Number of million pound properties in UK expected to triple by 2030

House moneyThe number of million pound properties in the UK will more than triple by 2030 and one in four London homes will cost £1 million or more by 2030, new research shows.

Yet less than 1% of properties in the North East, Yorkshire and Humber, the North West, Scotland and the East Midlands will be in this price bracket, according to the study from Santander Mortgages.

Also, by 2030 the average property price in the UK expected to double, surpassing the half a million pound mark with prices set to soar to as much as 16.5 times average incomes.

Today, less than half a million homes in the UK are valued at £1 million or more, says the research done partnership with economist and London School of Economics professor of economic geography Paul Cheshire.

It says that 25% of housing stock in London is expected to be valued at £1 million or more, rising to 70% in two London boroughs, highlighting a stark geographical divide.

Overall, the average UK property price, which currently stands at £283,565 is expected to increase 23% by 2020 to £349,3000. Fifteen years from now in 2030, the average UK property price will have almost doubled with a 97% increase, surpassing the half a million pound mark at £557,444.

While property prices are expected to soar, predictions suggest that incomes will not keep pace, resulting in an overall decline in affordability. At present in the UK, the average property price is 7.9 times the average income, but by 2030, this is expected to hit a multiple of 9.7. Again, this trend is elevated in London, where prices are currently 11.5 times incomes and predicted to rise to an eye-watering 16.5 by 2030.

‘Property price inflation will tip many existing home owners into the million pound price bracket but could also price some aspiring buyers out of the market if they don’t have the right support. The current property market is buoyant and the deals available to new and existing owners are extremely competitive, so those wishing to buy or move shouldn’t be put off,’ said Miguel Sard, managing director of mortgages, Santander UK.

‘Regardless of the price point a buyer is considering, our advice remains the same; do your research, find a mortgage provider that offers competitive rates and a range of products to ensure that the right deal is secured, and above all, ensure the repayments are affordable,’ he added.

Cheshire pointed out that by 2030 the divide between housing haves at the top and the have nots at the bottom will be even wider than it is now. ‘More owners will enjoy millionaire status, as homes that many would consider modest fetch seven figure prices in the most sought after areas,’ he said.

‘Property price inflation is beneficial for existing owners who will see their net-wealth increase, but it will make entering the market more difficult still for new buyers, further highlighting the importance of the right timing, advice, support and financial planning; and not just having a mum and dad who bought a house but a grandparent too,’ he added.

Source: Property Wire

UK property asking prices up almost 3% month on month

Boards smlThe price of property coming to the market in the UK increases by a substantial 2.9% or £8,324 in January, hitting a new record of £299,287 and surpassing the record set in October 2015 by over £2,700.

Housing demand is higher than ever as the latest Rightmove report records that traffic to the property portal hits record levels, with visits up nearly 20% year on year in January.

It says that there has been an encouraging 5% uplift in new properties coming to the market compared to same time last year resulting in the highest total number of newly listed properties at this time of year since the 2008 credit crunch.

The firm is also predicting that 2016 will be the year of the first time buyer as Government initiatives and a low interest rate outlook are now aligning when there is more property choice for first time buyers, with a 10% year on year jump in the number of two beds or fewer coming to the market.

‘The new year’s market has hit the ground running in many locations, continuing last year’s momentum and resulting in the price of property coming to the market hitting a new high. Many agents reported high numbers of sales in November and December and properties selling more quickly, so it’s encouraging to see signs of replenishment of property, especially in the first time buyer sector,’ said Miles Shipside, Rightmove director and housing market analyst.

‘However, in spite of the apparent veneer of market buoyancy, those thinking of putting their property up for sale need to avoid being too optimistic with their initial asking price, as most buyers are still understandably being very selective about their future home,’ he added.

The previous record price high was set in October 2015 but this has now been exceeded by £2,738, pushing the average new seller asking price to £299,287.

Shipside pointed out that a continuing feature of the recovering market over the past few years has been the supply of property coming to market failing to keep pace with demand. There are now signs of fresh supply increasing with the volume of new properties coming to the market is at the highest level since the credit crunch of 2008.

