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Average property prices in UK cities now six times annual earnings
Average house prices in cities in the UK have reached their highest since 2008 and are more than six times annual earnings, new research shows. The affordable cities review report from Lloyds Bank shows that the average UK city house price has risen by 8% from £196,229 in 2015 to its highest ever level of £211,880 in 2016. This has resulted in average affordability in the nation’s cities worsening in the last 12 months from 6.2 to 6.6 times gross average annual earnings, the third successive annual decline in affordability. The latest figures from Lloyds Bank also reveal a significant North/South divide, with 17 of the 20 least affordable cities located in southern England and only Lichfield, Leicester and York appearing in the top 20 outside of the South. Winchester has recorded the biggest gains over the past decade, whilst London, not surprisingly, has seen the largest growth during the economic recovery of the last five years. By contrast, all of the 20 most affordable cities for home buyers are outside of southern England. Affordability in UK cities is, on average, now at its worst level since the average house price to earnings rose to 7.2 at the height of the last housing market boom in 2008. ‘House price rises in the past three years have risen more steeply than average wage growth, making it more expensive to buy a home in the majority of UK cities. This has also widened the North/South divide, as house prices in the South have generally seen stronger growth than in the North,’ said Andrew Mason, Lloyds Bank mortgage products director. Oxford is the UK's least affordable city with the average house price 10.68 the gross average earnings in the city. At an average price of £364,429, houses in Oxford are more expensive compared with average earnings in the city than in any other UK city. This is partly due to Oxford’s attractiveness to commuters working in London. Winchester at 10.54, London at 10.06, Cambridge at 9.9 and Bath at 9.77 make up the top five least affordable cities. The London average figure disguises considerable variations across the capital with central boroughs being significantly less affordable than the Greater London average. Lichfield at 7.53 and York at 7.5 are the least affordable cities outside southern England. Londonderry in Northern Ireland is now both the UK’s most affordable and least expensive city. The average property price in the Northern Ireland city of £113,302 is 3.8 times the gross average annual earnings. Elsewhere in Northern Ireland Belfast at 4.42 and Lisburn at 4.64 are the fourth and sixth most affordable cities respectively, due primarily to the relatively low house prices in the country. Northern English and Scottish cities make up the remainder of the top 10 most affordable cities with Bradford at 4.31, Hereford at 4.55, Durham at 4.73, Lancaster at 4.89, Carlisle at 5.03, Glasgow at 5.07 and Stirling at 4.11. Winchester has recorded the biggest price rise of any UK… Continue reading
Detached new build homes outsell flats for first time in a decade
Flats are becoming less popular in England and Wales with the latest data from the Office of National Statistics (ONS) showing new build detached homes outselling apartments. Detached properties were the most commonly sold type of newly built home in the 12 months to September 2015 representing 32% of all new property sales, the first time flats have sold less in a decade. In the 12 months ending December 1995 sales of detached housing dominated the new build market with 44% of all sales for new properties. By 2000, the share of sales for new detached housing peaked at 52% but declined until 2008. Since then the share of sales for new detached property has been increasing steadily. The share of sales for new semi-detached properties has also been rising since 2008, albeit at a slower rate than the share of new detached properties. The percentage of new terraced housing exceeded that of semi-detached in 2001 and remained higher until 2014. For newly built flats, the share rose rapidly between 2000 and 2008, during which time many urban areas were regenerated. Since then the share of newly built flats has fallen steadily. The latest ONS data release also shows that the difference in median price between the most and least expensive parts of England and Wales was nearly £3.2 million in the year ending September 2015, down from a peak of £3.5 million in year ending December 2014. For all types of property, the median price paid ranged from £38,750 in one part of Pendle, Lancashire to £3,212,500 in one area of Westminster. The most expensive area outside of London was in Elmbridge, Surrey where the median price paid for all properties was £997,475 and house price growth has diverged for the most expensive and least expensive areas since the recession. Part of the difference in price paid between the least and the most expensive areas is caused by different types of dwelling being sold in those areas. For example, detached properties in England and Wales sold for 61% more than semi-detached properties on average in the year ending September 2015. Therefore, an area with a higher proportion of detached property sales is likely to have a higher median price overall than an area which had a higher proportion of semi-detached property sales. In the year ending September 2015 there were 581 middle layer super output areas (MSOAs) in which the median house price was in the lowest 10% of property prices in England and Wales overall. Generally, towns and cities in the north of England, the Midlands and also in south Wales contained most of these 581 MSOAs. There were 27 MSOAs in which the median price paid for all properties was more than £1 million in year ending September 2015. All these areas are in London and are predominantly in the central and western boroughs. The most expensive area outside of London was in Elmbridge, Surrey where the median price paid for… Continue reading
Index report shows Swiss property markets provided strong growth for investors in 2015
Switzerland’s property markets are currently providing strong growth for investors with the latest data showing total returns of 6.6% in 2015. This was up from 5.2% in 2014, which the index report from investment support tools firm MSCI says reflects continued strong growth in the Swiss properties sector. It also says that the strength of Swiss property market signals that the sector benefited from the Swiss National Bank’s (SNB) move last year to scrap the franc’s peg to the euro and lower interest rates. The figures showed that government bond yields and property yields both declined in 2015 from 2014, to -0.04 from 0.38%, and to 4.4% from 4.8%, respectively. The spread between the government yield bonds and property yields increased to 4.45% in 2015 from 4.4% the year before. The strong total return was fuelled by robust capital value growth, which rose to 2.4% from 1% in 2014. This capital value growth marks the second highest growth in the three, five and 10 year average. Residential properties remained the strongest sector in 2015, representing 47% of the measured universe in the index. Total return in this segment rose to 8.4% from 6.1% from the year before. The capital value growth in residential properties reached 4.1, marking the best performance since the index began. Moreover, office property returns recovered in 2015, achieving total return of 5.0%, compared to 4.2% in 2014. However, office property total returns remained below the five year average of 5.1%, and the 10 year average of 5.8%. Across the different sectors, rental growth weakened slightly. Net income return dropped to 4.1%, from 4.3% in 2014. ‘The Swiss property market enjoyed another robust year as the market continues to attract capital. The strong capital growth is a result of increased yield compression following investor demand. This is especially true for the major cities of Switzerland, such as Zurich, Bern, Basel or Geneva,’ said Justus Vollrath, MSCI executive director. ‘What’s particularly interesting is that the move by Swiss central bank to unpeg the Swiss franc and lower interest rates led to slight widening of spreads between government bond yields and property yields. This created an additional incentive for investors,’ he explained. ‘We also see that the residential market showed particular resilience and enjoyed exceptionally strong capital value growth,’ he added. Continue reading
