Asking rental growth slowing in UK, especially London and South East

Rent growth in the UK is slowing, particularly in London and the South East, but up overall 3% in October year on year, the latest index shows.

New tenancy rents were on average £902 per month, according to the HomeLet rental index which suggests that landlords appear to be balancing affordability with returns.

It was the second month in a row in which the index data recorded an annual increase of only 3%, suggesting that the pace of inflation in the UK’s rental market has started to slow. As recently as March this year, rents were rising at an average annual rate of 4.5%.

Landlords appear to be doing what they can to balance rents with regard to what tenants can afford with the income they need to generate, including for those with mortgage repayment obligations, according to Martin Totty, HomeLet’s chief executive officer.

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Buyer demand in UK residential market up for second month in a row

Buyer demand in the UK has increased for a second month in a row but they may find that there is not enough choice as supply remains low, according to the latest residential analysis report.

The October monthly report from the Royal Institution of Chartered Surveyors (RICS) shows that across the country 10% more respondents reported rise in home buyer interest while the number of properties on the market dropped.

It also shows that while prices are reported to have risen at a national level with 23% more respondents seeing growth, up from 18 in September but those in central London report the eighth consecutive monthly drop in prices.

Indeed, 16% more respondents in the capital reported a fall rather than rise in prices and RICS says that this figure more closely reflects inner London rather than the outer boroughs, many of which are still seeing significant price growth.

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London and other global property markets could benefit from Trump election

Property markets around the world could benefit from the election of Donal Trump as the next President of the United States but a lot will depend on how the country’s economy and dollar performs.

Experts believe that it could be good news for US investment in the UK property market as London in particular is regarded as a safe haven for real estate investors while the Canadian market could suffer as Americans look to buy elsewhere.

The election result saw the value of the dollar immediately fall and a prolonged dip could have a positive effect in that investors might want to move their money to other international markets, but it could also mean property buyers getting less for their money.

According to Adriano Amorese, a construction and property expert and partner at international law firm Berwin Leighton Paisner, Presidential elections traditionally result in a dip in the dollar which corrects once the new President takes office in the New Year.

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More houses selling in the UK for a million pounds and more

Million pound house sales in the UK are rising but the average price of a home in this bracket has fallen by 7% in the past two years, new research has found.

The number of million pound sales in the first half of 2016 was 12% higher than in the first six months of 2015, according to the latest research by Lloyds Bank, and this more than offset the 6% fall between the first half of 2014 and 2015.

However, the 6% increase overall between the first half of 2014 and the same period of 2016 contrasts with growth in million pound sales over the past five and 10 years of 88% and 162% respectively, indicating a significant slowdown over the past two years.

Nonetheless, the prime market has outperformed the rest of the market, with sales of houses under £1 million recording only a 2% rise from the first half of 2015 to the first half of 2016, the research also shows.

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New property listings down by almost 7% in UK towns and cities

New property listings fell in October by 6.9% on average across the UK with four out of five towns and cities seeing a drop in supply during a typically busy month for property market activity.

This is in contrast to September when property listings are generally up following the summer lull and suggests that sellers are in no rush to sell before Christmas.

Overall 81% of towns and cities saw a drop in property supply with the largest fall in Swansea with a decline of 52% while supply actually rose by 30.9% in Crawley, according to the property supply index from online estate agent House Simple.

Indeed, some 19% of towns and cities saw supply rising including Chichester with a rise of 25%, Salisbury up 24.2%, Warwick up 20%, Peterborough up 16.4%, Guildford up 15% and Birmingham up 14.5%.

But the majority saw supply fall. After Swansea the next biggest decline was in Stirling where supply was down by 37.7%, Stevenage down by 36.4%, Winchesters down by 35.7%, Carlisle down by 34.7% and Hereford down by 33.3%.

‘At this time of year we’d expect to see committed sellers rushing to put their properties on the market before the traditionally quieter period kicks in as we get closer to Christmas,’ said Alex Gosling, chief executive officer of House Simple.

