Tag Archives: real-estate
Brexit vote creating lethargy in prime central London property market
There are signs of lethargy in the prime property market in central London ahead of the vote on the future of the UK in the European Union, according to a new research report. But beyond the distraction of the EU referendum there are signs that demand is strengthening, according to the research from international real estate firm Knight Frank. Overall annual growth in the prime central London property market slowed to 0.1% in May, the lowest since October 2009 and the Brexit effect means demand is subdued even where asking prices have fallen 10% or more. On top of this the number of active buyers to available properties has halved over the last year and Tom Bill, head of London residential research at Knight Frank, described it as a price sensitive market. ‘Demand remains relatively subdued but in a change from recent months, the primary cause in May was the Brexit vote rather than new rates of stamp duty. Indeed, there are overlapping layers of uncertainty affecting supply and demand that are difficult to differentiate but which produce a cumulative impact,’ Bill explained. ‘There has been a discernible Brexit effect on the UK economy as decisions are delayed and the London property market is no exception. Buyers and sellers are postponing decisions because of the prospect of entering unchartered economic and political territory,’ he said. ‘The market has become price-sensitive due to higher levels of stamp duty, but an indication of the Brexit effect is that demand in May has remained subdued even for properties where asking prices have fallen by 10% or more,’ he pointed out. He also pointed out that demand was already more restrained as a result of the impact of two stamp duty increases in the space of 18 months and the ratio of active buyers per available property in prime central London has fallen to 4.8 from 10 over the last year. However, despite the looming referendum, there are signs underlying demand is strengthening, according to Bill as buyers drop asking prices to reflect higher transaction costs. The number of transactions between January and the middle of May was flat this year compared to 2015. Meanwhile, viewings increased 31% between January and April versus last year, suggesting a degree of pent-up demand. Overall, prices have grown 2.4% over the last two years and it has been three and a half years since annual growth was last above 10% in October 2012. A breakdown of the figures show that in the 12 months to May 2016 prices have increased 7.4% in Islington, by 6.3% in the City, by 1.9% in Mayfair, by 1,7% in Kensington, by 1.3% in Tower Bridge and by 0.3% in Riverside. Prices remained unchanged in St John’s Wood and Marylebone but fell by 7.5% in Knightsbridge, by 4.8% in Hyde Park, by 4.6% in South Kensington, by 3.5% in Chelsea, by 1.7% in Kensington, by 1.5% in Notting Hill, and by 0.2% in Belgravia. The report also points out… Continue reading
UK house prices crept up in May but annual growth slowed, says latest index
House prices in the UK edged up 0.2% in May but annual growth slowed to 4.7% to an average of £204,368, according to the latest index to be published. The annual pace of house price growth remains in the fairly narrow range between 3% and 5% that has been prevailing for much of the past 12 months, according to the date from the Nationwide, one of the leading home lenders in the UK. ‘In the near term, it’s going to be difficult to gauge the underlying strength of activity in the housing market due to the volatility generated by the stamp duty changes which took effect from 01 April,’ said Robert Gardner, Nationwide’s chief economist. ‘Indeed, the number of residential property transactions surged to an all-time high in March, some 11% higher than the pre-crisis peak as buyers of second homes sought to avoid the additional tax liabilities,’ he pointed out. ‘While cash purchases accounted for a significant proportion of the increase in activity it is not possible to determine whether or not these were purchased by landlords. Mortgage data suggests that, while buy to let purchases were a major driver of the increase, the purchase of second homes also accounted for a substantial proportion,’ he explained. The report also shows that the number of home mover mortgages, which is where second home purchases with a mortgage would show up, increased sharply in March. Gardner said that house purchase activity is likely to fall in the months ahead given the number of purchasers that brought forward transactions. ‘The recovery thereafter may also be fairly gradual, especially in the buy to let sector, where other policy changes, such as the reduction in tax relief for landlords from 2017, are likely to exert an ongoing drag,’ he added. But he also pointed out that healthy labour market conditions and low borrowing costs are expected to underpin a steady increase in housing market activity once stamp duty related volatility has passed, providing the economic recovery remains on track. ‘However, it is possible that the recent pattern of strong employment growth, rising real earnings, low borrowing costs and constrained supply will tilt the demand/supply balance in favour of sellers and exert upward pressure on price growth once again in the quarters ahead,’ he said. He added that according to the Royal Institution of Chartered Surveyors (RICS), the number of properties on estate agents’ books was already close to all-time lows on data extending back to the late 1970s. According to Matt Andrews, managing director of Bluestone Mortgages, consumer confidence is still rising, so with more people looking to secure lending it is important to see some innovation come into the sector to help more people get onto the housing ladder. ‘In order to help those who currently struggle to gain access to lending, such as people who have experienced a genuine blip on their credit scores, or who only have limited trading histories, we need to offer a more… Continue reading
Land agent suggests UK govt target of a million new homes by 2020 is achievable
Land agent Aston Mead has hit back at those who have doubted the ability of the UK to build a million new homes by 2020. The pledge is at the heart of the government’s landmark Housing and Planning Bill, which received Royal Assent earlier this month. However, a recent survey of owners and directors of 389 house builders across England indicated that just over half, some 51%, thought the target would not be met. Aston Mead land planning director Adam Hesse said there is a danger that the planning pessimists out there will create a self-fulfilling prophecy. ‘A million homes by 2020 is perfectly possible as the Home Builders Federation have stated quite clearly. But it will need conviction and commitment, as well as further government policies in favour of development, and help to speed up the planning process,’ he explained. He pointed out that there have already been huge increases in output, with build rates on large sites doubling since 2010. There were more than 180,000 new homes delivered in 2014/2015, with this year’s figure expected to be higher still. ‘By 2019 the big companies will be building double what they did six years ago. Now we need to speed up the momentum even further, so that we ensure we reach the target of one million new homes by 2020,’ he added. Despite his optimism, Hesse believes that the industry needs to see more land coming through the planning system, and processes that support both large and smaller house builders. ‘Several significant advances have happened already. Brownfield sites will now automatically be approved for building, with £10 million worth of funding to help local authorities prepare them. There are also plans to relax the planning rules for smaller house builders, enabling them to gain automatic planning permission on suitable sites. And changes to the section 106 agreement will enable developers to provide affordable homes to buy, instead of affordable homes for rent,’ Hesse explained. He added that it is local councils, who are the largest landowners in the country, which will be key to the success of this project. ‘They must get up-to-date housing plans in place, ensuring that they are robust and evidence-based,’ he said. He also pointed out that councils should review their planning application process and the conditions attached to planning which represent such a major challenge for developers. Plus they need to streamline their planning processes and improve communication so that once approved, building can get underway quickly. ‘For their part, house builders are already investing in their supply chains and have taken on tens of thousands of new workers to ensure there is the capacity and skills required. All we need now is the conviction and commitment to carry it off,’ Hesse concluded. Continue reading
