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Parts of prime property market in London hit by economic uncertainty
Some areas in London’s prime property market are experiencing falls in demand from international buyers for reasons of global economic uncertainly, according to a new analysis report. But this is making way for emerging markets in the capital city’s prime sector which are currently outperforming central London, according to the report from property buying agency Black Brick. This comes at a time when overall London’s housing market is set to see increased demand with the population forecast to grow to 10 million. The report suggests that continued local opposition to new developments and limited brownfield sites for new homes developers in London will struggle to meet building targets which will leave the rental sector to take up the slack. Prices currently vary considerably in the prime market with locations in Knightsbridge and South Kensington seeing prices fall but emerging prime areas such as Islington and the City and Fringe have performed strongly. The reason is straightforward, according to Camilla Dell, Black Brick managing partner. ‘Those areas dominated by international buyers have suffered from falls in demand as a result of global uncertainty around falling oil prices, sanctions on Russia, and the slowdown in the Chinese economy, among other factors,’ she said. ‘Conversely, those parts of London, where demand is driven by domestic buyers, have benefited from the perennial shortage of supply and the strong recent performance of the UK economy,’ she explained. ‘In addition, recent changes to taxation have reduced the appeal of more expensive properties; investors seeking attractive rental yields and the prospect of capital appreciation have been pushed towards properties below £2 million, which tends to lead them away from traditional prime areas in West London,’ she added. Dell also pointed out that this complex picture has two related implications for buyers; the first is that they need to cast their nets more widely when carrying out a search; and the second is that they need to consider areas of which they might not have much knowledge. ‘The upshot is that we’re seeing considerable interest from investors in parts of London they aren’t familiar with and they need a buying agent that not only offers broader geographical coverage, but also brings extensive knowledge of emerging prime locations,’ Dell said. ‘In a market that’s going up, it’s hard to make a bad decision, but in a market like this, good guidance is really important,’ she concluded. Continue reading
Property prices in metro areas in the US continue their upward trend
An uptick in sales activity amidst meagre supply levels upheld the trend of unwavering property price gains in an overwhelming majority of metro areas in the United States during the first quarter of 2016. It means that the median existing single family home price increased in 87% of markets with 154 out of 178 metropolitan statistical areas showing gains based on closed sales in the first quarter of the year compared with the same quarter of 2015, according to the latest data from the National Association of Realtors. Some 24 areas or 13% recorded lower median prices from a year earlier but there were more rising markets in the first quarter compared to the fourth quarter of 2015, when price gains were recorded in 81% of metro areas. The data also shows that 28 metro areas or 16% experienced double digit increases in the first quarter of the year, a slight decrease from the 30 metro areas in the fourth quarter of 2015 while 51 metro areas or 28% experienced double digit increases in the first quarter of last year. Lawrence Yun, NAR chief economist, pointed out that home prices chugged along at a robust pace in most metro areas during the first three months of 2016. ‘The solid run of sustained job creation and attractive mortgage rates below 4% spurred steady demand for home purchases in many local markets,’ he said. ‘Unfortunately, sales were somewhat subdued by supply and demand imbalances and broadly rising prices above wage growth. As a result, the path to home ownership so far this year remains strenuous for a segment of prospective buyers in the most competitive areas,’ he added. The national median existing single family home price in the first quarter was $217,600, up 6.3% from the first quarter of 2015 and the median price during the fourth quarter of 2015 increased 6.7% from the fourth quarter of 2014. Total existing home sales, including single family and condos, rose 1.7% to a seasonally adjusted annual rate of 5.29 million in the first quarter from 5.2 million in the fourth quarter of 2015 and are 4.8% higher than the 5.05 million pace during the first quarter of 2015. ‘In spite of deficient supply levels, stock market volatility and the paltry economic growth seen so far this year, the housing market did show resilience and had its best first quarter of existing sales since 2007,’ Yun explained. ‘The demand for buying is there, but unless the stock of new and existing homes for sale increases significantly especially in several markets in the West, the housing market will struggle to reach its full potential,’ he pointed out. At the end of the first quarter, there were 1.98 million existing homes available for sale, which was below the 2.01 million homes for sale at the end of the first quarter in 2015. The average supply during the first quarter was 4.3 months, down from 4.6 months a year ago. ‘Current home owners… Continue reading
Trend of letting to rent becoming more popular in UK
There is growing evidence that the concept of let to rent is becoming more popular in the UK where a home owner rents their property out and then rents a place in another location. While let to rent isn't a new concept, it's becoming a great deal less niche as an alternative owning and living option. ‘One of the biggest factors in this trend is the massive and rising cost of moving, and the difficulties that many owners are encountering in replacing their existing mortgage with a similar deal,’ said David Brooke Smith of Stacks Property Search. He explained that there are lots of reasons and schools are one of the main drivers. ‘Families who want to live in a specific catchment area, or who want to be close by for a child's limited time at a particular school, are letting out their home and renting close to the school,’ he pointed out. ‘It's also a great way of trying out a new area without committing to it fully. So for those who are contemplating a move from town to country, vice versa, or from one part of the country to another, or wanting to try out a specific village that has caught their eye but about which they know nothing, it reduces the risk of buying in haste and repenting at leisure,’ he added. Other scenarios include short term work contracts, taking time out, such as on a sabbatical and some even want to move, but can't bear the idea of selling their much loved property. ‘There are huge benefits to let to rent. Selling and buying is a big step both emotionally and financially so if there's ever any doubt that it's the correct long term decision, letting to rent makes a lot of sense,’ said Brooke Smith. But he warned that while let to rent is often a win-win scenario, there are several issues that need careful consideration before making a decision, most importantly the figures. He pointed out that that big disadvantage is that the rental income will be taxable income. ‘You can offset costs related to the property you're letting, but you can't offset the actual cost of renting. So if you want an even playing field, the figure you have available for your rental may need to be less than the figure you can achieve for letting your property out,’ he explained. ‘Depending on where you're moving from and to, the figures could stack up very nicely. Letting in London, and renting in the country, should mean you're well placed financially. But going in the opposite direction will mean you have to be pragmatic about what you can afford,’ he added. He also explained that availability can be a challenge in rural areas as rental homes are often in short supply and the choice can be further limited if landlords choose not to welcome children and or dogs. Home owners will also need to get consent to let their… Continue reading
