Tag Archives: investment
Prime property market in London set to be affected most by Brexit
The prime property market in London is likely to be the affected the most by the referendum results in the UK which will see the country leave the European Union. Sales activity and price growth in the prime London residential market have already both slowed since the middle of 2014 and in the run up to the historic vote many commentators and experts were predicting that a vote to leave would affect London the most. ‘There is no doubt that the vote in favour of Brexit will generate a period of renewed uncertainty in the prime London residential market. Some demand, especially from investors, will be delayed and in some cases redirected to other markets although the significance of these trends should not be overstated,’ said Liam Bailey of international real estate firm Knight Frank. He explained that demand for prime London property rests on a wide range of drivers most of which are unaffected by the referendum decision such as the scale of London’s business cluster, depth of skills, education, lifestyle and language. ‘It is not easy to identify an obvious alternative destination for investors despite short term nervousness. On the eve of the vote the pound sat 14% below its mid-2014 peak meaning pricing in the prime market was more attractive for dollar buyers. While a further weakening of the pound could increase inward investment, this impact will be constrained by the fact that around 80% of central London buyers are UK residents,’ he pointed out. ‘It seems a reasonable assumption to make that interest rates will be lower for longer, despite the risk of imported inflation from a weaker pound. While the long term benefit of ultra-low interest rates on the housing market may be questionable, in the short term they will act to underpin demand especially for equity rich buyers with access to the best funding rates,’ he added. Bailey also believes that the prime country house market will be similarly impacted by the result. ‘However while the market has performed relatively well over recent years, following a slow recovery immediately after the financial crisis, prices have not tracked London to date and there is scope for some outperformance in the short to medium term,’ he said. ‘While we are entering a period of renewed uncertainty in the UK and London market, ongoing issues around EU and especially Eurozone stability, which will be highlighted in the run up to French and German elections, are likely to counter this risk and shore-up London’s safe haven appeal,’ he concluded. The decision to leave has opened up a Pandora’s Box as far as the London property market is concerned and for overseas buyers, this big and dramatic drop in the value of Sterling will effectively offset the Stamp Duty and tax adjustments and it will make prime London property a lucrative investment for overseas investors bold enough to make a decision to buy despite the market uncertainty, according to Peter Wetherell, chief… Continue reading
Sales in US reach highest level for a decade and prices reach all time high
Existing home sales in the United States increased in May to their highest pace in almost a decade and median sales prices reached an all-time high. While the uptick in demand this spring amidst lagging supply levels pushed the median sales price to an all-time high, according to the National Association of Realtors®. All major regions except for the Midwest saw strong sales increases last month. Total existing home sales, which are completed transactions that include single family homes, town homes, condominiums and co-ops, were up by 1.8% to a seasonally adjusted annual rate of 5.53 million in May from a downwardly revised 5.43 million in April. The data from the National Association of Realtors (NAR) shows that with last month's gain, sales are now up 4.5% from May 2015 and are at their highest annual pace since February 2007. ‘This spring's sustained period of ultra-low mortgage rates has certainly been a worthy incentive to buy a home, but the primary driver in the increase in sales is more home owners realizing the equity they've accumulated in recent years and finally deciding to trade-up or downsize,’ said Lawrence Yun, NAR chief economist. ‘With first time buyers still struggling to enter the market, repeat buyers using the proceeds from the sale of their previous home as their down payment are making up the bulk of home purchases right now,’ he pointed out. ‘Barring further deceleration in job growth that could ultimately temper demand from these repeat buyers, sales have the potential to mostly maintain their current pace through the summer,’ he added. Surpassing the peak median sales price set last June of $236,300) the median existing home price for all housing types in May was $239,700, up 4.7% from May 2015 and the 51st consecutive month of year on year gains. The data also shows that total housing inventory at the end of May rose 1.4% to 2.15 million existing homes available for sale, but is still 5.7% lower than a year ago while unsold inventory is at a 4.7 month supply at the current sales pace, which is unchanged from April. ‘Existing inventory remains subdued throughout much of the country and continues to lag even last year's deficient amount. While new home construction has thankfully crept higher so far this year, there's still a glaring need for even more, to help alleviate the supply pressures that are severely limiting choices and pushing prices out of reach for plenty of prospective first time buyers,’ said Yun. The share of first time buyers was 30% in May, down from 32% both in April and a year ago. First time buyers in all of 2015 also represented an average of 30%. Properties typically stayed on the market for 32 days in May compared to 39 days in April, which is below a year ago when it was 40 days and the shortest time since NAR began tracking in May 2011. Short sales were on the market the longest… Continue reading
Northern UK seaside towns provide better yields for landlords than those in south
The Hull area has been named as the top seaside postal area for landlords in England and Wales in terms of offering the best average rental yields. Research shows that property investors who buy within the Hull postcode area can realise rental yields of up to 10.7% in seaside resorts like Withernsea. According to the data from online property investment firm LendInvest the next best postal area for landlords is Blackpool. Landlords who invest in property in the town itself can achieve rental yields of 8.2%. Colwyn Bay North Wales is third with buyers seeing rental yields of 6.1%, followed by Barry in Cardiff at 6%, Caister on Sea near Norwich as 5.7% and then Egremont in Cumbria also at 5.7%. Next comes Morecambe in Lancashire and Scarborough in Yorkshire, both with average yields of 5.5%, followed by Ramsgate in Kent and Portslade in Brighton both at 5.2%. Then comes Ryde on the Isle of Wight at 5.1%, Clacton-on-Sea in Essex, Bournemouth and Chapel St Leonards all at 5%, and finally Plymouth at 4.9%. ‘When you think about investing in property in a seaside town, many will immediately think of places like Brighton and Eastbourne. But as our research makes clear, investing in the right Northern seaside towns, for example, could prove a lot more lucrative,’ said Christian Faes, chief executive officer of LendInvest. He pointed out that seaside towns often enjoy strong demand from renters, whether that’s for yearlong tenancies or for a couple of weeks over the holiday months. ‘However, it’s crucial that would-be property investors do their research on the area to gauge just how much demand there is, and what sort of competition they face. It’s not enough to rely on the allure of ice cream and sea air,’ he added. Continue reading
