively. The lowest average price continues to be in the North East at £124,000. London was also the region which showed the highest annual growth, with prices increasing by 13.6% in the year to May 2016. The South East at 12.9% and the East of England at 12.8% also had high annual growth. The lowest annual growth was in the North East, where prices increased by 3.2% over the year. It is low interest rates, increasing employment and wage inflation that are supporting house price growth, according to John Goodall, chief executive officer of peer to peer platform Landbay. But he pointed out that the index has yet to see the effects of Brexit on prices. ‘What is clear is that a lack of housing supply will remain a crucial issue. Theresa May's new government must now commit to further housebuilding pledges and recognise the increasingly important role the private rented sector plays in the housing mix,’ he added. Rob Weaver, director of investments at property crowdfunding platform Property Partner, believes that housing activity was relatively mute in May due partly to a double whammy of tax changes, namely the stamp duty hike for second homes and the cuts to mortgage interest relief. ‘However, prices appear to be holding and even increasing in many areas due to the fundamental imbalance in supply and demand. Despite a recent slowing down in London, the capital still remains the engine of the housing market in the longer term, showing price rises more than almost double the annual rate of all other regions apart from the South East and East of England,’ he pointed out. ‘Following recent Bank of England announcements on softening monetary policy, it looks likely home owners mortgage interest payments will remain historically low for much longer than expected. This could help continue to support prices over the next 12 months,’ he added. However, Jonathan Hopper, managing director of the buying… Continue reading
European commercial real estate investment up 2.5% in second quarter of 2016
Commercial real estate investment remained strong across Europe in the second quarter of 2016 totalling €54.0 billion, up 2.5% on the previous quarter and 30.4% on the 10 year average, new research shows. However, overall activity fell short compared to the second quarter of 2015 with the office sector having the strongest quarter, seeing an 8.3% increase on the first three months of 2016, driven by a particularly strong performance in the Nordic region. The research from CBRE also points out that despite uncertainty in the UK caused by the European Union referendum, sentiment remained strong in other European markets and investment levels were stable year on year. Investment volumes in France and Sweden, Europe’s third and fourth largest markets, were particularly resilient. The data shows that over the last year investment in these markets has grown 32% and 20% respectively. Indeed, second quarter results in both France and Sweden were boosted by buoyant office sectors. Ireland also performed extremely strongly, transacting a record €2.3 billion of commercial property deals in the second quarter of 2016, more than double that of the same quarter last year, although the sale of the Blanchardstown Centre for close to €1 billion closed during this quarter. Poland followed suit, transacting €1.5 billion in the second quarter, over three times the level recorded in the same period last year. But Germany showed decreased levels of investment in the second quarter, which is likely connected to a lack of availability of stock in the core markets, which dampened the European total. Core property in Germany remains highly regarded as a safe haven and sentiment remains strong. The UK also performed less strongly than its continental European counterparts in the run up to the Brexit vote although strong fundamentals continue to underpin the UK market. The recent depreciation of sterling, coupled with low interest rates, has attracted the attention of overseas investors to the UK, and with the spread between bond yields and property being the widest on record, the fundamentals of UK and continental European real estate remain attractive. ‘Whilst investors have reacted cautiously to Brexit, the market fundamentals remain strong and investors still have significant capital to deploy. The uncertainty means that many investors will watch and see how the market develops before deciding how to act, said Jonathan Hull, managing director of Investment Properties EMEA at CBRE. ‘However, sentiment is already improving as the UK enters a more stable political environment and there are signs that the market is responding positively to this,’ he added. According to Miles Gibson, head of UK research at CBRE, the EU referendum risk was undoubtedly one factor affecting investment activity in the second quarter. ‘But instability in the financial markets earlier in the year was similarly important in causing investors to be more risk averse,’ he added. Continue reading