However, he added that it should be noted that this is patchy by region with only four regions above the 5% year on year average uplift, namely London, South East, South West and Yorkshire and the Humber. In the West Midlands new stock is actually down by 0.3% and Wales and the North West have seen an uplift of 1% or less, restricting fresh choice for buyers in these regions.

‘While more properties are coming to market there is little anecdotal evidence of tax shy landlords selling up. It is more likely made up of additional first-time sellers who are either hoping to bag a buy to let investor before the April stamp duty hike, or joining others who are deciding that 2016 is their year to trade up. Those trading up are no doubt encouraged by the stable interest rate outlook reassuringly communicated straight from the Governor’s mouth,’ Shipside explained.

The sector seeing the highest volume of new properties coming to the market is the typical first time buyer property with two bedrooms or fewer, up by 10% this month compared to the same month last year. It is suggested 2016 could be the year of the first-time buyer encouraged by low interest rates, initiatives such as Help to Buy, and buy to let investors facing increasingly adverse taxes.

‘For the second month running the highest increase in supply of homes coming to market is properties with two bedrooms or fewer, typically the target purchase of first time buyers or buy to let investors,’ said Shipside.

‘There is a 10% uplift in new supply compared to the same period in 2015, meaning all regions have more fresh choice in this sector than at this time last year. Regions outperforming the national average with over 10% more newly-marketed homes with two bedrooms or fewer are London, East, South East, South West, West Midlands, and Yorkshire and the Humber, and if this trend continues the increased competition among new sellers may help to temper price rises,’ he pointed out.

‘More and more agents are reporting a healthy return in first time buyer numbers, and with the cards increasingly stacked in their favour 2016 could prove to be the year of the first time buyer,’ he added.

Source: Property Wire

Demand remains strong in all commercial property sectors in UK

rics_logo-300x150Commercial property prices in the UK continue to rise as demand remains strong in all sectors according to the latest survey from the Royal Institution of Chartered Surveyors (RICS).

UK Commercial Property is still seen as a safe haven for investors with rents and capital values set to continue rising despite macro concerns, the survey says.

With businesses across the UK thriving and employment data still strong, the industrial sector has the greatest momentum in occupier demand.

Some 43% more chartered surveyors are seeing a rise in demand for industrial space in the fourth quarter of 2015, compared to 29% more seeing a rise rather than fall in demand for offices and 26% more seeing a rise in demand for retail.

As demand increases, supply has continued to decrease across the UK with the survey recording the eleventh consecutive quarterly drop in available space across the commercial property market.

The survey report also says that development nationally has only increased marginally with anecdotal evidence suggesting that there is a lack of commercial construction activity in many locations.

It also explains that a deepening skills crisis is playing a key role in inhibiting development. One notable exception to the low level of new build across the UK is in the London office sector, where development has risen sharply over the last three quarters and 34% more surveyors saw a rise rather than fall in office development starts in the quarter.

In the face of continued demand and lack of supply, rent expectations for the next quarter are strongly positive across all sectors with 35% more chartered surveyors projecting a rise in rents across all sectors.

Industrial space was again the strongest performer with 43% more surveyors envisaging a further rise rather than fall in rents.

Looking at the investment market, buyer enquiries have risen in each sector albeit less than previously and the upward trend in foreign buyers has noticeably flattened. Notwithstanding this, capital values are forecast to rise further in all sectors of the market in both the near and longer term with prime office and industrial sectors most likely to outperform.

Looking further forward, all sector rents are set to continue to rise both in the medium and longer term. Over the next 12 months, respondents are most confident of seeing rental increases in the prime industrial market with 87% more respondents foreseeing a rise as opposed to a fall.

At the other end of the scale, secondary retail space exhibits the most modest reading on a sectoral comparison, but still posted a relatively healthy balance of +51% expecting rents to grow.

Regionally price expectations are positive across the UK, with the strongest performers expected to be London and the East, however, 81% of respondents in the capital now view commercial real estate in central London to be overpriced, slightly up on the 77% who took this view in the third quarter survey.

The report also points out that there is a lack of incentives available. The value of incentive packages on offer from landlords to tenants fell across each sector in the final quarter of 2015 a trend in place for much of the past two years.

