Tag Archives: investment
No signs yet of Brexit creating a UK housing recession says new analysis
Since the European Union Referendum the number of residential properties advertised for sale in the UK has increased and average asking prices have reduced by 0.2%, new research shows. While the number of properties with a reduced asking price has increased from 29.3% to 34.5%, mortgage availability remains broadly unchanged, according to the analysis report from global investment banking firm. The early conclusion from the industry note from the firm’s UK Building and Residential Services team of analysts is that UK households have the confidence to try and move house and accept that prices may need to soften to make it happen since the decision to leave the EU while there is no sign of a property recession. The research says that listings volumes, for example, do not suggest a slowdown and an analysis of residential property listings on major UK property portals and have found that since the EU referendum the number of listings has increased by 3.6%. It also points out that in the two previous UK recessions housing transactions were, with hindsight, a lead indicator, falling for more than 18 months ahead of the recession. In the absence of current transaction data we view listings activity as an early look towards housing transactions. With listings increasing, it appears UK households are prepared and ready to move. Before the vote there were headlines suggesting that Brexit would result in a steep fall in house prices but according to the analysis the trend in asking prices is only just downwards. On average asking prices have reduced by 0.2% since the EU referendum, somewhat less than the movement in the prices of the shares of the companies which service the UK housing market. ‘Perhaps more interesting is the movement in the number of properties which have reduced their asking prices. Before the EU referendum 29.3% of listings had reduced their initial asking price, this figure has now increased to 34.5%, overall a move of 520bp or 18%. This suggests to us that UK households remain keen to move and are adjusting their price expectations,’ the report explains. In the two previous recessions London house prices were the first to fall and the first to rise but the research show that so far 76% of London postcodes have seen an increase of listings, 22% a reduction and 1% unchanged. With respect to asking prices 70% of London postcodes have seen a reduction in asking prices and 30% an increase. A breakdown of the figures show that in East London 35% of postcodes have seen asking prices rise and 65% fall, in the North of the city 30% have risen and 70% fallen, in South London the split is 27% up and 73% down and in West London 25% up and 75% down. ‘London has the largest rental market in the UK and we believe that asking rents provide the most cutting edge data point with respect to the health of the underlying… Continue reading
Rents up 1.5% in UK, but growth is slowing across the country
Rents in London fell by 0.5% in July compared to the same month in 2015 as growth in the lettings market in the city stalled, but they increased across the UK by 1.5%, the latest index shows. However, a breakdown of the figures from the Countrywide Lettings Index shows that rental growth slowed across every region of the country and the drop in London was the first annual fall in rents for six years. In July the average rent in the UK was £951 a month, up 1.5% on last year, but rising half as fast as in July 2015. Rents fell by 2% in Wales, by 1% in Scotland and by 1.1% in the South East of England but in the North of England and the Midlands, the rate of rental growth hit the highest level for two years. The highest rents are in Central London at an average of £2,638, up 2.1% year on year, followed by Greater London at £1,280 and the South East at £1,173. In the East of England they are £963, up 3.8%, in the South West £856, up 3.3%, in the Midlands £703, up 4.8%, in the North of England £694, up 4.7%, in Scotland £689, down 1% and in Wales £671, down 2%%. The report points out that while tenant demand has increased nationally, the volume of homes coming onto the rental market has slowed or in some cases reversed rental growth. In July there were 23% more homes available to rent in the UK than at the same time last year, while the capital saw a rise of a third. Some of this increase has been driven by purchases rushed through to beat the stamp duty deadline, however the number of homes available to rent has continued to rise in recent months, particularly in London and the South East. An increase in the number of homes on the market has meant less deals are agreed above asking rents. In July 2015 16% of tenants paid over the asking rent to secure a home compared to 7% in July 2016. In London the fall was larger, 11% of homes let for more than the asking price in July, down from 32% in July 2015. ‘The large rise in numbers of homes available to rent has certainly slowed rental growth, even with tenant numbers increasing. Stock levels were already running higher than usual due to investors bringing forward purchases in the rush to beat the stamp duty deadline in April,’ said Johnny Morris, director of research at Countrywide. ‘Added to that, uncertainty in the sales market in the run up to, and after the European Union Referendum has caused more discretionary sellers to turn to the rental market. While rental price growth has slowed, current market dynamics are likely to accelerate the growth of renting. It seems that with more stock and demand from tenants we will… Continue reading
Asking prices down across many parts of the UK, latest index data shows
Asking prices in London continue to fall, down 1.2% month on month, with values also down across other parts of the UK, the latest index shows. Prices fell in four English regions and Scotland, taking the overall mix-adjusted average asking price drop to 0.1% since last month and the number of properties reduced in price hit a 45 month high, according to the latest index from Home.co.uk. This means that the average annualised rate of home price appreciation for England and Wales slipped further to 5.3% and the total stock of property on the market edged up again and is just 0.5% less than in August last year. Indeed, supply of property increased sharply in key regions with supply up 27% in London, up 19% in the East of England and also up 19% in the South East. The report says that these increases will only serve to worsen the market conditions, especially in Greater London. It suggest that low confidence among sellers has triggered a spate of price cutting, the magnitude of which we have not seen since October 2012. This meant that asking prices slipped in the South East by a further 0.2% during the last month. Scottish asking prices also slipped for a second consecutive month, by 0.5%. A breakdown of the figures show that asking prices increased the most in the North East with a rise of 1%, followed by the West Midlands up 0.8%, the East of England up 0.6%, the South West up 0.5%, Wales up 0.3% and the North West up 0.1%. There is a significant risk that falling prices and uncertainly over Brexit in London and the South East will trigger a stampede to market, causing a major market slump, the report also says. ‘Overall, the current mix-adjusted average asking price for England and Wales is now 5.3% higher than it was in August 2015, and we anticipate that this figure will trend towards 0% over the coming months,’ said Doug Shephard, director at Home.co.uk. ‘Last month was simply too early to fully appreciate the Brexit fallout for UK property. This month we are seeing significant market changes but not all to the downside. Whilst the London market is looking rather panicky with falls being accentuated by Brexit worries, there are several strongly performing regions that remain unaffected so far,’ he explained. ‘While it is clear that the referendum result certainly unnerved many investors, it is also clear that they are not all running for the exit at once. We will be keeping a particularly close eye on the London market over the next month, watching whether or not the surge in new listings becomes a stampede. Such a panic would inevitably lead to a home price crash in the region and stress mortgage lenders to the limit or beyond,’ he pointed out. He believes that the decision by the Bank of England to take interest rates even lower to a record low of… Continue reading
