Tag Archives: investment
New analysis suggests Brexit vote is affecting prime central London lettings market
The lettings market in prime central London has weakened rental as tenants capitalise on the current economic uncertainty including the upcoming referendum on the future of the UK in the European Union. The latest analysis report from specialist residential investor advisors London Central Portfolio (LCP) says that the rental market is reflecting a slowdown as a result of economic strains. It shows that whilst new lets have seen consistently positive rental upticks over the last five consecutive quarters, averaging a 5.5% increase overall, the market is beginning to subdue, according to the published statistics. Against a backdrop of falling stock markets, a collapse in oil prices and Brexit uncertainty, new lets have achieved just a 0.3% increase over the last quarter. This has been exacerbated by the predictably quieter Easter and May bank holiday period. The analysis, however, shows that re-lets are showing a significantly weaker picture, with a 1.2% fall in rents over the last quarter, following a fairly static picture over the course of the year. The report says that this is due to applicants being attracted to brand new properties, without any sign of previous use, coupled with a significant uptick in rental stock available. This has increased by 26.7% from 23,039 to 29,198 in the last three months, attributable to a reduction in transactions in the sales market which has led to more properties being available for rent. ‘The overall suppression in rents reflects a market dynamic which was conspicuous during the credit crunch, as tenants capitalise on economic uncertainty to leverage up their bargaining power. This has been compounded by companies cutting their relocation budgets in the face of global instability and, in some cases, delaying relocations in the run up the EU referendum,’ said Naomi Heaton, chief executive officer of London Central Portfolio. ‘In light of the current market conditions, landlords may need to be more flexible to accommodate the higher negotiating power of applicants and to prevent void periods which may erode any increase in rent ultimately achieved. For as long as this cycle lasts, landlords also may need to be more open to remedial and upgrade works between tenancies,’ she explained. ‘A slowdown in the re-let market has been compensated by continued positive renewal increases by tenants in situ. With Landlords often able to achieve contractual rental increases, above that which can be achieved in the open market, average rental growth of 3.3% in the last quarter has been seen in contrast to the softer market elsewhere,’ she added. The report also points out that despite the somewhat gloomy picture generally, corporate belt tightening means that small one and two bedroom properties are reinforcing their position as the hardest working sector of the market. Appetite for these mainstream rental properties remains strong, with void periods down to just 23 days on average. For these properties, the area around Marylebone, Fitzrovia… Continue reading
Chancellor says house prices could fall by up to 18% if UK votes to leave EU
House values in the UK could fall by 10% and up to 18% due to the economic shock that would hit the country if people vote to leave the European Union in the referendum next month, according to the Chancellor of the Exchequer. George Osborne, speaking at the G7 finance ministers’ meeting in Japan, revealed that the forthcoming Treasury analysis on the short term economic consequences of a vote to leave will demonstrate a wide range of negative impacts on families and businesses, including the housing market. It concludes that by 2018, home owners will be hit as growth in Britain’s housing market will be reduced by at least 10% and up to 18% compared to what is expected if the UK remains in the EU, as heightened uncertainty generated by Brexit hits financial markets, consumer confidence and home values. Independent authorities, including the International Monetary Fund, have warned that if Britain votes to leave the EU then mortgage interest rates would also rise because of financial market instability, meaning fewer people being able to get a mortgage and mortgage costs rising for all. The Treasury conclusion follows warnings from Virgin Money’s Chief Executive, the CEBR, S&P, Fitch and Deutsche Bank about the potential negative impact on Britain’s housing market from a vote to leave the EU. The Chancellor said finance ministers from other G7 countries attending the summit in Sendai confirmed that in their assessment, leaving the EU could cause significant financial market turbulence, affecting families and businesses. The Chancellor also challenged the idea that negotiating a new relationship with the EU would be easy if the UK votes to leave, warning that instead it would be a long, costly and messy divorce. In the coming days the Treasury is going to publish analysis of what the immediate impact will be. Osborne also said that mortgages will get more expensive and mortgage rates will go up. ‘If we leave the European Union there will be an immediate economic shock that will hit financial markets. People will not know what the future looks like. And in the long term the country and the people in the country are going to be poorer,’ Osborne said. ‘That affects the value of people’s homes and the Treasury analysis shows that there would be a hit to the value of people’s homes by at least 10% and up to 18%. And at the same time first time buyers are hit because mortgage rates go up, and mortgages become more difficult to get. So it's a lose-lose situation,’ he pointed out. ‘We all want affordable homes, and the way you get affordable homes is by building more houses. You don't get affordable homes by wrecking the British economy. And of course if we left the EU, mortgage rates would go up, it would become more difficult… Continue reading
Home prices in Canada see biggest year on year gain since 2010
National home sales in Canada increased by 3.1% from March to April and prices were up 13.1% year on year, the biggest gain since May 2010, the latest index shows. The data from the Canadian Real Estate Association (CREA) also shows that actual (not seasonally adjusted) activity was up 10.3% compared to April 2015 while the number of newly listed homes was little changed with a decline of 0.2% from March to April. Sales were up in April compared to the previous month in about 70% of all local markets, led by the National Capital Region and Edmonton. Following small declines the previous month, activity held steady in the Greater Toronto Area (GTA) and edged lower in Greater Vancouver. ‘National home sales set new monthly records over the past two months, even as activity in Greater Vancouver and the GTA appears to have topped out,’ said CREA president Cliff Iverson. ‘With almost three quarters of all local markets posting sales gains in April, there are plenty of other places where sales are climbing as we head into the busiest time of the year for home buyers,’ he added. CREA chief economist Gregory Klump pointed out that supply shortages and tight housing market conditions have become self-reinforcing in the GTA and the Greater Vancouver Area appears to be heading in that direction too. ‘While significant home price gains may entice some homeowners in these markets to list their home for sale, the issue for many is that the decision to move means they would also be looking to buy while competition for scarce listings is fierce,’ he explained. ‘As a result, many home owners are deciding to stay put and continue accumulating capital gains. That’s keeping listings off the markets at a time when they are already in short supply,’ he added. Actual (not seasonally adjusted) sales activity rose 10.3% year on year ago to shatter all previous records for the month of April. It also marked the second highest level for transactions for any single month and stood 16.5% above the 10 year average for the month of April. Activity was up from year-ago levels in about 70% of all local markets, led by a number of markets in British Columbia as well as the GTA and the number of markets where new supply rose and where it fell was fairly evenly split. New listings were up most in Edmonton and on Vancouver Island but fell in the GTA, London and St. Thomas as well as Newfoundland and Labrador. The national sales to new listings ratio rose to 64.5% in April 2016, the ratio’s tightest reading since October 2009. A sales to new listings ratio between 40% and 60% is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively. The ratio was above 60% in about half of all local housing markets in April, virtually all of which are located in British Columbia, the… Continue reading