Source: Property Wire

Average home let within 20 days as rent rises go on

Countrywide logoBritain’s largest letting agency says rents grew by an average of 3.1 per cent in 2015, taking the average monthly rent to £919pcm. 

Rents rose in every region of Britain with the East of England seeing the highest growth – 6.5 per cent – and Central London the lowest with a mere 0.5 per cent.

Some 34 per cent of tenants who renewed their tenancies faced higher rents, an increase of seven per cent from 2014. However, the average rent for renewing tenancies only grew by 1.3 per cent, much less than for those moving into a new home.

The continuing imbalance between supply and demand has intensified competition for homes in the market, says Countrywide.

The average property is now let within 20 days of being instructed – two days quicker than it was in 2014.

Greater London as a whole saw a slowdown in rental growth in 2015 compared with 2014 yet rents still rose by 4.7 per cent on average. Affordability issues have kicked in across London; the proportion of under 25s living in the rental sector in the capital fell by four per cent in 2015, the continuation of a longer term trend.

Surrounding regions in the South of England have seen small growth in the proportion of under 25s in their market, as Londoners look further afield for more affordable markets.

“2016 looks to be a complicated year for landlords as the government focuses its efforts on boosting homeownership. The additional 3% stamp duty charge, stricter regulation and changes to tax relief from 2017 onwards will all take their toll on investor sentiment and impact behaviour” admits Johnny Morris, research director at Countrywide.

“With stock at a premium, the smaller landlords who decide to sell up will add upward pressure to rents, although any rises will be tempered by affordability pressures” he warns.

Source: Letting Agent Today


86% rise in volume of valuations for purchases of buy to let units

mortgage applicationThe number of valuations conducted for buy-to-let properties soared by 86 per cent between December 2014 and December 2015, according to Estate Agency and Valuation firm Connells.

“In an environment of competitive mortgage rates and strong demand for rental property from tenants, the buy-to-let sector is always going to be a popular option for investors with the time to devote to being a landlord. However, the added factor of the April 1 stamp duty increase has spurred many investors who might have been sitting on the fence to take the plunge and enter the buy-to-let market before its profitability takes a hit” according to John Bagshaw, corporate services director for the agency.

The buy to let increase came despite a one per cent dip in BTL valuations in the single month of December 2015 – a fall described as a typical seasonal variation by the firm.

The BTL increase over the past year far outstrips the rise in valuations conducted for remortgaging purposes – up 34 per cent over the 12 months.

“The remortgaging market has typically been a strong performer over the last year. A Bank of England rate rise now looks very likely at some point in 2016 – especially considering the US Federal Reserve has already raised their base rate. Many remortgagors realised this and, like buy to let investors, opted to take advantage of favourable borrowing costs while they lasted” says Bagshaw.

Across the whole market, valuations – for whatever purpose – were 29 per cent higher in December 2015 than in December 2014; the rate of annual growth of all valuations over the past year was nine per cent.

“There is a steady confidence in the market that wasn’t present in 2013, or even 2014. December’s results are also a reflection of the ever-increasing demand for homes as investment opportunities, as buy to let landlords join home movers seeking to make some sort of profit from their property” according to Bagshaw.

Source: Letting Agent Today

9.5% price rise in 2015 takes average home to over £208,000 says Halifax

halifax-logoPrices in the three months to the end of 2015 were 9.5 per cent higher than in the same three month period a year earlier – and the average price of a UK home is now £208,286 according to the Halifax index.

“There remains a substantial gap between demand and supply with the latest figures showing a further decline in the number of properties available for sale. This situation is unlikely to change significantly in the short-term, resulting in continuing upward pressure on prices” says Halifax housing economist Martin Ellis.

Homes are also becoming less affordable, as the house price to earnings ratio rose to 5.58 in December from 5.49 in November and 5.10 at the end of 2014, taking it to its highest level since January 2008, according to the data.

However, price growth in the final quarter of last year was slightly lower than in the preceding three months.

Source: Estate Agent Today

UK housing market is on solid ground, although price rises to slow in 2016

ReutersBritish house prices will rise more slowly next year than in 2015, according to a Reuters poll of analysts that also found interest rates would have to reach 3 percent before seriously affecting the market.

