Tag Archives: real-estate
UK remortgage figures up in May, but uncertainty could now creep in
Last month was the best May for remortgaging since 2008 but uncertainty and volatility are now expected following the decision by the UK to leave the European Union. Remortgaging reached £5 billion in May and the number of loans reached 32,334, higher than every May since 2008, when 77,100 loans were approved while the average amount of equity withdrawn reached £33,600, the highest amount this year and 43% up from the previous month. However, despite record low interest rates, borrowers felt the pinch due to falling incomes, according to the research from LMS. Remortgage lending was up by 26% compared to May of last year but was down by 16% from April, which was an exceptional month for remortgaging. The number of remortgage loans also decreased month on month by 7% from 34,800 in April to 32,334 in May but this is 31% more than May 2015 when 24,700 borrowers remortgaged. The average amount of equity withdrawn per customer from remortgaging activity has risen by 43% month on month, from £23,479 in April to £33,691 in May. The average amount of equity withdrawn is also up by a quarter in comparison to May last year when equity withdrawn stood at £26,863. The total amount of equity withdrawn rose by 33% over April from £817 million to £1089 million in May, some 64% more year on year from the £664 million recorded in May 2015. This is also the highest amount of total equity withdrawn since May 2008, back when remortgagors withdrew almost £1.21 billion. Despite being the lowest interest rate on record, however, average household income fell from £50,000 in March to £44,898 in April. A drop of 10%. The household income recorded in April 2016 is also 1% lower than in April 2015, when income was recorded at £45,365. ‘Remortgaging witnessed its best month of May since 2008, although the numbers are slightly down following a rush to remortgage in April. The favourable mortgage market, with eagerly competitive lenders, record low rates and rising house prices provided the ideal background remortgaging to continue its year on year surge,’ said Andy Knee, chief executive of LMS. ‘We will have to wait and see what the impact of June’s Brexit decision on the housing and mortgage markets will be in the short and medium term. There will be some uncertainty and volatility to cope with as everyone absorbs the news and this is likely to put a dampener on the housing market at least until the autumn,’ he pointed out. ‘However, interest rates remain at historically low levels and for those with a mortgage now is a great time to take out a fixed rate and stabilise their financial outgoings. Lenders may well come under pressure and their appetites for new business may shrink in the short term. If they do, the range of excellent rates available today might not be around… Continue reading
UK commercial property market could see short term weakening due to Brexit
The UK commercial property market is likely to see a weakening in demand due to the decision of the British people to leave the European Union. Foreign investors in particular are likely to cool while the terms for the country to leave are thrashed out as uncertainty about direction and timing affect decision making, according to experts. Even if it is effectively ‘business as usual’ for the UK in terms of trade and legislation until 2018 when the actual exit is likely to take place, such a major change will inevitably create uncertainty in the economy and real estate markets, according to Chris Ireland, chief executive officer of JLL UK. He explained that in the event of a well-managed exit these impacts will be largely confined to the UK. ‘In the short term we may see a weakening in occupier demand. The impact on rents may be limited by tight supply, but activity will be adversely hit while initial uncertainty about direction and timing continues,’ said Ireland. ‘Investor sentiment may also remain subdued in the short to medium term. For property markets, the initial correction may be most severe but should be followed by an upturn as opportunities re-emerge in UK core markets and benefits of weak sterling are recognised. Sentiment and relative pricing will be key,’ he pointed out. ‘Much will depend on the speed of negotiation, the wider political picture and whether a clear direction of travel and timetable for an EU exit is established early on,’ he added. According to an analysis by JLL occupier demand will weaken in line with economic growth and declining business sentiment. The impact on rents may be limited by tight supply, but activity will be adversely hit. It also suggests that investor sentiment will deteriorate further, subduing capital flows in the short to medium term and there is likely to be a negative capital value adjustment over the next two years, estimated at a fall of up to 10% with yields moving around 50bp. It points out that London sectors remain most vulnerable to correction given current keen pricing and their multinational occupier base but much will depend on the speed of negotiation, the wider political picture and whether a clear and favourable direction is established early on. According to Mark Clacy-Jones of international real estate firm Knight Frank the decision will cause volatility across all investment markets, and real estate will be no exception and he predicts that uncertainty over future economic conditions in the UK will cause some deals on hold to be shelved, and occupiers will reconsider the amount of space they need outside of the single market. ‘A fall in the value of sterling, combined with falling property values will be a buy sign for opportunistic overseas investors once the initial correction has occurred. This will cause a widening yield gap as real estate yields rise and bond rates fall from further Bank of England monetary loosening and will make property… Continue reading
Sales and prices falling in Hong Kong, latest analysis report shows
Residential sales increased by 2% month on month in Hong Kong in May, but transactions are down 11% year on year, the latest Land Registry figures show. But with developers offering deeper discounts and more incentives, a number of primary projects received a positive market response, according to the latest market analysis from international real estate firm Knight Frank. It points out that prices have dropped for seven consecutive months by a cumulative 11%, according to provisional figures from the Rating and Valuation Department. Mass residential prices led the decline, losing 11% in the period, while luxury residential prices dipped 8%. The report suggests that clouded by a potential US interest rate rise in June and abundant upcoming supply, residential land prices continued to edge down. A domestic site in Pak Shek Kok, Tai Po was sold last month for an accommodation value of HK$3,620 per square foot, down about 20% from eight months ago when the adjacent site was sold. However, the super luxury sector remained strong, indicated by a Shenzhen buyer’s acquisition of a 9,212 square foot luxury house at Gough Hill Road on The Peak for a reported HK$2.1 billion approximately, a record price for the city. Knight Frank expects more mainland buyers to return to the market in the future and points out that a number of primary projects are scheduled for release in June, hoping to reach the market before a possible US interest rate rise. ‘While the government restated in May the continued implementation of cooling measures, we do not consider the sales rebound in the past two months an indication of a general market recovery,’ the report says. ‘We maintain our forecast of a 5% to 10% drop in the luxury segment and up to a 10% drop in mass residential prices,’ it adds. Continue reading
