Tag Archives: investment
UK residential sales drop just 0.9% post Brexit vote
Residential property sales in the UK fell slightly by 0.9% between June 2016 and July 2016 and were down 8.3% lower compared with the same period in 2015, according to the latest data from HMRC. For July 2016 the number of non-adjusted residential transactions was about 0.7% higher compared with June 2016 and 13.6% lower than in July 2015. The seasonally adjusted estimate of the number of non-residential property transactions decreased by 7.5% between June 2016 and July 2016 and was 1.7% lower compared with the same month last year. The report points out that there was a large increase in transactions in March 2016 followed by a substantial reduction in April which was associated with the introduction of the higher stamp duty rates on additional properties in April 2016. However, whilst April and May 2016 are lower than the corresponding months in 2015, it should be noted that the total for March to May 2016 is still substantially higher than the corresponding period last year. Non-tax factors may have played a role as well, for example the Bank of England's plans to curb buy to let mortgages resulting in a rush to purchase before April 2016, and the European Union referendum affecting transactions in recent months. According to Andy Sommerville, director of Search Acumen, the statistics suggest the market is stabilising, as the month on month change sits at under 1%. ‘Many would have expected a sharp fall in transaction activity in what was the first full month in our post-referendum economy, yet an underwhelming change suggests the darkness in our market shows little sign of worsening,’ he said. ‘Despite the encouraging resilience the market has shown in the short term, the bigger picture reveals an 8.3% decrease in transactions since July last year, demonstrating the true hit we’ve taken from Brexit, combined with the underlying issue of affordability,’ he pointed out. ‘As our economy absorbs the shock of the past three months, it is positive that home buyers are being given a leg-up into the property market to reignite demand and boost our industry,’ he added. Doug Crawford, chief executive officer of My Home Move, believes the data shows that the property market largely shook off the short term uncertainty of the Brexit vote. ‘Following the referendum there was talk that the market would be quickly affected by the outcome, but these fears have been allayed with residential transactions falling by just 0.9% month on month. While transaction levels remain lower than a year ago, this is in the context of a market that is still feeling the effects of changes to stamp duty, which led to a frontloaded first quarter,’ he explained. ‘The figures reflect our own experiences of the market. Following the referendum the vast majority of purchases went ahead without any issue, and chains were largely unaffected. In the medium term the market will remain stable, and our view is that it is strong enough to weather… Continue reading
Interest from buyers in inner London new developments waning
A new analysis suggests that while there has been an increase in development in London the new homes are concentrated in a handful of areas and some are so pricey that interest from buyers is waning. The result is a deepening new build crisis in inner London in particular and the lack of interest in new builds is seeing prices fall. The report from London Central Portfolio shows that overall the number of new developments approved for construction has surged this year, with a substantial 20% increase in the planning pipeline since 2013, representing 106,208 new units. However, this pipeline is largely made up of projects in cluster areas around Tower Hamlets and south of the river in the Battersea-Nine Elms area where there is already a proliferation of new developments. This year, a further 33,239 and 18,665 units respectively are now scheduled to be built. New applications have also rocketed. Applications for 17,494 new units including 111 towers, buildings over 20 storeys, have been submitted, a 27% increase on 2013. This is equivalent to one new tower application every three days, of which 90% are located in Tower Hamlets and Wandsworth’s Battersea-Nine Elms development. Despite the ever increasing number of new developments, however, statistics have shown that the attraction of these new properties, where prices now average £914,532, is waning. According to LCP’s analysis of the Government’s Land Registry data, only 1,491 new units have been sold so far this year, a substantial 43% decrease on this time in 2015. This compares with older properties in inner London where transactions have remained static, 13,194 in 2016 compared with 13,190 over the same period last year. The analysis also shows that square foot prices have also fallen for new properties. Across the Battersea-Nine Elms stretch, for example, prices are down 8% on their 2014 high. This is in stark contrast to London as a whole where prices are up 23%. New build sales volumes are also significantly down, decreasing 43% on the same period last year but the prime central London market remains largely protected, due to its limited new build potential. Sales activity has been normal in the first half of this year ‘In light of the plethora of tax hits over the last few years, possibly exacerbated by the uncertainty of Brexit, it appears foreign investors, the majority buyer of new developments, may finally be turning away,’ said Naomi Heaton, chief executive of LCP. ‘These properties typically sell at a significant premium, averaging 25%, over older stock. History demonstrates that a saturation of overpriced commodity style property leads to softening prices, particularly during times of economic uncertainty,’ she explained. ‘In Tower Hamlets, for example, which undertook an extensive building programme before the Global Financial Crisis (GFC), prices took six years to reach parity with their pre-recession level. In contrast in prime central London, where there is very limited new build due to the conservation of… Continue reading
Hong Kong residential sales fell by 8% month on month in July
The volume of residential sales in Hong Kong fell 8% month on month in July after three months of growth in a row, the latest figures from the Land Registry show. Overall property prices remained stable and this was due to sustainable end user demand, according to the analysis in the latest monthly report from international real estate firm Knight Frank. It explains that the new build market, which contributed to about one third of total residential transactions in Hong Kong, is where major developers generated good sales in their recently launched projects. For example, Park Yoho Venezia in Yuen Long has sold 95% of its 62 units in its third batch of sales in July and The Ascent in Cheung Sha Wan was oversubscribed seven times and sold over 94% of its first batch of 125 units in one day. There have been some transactions in the otherwise muted land market. In one notable sale, a domestic site in Pak Shek Kok, Tai Po was sold at an accommodation value of HK$3,932 per square foot, up 19.2% from two years ago when the adjacent site was sold. However, the report points out that despite the recent pickup in sales, the surge in upcoming supply is expected to suppress growth in home prices. According to the latest data from the Transport and Housing Bureau, 93,000 new homes are to be provided in the coming three to four years. ‘Developers are expected to continue offering deep discounts and competitive mortgage schemes to attract buyers in order to offload inventory before a possible US interest rate hike in the coming months,’ the report says. ‘We maintain our forecast of luxury home prices falling 5% to 10% this year and mass residential prices dropping up to 10% over the year,’ it adds. The report also says that the Grade A office market in Hong Kong remained subdued in July as many large financial institutions continued to downsize which had a negative effect on leasing demand. This means that medium sized firms are using it as an opportunity to take up space released by multinational corporations and Knight Frank expects this trend to continue. By the end of the year Knight Frank expects central office rents to increase but in decentralised areas, such as Kowloon East, there is likely to be rental pressure due to increasing upcoming supply. Continue reading
