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London house price growth remains below UK city average

House prices in London edged up 0.2 per cent in August but inflation remained below the UK average growth rate for cities of 1.9 per cent.

However, mortgages for home purchases in London have been increasing slowly following the lower numbers seen since late 2014, suggesting that the decline in London housing sales has bottomed out.

Data from Zoopla and Hometrack shows that 9.7 per cent of live listings had the price reduced – the lowest level for three years.

“We do not expect house price growth to increase but builders and agents in London will welcome any improvement in market activity,” the House Prince Index report said.

Leicester is the fastest growing city as house prices have increased 4.8 per cent, while Aberdeen has the lowest growth in the country with a rate of minus four, according to research by Zoopla and Hometrack. August was the first time since 2012 that no big city saw annual property growth rise above 5 per cent.

Bentham and Reeves director Marc von Grunderr said: “London continues to act as a house price growth anchor for the time being and this is largely being driven from the inside out as those who have seen the largest decline in property values continue to hold fire for greener pastures on the other side of the Brexit bridge.

“However, to view the capital as down and out when it comes to its property pedigree would be very foolish indeed. London is currently a sleeping giant rather than a crumbling carcass and once stability returns, so too will buoyant house price growth.”

The acceleration in house price inflation since 2013, which reached almost 20 per cent in London in 2014, and the slowdown since 2016 are “part of the unfolding house price cycle”, the research said.

CityCurrent price% year-on-year August 2019
London£483,8000.2 per cent
Leicester£182,9004.8 per cent
Liverpool£124,7004.6 per cent
Manchester£173,0004.5 per cent
Cardiff£211,8004.1 per cent
Edinburgh£235,4004 per cent
Birmingham£168,3003.8 per cent
Belfast£136,4003.6 per cent
Leeds£168,9003.5per cent
Glasgow£127,0003.3 per cent
Nottingham£155,3003.1 per cent
Sheffield£139,6002.8 per cent
Bristol£283,0002.2 per cent
Newcastle£128,9002 per cent
Bournemouth£293,6001.3 per cent
Southampton£228,3000.5 per cent
Cambridge£429,5000.3 per cent
Portsmouth£237,8000.2 per cent
Oxford£409,100-0.4 per cent
Aberdeen£158,800-4 per cent
20 city index£257,9001.9 per cent
UK£220,7002.1 per cent

By Jessica Clark

Source: City AM

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Demand for retail property in London plummets

Demand for retail property in London is approaching lows last seen after the 2008 financial crash, according to new research.

The latest UK Commercial Property Market Survey results published today by the Royal Institute of Chartered Surveyors (RICS) showed that demand for retail property in London fell for the second quarter of the year.

In an indication of the ongoing malaise in the sector, retail was found to be responsible for pulling the overall figure in terms of demand for property down below zero, with a net balance of -61.

The retail property sector also posted the highest rise in terms of availabilities, with 52% of respondents reporting a “significant rise in availability”.

The survey also found demand from overseas investors continued to drop during the quarter as Brexit loomed, with respondents reporting -9% growth. This represented the third quarter in a row where overseas investor demand fell.

However, the RICS report found a rise in demand for industrial buildings – in particular warehouses for ecommerce.

Rents on prime and secondary retail sites are predicted to fall 3.5% and 7% respectively over the next 12 months.

RICS economist Tarrant Parsons said: “The overall picture remains little changed across the UK commercial property market in Q2, with the disparity between a strong backdrop for the industrial sector and weakness in retail still very evident. While expectations continue to point to solid rental and capital value growth in the former, further declines are expected in the latter.

“Brexit uncertainty also remains a notable headwind, causing caution across both occupiers and investors while they await clarity on the UK’s future trading relationship with the EU.”

By Hugh Radojev

Source: Retail Week

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London housing market rebounds slightly after Brexit delay

The London housing market showed signs of bouncing back last month as sentiment rose to its highest level since April 2017, according to the latest forecasts.

