Tag Archives: european
UK house prices set to slow in 2016 and fall slightly in 2017 then recover in 2018
House price growth in the UK is forecast to slow to 2.5% by the end of 2016 due to economic risks and uncertainty as Brexit unsettles the economy, according to new research. With growth slowing in 2016 next year prices could fall by 1% but the market will recover in 2018 and see growth of 2%, says the analysis from Countrywide. It predicts that while growth will slow across all regions, London is likely to see price growth slow to 3.5% in 2016 before a fall of 1.25% in 2017 and a recovery to 2% in 2018. The prime central London market is expected to be the hardest hit with prices forecast to fall by 6% in 2016, rising to 0% in 2017 and 4% in 2018 while the South and East of England is also expected to slow in 2016 followed by small price falls in 2017 before returning to positive price growth in 2018. Prices in the South East are expected to ease to 3.5% in 2016 from 9.6% in 2015 and fall by 1% in 2017 and a similar outlook is forecast for house prices in the East and South West as prices adjust to weaker economic conditions and previous strong growth. Weaker economic conditions are also expected to hit prices in the North, the Midlands and Wales. The North East is expected to see price growth fall to 0.5% in 2016 and a decline of 0.25% in 2017. Price growth in the North West, Yorkshire and Humberside, Wales and the Midlands is also expected to slow in 2016. Next year is likely to see small falls too as uncertainty about life outside the European Union impacts investment and labour markets despite the support of a weaker currency. The report points out that the vote to leave the EU has unsettled the UK economy as uncertainty surrounding the arrangements for decoupling from the EU and the effect this will have on trade and future economic growth. The firm expects a weaker economy and for this to affect house prices and transactions through consumer confidence, household incomes and the labour market. This is not the only factor affecting the path of house prices. It also points out that higher stamp duty continues to take its toll on the top end markets and after several years of double digit price growth, expectations of future capital gain have weakened in many areas leading to reduced demand. However the continuing lack of supply of property and very low borrowing rates will remain a supportive factor for house prices. The predicted price falls in 2017 will mean prices returning to levels similar to the first quarter of 2016. And the report explains that there are higher than usual risks to these forecasts given the extraordinary nature of the challenges ahead. These are mainly to the downside, although the UK housing market always has the capacity to surprise to the upside and… Continue reading
Strong fundamentals mean UK property market set to see 3% growth overall in 2016
Strong market fundamentals remain in the UK’s regional residential property markets despite recent political events, most notably the decision to leave the European Union. The latest analysis from real estate firm CBRE suggests that UK house prices are expected to grow by an average of 3% this year with current growth of 5.1% across the country regarded as encouraging. The report says that the Outer Metropolitan area saw the strongest performance in the second quarter of 2016 with prices up 12.4% in June. London followed closely with 9.9% growth, whilst the North was the weakest performing region with prices down 1% year on year. It explains that with a period of uncertainty ahead, the UK remains in a strong position with high employment, low borrowing costs and weaker sterling which will help boost exports and although buyer sentiment is likely to remain cautious prices will continue to grow. ‘Despite some short term turmoil following the referendum, the UK still has otherwise very stable economic foundations. While the recovery in 2013 was largely driven by consumer spending, there are now encouraging signs of growth becoming more broad based and coming from multiple sectors,’ said Jennet Siebrits, head of residential research at CBRE. ‘London and the UK are still robust investment regions with a strong and established legal structure, favourable time zone, world class education system, and a durable, settled, democratic political structure. Despite the outcome of the EU referendum, our current forecasts remain broadly unchanged and we expect UK house prices to grow by an average of 3% this year,’ she added. Overall the report says that London’s land market remains highly price sensitive and underpinned by cautious sentiment, but activity remains driven by the capital’s acute supply/demand imbalance. In the South East, the residential land market continued at a strong pace in the second quarter of the year, driven by a number of successful converted office schemes and Permitted Development Rights opportunities. It is the South West supply/demand imbalance remains a key driver of price and rental growth, whilst the private rented sector dominates city markets. But in the Midlands Birmingham city centre dominates, with a reliance on office to residential conversions for the delivery of much needed housing stock. There are further new entrants to the market and Birmingham remains one of the key target cities for institutional investment, it adds. The trend of the last two quarters continues in the North, with modest house price rises driven by an emphasis on lower value £180 to £190 per square foot areas benefitting from the government’s Help to Buy schemes. It also points out that in Scotland, the sub-£500,000 housing market is performing well, whilst LBTT rates continues to impact the upper end of the market. Meanwhile, Scotland’s land market has seen prices generally increase off the back of an acute lack of supply. This is particularly evident in the prime regions of Edinburgh and East Lothian, where values are now pushing £1.2 million per… Continue reading
Office rents in Europe saw strongest growth of last five years in second quarter of 2016
Rents on prime office assets across Europe grew by 1.5% quarter on quarter in the second quarter of 2016 compared to 0.7% in the previous quarter, the strongest increase in the past five years. Rents in Europe outpaced the Americas and Asia Pacific regions with Stockholm recording the strongest growth in region of 9.4% followed by Berlin with growth of 6.3%. The data from real estate firm JLL also shows that Paris saw growth of 3.4% as limited new supply and more robust take-up pushed up prime rents for the fourth consecutive quarter while in Southern Europe, the momentum in the market recovery has continued in Milan with rents up 2% and in Barcelona up 3.7% and Madrid up 0.9%. Following the UK’s decision to leave the European Union headline rents have so far remained unchanged in London compared to the first quarter of 2016. The report says that rent free periods may soften as occupiers look to negotiate more flexible terms with greater lease flexibility. But the Brexit vote has so far had little effect on rental growth outside the UK. ‘Office demand is proving resilient in many of the world's dominant commercial real estate markets despite increased political and economic uncertainty which is leading to corporate occupiers striking a more cautious tone,’ said Jeremy Kelly, director in global research programmes at JLL. ‘Underlying market fundamentals are sound and corporate demand is holding up well, notably in continental Europe,’ he pointed out and added that looking to the second half of the year, a period of steady rental increases for prime European offices is anticipated. Indeed JLL is predicting rental growth of 2.5% to 3% in Western Europe which will outperform the 10 year average over the next few years. Stockholm and Madrid are expected to be the region's high performers over 2016. ‘In London, rents and incentives may come under pressure in certain sections of the market, although low vacancy rates coupled with an increasingly diverse occupier base will act to cushion the impact of weaker sentiment,’ said Jon Neale, head of UK research at JLL. ‘Our priority over the second half of the year will be to monitor occupier activity and other developments, although it is unlikely that any real conclusions over longer term market implications can be made until the nature of Brexit becomes more apparent as we move into 2017,’ he explained. ‘For the time being, however, our research indicates that the vast majority of occupier deals in progress at the time of the referendum are still continuing as planned,’ he added. Continue reading
