Tag Archives: london
UK asking prices up just 0.4% but first time buyers paying much more
Property asking prices in the UK increased by the modest amount of just 0.4% in May, taking the average price to £308,151, according to the latest index figures. But it is first time buyers who have faced the highest rises, with the data from property portal Rightmove showing that for this segment of the market asking prices increased by 6.2% month on month and 11.4% year on year. In some areas first time buyers have seen prices rise even more with Croydon, Dartford and Luton recording an annual price surge of 18%. Those moving up the housing ladder have fared better with second steppers seeing prices fall 0.8% month on month, but they are still paying some 8.1% more than a year ago. The report points out that it was speculated that the investor activity drop-off after the April additional home stamp duty deadline would act as a brake on prices at the lower end of the market. However, intense investor activity, with March transaction numbers up a massive 80% on last year, exacerbated the property drought in this sector and is now causing upwards price pressure. This resulted in prices for properties with two bedrooms or less, typical first time buyer homes, increasing. ‘If you were expecting a long period of price doldrums at the lower end of the market following the mass exit of the buy to let brigade, this month’s 6.2% price rise will come as a big surprise,’ said Miles Shipside, Rightmove director and housing market analyst. ‘Properties at the lower end of the market were the most common target for the investor community, and the immediate aftermath of the tax deadline saw new seller asking prices drop in this sector for just one month. The 1.4% fall reported in April’s index appears to have been a very short lived knee jerk, with an average price surge of £11,298 this month for properties coming to market with two bedrooms or fewer,’ he explained. ‘It remains to be seen if these prices can be achieved and there may be some over pricing in the market; it is also a reflection of better quality property coming to market in this sector which is now targeting owner-occupiers rather than landlords,’ he added. He pointed out that since November when it was announced that an extra 3% stamp duty would be charged on additional homes and its implementation at the end of March, the price of property coming to market in this first time buyer/investor sector increased by 3%. In just four weeks it has now risen by 6.2%, the highest monthly rise recorded for this sector since February 2012. The report also show that demand for typical entry level property remains high, with searches on Rightmove specifying two bedrooms or fewer being up by 47% in April compared to April 2015 in spite of waning investor interest. In contrast, fresh supply for this sector is down by 1.5% in the last four… Continue reading
New analysis suggests Brexit vote is affecting prime central London lettings market
The lettings market in prime central London has weakened rental as tenants capitalise on the current economic uncertainty including the upcoming referendum on the future of the UK in the European Union. The latest analysis report from specialist residential investor advisors London Central Portfolio (LCP) says that the rental market is reflecting a slowdown as a result of economic strains. It shows that whilst new lets have seen consistently positive rental upticks over the last five consecutive quarters, averaging a 5.5% increase overall, the market is beginning to subdue, according to the published statistics. Against a backdrop of falling stock markets, a collapse in oil prices and Brexit uncertainty, new lets have achieved just a 0.3% increase over the last quarter. This has been exacerbated by the predictably quieter Easter and May bank holiday period. The analysis, however, shows that re-lets are showing a significantly weaker picture, with a 1.2% fall in rents over the last quarter, following a fairly static picture over the course of the year. The report says that this is due to applicants being attracted to brand new properties, without any sign of previous use, coupled with a significant uptick in rental stock available. This has increased by 26.7% from 23,039 to 29,198 in the last three months, attributable to a reduction in transactions in the sales market which has led to more properties being available for rent. ‘The overall suppression in rents reflects a market dynamic which was conspicuous during the credit crunch, as tenants capitalise on economic uncertainty to leverage up their bargaining power. This has been compounded by companies cutting their relocation budgets in the face of global instability and, in some cases, delaying relocations in the run up the EU referendum,’ said Naomi Heaton, chief executive officer of London Central Portfolio. ‘In light of the current market conditions, landlords may need to be more flexible to accommodate the higher negotiating power of applicants and to prevent void periods which may erode any increase in rent ultimately achieved. For as long as this cycle lasts, landlords also may need to be more open to remedial and upgrade works between tenancies,’ she explained. ‘A slowdown in the re-let market has been compensated by continued positive renewal increases by tenants in situ. With Landlords often able to achieve contractual rental increases, above that which can be achieved in the open market, average rental growth of 3.3% in the last quarter has been seen in contrast to the softer market elsewhere,’ she added. The report also points out that despite the somewhat gloomy picture generally, corporate belt tightening means that small one and two bedroom properties are reinforcing their position as the hardest working sector of the market. Appetite for these mainstream rental properties remains strong, with void periods down to just 23 days on average. For these properties, the area around Marylebone, Fitzrovia… Continue reading
Chancellor says house prices could fall by up to 18% if UK votes to leave EU
House values in the UK could fall by 10% and up to 18% due to the economic shock that would hit the country if people vote to leave the European Union in the referendum next month, according to the Chancellor of the Exchequer. George Osborne, speaking at the G7 finance ministers’ meeting in Japan, revealed that the forthcoming Treasury analysis on the short term economic consequences of a vote to leave will demonstrate a wide range of negative impacts on families and businesses, including the housing market. It concludes that by 2018, home owners will be hit as growth in Britain’s housing market will be reduced by at least 10% and up to 18% compared to what is expected if the UK remains in the EU, as heightened uncertainty generated by Brexit hits financial markets, consumer confidence and home values. Independent authorities, including the International Monetary Fund, have warned that if Britain votes to leave the EU then mortgage interest rates would also rise because of financial market instability, meaning fewer people being able to get a mortgage and mortgage costs rising for all. The Treasury conclusion follows warnings from Virgin Money’s Chief Executive, the CEBR, S&P, Fitch and Deutsche Bank about the potential negative impact on Britain’s housing market from a vote to leave the EU. The Chancellor said finance ministers from other G7 countries attending the summit in Sendai confirmed that in their assessment, leaving the EU could cause significant financial market turbulence, affecting families and businesses. The Chancellor also challenged the idea that negotiating a new relationship with the EU would be easy if the UK votes to leave, warning that instead it would be a long, costly and messy divorce. In the coming days the Treasury is going to publish analysis of what the immediate impact will be. Osborne also said that mortgages will get more expensive and mortgage rates will go up. ‘If we leave the European Union there will be an immediate economic shock that will hit financial markets. People will not know what the future looks like. And in the long term the country and the people in the country are going to be poorer,’ Osborne said. ‘That affects the value of people’s homes and the Treasury analysis shows that there would be a hit to the value of people’s homes by at least 10% and up to 18%. And at the same time first time buyers are hit because mortgage rates go up, and mortgages become more difficult to get. So it's a lose-lose situation,’ he pointed out. ‘We all want affordable homes, and the way you get affordable homes is by building more houses. You don't get affordable homes by wrecking the British economy. And of course if we left the EU, mortgage rates would go up, it would become more difficult… Continue reading