Negative trends in agreed sales, prices and new instructions all eased in May after the Brexit deadline was extended to October, the Royal Institute of Chartered Surveyors’ (RICS) latest housing market survey revealed.

Despite fresh optimism, the survey showed that house prices are still expected to fall over the next twelve months and sales expectations remained downbeat.

When it came to London house prices, 29 per cent more respondents predicted a fall than a rise in May, up from the April net balance of -59, which RICS said showed the pace of price decline slowing.

RICS chief economist Simon Rubinsohn said: “Some comfort can be drawn from the results of the latest RICS survey as it suggests that the housing market in aggregate may be steadying.

“However much of the anecdotal insight provided by respondents is still quite cautious, reflecting concerns about both the underlying political and economic climate.”

In the lettings market, tenant demand rose slightly but landlord instructions fell, causing near term rental expectations to jump to their highest level since May 2016.

By Callum Keown

Source: City AM

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This chart shows how badly house prices are faring in central London boroughs

Key measures of the health of central London’s housing market are trending downwards, according to a new graphic produced by UBS.

The Swiss investment bank sent its third ‘London residential monitor’ note to clients on Wednesday, which is based on analysis of over 100,000 listings on online property portals. UBS’ analysis found that:

  • More and more property listings in London are cutting their asking prices
  • Asking prices are being reduced on average by 2.6% versus historic prices
  • Most houses remain on the market for 128 days, a high since UBS has been measuring
  • Expensive houses in boroughs like Kensington & Chelsea are taking longer to sell

“The London housing market remains weak,” UBS analyst Osmaan Malik and his team wrote. “Stretched affordability, high levels of supply at prime price points, and numerous changes to stamp duty have all taken their toll, at a time where Brexit uncertainties linger.

“In past cycles, a London downturn has pre-empted a wider loss of momentum and decline in consumer confidence. The Bank of England appears to think this time may be different, as the capital is more exposed than the national market to stamp duty changes and is more likely to be impacted by the departure of European Union nationals.”

UBS’ data shows that the steepest house price discounts are in Kensington and Chelsea, where average listing prices are over 4% lower than historic averages. The borough also had the highest average asking price and listings in the area spend the longest time on the market.

Land values in prime central London declined by 2.8% in the fourth quarter of 2018, according to recent Knight Frank data, taking the annual decline to 5.6%.

Economists believe house price growth across the UK could be sluggish this year. Britain’s official exit from the EU in March is seen as the most important influencing factor on house prices across the country in 2019.

Source: Yahoo Finance UK

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London house price boom over, at least for now

The days of London house price rises hugely outpacing inflation won’t be returning anytime soon, even if Britain and the EU strike a Brexit deal, the vast majority of economists and analysts polled by Reuters said.

Property values in the capital, long a haven for foreign investors, more than tripled in the last 20 years, but demand and turnover have crumbled since the June 2016 vote to leave the European Union and property taxes were raised.

According to the Nov 13-22 Reuters poll, London house prices will fall 1.7 percent this year and another 0.3 percent in 2019. Asking prices in London fell 1.7 percent this month from October, according to property website Rightmove.

Sterling, the stock market and businesses have had a turbulent few years since Britons narrowly voted to end their 45-year membership of the EU.

With just over four months left until Brexit day, Prime Minister Theresa May faces opposition from lawmakers in all parties to her negotiated withdrawal deal, fuelling fears the country may leave without one.

As that risk appeared to grow on Nov. 15, shares in housebuilders Persimmon (PSN.L), Taylor Wimpey (TW.L) and Berkeley Group (BKGH.L) fell between 6 and 7 percent in their worst daily performance since the referendum.

“Things are starting to look a bit bleak. Uncertainty is about the only thing we can be certain about over the next two years,” said independent buying agent Henry Pryor.

