Tag Archives: election
Prime central London rental values up for third month in a row
Rental values in the prime central London rose by 0.2% for the third consecutive month in March, pushing annual growth to 4%, the highest rate in more than three years. The rental value index is now at the same level it was during the summer of 2012, when London hosted the Olympic Games, according to the latest report from real estate firm Knight Frank. Rental values subsequently dipped as the sales market strengthened but growth returned at the start of 2014 but the lettings market benefited as the UK economic recovery took hold and companies began hiring more staff. Annual growth was 4%, the highest rate in more than three years but the report says that some landlords are hesitant to agree deals because they believe the sales market could strengthen. The number of tenancies, viewings and new prospective tenants are up markedly on 2014 rental yields at 2.92%, an increase on March 2014, the report also points out. The report points out that jobs in London’s financial services sector rose 17% in February compared to 2014 and according to recruiters this is due to oil price stability and subsiding concerns over a Greek exit from the euro zone. However, it is not a clear cut picture, the report says, and activity and stock levels have been dampened by the kind of indecision that has affected the sales market. ‘While some vendors have become landlords in order to wait out the general election to obtain more clarity around the future political landscape, the overwhelming mood of uncertainty has led to hesitancy as the election draws closer and campaigning steps up,’ said Tom Bill, head of London residential research at Knight Frank. He pointed out that some property owners who had considered the rental option have been reluctant to sign two year tenancy agreements while there is a possibility the sales market could strengthen in the second half of the year, depending on the outcome of the election. ‘Either way, demand in the lettings market remains strong. In the year to February 2015, the number of tenancies increased by 37% compared with the preceding 12 month period,’ Bill said. Meanwhile, the number of viewings rose 16%, property inspections increased 14% and the total number of new prospective tenants registering grew by 18%. A stronger lettings market and slower price growth in the sales market resulted in rental yields of 2.92% in March, higher than a figure of 2.83% recorded in the same month last year. Continue reading
UK property markets likely to see more capital growth in 2015, but at slower rate
UK property markets are likely to see continued capital value growth in 2015, especially in prime sectors, but perhaps at a slower late, according to an outlook analysis report. Strong capital value growth was undoubtedly the key theme of 2014 and growth across all sectors was stronger than forecast at the beginning of the year, according to the spotlight report from Savills. Growth could be slower in 2015 and the general election in May will definitely have some effect on sentiment, though in the agricultural and commercial sectors the firm expects the effects to be relatively muted. In the residential markets the threat of a mansion tax, combined with the Mortgage Market Review introduced in 2014 could lead to a more sustained hiatus in capital value growth in 2015. ‘Generally we expect that the macroeconomic story for the UK will remain benign, with base rates remaining unchanged until early 2016, and the combination of low oil prices and recovering incomes giving a boost to the UK consumer,’ the report says. ‘The high returns that will be thrown off by all property sectors in the UK will continue to attract attention, and we expect that UK real estate will continue to deliver high returns in comparison to other asset classes,’ it explains. ‘This will mean that domestic and international demand for prime and good secondary assets will be strong, though we expect to see more focus on supply and demand fundamentals in 2015, rather than just the potential for yield shift,’ it adds. As far as the residential outlook is concerned the report suggests that returns will be less driven by yield shift in 2015, with the best performance coming from understanding where local markets and sectors are in the rental cycle. Following a year of strong mainstream house price growth in 2014 that ran well ahead of the economic recovery, Savills expects much more subdued price growth in 2015. This is particularly the case in London, which has now outperformed the rest of the UK for over nine years and where correspondingly, affordability is likely to look increasingly stretched as interest rates rise. ‘In addition, the mortgage market review is likely to restrict the amount which people are able to borrow. In turn, this is likely to restrict mortgaged buyers' ability to get on or trade up the housing ladder, thereby continuing to drive demand into the private rented sector and underpinning rental growth,’ the report says. ‘The ongoing debate around the taxation of high value property is likely to mean a relatively muted prime market in the run up to the election. While the mainstream market may receive a one off fillip from the stamp duty changes in the 2014 Autumn Statement, prime markets that are bearing an increased tax burden will also have to contend with political rhetoric regarding a potential mansion tax, even though the medium term prospects remain positive,’ the report adds. In the agricultural perspective, Savills expects further growth in UK… Continue reading
Property prices still falling in London, but five year outlook suggests rise of 30%
Residential property prices are continuing to fall in London while Scotland and Northern Ireland outperform the rest of the UK, according to the latest monthly survey from the Royal Institution of Chartered Surveyors (RICS). Some 28% of surveyors in London reported falling prices in February, the sixth monthly decline in a row. But RICS members are positive about the outlook for prices and believe that they will rise by 30% in the next five years. Values increased across the rest of the country due to the demand supply imbalance, the report shows. There was also price growth across the South West and the South East. The upward shift in prices is in part being driven by a decline in the number of houses coming onto the market in most parts of the UK and 8% more surveyors saw declines in new supply in February and new instructions have now fallen in six out of the last seven months. Price expectations over the next three months increased from a net balance of 3% to 10% and despite anecdotal evidence suggesting that political uncertainty may be leading to the election effect of vendors sitting on the fence, RICS member forecast for house price growth over the next 12 months stand at 2.4%, up from 1.8% in January. Notable exceptions to the trend however were London, the North of England and the East Midlands, which may indicate that political uncertainty may be weighing more heavily on specific markets, the report suggests. It points out that as supply dips, the national picture of demand appears to be stabilising after seven consecutive months in which the headline reading for new buyer enquiries was negative and a slightly more upbeat trend is also emerging in more parts of the country than previously was the case. In the lettings market, demand continues to rise, while instructions to let remained unchanged following 10 months of steady declines. This is being reflected in the medium term view for rents with respondents, on average, envisaging an increase of 2.6% over the coming year. ‘It is encouraging that that the negative trend in buyer enquiries appears to be dissipating, perhaps in part because of growing confidence that the cost of borrowing will stay lower for longer, but more worrying that instructions to sell property continue to drop,’ said Simon Rubinsohn, RICS chief economist. ‘This very modest reversal in the demand picture is already being felt in the key measures of price expectations highlighting the extent of the challenge policy makers will face in addressing the housing crisis in the aftermath of the coming general election,’ he explained. ‘Even in London, where the key RICS indicators remain in negative territory, there is a strong view in the survey that property will become even more unaffordable over the medium term. Respondents suggests, on average, that house prices will rise by a further 30% in the capital over the next five years,’ he added. Continue reading
