Tag Archives: investment
Property price growth in UK set to fall to 5.7% by end of 2016 and 2.2% in 2017
Residential property price growth in the UK will half in the rest of 2016 but house prices are set to by 5.7% over the whole of the year, a new analysis suggests. The fall in growth in the rest of the year will largely be due to the rush of buyers looking to beat April’s stamp duty surcharge having pushed prices up in the middle of the year and Brexit uncertainty now impacting the market. According to the analysis from economic forecaster the Centre of Economics and Business Research (Cebr) London will be most impacted by Brexit uncertainty. Average house price in the capital is expected to increase by 8% in 2016, but fall 5.6% the following year, it predicts. The report suggest that in the medium and long term housing market performance will heavily depend on the economic and immigration policies agreed during the UK’s exit negotiations with the European Union. It points out that average prices increased by 8% year on year in the first quarter of the year so a slowdown will materialise in the second half of the year. As a result of Brexit, Cebr has downgraded its short term house price expectations and now expects prices to grow by just 2.2% over 2017 but expects a smaller impact further down the line. In the medium term Cebr expects house price growth to pick up as exit negotiations with the EU progress and investors and households gain clarity on how post-Brexit UK will look. This expectation is in line with Cebr’s central view of the upcoming post-Brexit negotiations progressing relatively smoothly with the ultimate outcome seeing the UK maintain a close economic relationship with the rest of the continent, without necessarily agreeing to an unrestricted flow of labour or goods and services. The report also says that beyond 2020/2021, housing market developments will depend heavily on the immigration and economic policies the UK negotiates with the EU and the rest of the world. And it explains that although Brexit does have a far reaching impact on housing, it is important to keep in mind that the property market was losing steam even before the referendum. In April, the stamp duty surcharge on second homes was introduced and this is on top of reductions in buy to let tax relief that were announced in the July 2015 Budget. Furthermore, in London, the prime end of the market was showing cracks well before the referendum vote on June 23rd. Also, some of the global regions that many of London’s non-UK buyers come from such as Russia and the Middle East are experiencing economic turmoil and are not as able to invest. ‘Although Brexit has certainly sent shockwaves Cebr expects the housing market to slow down but not plummet. Years of under building mean that demand would have to fall very dramatically to… Continue reading
Brexit could create opportunities for UK farm land market
The decision by the UK to leave the European Union has created uncertainty for farm land values but it could also create opportunities, according to new research. In the short term the effect could be muted, according to the initial analysis from real estate firm Savills. It says that a weak Pound creates export opportunities and if this continues into September there will be a significant increase in farm subsidies to British farmers in 2017. It also points out that a weak Pound creates a favourable buying environment for overseas investors and this, along with the potential of reduced supply due to uncertainty may help to support farmland values. However, according to Ian Bailey, head of rural research at Savills, in the event of a significant reduction in farm subsidies, and therefore incomes, the negative effect is likely to be greater on rents than land values. ‘The full impact of Brexit on all of the UK's property markets will be very dependent on the macroeconomic background and the evolution of the story over the next two to three years. We must stress it is early days and there are many unknowns,’ said Bailey. ‘Uncertainty has to be the key factor and this will principally be around those factors that have direct impact on farm incomes. It is likely that farmland market activity in the remainder of this year will be more subdued as potential sellers wait and see,’ he explained. The report is Savills’s first analysis of how the change might affect rural markets in the UK and this is likely to be updated on a regular basis over the following months as hard data, anecdotal news and forecasts evolve. ‘Uncertainty is the key factor and it is very likely that farmland market activity in the second half of this year will be more subdued as potential sellers wait and see. Our research shows just over 100,000 acres were publicly marketed across Great Britain in the first half of 2016, which was on a par with activity for the same period of 2015,’ Bailey said. ‘Historic trends suggest uncertainty creates a lull in market activity and this appears to be the case across England, where supply in the first half of this year, at 68,000 acres, was 10% lower than the same period last year,’ he pointed out. However, in Scotland and Wales the opposite pattern was recorded. ‘Anecdotal evidence suggests that, in Scotland at least, there has been a degree of referendum fatigue which has not hindered activity. In Wales the market is very small and a few farms can make a difference either way,’ Bailey added. Savills also suggests that the uncertainty will principally be around those factors that have direct impact on farm incomes. These will include the UK’s international trade relationships and the level of farm support that will replace the Common Agricultural Policy (CAP). Currently subsidy represents about 67% of the average UK farm income. However, farming subsidies under the… Continue reading
Economy slowing and lower oil prices affecting Abu Dhabi’s rental markets
Average housing rents in Abu Dhabi have fallen for the first time in three years, driven by thousands of job cuts and an increase in the cost of living. The first signs of long expected falls in housing rents in Abu Dhabi started to appear in the second quarter, according to new reports from property brokers JLL and CBRE. Residential property rents in Abu Dhabi have fallen for the first time in three years at a time when jobs are being cut and the cost of living is increasing. The average rental price of a prime two bedroom apartment fell by 2% in the second quarter of 2016 compared with the first quarter, according to the latest report from real estate services firm JLL. The latest report from property firm CBRE also shows that there was a 2% fall in apartment rents in the second quarter of the year while it adds that villa rents fell by an average of 1%. ‘While supply remains stable, the reduction in demand has now started to cause vacancy rates to nudge upwards, indicating we have now reached a tipping point with rents declining for the first time in three years,’ said David Dudley, head of JLL’s Abu Dhabi office. The firm believes that plans by the state owned oil company Adnoc to cut 5,000 jobs by the end of the year, and staff cuts at other government companies, means fewer people are attracted to the emirate and apartments are left empty. JLL is forecasting that rents will fall further this year as more expats and their families are expected to leave as their tenancies expire at the end of the academic year. ‘We expect the impact of these job cuts and reduced incomes to become more pronounced over the summer, as some people look to either leave or downsize. This will push vacancy rates up further and cause rents to decline,’ explained Dudley. The CBRE report also points to a drop in incomes as being behind demand falling for rental apartments with tenants looking for cheaper lets due to a combination of falling wages, a reduction in allowances and benefits, the removal of fuel and water subsidies and a new 3% municipality fee on Abu Dhabi expat rentals. ‘With economic challenges expected to continue in the short term, we anticipate further deflation of high end luxury rates as reduced corporate demand creates a more tenant led market,’ said Matthew Green, head of research in CBRE’s office. He believes that with just 14,500 new homes expected to come to the market over the next two and a half years, around 5% of the current housing stock most of which will be aimed at the upper end of the market, rents for more afford¬able homes are likely to remain fairly flat. ‘With limited stock against current requirements, rental rates for affordable units have remained steady with minimal fluctuation recorded against the general slowdown observed in the upper segments,’ he added. But… Continue reading
