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House price sentiment increases in UK after Brexit low but still down on peak
Households across the UK believes that the value of their home rose in August but expectations remain muted following the decision to leave the European Union. Households in the East of England perceived the biggest price growth in August, followed by those in the South West and South East, according to the latest House Price Sentiment Index (HPSI) from Knight Frank and IHS Markit. Respondents in six of the 11 regions covered by the index believe prices increased over the course of the month and the future HPSI picked up in August with households still confident that the value of their home will rise over the next 12 months, albeit at a slower pace than before the EU referendum. Households in the South of England are more confident about price rises than those in the North of England, Scotland or Wales and overall 15.2% of the households surveyed across the UK said that the value of their home had risen over the last month, while 12.4% said that prices had fallen. A breakdown of the figures shows that with those in the East of England reported the biggest rises at 58.5, followed by those in the South West t 55 and the South East at 54.5. Scotland and the North East were the only two regions where sentiment fell month on month from 49.3 and 45 to 45.6 and 44.3 respectively. This resulted in a HPSI reading of 51.4. Any figure over 50 indicates that prices are rising, and the higher the figure, the stronger the increase. Any figure below 50 indicates that prices are falling. August’s reading was an increase from the 48.3 recorded in July following the EU referendum and took the index back into 50 plus territory. However, it remains notably below the average HPSI reading for the first six months of the year before the vote which was 59.9. It is also significantly lower than the peak of 63.2 recorded in May 2014. The future HPSI, which measures what households think will happen to the value of their property over the next year, rose to 58.3 in August from 50.3 in July. While the sentiment index has risen month on month, it remains subdued on a longer term basis. The last time the future sentiment index was below 60 for two consecutive months was back in March 2013. This report says that this suggests that while households are still positive, they are expecting more modest growth in property prices over the next 12 months. There remain regional variations in future house price sentiment, mirroring trends in the wider housing market. Households in the East of England are the most confident that prices will rise over the next year at 68.3, followed by those in the South West at 64.7 and the South East 63. ‘The greater political confidence instilled after Brexit by the swift appointment of a new Prime Minister, coupled with the Bank of England’s base rate… Continue reading
Number of UK home buyers falls by a third year on year, agents data shows
The number of house buyers in the UK has fallen by a third year on year with demand now at its lowest since November 2013, according to estate agents. In July the number of house hunters registered with members of the National Association of Estate Agents (NAEA) dropped to an average of 298, down 330 from the previous month. It means that demand is some 35% lower than July last year when 362 were registered per branch. The fall off comes at a time when the supply of housing increased marginally from 37 per branch to 38 in July. The NAEA monthly report also shows that last month, eight out of the 10 properties sold per member branch were for less than the original asking price, an increase of 8% from June. The number of sales made to first time buyers decreased in July from 30% of total sales made in June to 25% and in July, the number of sales agreed per member branch remained at eight. Some 31% of estate agents reported that there has been no changes in the housing market since Brexit and everything is business as usual while 31% of agents stated that the interest from foreign investors has remained the same. ‘We expected to see uncertainty in the immediate period following Brexit and during the summer months the market always quietens down, so we are optimistic that the housing market will spring back into full swing in the coming months,’ said Mark Hayward, NAEA managing director. Continue reading
Currency fluctuations adding to slowdown in Dubai property market
Residential property prices in Dubai fell again during the second half of 2016 and the slowdown is projected to continue. Data from two sets of figures covering the second quarter show that the real estate market is slowing although sales are holding up. However, currency fluctuations are adversely affecting demand from foreign buyers. The data from CBRE shows that it was the sixth consecutive quarter of declines with the average sales rate down 2% quarter on quarter and 12% year on year, with the most significant fall recorded in the upper segment of the market. ‘Prices within the mid-market segment have proven to be far more resilient to this downward rate trend, reflecting the current demand for affordable accommodation in freehold communities,’ the report says. Although sales have held up relatively well, rental values in the mid-market segment of the market in areas like Al Barsha, Oud Metha and Bur Dubai have fallen, reflecting the higher availability of homes on the market. It suggests that the devaluation of major currencies, global economic uncertainty, redundancies and lower accommodation budgets mean that there is likely to be a further softening of demand levels and sales rates in the short term, especially for higher end and larger units. Indeed, the firm predicts that property sales rates are set to fall further by an additional 3% to 5% in the coming quarters although some locations may vary. ‘It is estimated that around 48,000 new residential units, apartments and villas, could enter the Dubai market during the period 2016 to 2018, provided that construction delays are at a minimal,’ said Mat Green, head of research and consulting UAE at CBRE Middle East. Meanwhile, the latest Phidar Advisory Dubai residential research note for the end of the second quarter of 2016 shows that residential prices dropped in the first half of the year and projects further declines. ‘Some claim this is a supply story, but supply has expanded slowly over the past thirty months. The current declines reflect soft demand,’ said Jesse Downs, managing director of Phidar Advisory. The Phidar house price index data shows that apartment lease rates declined 2.2%, while sale prices declined 3.7%, pushing gross yields up to 7.9%, a three month gain of 12 basis points while lease rates for villas decreased 3.6% and sale prices declined 1.1%, which pushed yields down to 4.7%, a loss of 12 basis point in the first half of the current quarter. ‘The compression of villa yields is unsustainable and should slowly reverse in the coming year. Sale prices and rent declines for both villas and apartments will likely continue for the next 12 months, possibly up to 18 months,’ added Downs. She also pointed out that as there are a high number of foreign buyers in Dubai currency fluctuations are affecting the real estate market. ‘The strong US dollar is one of the biggest barriers to a Dubai real estate recovery now. Unfortunately, a strong dollar also is usually associated… Continue reading