Asked if there would be a return to strong turnover and above-inflation house price growth in London and the South East if a Brexit deal was struck, 14 of 17 respondents said no. Two said it would happen regardless and one said it depended on the deal.

But Brexit is not the only factor holding back prices – a sharp increase in Stamp Duty Land Tax, paid when buying a house, has particularly affected the capital where houses are much more expensive than the rest of the country.

“The high rates of SDLT will continue to stifle transaction volumes, especially in expensive price areas like London and the South East,” said Ray Boulger, a senior manager at mortgage broker John Charcol.

After next year’s modest dip London prices will rise 1.5 percent in 2020, the poll found. A separate Reuters survey said overall inflation would be 2.0 percent that year. [ECILT/GB]

Graphic on UK and London house prices forecast: tmsnrt.rs/2Q89SKn?eikon=true

Graphic on UK house price-to-earnings ratio: tmsnrt.rs/2R1jZgW

Graphic on outlook for London’s housing market: tmsnrt.rs/2DCgt8Z?eikon=true

LITTLE CHANCE OF CORRECTION

When asked about the probability of a significant correction in London’s housing market by end-2019 the median forecast was only 20 percent, significantly down from the 29 percent given in August. That may be partly explained by the view that prices are already falling.

But not everyone was gloomy about the capital’s prospects.

“London demand is starting to poke its head above the stamp duty-laden parapet again,” said Russell Quirk, chief executive of online estate agent eMoov.

“History tells us that you can’t subdue London long term and therefore it’s clear that the current downturn in the capital’s volumes and values is temporary.”

Nationally, house prices are forecast to rise 2.0 percent this year, 1.8 percent year and 2.0 percent again in 2020, the poll found.

Those moderate gains are below expectations for wage increases and will likely cheer first-time buyers who are struggling to get on the property ladder.

When asked to rate the level of London house prices on a scale of 1 to 10, where one is extremely cheap and 10 extremely expensive, the median response was 8. Nationally they were rated 7, where it has been for a couple of years.

While borrowing costs are currently low, the Bank of England is forecast to raise rates again after Brexit. But the new level of Bank Rate will still be historically low at 1.0 percent and it is not expected to rise to 1.25 percent until early 2020.

Source: UK Reuters

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Why Brexit is killing the London housing market

The growing uncertainty around the outcome of the long-drawn-out Brexit talks has made buyers wary of the housing market’s future in the capital. With stamp duty rises and the removal of tax breaks for buy-to-let investors, the climate is firmly on the sell, and high prices have deterred buyers.

In this unusual situation for the formerly buoyant London housing market, many are preferring to wait and see for any indication of changes in the short and medium term, preferring to keep their hands in their pockets for now.

Meanwhile, international buyers, the traditional engine of price growth in the city, have now slowed down their investment after an initial enthusiasm for a weaker pound in the aftermath of the vote. The possibility of a no-deal Brexit keeps surfacing time and time again, and with little progress on the negotiations front, sellers are left fearing the worst: a decline in property prices.

On the flipside, local and international buyers, especially first-time buyers, are hedging their bets that prices will fall, while keeping an eye on the affordability of mortgages. The recent rise of the Bank of England’s interest rate has led to more expensive mortgages and there are talks of more hikes to come by 2020.

Sellers have realised that they are going to have to lower their prices to find buyers, with many having already taken hits of up to 10%. After a long period with a marked lack of properties coming to the market, it is now inundated with more properties than at any time since September 2015. As a result, sellers are having to cut overly optimistic asking prices, even in rather central areas such as Hammersmith and Fulham (-3.3%), Ealing (-3.4%) and Hackney (-3.5%). Such examples offer buyers hope that there will be continued drops across the capital.

This is good news for landlords that are looking at making the most of vacation rentals, homestays and shorter rents, as a weaker pound, and hopefully minimal visa requirements, will help to drive tourists to the city. For those who cannot sell their properties right now, this could be an unexpected boon.