‘The weather has also been unseasonably mild recently, and that should be encouraging sellers to list their houses as it presents an opportunity to show off their property in the best possible light,’ he pointed out.

‘Instead, we have seen new listings stall in October, with supply down in four out of five UK towns and cities. This might simply be a correction after September saw a surge in new properties coming onto the market, and the overall drop in property supply is still less than 2% in October compared to September,’ he explained.

‘We may need to wait until the New Year now to see market activity pick up. But there will always be people that have to sell their properties in November and December, and that could mean opportunities to negotiate a good deal for buyers who have their finance in place and are ready to proceed,’ he added.


Pending home sales in the US up 1.5% month on month after falling in August

Pending home sales in the United States increased by 1.5% in September after a significant fall in the previous month and are now at their fifth highest level over the past year.

The latest data from the National Association of Realtors shows that there were increases in the South and West which outgained declines in the Northeast and Midwest.

Overall the NAR pending homes sales index, a forward looking indicator based on contract signings, is now 2.4% higher than last September and has risen year on year for 22 of the last 25 months.

Lawrence Yun, NAR chief economist, says a robust increase in the West and a healthy bump in the South pushed pending sales upward in September. ‘Buyer demand is holding up impressively well,’ he said.

‘Although depressed inventory levels are keeping home prices elevated in most of the country, steady job gains and growing evidence that wages are finally starting to tick up are encouraging more households to consider buying a home,’ he added.

Yun pointed out that there are many positive indicators showing that the housing market’s overall health continues to improve as towards the end of 2016. In addition to sales matching their third highest pace since February 2007, foreclosures and short sales fell to their lowest share since NAR began tracking them in October 2008 to 4%.

Furthermore, sales to first time buyers reached 34% which matched the highest share since July 2012 and was up convincingly from September 2015 when it was 29%.

‘The one major predicament in the housing market is without a doubt the painfully low levels of housing inventory in much of the country. It’s leading to home prices outpacing wages, properties selling a lot quicker than a year ago and the home search for many prospective buyers being highly competitive and drawn out because of a shortage of listings at affordable prices,’ Yun explained.

A breakdown of the figures show that the index fell by 1.6% in the Northeast but is still 7.7% above a year ago. In the Midwest the index fell modestly by 0.2% and is now 1% lower than September 2015.

Pending home sales in the South rose 1.9% and are now 1.7% higher than last September. The index in the West jumped 4.7% in September and is now 4% above a year ago.


UK housing market expected to be strong and active throughout Brexit process

The path towards Brexit will dictate what happens in the UK housing market over the next few years but it is expected to remain reasonably strong and active, according to a new analysis.

There may be some turbulence along the way with article 50 to be enacted by march 2017 and the country set to leave in 2019, but the latest forecast from real estate firm JLL says that there will still be moderate growth with the residential market picking up again from 2020 onwards.

‘Demand will be undermined in the short term by uncertainty and a more subdued economy while supply issues will exacerbate, lending support to prices. The perennial issue for the housing industry remains supply and we are pleased that there seems to be fresh impetus in this regard,’ it says.

‘The big question, however, is whether policy initiatives target short term supply improvements, or look beyond the immediate horizon to create lasting, long term solutions,’ it adds.

JLL forecasts growth of 0.5% across the UK in 2017 and 1% in 2018 followed by 2% in 2019, then 4% in 2020 and 5% in 2021 but there is regional variations. Scotland is expected to be flat in 2017 then see 1% growth in 2018, 2% in 2019, 3% in 2020 and 4.5% in 2021. Wales is expected to do less well but catch up by 2020 with a forecast of prices falling by 1% in 2017, up 0.5% in 2018, up by 1% in 2019, by 3% in 2020 and then 4% in 2021.

Greater London is predicted to do well with growth of 1% in 2017, some 2% in 2018, then 3% in 2019, 5% in 2020 and 7% in 2021 but the prime central London market will not see as much growth with the JLL prediction showing prices likely to be flat in 2017 then 1% in 2018, 3% in 2019, 5.5% in 2020 then a slight reduction to 5% in 2021.

