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Rents up 1.5% in UK, but growth is slowing across the country
Rents in London fell by 0.5% in July compared to the same month in 2015 as growth in the lettings market in the city stalled, but they increased across the UK by 1.5%, the latest index shows. However, a breakdown of the figures from the Countrywide Lettings Index shows that rental growth slowed across every region of the country and the drop in London was the first annual fall in rents for six years. In July the average rent in the UK was £951 a month, up 1.5% on last year, but rising half as fast as in July 2015. Rents fell by 2% in Wales, by 1% in Scotland and by 1.1% in the South East of England but in the North of England and the Midlands, the rate of rental growth hit the highest level for two years. The highest rents are in Central London at an average of £2,638, up 2.1% year on year, followed by Greater London at £1,280 and the South East at £1,173. In the East of England they are £963, up 3.8%, in the South West £856, up 3.3%, in the Midlands £703, up 4.8%, in the North of England £694, up 4.7%, in Scotland £689, down 1% and in Wales £671, down 2%%. The report points out that while tenant demand has increased nationally, the volume of homes coming onto the rental market has slowed or in some cases reversed rental growth. In July there were 23% more homes available to rent in the UK than at the same time last year, while the capital saw a rise of a third. Some of this increase has been driven by purchases rushed through to beat the stamp duty deadline, however the number of homes available to rent has continued to rise in recent months, particularly in London and the South East. An increase in the number of homes on the market has meant less deals are agreed above asking rents. In July 2015 16% of tenants paid over the asking rent to secure a home compared to 7% in July 2016. In London the fall was larger, 11% of homes let for more than the asking price in July, down from 32% in July 2015. ‘The large rise in numbers of homes available to rent has certainly slowed rental growth, even with tenant numbers increasing. Stock levels were already running higher than usual due to investors bringing forward purchases in the rush to beat the stamp duty deadline in April,’ said Johnny Morris, director of research at Countrywide. ‘Added to that, uncertainty in the sales market in the run up to, and after the European Union Referendum has caused more discretionary sellers to turn to the rental market. While rental price growth has slowed, current market dynamics are likely to accelerate the growth of renting. It seems that with more stock and demand from tenants we will… Continue reading
House prices in Slough and Reading set to benefit most from London’s Crossrail project
House prices in the commuter towns of Slough and Reading have so far benefitted the most from the new Crossrail project that will join central London to routes west and east of the city when it opens in 2019, new research shows. House prices in these two locations have increased by 39% and 33% respectively since April 2014, compared with the regional average of 22%, according to the research from UK home lender the Nationwide. The railway line, to be known as the Elizabeth Line, will stretch from Reading and Heathrow in the west to Shenfield and Abbey Wood in the east, meaning that 40 stations will connect town in Berkshire and Essex to major hubs in London including the City and Canary Wharf as well as Heathrow airport. According to the research commuter towns' property markets are likely to benefit most from the introduction of Crossrail as Greater London stations are already well integrated, with good transport links around the capital, and thus house prices in these areas are unlikely to benefit substantially from marginal improvements in transport links. The strong rate of house price growth in Slough and Reading has been driven by robust demand for properties and a rise in transactions. Following the announcement that the project would go ahead, the number of homes sold in the three months to August 2014 was up 24% year on year in Wokingham, versus an average increase of 16% in the region as a whole in the same period. The research explains that eastern branches of the line do not extend as far out of Greater London as the western section, only reaching Brentwood and Shenfield outside of the capital and this may help to explain why the positive Crossrail effect apparent in the west is slightly more muted in the eastern section. House prices in the borough of Brentwood, which also includes Shenfield, have increased by 43% since the May 2010 government pledge of completion, compared with a regional average in the East of England of 36%. Over the last two years Brentwood house prices have risen broadly in line with the regional average at 24% versus 23%. The report suggests that lower rate of price growth, compared with western areas, may be due to the area already having good transport links to both The City and the Docklands, via Stratford, through Greater Anglia services and also the Shenfield metro now operated by TfL Rail. ‘Slough has been much maligned for many years. However, our research into the effect of the new Elizabeth Line on house prices in the town suggests that this may be unfair and that Slough, in fact, may be a more desirable place to live than people might imagine,’ said Andrew Harvey, senior economic analyst at Nationwide. He pointed out that the analysis suggests that the Crossrail project has provided a significant uplift to prices on the western section of the line to Berkshire. Slough, in particular, has… Continue reading
Home mover market in UK hits nine year high
The number of home movers in the UK increased by 9% in the first six months of 2016 compared with the same period in 2015, according to the latest research. Some 174,700 people moved up the housing ladder in the first half of the year even although rising house prices mean home movers need a higher level of deposit for their next property, the report from Lloyds Bank reveals. It means that the number of home movers has reached its highest level since 2008 when it was 179,800 over the same six month period. Since hitting a market low of 117,900 in the first half of 2009 the number of buyers moving along the housing ladder has grown by 48%. However, the report points out that the current number of home movers is still at around half the pre-crisis level of 327,600 recorded in the first half of 2007. Housing affordability for second steppers stood at 6.5 times gross annual average earnings in June 2016. On this measure, affordability has improved over the past five years from 7.3 in 2011. The research also shows that most regions of the UK have seen an improvement in Second Stepper affordability since 2011. The largest improvement was in Northern Ireland where this ratio has fallen from 6.2 in 2011 to 4.9 in 2016, followed by the North down from 7.2 to six and Scotland down from 6.6 to 5.6. In contrast, affordability has deteriorated in London from 9.7 to 10.9 and the South East from 8.7 to 9.4. Whilst a mortgage term of 25 years has been the norm for some time, many home movers are increasingly taking out mortgages where payments are spread over a longer period. In the first half of 2011 the proportion of home movers taking up a 25 to 35 year mortgage stood at an average of 9%. The research reveals that for the same period in 2016 this figure had doubled to almost one in five or 18%. Over the same period, the share of mortgages with a 20 to 25 year term dropped from 36% to 29%. Over the past five years, the average price paid by home movers has grown by 38% from £206,997 in 2011, to £261,550 in June 2016, an increase of £78,609, equivalent to a monthly increase of £1,310. In London the average home mover price has grown by 55% since June 2011 to £540,440, the largest increase in the UK. The capital is followed by the South East where home movers now pay on average, £382,324 an increase of 45% in the past five years. By contrast, the average home mover price in Northern Ireland has edged up over the same period by just 2% from £156,764 to £159,326. In the past year the average home mover price has grown by 9% or £24,056 to £285,606. The average deposit put down by a home mover has increased by 32% in the… Continue reading
