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Land value growth moderates in England and Wales
The growth in land values moderated across England and Wales in the final quarter of 2014, reflecting the movement in the wider housing market. However residential development land values in prime central London continued their strong growth, ending the year up 24%, the latest report from Knight Frank shows. Greenfield residential development land values remained broadly static in the final quarter of 2014, rising by just 0.1%. Grainne Gilmore, head of UK residential research at Knight Frank pointed out that the annual rate of growth at 2.3% is well below the 7.2% average growth seen in house prices over the year. ‘However it is likely that land price growth will remain subdued over the coming year as rising costs press on margins,’ she explained, and added that activity in the land market has certainly picked up over the last 12 to 18 months. This is reflected in 17% rise in private units under construction across the UK in December 2014 compared to December 2013. The report also shows that there has been an increase in activity in most regions with demand for new housing is also robust across most parts of the country. Indeed, the take-up of the Government’s Help to Buy Equity Loan scheme rising to 38,052 in the 20 months to November 2014, with some 83% of these being first time buyers. The supply of land has also risen, with the activities of land promoters helping boost the pipeline of oven-ready sites. ‘This, in turn, has started to weigh on pricing as while there is still sturdy competition for good sites, it is less fierce,’ explained Gilmore. The report also explains that another factor weighing on green field land prices is the increasing cost of labour and materials. The industry is still gearing up after the recession, and recruitment of new tradesmen is proving problematic in many areas. Gilmore also said that it is no coincidence that the cost of building in the UK has risen up the international rankings. ‘It is now the eighth most expensive country in which to build, from 43 countries surveyed, according to Arcadis, the design consultancy firm, although the relative strength of sterling to the Euro this year has also played a part in this calculation. In prime central London however, the trend is very different,’ she added. Average residential development land values rose by 24% in 2014, up from a modest 2.5% increase in 2012. This takes the cumulative increase in land values since September 2011 to 48%, although this is still lagging the 72% increase in residential property prices seen since the trough in the market after the financial crisis. Rising land prices have helped push the cost of building in central London to the top of the international rankings with the planning system and complicated construction needs also boosting the expense of construction. ‘There has been much competition for land in prime central London, with oven-ready sites particularly sought after. International… Continue reading
Demand sees average rents in UK go up, especially at end of 2014
A slowdown in the sales market in the UK during the last six months of 2014 saw a demand for rental accommodation grow with average rents up 1.8% during the year. But this headline figure hides what has actually been happening towards end of the year as there was a 4.2% rise in average rents for new lettings, according to research by Countrywide Residential Lettings. There were 7% more would be tenants registering during the second half of the year than they did during the traditionally busier first half. The firm says that movement of households between the sale and rental markets has had an impact on shaping growing demand in the second half of the year. Indeed, the data shows that 14% of households that moved in England last year, moved between the owner occupation and the private rental sector, broadly in equal numbers. The increase in demand from tenants for rental properties is reflected in the growth in average rents. For newly let properties, the rate of annual growth ran at an average of 3.7% during the first six months of 2014, rising to 4.2% during the final six months. It was a similar story for sitting tenants for whom rents increased from 1.7% to 1.8% over the same period. 26% of tenants who chose to renew their contract at the end of 2014 saw their rent rise 2.9% over the year. Alongside the relationship with the sales market, the nature of the lettings market means it is highly seasonal. Much activity is concentrated within a few key times of the year. In city centre markets, the summer months tend to see particularly high levels of activity, the time when students seek property for the forthcoming year. In the heavily dominated student markets of Birmingham, Bath, Cambridge, Oxford and Liverpool, over a third of lets are made during just two months in the summer. For many investor landlords, this represents the best time to market their property to let. Outside of the city centre, where three times the proportion of homes are let to families with children, activity in the rental market is closely correlated to school terms. Given the longer timescales involved, properties have to be secured well in advance of the September term. April, May and June represent the three months when 35% of lets are made in the year. Conversely, half terms and the first few weeks of September see activity levels decrease, with the number of registering tenants, viewings and agreed lets all running at two thirds of the average over the year. ‘The sales and rental sector are closely linked with thousands of households moving between the two tenures every year. In the second half of 2014, we saw a decrease in the number of tenants actively looking to buy. This has kept demand for rental accommodation at a high, allowing more landlords to stand firm in the face of attempted negotiation… Continue reading
London saw massive 16.3% rise in house prices in 2014, official data shows
Average house prices in England and Wales grew by 7% in 2014 with London seeing a rise of 16.3%, the latest land registry figures show. They increased 0.6% in December compared with the previous month, taking the average price to £177,766, not far from the peak of £181,138 in November 2007. London also experienced the greatest monthly rise with an average increase of 1.8%, taking the average price in the city to £464,936. The North West saw the lowest annual price growth of 1.5% and also saw the most significant monthly price fall of 1.6%. The most up to date figures available show that during October 2014 the number of completed house sales in England and Wales increased by 4% to 80,158 compared with 77,371 in October 2013. The number of properties sold in England and Wales for over £1 million in October 2014 increased by 15% to 1,132 from 984 in October 2013. The land registry data also shows that repossession volumes decreased by 37% in October 2014 to 796 compared with 1,260 in October 2013. The region with the greatest fall in repossession sales in October 2014 was the South East. According to Graham Davidson, managing director of Sequre Property Investment, the 0.6% increase in December compared to the previous month, was a surprise and is a trend which his firm does not expect to continue. ‘This increase is possibly due to a hive of buyer activity during September and October, and has resulted in the purchase prices being pushed up. In addition to the house price increase, an annual rise of 16.3% in London illustrates that the capital still remains a difficult market for property investors,’ he explained. He believes that London and the South East remain relatively unaffordable to all but the wealthiest buyers. ‘This is causing more to look to areas such as the North of England, where property remains affordable. The North West has taken a dip of 1.6% in December, which signifies the North’s affordability and higher yielding opportunities for investors,’ said Davidson. ‘Repossessions have also continued to fall, demonstrating how improving employment rates and a slow in the rate of inflation is creating a more sustainable and stable environment for home owners,’ he added. Adrian Gill, director of Reeds Rains and Your Move estate agents, said that the figures demonstrate that house price growth has ploughed forward solidly to the very end of 2014. 'The real variation is in how growth is spread so unevenly across the country, and in many regions property prices are stuck in a rut or even sliding backwards,' he commented. 'But December is the close of one chapter, and shouldn’t be viewed as a prologue to the coming year. Aspiring buyers are equipped with all the tools they need to climb onto the housing ladder and secure great deals on homes. Demand at the bottom of the market continues to… Continue reading
