Tag Archives: economy
Overseas investors become largest investors in UK commercial property
Overseas investors have for the first time overtaken UK institutions to become the largest owners of UK commercial property, new data shows. The value of portfolios held by overseas owners has more than doubled, up by 129%, over the last decade to £94 billion, according to the Property Industry Alliance. The increase means that overseas investors now own almost a quarter, 24%, of all commercial property investment in the UK, the Property Data Report 2014 shows, with three quarters of this investment in London. By contrast the total owned by UK institutions fell by 16% over the decade to £75 billion, representing just under one fifth of the £385 billion invested in commercial buildings. ‘The annual Property Data Report is an invaluable resource which sets out clearly key facts about commercial property and shows the crucial role it plays in the UK’s economy,’ said Sir Robert Finch, chairman of the Property Industry Alliance. ‘Aside from its contribution to the economy, which the report shows to be sizeable, the commercial property industry is also a platform for virtually all the country’s other major industries and a significant contributor to the financing of retirement. Its attractiveness to investors from both the UK and overseas is therefore to be welcomed,’ he added. The research also reveals that average rental increases over the last 10 years in the office sector of 1.1% and 0.5% in the retail sector have increased at a much slower rate than other business costs, and well below the rate of retail price inflation of 3.3%. Drawing on recent work by the Investment Property Forum, the report highlighted that of the £683 billion total UK commercial stock, retail is the largest sector by value at £305 billion, followed by offices at £195 billion and then industrial property at £126 billion. Other commercial property, including hotels and leisure, was valued at £58 billion. Continue reading
UK mortgage lenders braced for further interventions despite market growth cooling
Mortgage lenders and brokers expect further interventions by the Bank of England’s Financial Policy Committee (FPC) despite market growth cooling, according to new research. According to the latest survey by the Intermediary Mortgage Lenders Association (IMLA) some 55% of intermediary mortgage lenders and 40% of brokers are expecting further intervention. The findings come as the first FPC recommendations; the interest rate stress test against a 3% base rate increase for borrowers, and a 15% cap for lenders on the volume of new loans above 4.5 times loan to income (LTI ), take effect across the mortgage market this month. IMLA’s research reveals lenders and brokers are in agreement that the 3% stress test will have the biggest impact of the two measures. Some 54% of brokers and 26% of lenders believe this will have a high impact, compared with just 34% of brokers and 11% of lenders who feel the same about the cap on high LTI loans. Following the implementation of the Mortgage Market Review (MMR) in April and the FPC recommendations in its Financial Stability Report in June, IMLA’s research found that industry optimism over the mortgage market recovery has cooled. Just 44% of lenders and 41% of brokers feel market conditions were improving in the third quarter of 2014, down from 100% of lenders and 90% of brokers in the first quarter of 2014. Just 3% of brokers felt conditions were worsening in Q1, but 45% took this view in the third quarter and the proportion that felt lending volumes were growing faster than expected dropped from 87% to 31% among lenders from the first to the third quarters and from 60% to 45% among brokers. Concerns remained over the housing market with the latest findings showing 31% of lenders and 38% of brokers believing house price growth was unsustainable, up from 13% and 25% in the first quarter. However, subsequent data from national house price indices show that the monthly growth of house prices has since slowed. ‘These findings show the industry is well aware that its recovery will be closely monitored in the interests of maintaining economic and financial stability. The announcement that the FPC is considering loan to value (LTV) limits shows it remains vigilant,’ said Peter Williams, executive director for the IMLA. ‘But recent changes, including MMR, have already had a calming effect on activity and the full effects are still to emerge. IMLA’s research has clearly shown that some would-be borrowers are not passing initial broker checks which have been tightened to fully reflect the lender assessments that follow,’ he explained. ‘While caution is needed for the good of consumers and the economy, this applies to regulation as well as lending. Market interventions have been reasonable to date, but an immediate push for further regulation would be excessive, especially when house price growth appears to be slowing,’ he added. Using credit policies to compensate for weak supply in the housing market can have a major impact on who can… Continue reading
Average House prices in England and Wales up 8.4% year on year
Average house price in England and Wales increased 1% in August to reach £177,824, according to the latest index from the Land Registry. The data also shows that prices have increased by 8.4% year on year and are now not far from the peak of £181,383 in November 2007. Overall over 82,600 residential properties in England and Wales lodged for registration in August ranging from £13,000 to £24.5 million. The biggest price increase was in London with a year on year rise of 21.6% and London also experienced the greatest monthly rise with growth of 2.7% in August. The North East saw the lowest annual price growth with a rise of 3% and both the South West and the North West saw the most significant monthly price fall of 0.1%. The most up to date figures available show that during June 2014 the number of completed house sales in England and Wales increased by 11% to 73,158 compared with 66,123 in June 2013. The number of properties sold in England and Wales for over £1 million in June 2014 increased by 34% to 1,135 from 848 in June 2013. Jonathan Hudson of West End estate agent Hudsons Property, pointed out that while London is well beyond the average price in 2007, it is interesting to see the rest of the country is almost there too. ‘However, with London and the South East making up the majority of the average prices, it shows some parts of the UK are someway adrift, still more so than this figure suggests,’ he explained. ‘The annual 8.4% increase in August will be from transactions agreed a few months earlier, so it will be interesting to see how these figures match up in a few months’ time, due to a drop in buyers in the last quarter compared to the recent boom years,’ he added. He also pointed out that while some areas in the UK are still struggling with regards to getting close to the average price of 2007, with the economy moving in the right direction, and with stricter lending, hopefully repossessions will decrease further,’ he said. Continue reading
