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Prime central London prices down 0.2% in June
Average property in the prime central London market fell by 0.2% in June, making it the weakest monthly result since November 2014, according to the latest published data. It means that year on year annual price growth in this sector is down, 0.6%, according to the index report from international real estate firm Knight Frank. Tom Bill, head of London residential research at Knight Frank, pointed out that the index data for June largely covered the period leading up to the UK’s referendum on the country’s future in the European Union. ‘Weaker price growth, together with rising economic and market uncertainty surrounding the European vote, has prompted vendors to reduce asking prices over recent months,’ he explained. But he pointed out that this more realistic approach has resulted in an uptick in activity, most notably in the immediate aftermath of the referendum result on 24 June. Following the referendum the number of transactions across prime London was 38% higher than the prior week and 29% higher than the final week of May. ‘This positive story has been widely reported, but what has often been missed is the weakness of sales prior to the vote, which has flattered more recent sales data. While the reduction in asking prices has boosted recent activity, it would be wrong to ignore market risks,’ said Bill. ‘An initial reading of post-referendum data on new buyer registrations and viewings reveals both have slipped back slightly compared to the same period a month ago although it is still very early to draw firm conclusions,’ he added. Looking ahead, Bill said that political uncertainty in the UK will undoubtedly weigh on sentiment, and will be likely to last until at least the heads of terms of the new relationship between the UK and the EU are agreed. ‘A reduction in political risk, should allow mitigating factors to kick in and support the London market. A cut in the UK base rate, while unlikely to fully translate into lower mortgage rates, would be a positive for the property market. Similarly, recent and proposed rate cuts in markets like India and China and record low government bond yields make property a more attractive investment by comparison,’ he explained. The index report also shows that the current residential yield in prime central London is 3.1% versus 0.9% on a 10 year UK government bond. Bill also pointed out that the recent weakening of Sterling is having a positive impact on relative affordability for international buyers in the London market. For example, for a Hong Kong buyer effective pricing in prime central London is 21% lower than it was two years ago. ‘Looking at the market by price band, we see a more nuanced story. On a quarterly basis, while the whole market saw prices fall 0.3%, prices for sub-£1 million properties rose on average by 0.4%,’ Bill also said. The data also shows that this outperformance of lower price points within the prime London market is… 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
Buy to let lending via limited companies up in the UK in first half of 2016
Lending to buy to let investors borrowing via limited companies in the UK grew in the first half of the year according to the latest data to be published and the number of lenders and products available to limited company borrowers also increased. According to transactional data the number of buy to let mortgage applications completed by limited companies grew to 30% of all buy to let completions, up from 21% in the second half 2015, and 18% in the first half of 2015. By volume the number grew to 30% of all buy to let loans, up from 25% in the second half of 2015 and 20% in the first half of 2015, according to the buy to let data from Mortgages for Business. It also shows that the number of lenders offering products to limited company borrowers also increased in the first half of the year to 14 from 12 in the second half of 2015. The rise was due to existing buy to let lenders introducing limited company products rather than new lenders entering the buy to let sector. Lenders offering limited company products now account for 42% of the whole buy to let lending sector, up from 30% in the first half of 2016. Product numbers increased to an average of 154, up from 147 in the last six months of 2015, although the actual proportion of them as a percentage of the whole buy to let market fell due to the increase in product numbers available to individual borrowers. Whilst average products numbers for limited companies accounted for 13% of all buy to let products in the first half of 2016 but by the end of June the percentage had risen back to 16% of all buy to let products, the same percentage recorded in the first half of 2015. ‘Both applications and completions for limited company borrowers appear to have stabilised at around one third of all buy to let business,’ said David Whittaker, managing director of Mortgages for Business. ‘However this masks a dramatic change in the investment pattern for new purchases where the proportion investing through limited companies has risen from less than 20% by number or 25% by value in the first half of 2015 to over 50% in 2016, with second quarter applications by limited companies running at over 60% of total applications related to purchases of buy to let properties. This increasing proportion will also drive an increase in the proportion of completions in the next quarter,’ he explained. He pointed out that there has only been a slight uplift in the proportion of remortgaging activity that relates to limited company borrowers, due to historical investment patterns. ‘It would, however, appear that some landlords who already own property personally are sitting on their hands somewhat and holding back from remortgaging, probably waiting to see how the economy pans out post-referendum,’ he said. ‘With the Chancellor announcing his intentions to lower corporation… Continue reading
