Tag Archives: investment
Smaller prime properties in London commuter belt set to see strongest rental growth
Smaller properties in prime markets in the commuter belt around London continue to see the strongest rental growth in the first quarter of 2016, according to a new research report. There is such strong demand for smaller properties because tenants are faced with the issue of raising the deposit for their first mortgage,’ says the report from real estate firm Savills. It points out that landlords have been hit with a number of measures introduced by the current government in an attempt to limit future investment in the residential sector and Savills expects that these measures to limit the amount of stock which comes onto the rental market, underpinning the growth in rents for existing investors. Rental values of prime property in the commuter zone increased by an average of 1.4% over the year to March 2016 to bring five year rental growth up to 7.6%, reflecting the continuation of modest but consistent rental growth in the period since the middle of June 2012. The figures from the report show that the average rent for one or two bedroom homes is up 2.5% year on year, for three bedrooms it is up 2.8%, for four bedroom up 1.6%, or five bedrooms up 0.9% and for six bedrooms or more up 0.5%. This brings growth over five years to 12.3% for one or two bedroom prime properties, 12.3% for three bedrooms, 9% for four bedrooms, 5.5% for five bedrooms and 4% for six bedrooms or more. The report suggests that the strength in demand for one and two bedroom accommodation reflects the age profile of the tenants in this sector with one third of tenants being in their 20s and a further 35% in their 30s and their personal and financial circumstances. ‘Such tenants face well documented issues in raising the deposit for their first mortgage but are also increasingly attracted by the flexibility of renting given an increasing propensity to move jobs in the first half of their working life,’ said Lucian Cook, director of Savills residential research. ‘With such tenants renting for longer life stages, this has fed into more demand for small family accommodation for tenants in their thirties and early forties,’ he added. He pointed out that markets for these smaller properties are generally serviced by landlords with a strong investment motive for the purchase and ownership of their rental property. By contrast, Landlords of larger prime rental properties are more likely to be letting out a dwelling which has previously been their main residence. ‘Our research shows that 39% of Landlords of properties of five bedrooms or more are letting their property out because either they are relocating for employment purposes or are unable to sell their main home. Landlords of such properties have only seen rents rise by a net figure of 4% over the past five years, and a meagre 0.5% in the past 12 months,’ Cook explained. He also pointed out that going forward, all landlords will have… Continue reading
Capital city home values up 3.3% in first four months of 2016
Home values in Australian capital cities continued to rise in the first four months of 2016, up 3.3% compared to the same period in 2015, the latest index shows. In April, the pace of capital gains rebounded from the relatively flat numbers recorded in March, with dwelling values increasing by an average of 1.7%, according to the Corelogic April home value index. Across the country, housing market trends remain mixed, however, and CoreLogic research director Tim Lawless noted that the improvement in the rate of capital gains has been ‘broad based’ during 2016 with every capital city except Perth recording a lift in dwelling values over the calendar year to date. ‘The results show value growth moved at a faster pace compared with the final three months of 2015 when capital city dwelling values slid 1.4% lower off the back of weaker market conditions in Sydney and Melbourne,’ he explained. ‘While we’ve seen capital gains moderate substantially after peaking last year in Sydney and Melbourne, dwelling values continue to trend higher, just not as fast,’ he added. The data shows that the annual rate of growth in Sydney peaked at 18.4% in July last year and has since moderated back to slightly less than half the peak rate of growth, at 8.9% over the most recent 12 month period. Melbourne’s housing market continues to show a level of resilience to a slowing trend, however the annual growth rate has fallen from a recent peak of 14.2% to the current annual growth rate of 10.1% but Melbourne was the only capital city to see double digit growth over the past year. Perth and Darwin remain as the only two capital city markets to experience a decline in home values over the past 12 months, with Perth values down 2.1% and Darwin values 3.7% lower. ‘With recent month on month increases in home values in these two cities, the declining trend rate is now levelling. This may be an early sign that these markets are beginning to find their cyclical trough after more than a year of annual declines,’ said Lawless. Over the current growth cycle, which commenced broadly in June 2012, capital city dwelling values have moved 34.4% higher, led by a 52.7% rise in Sydney home values and a 37.1% lift in Melbourne values. Lawless pointed out that this highlights the two tiered nature of Australia’s housing market at present. Brisbane experienced the third highest rate of dwelling value growth over the growth cycle to date and dwelling values in the city are now up 18% and Lawless explained that Australia’s regional markets also exhibited a lift in house values over the year to date. He added that while house values across the non-capital city markets have generally underperformed compared with the capital city regions, regional house values moved 2.4% higher over the first quarter of the year. Continue reading
Rents in the UK continue to trend upwards, latest rental index shows
Residential rents increased in all but one region of the UK over three months to April taking the average rent, excluding Greater London, to £764 per month, the latest index data shows. It means that the average rent in the UK outside of Greater London us now 5.1% higher than a year ago while the average rent in London is now £1,543, up 7.7% Scotland and the East Midlands lead the way with fastest rising rents while the North West is the only region to register declines in rent, according to the HomeLet rental index for April. The index report says that fears that higher stamp duty charges on buy to let rental property purchases might destabilise the market have so far proved unfounded. Indeed, HomeLet’s figures show that rents agreed on new tenancies across the UK over the three months to the end of April have continued to grow at remarkably consistent rate. The index also shows that rents on new tenancies signed over the three months to April 2016 were, on average, 5.1% higher than in the same period of last year. That was barely changed from March’s figure of 4.9%, with rent rises having remained in a very narrow band since the beginning of the year. However, in London rents on new tenancies signed over the three months to the end of April were 7.7% higher than a year ago, the third successive month that London has registered this rate of increase. The latest figures show that rents in Scotland are currently rising faster than anywhere else in the UK, with new tenancies costing 11.4% more than in the same period a year ago while the East Midlands saw a rise of 7.9% in rents compared to last year. London’s rental market, where the average rent on a new tenancy is now £1,543, also continues to see rents rise more quickly than in most other areas of the country. The 2.6% gap between rent rises on new tenancies in London and the rest of the UK, where rents average £764, is barely changed on the previous. Just one area of the country, the North West of England, saw lower rents on new tenancies over the three months to March, as was the case in the previous month’s index. However, the speed at which rents are falling in the region continues to slow, to an annual rate of just 1% over the three months to April, compared to 3.5% over the three months to March. Rents agreed on new tenancies in April alone were 1.7% higher than in March. ‘It may be that over the next several months, the trends observed in the rental market begin to reflect the signs of some slowdown in the rate of house price growth that we are now beginning to see and that will be something to watch closely,’ said Martin Totty, chief executive officer of HomeLet… Continue reading
