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UK property prices fall in April and could soften further ahead of EU vote
Property prices in the UK fell by 0.8% in April and annual house price growth eased to 9.2%, taking the average price to £212,321, the latest index data shows. The figures from lender, the Halifax, also show that house prices in the three months from February to April were 1.5% higher than the preceding three months. Martin Ellis, Halifax housing economist, pointed out that both the quarterly and annual price rates are at their lowest since November 2015. ‘Current market conditions remain very tight as the severe imbalance between supply and demand persists. This situation, combined with low interest rates and rising employment and real earnings, should continue to push house prices up over the coming months,’ he said. ‘Weakening sentiment regarding house price prospects and a dip in consumer confidence, however, suggest that annual house price growth may ease,’ he added. The 0.8% between March and April, combined with February’s 1.5% fall has offset March’s 2.2% gain. But according to Ellis monthly house price changes can be volatile and he pointed out that the quarter on quarter change is a more reliable indicator of the underlying trend. Confidence in the UK housing market is at its lowest level in over a year, according to the latest quarterly Halifax Housing Market Confidence Tracker. The latest fall continues the downward trend since a high point in May 2015, and comes as consumers feel increasingly uncertain about the wider economy. Nonetheless, a clear majority of 65% still believe that average UK property prices will be higher rather than lower 12 months from now, double the 32% found when the Tracker was launched five years ago in April 2011. Jonathan Hopper, managing director of the buying agents Garrington Property Finders, believes that double digit annual price rises are unlikely to return any time soon but the cooling of the market may mark an opportunity for buyers, as some sellers are being forced to reassess their overly ambitious asking prices. ‘For the first time in more than a year, we’re seeing many mid-range properties in the most desirable locations selling for below asking price, hinting that the power dynamic is shifting from a seller’s to a buyer’s market,’ he said. ‘But with demand still strong and supply still chronically low, the net effect is likely to be a gradual return to more normal rates of price growth rather than a serious slowdown. With the Halifax also finding that levels of confidence in the housing market have fallen to their lowest level in more than a year, sellers must think urgently about pricing competitively,’ he added. On top of the slightly cooling of the market there is also uncertainty over the referendum on the future of the UK on the European Union on 23 June. Mark Posniak, managing director at Dragonfly Property Finance, thinks prices are likely to edge down further. ‘People are starting to understand the magnitude of the Brexit vote and that will lead many to… Continue reading
Smaller prime properties in London commuter belt set to see strongest rental growth
Smaller properties in prime markets in the commuter belt around London continue to see the strongest rental growth in the first quarter of 2016, according to a new research report. There is such strong demand for smaller properties because tenants are faced with the issue of raising the deposit for their first mortgage,’ says the report from real estate firm Savills. It points out that landlords have been hit with a number of measures introduced by the current government in an attempt to limit future investment in the residential sector and Savills expects that these measures to limit the amount of stock which comes onto the rental market, underpinning the growth in rents for existing investors. Rental values of prime property in the commuter zone increased by an average of 1.4% over the year to March 2016 to bring five year rental growth up to 7.6%, reflecting the continuation of modest but consistent rental growth in the period since the middle of June 2012. The figures from the report show that the average rent for one or two bedroom homes is up 2.5% year on year, for three bedrooms it is up 2.8%, for four bedroom up 1.6%, or five bedrooms up 0.9% and for six bedrooms or more up 0.5%. This brings growth over five years to 12.3% for one or two bedroom prime properties, 12.3% for three bedrooms, 9% for four bedrooms, 5.5% for five bedrooms and 4% for six bedrooms or more. The report suggests that the strength in demand for one and two bedroom accommodation reflects the age profile of the tenants in this sector with one third of tenants being in their 20s and a further 35% in their 30s and their personal and financial circumstances. ‘Such tenants face well documented issues in raising the deposit for their first mortgage but are also increasingly attracted by the flexibility of renting given an increasing propensity to move jobs in the first half of their working life,’ said Lucian Cook, director of Savills residential research. ‘With such tenants renting for longer life stages, this has fed into more demand for small family accommodation for tenants in their thirties and early forties,’ he added. He pointed out that markets for these smaller properties are generally serviced by landlords with a strong investment motive for the purchase and ownership of their rental property. By contrast, Landlords of larger prime rental properties are more likely to be letting out a dwelling which has previously been their main residence. ‘Our research shows that 39% of Landlords of properties of five bedrooms or more are letting their property out because either they are relocating for employment purposes or are unable to sell their main home. Landlords of such properties have only seen rents rise by a net figure of 4% over the past five years, and a meagre 0.5% in the past 12 months,’ Cook explained. He also pointed out that going forward, all landlords will have… Continue reading
UK private sector rents up 2.6% year on year
Private rental prices paid by tenants in Great Britain rose by 2.6% in the 12 months to March 2016, unchanged when compared with the year to February 2016. The figures from the private housing rental index from the Office of National Statistics also show that rental prices grew by 2.8% in England, 0.2% in Wales and 0.6% in Scotland. Rental prices increased in all the English regions over the year to March 2016, with rental prices increasing the most in London at 3.7%. Since January 2011 England rental prices have increased more than those of Wales and Scotland. The annual rate of change for Wales at 0.2% continues to be below that of England and the Great Britain average while rental growth in Scotland has gradually slowed to 0.6% in the year to March 2016, from a high of 2.1% in the year to June 2015. Private rental prices in England show three distinct periods with rental price increases from January 2005 until February 2009, rental price decreases from July 2009 to February 2010, and increasing rental prices from May 2010 onwards. When London is excluded, England shows a similar pattern but with slower rental price increases from around the end of 2010. Since the beginning of 2012, English rental prices have shown annual increases ranging between 1.4% and 3% year on year, with March 2016 rental prices being 2.8% higher than March 2015 rental prices. Excluding London, England showed an increase of 2.1% for the same period. In the 12 months to March 2016, private rental prices increased in each of the nine English regions. The largest annual rental price increases were in London at 3.7%, down from 3.8% in February 2016, followed by the East at 3% and the South East at 2.9%, both unchanged over the same period. Annual price increases have been stronger in London than the rest of England since November 2010. The lowest annual rental price increases were in the North East at 0.8% down from 0.9% in February 2016, followed by the North West at 1.1%, up from 1% and Yorkshire and the Humber at 1.2%, down from 1.3% over the same period. According to Adrian Gill, director of lettings agents Your Move and Reeds Rains, rents will start to build a gradual but inevitable path, ultimately reaching the very peak of the market in the autumn. ‘Early spring is just the calm before the storm. Demand for homes in the private rented sector is driven by the flow of jobs and the flux of a generally more mobile workforce looking for a place to live,’ he said. ‘This reflects the strengths of private renting, the opportunity for young independent adults to strike out on their own, or for families to move across the country and earn the best possible livelihood. In the towns and cities with the biggest renting populations it is a constant struggle for supply from landlords to match demand from tenants. With a… Continue reading
