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UK interest rates cut to lowest ever at 0.25% in boost for home borrowers
The decision by the Bank of England to cut interest rates in the UK to their lowest ever level at 0.25% is not expected to have a major impact on the general property market but it is a signal that borrowing on a home is not likely to rise in the near future. It is the first time that the interest rate has been cut for seven years and some experts had even been predicting that it might rise but the potential economic fallout due to Brexit has ensured that borrowing will remain historically low. However, some parts of the real estate market could see an effect. According to Andy Pyle, UK head of real estate at KPMG, it will depend on location and price. ‘Whilst a number of overseas investors are being cautious, others are attracted by the depreciation in sterling enabling them to buy more cheaply, and the reduction in interest rates has already had an impact on the value of the pound,’ he said. Adam Challis, Head of residential research at JLL, pointed out that the reduction will signal to mortgagors that cheap mortgage rates will be around for even longer. ‘This will benefit many would be home movers and we are encouraged by the Term Funding Scheme that will ensure lenders pass on most of the rate reduction to consumers,’ he said. ‘More important for the housing market is a strong, stable economy and the rate cut will help. Post-referendum we need greater certainty that will encourage house builders, protect jobs, and ultimately provide a range of housing that people can afford,’ he added. While it will be welcomed by many home owners, Mark Hayward, managing director, of the National Association of Estate Agents (NAEA) explained that for future first time buyers saving for a deposit on their first home they face getting less interest on these savings. ‘It represents a body blow for savers and those hoping to get their first foot on the property ladder. Home owners with outstanding mortgages are currently enjoying some of the lowest fixed rate mortgages seen for a long while, with lenders battling it out to offer the cheapest deal. Cutting interest rates further is likely to improve confidence among those prospective house-buyers who may have put their search on hold, following the Brexit vote in June,’ he said. ‘But for those saving to pay a deposit on a future home, the interest rate cut will be frustrating. The last government focused heavily on supporting first time buyers with the introduction of schemes such as Help to Buy. Many of those looking for help now will have to wait for initiatives such as the Lifetime ISA to launch, which will then only help those under 40 to save for a home,’ he pointed out. ‘The outcome of the today’s rate cut is simple in that we will see aspiring homeowners saving harder for longer, which will no doubt have an impact on… Continue reading
Scottish farmland values static in first half of 2016
The value of Scottish farmland remained virtually static in the first half of 2016, down just 0.2% to £4,357 per acre, according to the latest sector index. Year on year values are down 1.7% but up 26% over five years, up 169% over 10 years and up 174% over 20 years, the data from the Knight Frank Scottish Farmland Index shows. A breakdown of the figures show that good quality arable land remains at £9,046 per acre, while the price of permanent pasture fell fractionally to £2,719 per acre and overall despite prices holding up, there has been relatively little market activity in 2016. ‘There have been very few farms sold so far this year, and fewer than usual were launched around the time of the Royal Highland Show, which is the point the market here traditionally gets going,’ said Tom Stewart-Moore, head of Scottish farm sales at Knight Frank. ‘We are still talking to potential vendors who had just got to grips with the result of the recent reform of the Common Agricultural Policy and Land Reform, but until they get a better feel for what Brexit means for the Scottish agricultural industry they are wary of committing to a sale,’ he explained. ‘Combined with the continued slump in commodity values, many people were expecting a rush of farms to the market in 2016 and a subsequent drop in prices,’ he pointed out, adding that low interest rates mean there have been very few forced sales so far. He also pointed out that demand for good quality arable and livestock units is definitely outstripping supply and demand also remains strong for amenity and sporting estates. Knight Frank recently sold the 6,500 acre Kinnaird Estate in Perthshire for in excess of its £9.6 million guide price and an 8,000 acre stalking estate in Sutherland, which is due to launch soon, is expected to be another good test of the market. ‘Although Scotland did not vote for Brexit, the slide in the value of Sterling since the referendum makes land here better value than it was before the vote so I’m expecting more interest from overseas buyers,’ said Stewart-Moore. ‘Despite uncertainty in the economy, the value of the pound and volatility in the stockmarket, land is still seen as a very safe investment,’ he added. Continue reading
New UK residential listings bounce back after downturn in June due to EU vote
New properties listed for sale in the UK increased by 3.4% in July with 62% of towns and cities seeing an increase in supply July compared to the previous month, the latest research shows. The biggest rise was recorded in Durham with a rise of 51%, followed by Hartlepool with an increase of 32.5% and Hemel Hempstead up by 31.7%, according to the figures from online estate agents HouseSimple. London’s property supply was up 13.7% in July, with Bexley, Greenwich and Lambeth seeing new property listings rise 44.1%, 41.3% and 40.5% respectively. The index report suggests that home owners don’t appear to be too worried about the possibility of falling property prices, as July saw new property listings bounce back from June when they fell by 7.3% across the country and by 12.8% in London. However, despite the majority of towns and cities experiencing a boost in supply in July, more than a third experienced significant falls in new properties listed, including Bootle, where listings fell by 30.8% in July and Chichester with a fall of 27.7%. ‘It has been business as usual after Brexit in terms of activity, with many sellers who were waiting on the result of the Referendum, now actively marketing their properties. The reality is that people need to sell for a whole host of reasons, and delaying post-Brexit is simply not an option if people are relocating for work or family reasons,’ said Alex Gosling, the firm’s chief executive officer. ‘On the ground, what was probably a sellers’ market before the vote is now going to be a more level playing field. That doesn’t mean that quality properties in desirable areas won’t still sell for close to or at asking price, but buyers are holding a few more cards now, and motivated sellers may need to more flexible on price negotiations,’ he added. Continue reading