Source: Property Week

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Lack of rental properties in London sees asking prices rise for first time since 2014

Asking rents in London have risen to an average £2,000 a month, the highest rate in three years and the first time since 2014 that the capital has had the strongest-performing rental market in Britain.

The rebound has been fueled by a lack of new rental properties in the city, which has pushed prices upwards as competition grows. Average rents are now 3.4pc higher in London than this time last year, according to Rightmove’s rental tracker.

Outside London, average asking rents have risen by a more modest 0.7pc over the past year, to £796 per month, with growth dragged down by flat rental markets in the south west and south east. On a quarterly basis, prices have risen by 2.7pc.

Rightmove found that nationally, on average, it takes a letting agent 36 days from the time a rental property goes on the market until its let is agreed, while it takes 40 days in London.

The national average masks some of the faster places to let such as Stirling, Bristol and Ashford, which all take 22 days, the property portal said.

Miles Shipside of Rightmove said: “After a few years of more plentiful supply in the London market we’ve now reached a point again where competition among tenants for a great rental home can be very high in the most popular rental areas of the capital.”

Since 2016 an increasing number of landlords have been squeezed out of the buy-to-let market, as tax changes and falling yields continue to affect their bottom line.
The Government has repeatedly made changes to the tax structures affecting the buy-to-let market in an attempt to give first-time buyers a better chance of getting onto the ladder, including imposing an extra 3pc stamp duty charge on people buying an additional property.
The fall in the number of landlords investing was made evident by Bank of England figures from March that showed just 12.7pc of mortgages in the final three months of 2017 went to buy-to-let borrowers, the lowest level since 2013.

Source: Yahoo Finance UK

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House prices pick up in London over Q2

London City house price growth has picked up over the last quarter as the capital’s housing market starts to stabilise, the latest Hometrack UK Cities House Price Index has found.

In the three months to June house prices rose by 1.8%, having fallen by 1% over the previous six months.

After two years of weak demand and falling sales there are signs that London’shousing market is beginning to steady, although the annual rate of growth remains low at +0.7%.

Richard Donnell, insight director at Hometrack, says: “After two years of falling sales volumes and rising discounts to achieve a sale there are some signs of life returning to the London housing market. Discounts are finally starting to narrow as sellers become more realistic over pricing.

“While prices in London have picked up over the last quarter, we expect the annual rate of growth to remain weak for the foreseeable future. The positive news is that greater realism on the past of sellers will support transactions, which have fallen by 20% since 2014.

“The UK market is operating at two-speeds at the moment, with growth in regional cities in the Midlands and North West far outstripping those in the South.

“However, affordability pressures in the South East in particular are having a slowing effect on house prices as borrowers are priced out of the market.”

The recent trend is supported by the fact that 61% of postcodes in London are currently registering month-on-month price rises according to Hometrack’s most granular indices.

This modest improvement in market conditions reflects greater realism on the part of sellers in the wake of a two-year re-pricing process. The discounts sellers must give buyers to achieve a sale has started to narrow across London, reversing a two year upward trend where the discount grew from 1% in Q2 2016 to 5% in Q1 2018. It has fallen back to 4.8%.

London is in a group of six cities where house prices are failing to keep pace with the rate of goods inflation (CPI) and where house prices are falling in real terms – Southampton (2.1%), Oxford (1.9%), Belfast (1.4%), London (0.7%), Cambridge (-0.2%) and Aberdeen (-2.8%).

House price growth was strongest in cities in the Midlands and North West of England. Manchester is registering the highest annual growth rate (7.4%), followed by Liverpool (7.2%), Birmingham (6.8%) and Leicester (6.5%).

The level of discounting from the asking price to achieve a sale was lowest in Manchester (2.2%) where market conditions have remained strong for the last two years. Discounts have fallen in Liverpool, where prices are rising off a low base, but remained above average at 4.8%.