The bedrock of consumer wealth in Britain, house prices will rise 5 percent this year and 4 percent in the next two years, according to a poll of 22 property market experts taken in the past week, similar to forecasts published three months ago.

Wages will pick up faster than inflation – pegged at 0.2 percent this year, 1.6 percent in 2016 and 2 percent in 2017 – but will not match house prices rises until 2017, another Reuters poll found.

“An acute shortage of homes for sale, coupled with a recovery in housing demand as the labour market continues to strengthen, is putting upwards pressure on house prices,” Capital Economics’ Matthew Pointon said.

“However, with interest rates set to rise gradually from next year, and house prices already at very high levels, gains in 2016 and 2017 will be far more modest.”

Interest rates have sat at a record low of 0.5 percent since early 2009 and a Reuters poll this month suggested they will not rise until early next year and that even then, increases will be gradual.

Sixteen of 19 participants in the poll said the housing market was strong enough to withstand higher interest rates and the median said the lending rate would need to reach 3 percent before having a serious effect, something the rates poll predicted would not happen until 2018 at least.

“Small, gradual and anticipated interest rate rises, alongside decent GDP growth, are unlikely in themselves to derail the housing market,” the Council of Mortgage Lenders’ Bob Pannell said.

In a further sign Britain’s housing market is on solid ground, mortgage approvals rose in July to their highest level in 17 months.

The average asking price for a home in greater London was £606,826 ($951,078) in August, property website Rightmove said last week, more than double the national level of £292,284.

With the national average annual salary at £27,200 last year, house prices in London – which have surged in recent years – were therefore deemed unaffordable or very unaffordable by all but one respondent in the poll.

If prices rise 5.3 percent this year, 3.5 percent in 2016 and 4.5 percent in 2017 as expected, homes in the capital will be even further out of reach of most people.

Medians from the poll said the average level of London house prices on a scale of one to ten – from very cheap to very expensive – was nine. On a national scale they were rated seven.

“London is now significantly above its previous peak and a large part of a generation is priced out of the market. Across the country, this is markedly less true,” independent consultancy Building Value’s Tony Williams said.

Source: Reuters

Year ends with high price growth almost everywhere says Nationwide

House prices ended the year with strong growth of 0.8 per cent in the month of December according to the building society Nationwide.

This took the average value of property in the UK is now £196,999, up 4.5 per cent compared with a year ago. London remained the strongest performing region for the fifth year running, with average prices up 12 per cent in 12 months.

London’s average values are now 50 per cent above their pre-crisis peak in 2007 – a sharp contrast to, say, Northern Ireland which remains 44 per cent below its pre-crisis peak, despite rising by 6.5 per cent in the last three months of the year.

But the capital will not be such a success in 2016 because of widespread unaffordability across boroughs, says the building society.

UK-wide, prices are around 7.0 per cent higher than a year ago with Scotland the only part that saw a fall, with values down 1.9 per cent in the three months to the end of December compared with the same period a year ago.

“Further healthy gains in employment and rising wages are likely to bolster buyer sentiment, while borrowing costs are expected to rise only gradually. However, the main concern is that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability” according to Robert Gardner, Nationwide’s chief economist.

On Twitter, Howard Archer – chief UK and European economist at IHS Global Insight – says the Nationwide figures back up his firm’s forecast house price growth of 6.0 per cent in 2016.

Meanwhile Jeremy Leaf, former RICS chairman and north London estate agent, says: ‘Supply is simply not increasing fast enough to keep house prices in check and is making it harder for first-time buyers to get on the ladder. The situation is likely to get worse before it gets better in view of the build up to the increase in stamp duty in April, particularly as these [Nationwide] figures are a little historic.”

Source: Estate Agent Today

Demand for Alpine property is rising

Demand for French Alpine property is rising, spurred on by a more resilient Eurozone, greater clarity over tax and the second home cap in Switzerland, as well as a weaker euro, according to Knight Frank’s 2015 Ski Property Report.

French resorts occupied the top five rankings in 2015 as uncertainty surrounding Lex Weber in Switzerland dampened sales, and as a result price growth.

