Tag Archives: easter
New analysis suggests Brexit vote is affecting prime central London lettings market
The lettings market in prime central London has weakened rental as tenants capitalise on the current economic uncertainty including the upcoming referendum on the future of the UK in the European Union. The latest analysis report from specialist residential investor advisors London Central Portfolio (LCP) says that the rental market is reflecting a slowdown as a result of economic strains. It shows that whilst new lets have seen consistently positive rental upticks over the last five consecutive quarters, averaging a 5.5% increase overall, the market is beginning to subdue, according to the published statistics. Against a backdrop of falling stock markets, a collapse in oil prices and Brexit uncertainty, new lets have achieved just a 0.3% increase over the last quarter. This has been exacerbated by the predictably quieter Easter and May bank holiday period. The analysis, however, shows that re-lets are showing a significantly weaker picture, with a 1.2% fall in rents over the last quarter, following a fairly static picture over the course of the year. The report says that this is due to applicants being attracted to brand new properties, without any sign of previous use, coupled with a significant uptick in rental stock available. This has increased by 26.7% from 23,039 to 29,198 in the last three months, attributable to a reduction in transactions in the sales market which has led to more properties being available for rent. ‘The overall suppression in rents reflects a market dynamic which was conspicuous during the credit crunch, as tenants capitalise on economic uncertainty to leverage up their bargaining power. This has been compounded by companies cutting their relocation budgets in the face of global instability and, in some cases, delaying relocations in the run up the EU referendum,’ said Naomi Heaton, chief executive officer of London Central Portfolio. ‘In light of the current market conditions, landlords may need to be more flexible to accommodate the higher negotiating power of applicants and to prevent void periods which may erode any increase in rent ultimately achieved. For as long as this cycle lasts, landlords also may need to be more open to remedial and upgrade works between tenancies,’ she explained. ‘A slowdown in the re-let market has been compensated by continued positive renewal increases by tenants in situ. With Landlords often able to achieve contractual rental increases, above that which can be achieved in the open market, average rental growth of 3.3% in the last quarter has been seen in contrast to the softer market elsewhere,’ she added. The report also points out that despite the somewhat gloomy picture generally, corporate belt tightening means that small one and two bedroom properties are reinforcing their position as the hardest working sector of the market. Appetite for these mainstream rental properties remains strong, with void periods down to just 23 days on average. For these properties, the area around Marylebone, Fitzrovia… Continue reading
UK first time buyer home market resilient in first months of 2016
First time buyers in the UK are resilient despite a month on month dip in property sales to this group, according to the latest first time buyer tracker index. It shows that people buying their first home increased by 6.6% year on year but month on month fell by 1.4% between January and February 2016. The data from Your Move and Reeds Rains also shows that total monthly volume of first time buyer transactions was 21,100 in February but on a seasonally adjusted basis it is considerably higher at 25,900. According to Adrian Gill, director of estate agents Your Move and Reeds Rains, February is a traditionally quiet period for the first time buyer market but the figures demonstrate the strong, steady underlying growth that comes with growing first time buyer confidence. ‘This optimism may begin to reveal itself more clearly in March, when an Easter uplift may sweep away any residual doubts among some first timers. While the more general mismatch between buyers and sellers will continue to exert upwards pressure on prices, a combination of pluck and poise from first time buyers will ensure that this does little to impact the overall trend of growing demand at this end of the market,’ he explained. The figures also show that the costs of buying and owning a first home have remained broadly stable in February, with lower borrowing costs balancing larger prices and deposits. Average mortgage rates for first time buyers have improved, down 0.56% on a 12 month basis and by a much slighter 0.03% between January and February 2016. February’s average mortgage rate also represents the lowest mortgage rate for first time buyers in over five years. Similarly, the average LTV ratio remains high, meaning first time buyers have been able to borrow more against the value of the home they wish to purchase. February’s average loan to LTVs recorded in 2014/2015 and represents only a 0.1% fall on February 2015. While first time buyer property prices have risen significantly on an annual basis, mortgage lending levels have kept pace. In February, the average purchase price for a first time buyer home stood at £168,539, an increase of £21,320 or 14.5%, on February 2015’s average of £147,219. However, over the same 12 month period, the average size of a first time mortgage grew from £121,534 to £139,088, an increase of 14.4%. Larger deposit costs represent the other side to this balance of affordability, the report points out. In February the average deposit put down by a first time buyer stood at £29,451, an increase of 14.7% or £3,766, on an annual basis. The report suggests that this uptick has been a factor in the growing proportion of first time buyer income which is consumed by deposit costs. In November 2015, a deposit ate up 67.4% of an average first time buyer’s annual income, whereas in February of this year the average deposit consumed, on average 74.9% of their income. However,… Continue reading
Sales and rental markets in prime central London feeling election effect
Both property prices and the rental markets in prime central London are being affected by the uncertainty surrounding the next UK government as the election remains too close to call just hours before polling opens. Prices in this sector rose by 0.3% in April and have been broadly flat in recent months with annual growth dipping to 2.8% in April, according to the latest report from real estate firm Knight Frank. Indeed, it is the lowest rate since November 2009, a period when the market had begun to rebound following the collapse of Lehman Brothers the previous year. After an exceptionally strong run of growth that saw prime central London property cement its global reputation as a safe investment, political uncertainty has now replaced economic uncertainty, according to Knight Frank associate Tom Bill. ‘During an election campaign where the opinion polls remain deadlocked and a clear cut outcome is not immediately guaranteed, some sellers are waiting for more clarity before acting, which has led to pent-up demand,’ he said. He pointed out, however, that irrespective of the outcome, a growing number of vendors are lining up properties for sale once the election is over, which suggests there will be a bounce in transaction levels. He also explained that in the sales market demand remains robust, primarily on the back of a strengthening UK economy but also from overseas buyers who view London as an attractive place to live given the shifting nature of geo-political uncertainty around the world. ‘Tight supply and strong demand has in some instances led to a stand-off between buyers and sellers in the expectation that more stock will appear after the election. As a result, viewings were 14% lower in the year to March 2015 than the previous year,’ said Bill. ‘While there is less political uncertainty in lower price brackets and price growth broadly remains stronger below £2 million, there remains strong appetite for higher value property. Some deals have been done as sellers have adjusted asking prices down to reflect the fact growth has cooled across the various price bands,’ he explained. ‘It is also worth noting that annual price growth in prime central London has been slowing for three years, which means that some degree of political uncertainty is already priced in,’ he added. According to Bill, over the last year, the prime central London lettings market has benefited from uncertainty in the sales market surrounding the outcome of the general election and a number of buyers have opted to rent until the outcome is clear, though demand has been more broadly driven by the strengthening UK economy. ‘As the election moves closer, this trend has become less marked as a universal sense of hesitation permeates both the lettings and sales markets. Some prospective tenants have been holding out for the election result before deciding whether to rent or buy which, combined with the Easter holiday, led to fairly subdued activity across many markets in April after a strong… Continue reading
