Tag Archives: finance
Spanish property expert says Brexit will affect demand from British buyers
A weak pound, plus the uncertainty about what comes next following the UK's decision to leave the European Union, will undermine British demand for property in Spain, especially in the short term, it is suggested. This should be a concern as British demand has been growing strongly since 2013 and according to Mark Stucklin of Spanish Property Insight there could now be a reversal in that trend. He believes that this will have a negative impact on the markets where British demand is dominant, namely Alicante and Malaga, and to a lesser extent the Balearics, the Canaries, and Murcia. ‘Thanks to this Brexit vote, there will just be fewer British buyers about,’ he said. One reason is that British demand in Spain is driven by the strength of the pound. When the pound goes up against the euro, British acquisitions inscribed in the property registry rise with a delay of around two quarters. ‘Now we have a weak pound plus the dramatic situation of a Brexit, so falling sales in coming quarters are almost a given,’ Stucklin explained. He pointed out that it won’t be good for British vendors either. ‘They now have a smaller pool in which to find a buyer. Price expectations may have to adjust even further down,’ he added. He also expects fewer British people to move to Spain until the deal for exit is struck and that will take a minimum of two years. ‘British expats in Spain will now be in limbo until the new order is established. That could take years, and in that period I expect to see more British expats leaving than arriving,’ he pointed out. British owners of holiday homes in Spain with no plans to sell won’t be affected much for now. A much bigger worry for them is what will happen to the UK, or whatever is left of it when the dust settles. Figures from the registrar of Notaires confirm that British demand for property in Spain grew strongly last year on the back of a strong pound and attractive Spanish property prices. Buyers from the UK were the biggest group by a wide margin, making up 21% of the foreign market and increased the most by up by 42% last year. Indeed, in some regions like Alicante on the Costa Blanca and Malaga on the Costa del Sol, the British dominate the overseas buyer market. On the other hand for those who want to buy in Spain properties will be cheaper due to the Pound falling making currency exchange more favourable for changing into euros. However, those wishing to move permanently to Spain who are reliant on a British pension will get fewer euros for their money. Continue reading
UK sees highest gross home lending for May since 2008
Gross mortgage lending in the UK reached £18.2 billion in May, some 4% higher than April’s £17.6 billion and 14% higher than May 2015, the latest data shows. The figure from the Council of Mortgage Lenders, which represents the vast majority of home lenders in the UK, was the highest May figure since 2008 when gross lending reached £23.7 billion. CML senior economist Mohammad Jamei pointed out that, as expected, lending continued to be somewhat dampened in May, reflecting the earlier rush in the first quarter to beat the stamp duty change on second properties. ‘Looking ahead, there is likely to be considerable uncertainty as a result of the European Union referendum decision. We expect this to affect sentiment and reduce activity below levels that would otherwise be expected in the near term, as both buyers and sellers adopt a wait and see attitude until the dust begins to settle,’ he explained. ‘Market fundamentals underpinning house prices still look sound, and we do not expect significant house price falls, especially given the current supply demand imbalance,’ he added. According to Adam Tyler, chief executive officer of the National Association of Commercial Finance Brokers (NACFB), a wait and see attitude and increased caution is likely among buyers and sellers alike due to the referendum result. ‘Our own view mirrors that of the Council of Mortgage Lenders in that market fundamentals still look sound and the sharp imbalance between supply and demand will prevent a material decline in prices,’ he said. ‘Sentiment may have shifted dramatically over the past few days but the structural imbalance between supply and demand is as strong as ever. Demand naturally tapered off in the buy to let sector following the stamp duty surcharge but it may experience a bounce after Friday's referendum result,’ he explained. He also pointed out that current market, political and economic volatility could benefit buy to let as investors once again look to bricks and mortar as a safe investment and the fact that Bank Rate is now more likely to go down than up in the near term will provide further support to the property market. ‘Understandably, there's a lot of hysteria surrounding the trajectory of the property market but our own view is that the reality will prove to be relatively benign,’ he added. Continue reading
British rental prices up 2.5% year on year
Rents in Britain increased by 2.5% in the 12 months to May, down slightly from the 2.6% annual rise recorded in the previous month, the latest index figures show. Rental prices grew by 2.6% in England, 0.4 % in Scotland and were unchanged in Wales, the data from the Index of Private Housing Rental index published by the Office of National Statistics also shows. It means that a property that was rented for £500 a month in May 2015, which saw its rent increase by the Great Britain average rate, would be rented for £512.50 in May 2016. Rental prices for Great Britain excluding London grew by 2% in the same period and rental prices increased in all the English regions over the year to May 2016, with rental prices increasing the most in the South East at 3.4%, up from 3.1% in April 2016. This was followed by London at 3.3 but this was down from 3.7% in April 2016 and the East of England at 3.2%, up from 3.0%. Annual price increases had previously been stronger in London than the rest of England since November 2010. I The lowest annual rental price increases were in the North East at 0.8%, unchanged when compared to April 2016, the North West at 1.2%, up from 1.1% and Yorkshire and the Humber at 1.2%, down from 1.3% over the same period. The zero annual rate of change in Wales continues to be below that of England and the Great Britain average. Rental growth in Scotland has gradually slowed to 0.4% from a high of 2.1% in the year to June 2015. The IPHRP series for England starts in 2005. Private rental prices in England show three distinct periods: rental price increases from January 2005 until February 2009, rental price decreases from July 2009 to February 2010, and increasing rental prices from May 2010 onwards. When London is excluded, England shows a similar pattern but with slower rental price increases from around the end of 2010. Since January 2011 England rental prices have increased more than those of Wales and Scotland and since the beginning of 2012, English rental prices have shown annual increases ranging between 1.4% and 3% year on year, with May 2016 rental prices being 2.6% higher than May 2015 rental prices. Excluding London, England showed an increase of 2.3% for the same period. Looking at data from the UK House Price Index over a longer period shows residential house price growth has typically been stronger than rental price growth for a number of years, with an average 12 month rate of house price inflation of 5.7% between January 2013 and April 2016, compared with 2.1% for rental prices. Inflation in the rental market is likely to have been caused by demand in the market outpacing supply. Demand in the lettings market continues to strengthen, with RICS’ Residential Market Survey noting that tenant demand continued to grow robustly in May 2016. The strength… Continue reading