Home to the world’s oldest ski resorts, the French and Swiss Alps attract in excess of 80m ski visits per annum and account for a third of the total number of ski resorts worldwide.

In the past year ski homes in Europe’s top resorts have continued on the same trajectory that they have been following since 2008; no radical acceleration or deceleration just small single digit shifts year-on-year.

Val d’Isere and Meribel lead the 2015 rankings with the price of a typical 4-5 bedroom chalet in each resort rising by 5.8% and 4.5% respectively in the year to June.

The length of Val d’Isere’s ski season explains its long-standing appeal, particularly with British buyers. Few other Alpine resorts can guarantee sufficient snow to ski during both the Christmas and Easter holiday periods.

In Meribel’s case, a combination of its location (in the heart of The Three Valleys) and its pricing explains its 4.5% increase year-on-year. Meribel provides better value than Courchevel 1850, but can compete with 1550 and 1650 in terms of facilities. Investment in the form of new residential developments has also helped to build confidence amongst buyers.

In the French Alps, the focus of sales activity in the last 12 months has been within the €1.5m and €2.5m price bracket.

British buyers looking to purchase in the French Alps are now in a stronger position than two years ago, the GBP/ EUR exchange rate has moved from approximately 1.17 to 1.43 during this period.

Taking account of currency movements only and focussing on the year to July 2015, a British buyer who bought a French property in July 2015 instead of a year earlier will have saved approximately 11%.

Take a look at our latest French Ski Property listings.

Commercial property debt in UK set to fall to 10 year low

Picture1Outstanding commercial property debt in the UK is on course to fall to a 10 year low during 2015, declining by 1% in the first half of 2015 to £163.7 billion, according to a new report.

However, strong levels of new loan origination in 2015 mean that the total amount outstanding may actually increase for the first time since the recession, the report from academics at De Montfort University also says.

The half year edition of the De Montfort Commercial Property Lending Report, the most comprehensive study of the UK’s commercial property lending market, concludes that the continuous decline in total real estate debt since 2008 appears to have almost halted and may subsequently be reversed by the end of the year.

The value of new loan originations in the first half of 2015 was £24.7 billion, the highest half year value reported to the research since £49.2 billion recorded for the first half of 2007. In a further sign of commercial property market health, the value of distressed loans fell from £23.2 billion at the end of 2014 to £15.7 billion by the middle of 2015.

The report also show that the proportion of loans with a loan to value (LTV) ratio of less than 70% has continued to grow in the first half of 2015, representing 80.5%, or £135.5 billion of outstanding debt of the traditional lenders and allocated to investment projects.

Outstanding debt with a LTV ratio of between 71% and 100% fell from 14.3% of the total of £20 billion at the end of 2014 to 12% or £16 billon by the middle of 2015.

The first half of the year also showed an encouraging pick-up in development finance, particularly for speculative or partly pre-let projects, where more non-traditional lenders now feel comfortable providing finance against such schemes.

At the same time, the research suggests that banking regulation may be having an adverse impact on development finance by the traditional lenders. At the middle of 2015, only 2.8% of debt was allocated to commercial development projects by these lenders.

Interest rate margins for senior debt continued their three-year long decline but the pace of decline has moderated considerably. By the middle of 2015, the average margin for senior loans secured by prime office property was recorded at 214bps, down from 218.7bps recorded at the end of 2014. The report suggests that that the floor in interest-rate margins may have been reached.

Following a surge in non-traditional lenders in 2014, Banks and Building Societies remained the dominant lenders in the market, holding 76% of all loan originations at the middle year point compared to 75% at the end of 2014. The level of new lending by UK Banks and Building Societies remained stable at 39% of all loan originations.

‘We seem to have reached a turning point in the amount of commercial property debt in the market, with the impact of post-crisis deleveraging almost totally cancelled out by new lending,’ said Ion Fletcher, director of policy (finance) at the British Property Federation.

‘While this suggests things are hotting up, a stabilising of senior debt margins and broadly level LTV ratios indicates lenders remain risk conscious. We are also encouraged to see increased lending to speculative commercial property development projects. These are crucial if we want SMEs to have room to grow their businesses,’ he added.

Source: Property Wire