Tag Archives: real-estate
Irish property price growth slowing as new lending rules have an impact
Residential property prices in Ireland are continuing to increase year on year but the rate of growth has slowed considerably, the latest official data show Figures from the Central Statistics Office shows that in the year to November prices at a national level increased by 6.5%. This compares with an increase of 7.6% in October and an increase of 16.2% recorded in the 12 months to November 2014. The data also show that prices actually fell on a national level month on month in November by 0.5%. This compares with an increase of 1.6% recorded in October and an increase of 0.5% recorded in November of last year. In Dublin residential property prices decreased by 1.3% in November and were 3.3% higher than a year ago. Dublin house prices decreased by 1.2% in the month and were 3.1% higher compared to a year earlier. Dublin apartment prices were 6.1% higher when compared with the same month of 2014. However, it should be noted that the sub-indices for apartments are based on low volumes of observed transactions and consequently suffer from greater volatility than other series. The price of residential properties in the rest of Ireland rose by 0.2% in November compared with a rise of 1.2% in November of last year. Prices were 9.6% higher than in November 2014. House prices in Dublin are now 33.8% lower than at their highest level in early 2007 while apartments in Dublin are 41% lower than they were in February 2007. Prices in Dublin are 35.8% lower than at their highest level in February 2007. The price of residential properties in the rest of Ireland is 36.2% lower than their highest level in September 2007. Overall, the national index is 33.8% lower than its highest level in 2007. However, experts think that prices will rise by around 6% in 2016 and point out that the decrease in prices in Dublin has more to do with new Central Bank rules on lending than a downturn in the real estate market. ‘Given that the Central Bank’s rules on high loan to value mortgages apply only to first time buyers in homes over €220,000, their impact has been felt most sharply in the capital where affordability is most stretched,’ said Conall MacCoille, an analyst with Davy Research. ‘The recovery outside the capital began almost one year later, so that affordability is less stretched, and there is probably more room for catch-up,’ he explained, adding that the firm expects property prices to rise by some 7% through 2016 as wages grow and tax cuts take hold. Goodbody economist Juliet Tennant also believes that the Central Bank’s new lending restrictions, which limit banks from lending any more than 80% of a mortgage except in the case of first time buyers, have had an effect. ‘Macro prudential rules are continuing to have a dampening impact on the Irish housing market. However, the… Continue reading
Annual property rental values in prime central London fell last month
Annual rental value growth in the prime central London residential property market eased to 0.7% in December on the back of falling demand in the financial services sector. Rental values fell 0.4% from November, taking the annual rate of growth to its lowest level since July 2014, according to the latest analysis report from real estate firm Knight Frank. However, Tom Bill, head of London residential research at Knight Frank, explained that there is also an element of seasonality and a quarterly drop of 1.1% in the last three months of the year was the weakest since December 2014 and repeats a pattern of previous years. Rental value growth peaked in May this year at 4.2% and the subsequent decline has resulted in prime gross rental yields dipping from 2.96% to 2.93% over the same period, the report says and demand has fallen over the last six months as a number of banks have implemented restructuring plans. ‘European banks in particular have been slower to cut jobs than their US counterparts following the financial crisis. Profitability has fallen due to new regulations that force banks to hold more capital, which has contributed to job cuts at European banks that have been in excess of 100,000 in recent months,’ said Bill. ‘As well as the macroeconomic backdrop, including uncertainty over China and falling commodity prices, the situation is compounded by the fact many large European banks have new chief executives, who typically take a more radical approach to cost savings in the early stages of their tenure,’ he pointed out. ‘The result is that optimism at financial services companies fell markedly in the third quarter of this year across a range of sectors. However, there have been signs of stronger demand from boutique financial services companies like private equity businesses and hedge funds as clarity emerges surrounding the level of 2016 bonus packages,’ he added. The report also says that demand at the super prime level of £5,000 plus per week remains strong as uncertainty continues to surround taxation and price growth in the higher price brackets of the sales market. ‘Equally, demand remains strong in lower price brackets among workers of all professions, bolstered by the strength of the UK’s economic recovery,’ Bill said. Continue reading
Average UK property price up to £200,000, latest index shows
Property prices in the UK increased by 0.8% month on month in December to an average of £196,999 and up 4.5% year on year, according to the latest monthly index to be published. The data from home lender, the Nationwide, shows that after moderating during the first six months of 2015, house price growth has remained in a narrow range between 3% and 4.5% in the second half of the year. All regions except Scotland saw increases in house prices in 2015, though all recorded slower rates of annual price growth than in 2014. London was the strongest performing region for the fifth year running, with average prices up 12% year on year. The Nationwide’s quarterly index, however, shows that average prices in London are now 50% above their pre-crisis peak in 2007, while in the UK overall prices are around 7% higher. The neighbouring Outer Metropolitan region took second place, with prices up almost 11% compared with the fourth quarter of 2014. Yorkshire and Humberside was the weakest performing English region, with prices up 0.4% year on year. House prices continue to recover in Northern Ireland, with annual growth of 6.5% in the fourth quarter, although average prices are still 44% below their pre-crisis peak. Wales saw a 0.7% year on year increase in average prices, similar to the 1.4% increase recorded in 2014. Scotland was the only region to see prices fall over the year, with prices down 1.9% compared with the fourth quarter of 2014. The full data also suggests that in England the North/South divide has widened further. Average house prices in England increased by 2.2% in the fourth quarter and were up 6.9% year on year. Price growth in the South exceeded that in the North for the 27th consecutive quarter. Prices in Southern England, that is the South West, Outer South East, Outer Metropolitan, London and East Anglia, were up 8.9% year on year, whilst in the West Midlands, East Midlands, Yorkshire & Humberside, North West and North prices rose by just 1.6%. In cash terms, the gap in average prices between the South and the North of England widened further and now stands at nearly £159,000, around £23,000 higher than a year ago. Looking ahead to 2016, the risks are skewed towards a modest acceleration in house price growth, at least at the national level, despite the likelihood of interest rate increases from the middle of next year, according to Robert Gardner, Nationwide's chief economist. ‘Further healthy gains in employment and rising wages are likely to bolster buyer sentiment, while borrowing costs are expected to rise only gradually. However, the main concern is that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability,’ he said. ‘Overall, we expect UK house prices to rise by 3% to 6% over the next 12 months. It remains an open question whether the striking divergence in regional house price performance evident in… Continue reading
