Tag Archives: london
Analysis suggests Brexit will have a varied impact on London property markets
The decision by the UK to leave the European Union is set to have a hugely varied impact across London's property markets with some likely to be worse off than others. According to a new analysis from independent property buying agency Black Bric, the sub-£2 million price bracket will continue to attract investors due to its favourable yields, good liquidity, and domestic demand. But the firm’s managing director Camilla Dell predicts that the same can't be said for the prime property market in London and the new build outer prime markets. ‘We expect the section of the market dominated by domestic buyers and those working in the financial services sector, predominantly £2million to £5 million but also up to the £12million to £15 million range, to potentially face some pressure linked to Brexit concerns,’ said Dell. ‘We do not expect the wholesale flight of financial services firms away from London, but it is likely that they will lose their passporting rights, or their ability to sell financial services across the EU if the UK does leave, triggering the departure of some financial services capacity to Dublin or the continent,’ she explained. ‘However, even relatively low numbers of bankers leaving areas such as South Kensington or Notting Hill where Europeans, in particular, tend to be concentrated could have a significant effect on local markets over the next couple of years,’ she added. Black Brick also expects the new-build outer prime market to suffer most from continuing uncertainty, having already experienced a lull period before the referendum vote. ‘The stock market has already heavily bid down builders linked to this part of the market, which is suffering from significant oversupply and the disappearance of the foreign investors who had supported it in recent years,’ said Dell. ‘Areas such as Nine Elms in Vauxhall and Earls Court in West London are particularly vulnerable due to oversupply of expensive properties aimed at the overseas investor. However, there are a handful of stand out developments, such as Television Centre, that we believe are likely to continue to prove popular, and there will certainly be bargains to be had, particularly on the secondary market,’ she pointed out. On the other hand, Black Brick expects the super prime market to be the least negatively affected, with the collapse of the sterling meaning that dollar buyers are actually factoring in a 12.5% increase in their purchasing power since before the referendum. ‘For the global elite buying properties at £15 million to £20 million or above, purchases tend to be about lifestyle choices, rather than business decisions, or are to diversify extremely large portfolios. Indeed, we are still seeing transactions continue. Brexit did not feature in conversations with clients in this part of the market before the referendum, and it is unlikely to be much of a factor now it is underway,’ Dell added. Meanwhile, London’s new Deputy Mayor for Housing James Murray has said there will be meeting with major developers and the… Continue reading
Pending home sales fall across all regions of the United States
After steadily increasing for three months, pending home sales in the United States let up in May with the first year on year fall for almost two years with all four major regions seeing a decline. The Pending Home Sales Index, a forward looking indicator based on contract signings from the National Association of Realtors fell by 3.7% to 110.8 in May from a downwardly revised 115 in April and is now 0.2% lower than May 2015. But even with last month’s decline, the index reading is still the third highest in the past year, but declined year on year for the first time since August 2014. According to Lawrence Yun, NAR chief economist, pending sales slumped in May across most of the country. ‘With demand holding firm this spring and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity,’ he said. ‘Realtors are acknowledging with increasing frequency lately that buyers continue to be frustrated by the tense competition and lack of affordable homes for sale in their market,’ he added. Despite mortgage rates hovering around three year lows for most of the year, Yun explained that scant supply and swiftly rising home prices which surpassed their all-time high last month are creating an availability and affordability crunch that’s preventing what should be a more robust pace of sales. ‘Total housing inventory at the end of each month has remarkably decreased year on year now for an entire year. There are simply not enough homes coming onto the market to catch up with demand and to keep prices more in line with inflation and wage growth,’ Yun pointed out. Looking ahead to the second half of the year, Yun believes that the fallout from the UK’s decision to leave the European Union breeds both immediate opportunity as well as potential headwinds for the US housing market. ‘In the short term, volatility in the financial markets could very likely lead to even lower mortgage rates and increased demand from foreign buyers looking for a safer place to invest their cash,’ he said. ‘On the other hand, any prolonged market angst and further economic uncertainty overseas could negatively impact our economy and end up tempering the overall appetite for home buying,’ he added. In spite of last month’s step back in contract signings, existing home sales this year are still expected to be around 5.44 million, a 3.7% boost from 2015. After accelerating to 6.8% a year ago, national median existing home price growth is forecast to slightly moderate to between 4% and 5%. A regional breakdown of the figures shows that the PHSI in the Northeast dropped 5.3% to 93 in May, and is now unchanged from a year ago. In the Midwest the index slipped 4.2% to 108 in May, and is now 1.8% below May 2015. Pending home sales in… Continue reading
Mortgage approvals increased in UK in May but still below six month average
The number of mortgages approved for buyers in the UK increased in May compared to the previous month but are still below the high level recorded in March due to stamp duty changes. The data from the Bank of England’s Money and Credit Report shows that there were 70,553 approvals for house purchases in March, 66,205 in April and 67,042 in May. This compares to an average of 70,598 over the previous six months. The data also shows that the number of approvals for remortgaging was 42,919, compared to the average of 41,019 over the previous six months. According to Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), stamp duty changes for buy to let properties and second homes meant there was an air of inevitability about the April dip in mortgage approvals, which has now been followed up by a modest recovery in the lead-up to the UK’s referendum on its European Union membership. ‘House purchase activity hasn’t quite returned to the heightened levels of early 2016, but the homebuyer market has visibly strengthened over the last 18 months. The data also shows record remortgage activity with almost 43,000 approvals in May, the highest of the post-Mortgage Market Review (MMR) era,’ he said. ‘A resurgence in remortgaging has been underway for the last six months, with more than 40,000 loans approved every month since December. It reflects growing opportunity for consumers to use the equity in their homes to switch to a new deal, and growing awareness of the savings on offer while rates are low and lender competition is high,’ he pointed out. Williams also explained that a year ago, the UK mortgage market was about to experience a post-election bounce and it seems unlikely that last week’s EU referendum result will produce a similar effect this time round. ‘However, despite inevitable uncertainty as some buyers and sellers wait to see how the dust settles, lenders will be maintaining business as usual. Mortgage rates continue to look attractive and the housing supply shortage means homes appearing on the market are still likely to be subject to considerable demand,’ he added. David Whittaker, managing director of Mortgages for Business, explained that investors’ desire to complete before the 01 April deadline meant that business was brought forward into February and March, which then resulted in dampened approval figures for April. ‘However, following this, it is now clear that the number of purchase approvals did increase between April and May, as property investors came to terms with the new normal this tax year,’ he said. ‘May feels like an age ago. Now, there is little doubt that the rest of the year will be dominated by the events of the last seven days. Following the Brexit vote, anecdotal evidence suggests that many are holding off on transactions until a more detailed picture of the economic and political fallout emerges. This could make for a quieter third quarter,’… Continue reading