According to Neil Chegwidden, head of JLL residential research the real key to the outlook for the property market is the widespread positive attitude adopted within the UK. ‘Much will depend on the trade agreements negotiated, but with greater certainty the economic outlook should brighten along with consumer and business confidence as we head into 2019,’ he said.

‘We expect the UK housing market to be more subdued over the next two to three years. However, it will remain reasonably active with little chance of meaningful price corrections. Assuming Brexit negotiations are not too detrimental, we could see a rebound in London housing markets in 2020, before the rest of the country follows,’ he explained.

One concern on the horizon is that house builder activity could pull back from current rates of construction. ‘Although levels of new housing delivery were still woefully low prior to the referendum at least the direction of travel was positive and encouraging. This will now fall back again. We are predicting England starts to drop to 134,000 units next year,’ Chegwidden explained.

‘In London, we expect the house building slowdown to be more marked. Not only is London’s economy more vulnerable to Brexit but the housing market is also more reliant on investors, both domestic and international, and is hence more susceptible to buyer confidence,’ he pointed out.

But he also explained that the short term London supply prognosis implies that prices should bounce back when confidence returns. ‘The work stream of new supply should then pick up, albeit slowly. While central and local government policies will be pro-development, we question whether they will really be able to outweigh the more cautious approach adopted by house builders in response to weaker market forces. Most worryingly, both the UK’s and London’s housing shortages will be even more acute by this point,’ he added.

The report also points out that the forthcoming five year UK economic outlook is particularly uncertain and much depends on the nature and detail of the EU exit. JLL’s base economic forecast assumes a hard Brexit with access to the single market sacrificed in favour of immigration controls.

‘Despite this, the economic prognosis is not too detrimental for the UK. There is clearly downside risk to this quite benign outlook, if trade agreements and financial sector passporting rights are not favourable. However, this base assumption also implies that there is significant upside potential too, so the economy could prove more robust next year and could also expand faster thereafter,’ it concludes.


Hundreds of homes to be demolished for new third runway at Heathrow Airport

Hundreds of home owners will get compensation from the UK Government for 125% of the value of their properties after it was announced that a third runway will be built at Heathrow Airport in London.

Parts of some villages will be demolished to make way for the runway which is set to open in 2025 but thousands of owners face being unable to sell as they will not be near enough for the compensation plan but close enough to be affected by noise and pollution.

However, one property expert says it is in opportunity for first time buyers to get on the housing ladder as prices in some areas close to the new runway will fall considerably. But others face their homes being unsaleable until the exact location of the work is announced.

The Government said that a decision on the exact location of the new runway will be the subject of a consultation and Parliament will vote on it in about a year’s time. But it is likely to mean that around 750 homes, some dating back to the 17th century in pretty villages will be demolished.

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Central belt of Scotland sees rental values soar

Average residential rents in Scotland increased by 2.4% in the year to September led by strong growth in the country’s central belt, the latest index figures show.

Rents in the private rented sector reached an average of £755 per month but there is considerable variations. In Edinburgh, for example, the average rent surpassed £1,000 a month, up 7.56% year on year, the CityLets report shows.

Rental growth was also strong on Glasgow, up 7.2% year on year and in West Lothian with an annual rise of 5%.

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Most key cities in the UK seeing house price growth, according to latest index

House prices in key cities in the UK have increased by 8.5% in the year to September 2016 and 1.7% in the third quarter of the year, the latest index shows.

This take the average price in the Hometrack cities house price index to £239,100 with 11 cities seeing higher growth than at the start of the year and nine slowing. The data also shows that growth in London has slowed rapidly to its lowest level of quarterly growth for 20 months.

Residential values across UK Cities are registering a higher rate of growth than the overall UK market where house price growth is running at 7.2% per annum and the report also says that house price inflation continues to run more than three times faster than the growth in earnings as household confidence improves, earnings rise ahead of inflation and low mortgage rates make housing affordable for those with equity.

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