Tag Archives: european
Rental growth in prime central London down 3% in year to June 2106
Annual rental value growth in London’s prime property market fell by 3% in June, continuing a decline experienced in recent months that has been driven by higher stock levels and uncertainty in financial markets. The index report from real estate firm Knight Frank relates to before the UK’s decision to leave the European Union, but Tom Bill, head of London residential research said that the current sense of uncertainty following the vote is likely to boost rental demand in the short term. ‘However, any upwards pressure on rents is likely to be countered to some extent by rising stock levels, which will tick up in line with the ongoing uncertainty in the sales market and there is early anecdotal evidence that some vendors are deciding to let their property until more clarity emerges,’ he explained. Bill pointed out that underlying demand remains strong and the number of new prospective tenants that registered in June was the highest it has been since September 2015 and the number of viewings was the third highest on record. Meanwhile, the number of new tenancies agreed in June 2016 was almost identical to the same month in the previous two years. ‘For investors able to see through the current political bout of political uncertainty, there are also grounds for longer term positivity,’ Bill added. The prime gross yield in June was 3.1%, which is markedly in excess of the current record-low yield on a 10 year government bond of about 0.8%, or the so-called risk-free rate and Bill pointed out that a mood of indecision in financial markets is also more accentuated than it was before the Brexit vote, which will also cause some tenants, particularly in financial services, to rent for longer. ‘More broadly, uncertainty over the result of the referendum has been replaced by uncertainty over the more nuanced question of the UK’s relationship with Europe and demand will strengthen further as clarity emerges surrounding key negotiating positions,’ Bill said. He also pointed out that as the Brexit negotiation process unfolds, it should be remembered that no candidate for Prime Minister has indicated any willingness to relinquish London’s role as Europe’s leading financial centre. Indeed, Chancellor George Osborne has signalled he may cut corporation tax in a sign that London will strive to remain competitive versus other European cities, both as the key financial and tech market in the continent. The prospect of an interest rate cut in the UK is also likely to stimulate a degree of activity and the likelihood of further cuts by central banks in other countries, particularly in Asia, will cause global investors to seek the type of higher returns on offer in property, according to Bill. ‘This search for yield will be allied to a favourable currency play due to the current weakness of Sterling. Meanwhile, other fundamentals that remain unchanged after the referendum include the supply shortfall and projected population growth over the next decade in London, factors that will… Continue reading
Housing market demand rises in UK, but falls in London
Demand for homes in the UK has increased by 3% since the first quarter of the year but in London it is a different picture with demand falling by 2%, the latest research shows. Overall, national demand now stands at 40% but it 39% in London but excluding London the demand has grown by 8% since the first three months of the year, according to the hot spot index from eMoov. Despite demand cooling in London the borough of Bexley remains the hottest spot in the UK for property demand at 71%, but this has fallen by 7% since the start of the year. Bristol remains the hottest spot outside of London with demand at 69%, followed by Bedford at 67%, Aylesbury and Medway both at 64%, and Ipswich, Sutton and Watford all at 61%. Both Cambridge and Milton Keynes are no longer in the top 10, replace by Northampton and Coventry at 64% and 58% respectively. While in Scotland Edinburgh is top with 54% and Glasgow at 48%. In Wales Cardiff is at 48% and Swansea 27%. In London some locations are seeing growth with Kingston Upon Thames seeing demand rise to 59% and Southwark 47%, the first and second largest increases across the UK respectively. There has also been a resurgence for property demand across the North East. Stockton-on-Tees at 47%, North Tyneside at 46%, Gateshead at 42%, Durham at 37% and Newcastle at 32% have recorded some of the biggest increases in property demand since the first quarter of 2016. The coldest spot for demand is the London borough of Westminster at 12% along with Kensington and Chelsea, with Hammersmith and Fulham at 17% and Camden at 20%. Aberdeen is also in the bottom group at 13%. ‘The changes to stamp duty tax brackets for those looking to secure a second home or buy-to-let property seem to have hit the London market harder than the rest of the UK. Despite London tending to drive the UK market as a whole, it would seem for once, it has taken a back seat whilst the rest of the UK has enjoyed upward growth on the first quarter of this year,’ said Russell Quirk, chief executive of eMoov. ‘That said national demand is still lower than the levels seen at the back end of last year and the big decider on which way it goes now will be Britain's choice to leave the European Union. There has been a lot of talk about the consequence of this vote on the UK property market with many forecasting a detrimental impact on house prices. We don't believe this to be the case and I'm certain that our third quarter index will show a further increase in property demand across the nation,’ he added. Continue reading
UK property prices record surprise 1.3% rise in June
Property prices in the UK increased by 1.3% in June but the underlying pace of growth is slowing with year on year prices down to 8.4% from 9.2% in May, the lowest since July 2015. This takes the average price to £216,823 and the data from the Halifax house price index also shows that quarterly growth was 1.2%, also down, compared to 1.5% the previous month and the lowest since December 2014. ‘House prices continue to increase, albeit at a slower rate, but this precedes the European Union referendum result, therefore it is far too early to determine any impact since,’ said Martin Ellis, Halifax housing economist. He pointed out that the month on month changes can be erratic and the quarter on quarter change is a more reliable indicator of the underlying trend. The figures show that despite Brexit the UK housing market is fundamentally strong, according to Russell Quirk, chief executive of eMoov. ‘With a continuing, acute shortage of new housing being built and a growing population even if immigration numbers are now curtailed, the demand and supply imbalance and the prospect of even low interest rates will underpin the market,’ he said. David Cheetham, market analyst and FX broker at XTB, pointed out that the month on month rise could be regarded as unexpected following an increase of just 0.6% the previous month. ‘The rise is somewhat surprising considering the impact on house building shares and property funds that has been seen following Britain's decision to leave the EU last month,’ he explained. ‘The worst hit shares in the FTSE100, in both the immediate aftermath and days that followed the Brexit were in the building sector with the majority of observers forecasting the decision to be negative for UK house prices. So far this week numerous asset managers have taken the steps of suspending trading in their property funds as withdrawals have surged amongst jittery investors,’ he pointed out. Sales should start to pick up in the coming months, according to Rob Weaver, director of investments at property crowdfunding platform Property Partner. ‘The fundamentals in the housing market remain unchanged. People still need a roof over their heads. There’s been a stand-off between sellers and buyers with transactions dropping off since the stampede in March to beat the stamp duty deadline. But sales should start to pick up in coming months with the weight of uncertainty now partially lifted,’ he said. ‘While people clearly delayed house purchases in the lead-up to the referendum, that backlog in transactions should unwind through the second half of the year. Life decisions like moving house can’t be put on hold forever. During periods of volatility in the stock and currency markets, investors tend to prefer assets which can provide a reliable income, combined with lower risk to preserve their wealth. For investors, residential property offers both of these attributes,’ he pointed out. ‘Historically, residential property has been the best performing… Continue reading