Source: Mortgage Introducer

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Brexit Impacts London Investment Property Prices

London house prices are likely to fall this year as Brexit impacts demand, according to a poll of housing market specialists conducted by Reuters.

Property prices in London could fall by an average of one per cent this year, marking the first annual dip in nearly 10 years, according to a poll of 30 experts. However, prices are expected to bounce back in the coming years.

The survey suggested that house prices could rise an average 1.7 per cent across Britain in 2018, before falling again with inflation. A 2.5 per cent consumer price rise is expected too.

Next year, growth in house prices is expected to pick up, with a rise of two per cent nationally predicted. A smaller rise of 0.5 per cent is expected in London. By 2020, it is thought that house prices will increase by two per cent both in the capital, and in Britain.

Reuters found a range of forecasts for London, noting predictions ranging from a six per cent fall to a 2.5 per cent rise.

Associate at estate agency Knight Frank, Oliver Knight, attributed much of the uncertainty ‘as to where we are with Brexit negotiations’. He said: ‘That has really kept a lid on further growth. There is a wait-and-see attitude.’

Brexit-related uncertainty may have reduced the appeal of the capital for overseas buyers, with a decline in demand for property in London also attributed somewhat to reductions in mortgage interest relief.

Brexit may have reduced the appeal for overseas buyers, according to the ONS, while falling demand for property in London could also be partly attributed to reductions in mortgage interest relief.

The ONS commented ‘With the referendum and subsequent uncertainty regarding Britain’s political and economic environment, perceptions of the future value of London property have been adversely affected. This is what you might call a fall in ‘speculative demand.’

Source: Residential Landlord

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Over half of London properties to be priced out of stamp duty relief in 10 years

Over half of the 52,002 properties that currently qualify for a stamp duty relief for first-time buyers in London will be priced out of the tax cut in the next ten years, according to mortgage adviser L&C Mortgages.

The company looked at how many homes across England are and will be available for under £500,000 by 2028, and therefore qualify for the Government’s first-time home buyer’s relief.

The research shows that as many as 4m homes across England could move out of the stamp duty relief threshold in the next 10 years due to rising house prices.

In London, the total proportion of properties that would benefit from the stamp duty cut will drop from 57 per cent to 28 per cent by 2028.

The study also found that London has a relatively low proportion of properties within the band eligible for a cut, primarily because just over two fifths of sales are over £500,000 and therefore not applicable for the stamp duty cut.

In Brighton, almost a third (30 per cent) of properties that could currently be eligible to pay less stamp duty are forecast to move above the threshold in ten years.

However, homes in Nottingham are the most likely to remain within the price bracket for tax exemption over the next ten years.

The research also found that Southampton, Norwich, Bristol and Plymouth are currently the best places to buy to avoid stamp duty.

City Houses below £500,000
Southampton 88 per cent
Norwich 87 per cent
Bristol 87 per cent
Plymouth 80 per cent
London 57 per cent

According to the research, Nottingham will have the most houses within the price bracket for tax exemption over the next ten years.

David Hollingworth from L&C said: “It’s alarming that in cities in the South, so few properties will see any type of benefit from the stamp duty changes in 10 years’ time.

“Our research shows that many of the first-time buyers, especially those based in southern England, who are set to pay less or nothing will need to act fast before many of the properties currently eligible fall out of the price bracket that qualifies for the cut.”

The research also found that almost a third of first-time buyers don’t know if the stamp duty abolition will benefit them when they buy their first home.

However, a fifth of first-time buyers have changed the area in which they want to buy in order to pay less or no stamp duty, which rises to 37 per cent of Londoners.

James Hender, head of private wealth at Saffery Champness, said: “The research shows that people are aware of the stamp duty relief and are changing behaviour to benefit from the savings.

“House price inflation could render this relief meaningless. Although higher stamp duty receipts would be the result, a future Chancellor may wish to raise the thresholds to ensure that first time buyers continue to get a helping hand onto the property ladder.”

Source: City A.M.