London house prices are set to grow by 2 – 3% in 2012

The Prime Central London market is seeing persistent demand in the current global economic and financial instability, while supply levels are close to an historic low as homeowners and investors sit on prime assets, reports Cluttons in its Residential Property Forecasts Q2 2012.

These same factors are stimulating demand from investors, particularly from overseas based buyers seeking to secure funds in the prime London residential market.

Buyers from Greece, Spain and Italy have a growing presence in the market, with 20% of all buyers in central London currently from abroad. This figure rises to between 35 – 40% for properties valued over £5 million. However, the vast majority of these buyers have a connection with the UK and are making purchases from an informed position.

The pace of growth in the London market has slipped over recent months, with activity in the housing market taking a backseat to the Jubilee and the approaching Olympics. The current low volume of homes for sale is likely to persist over the summer which, combined with ongoing uncertainty, means house prices are set to grow by 2 – 3% in 2012. While subdued in historical terms, this is a positive outcome for the market in the current climate. Cluttons anticipates UK house prices will fall by close to 3% this year, followed by a marginal further fall of up to 1% in 2013.

Sue Foxley, Head of Research at Cluttons, said: “The central London market remains buoyant, but even London activity is slowing relative to its performance in 2011. The outcome of the current Eurozone crisis is not yet known, which is denting confidence and encouraging London property owners to retain Central London residential assets in the face of instability in the residential markets.

“At the same time, strong demand from international buyers seeking a safe haven is creating even more competition for homes and sustaining prices. Whatever the outcome of the Eurozone crisis, buyers and investors are demonstrating faith that London is well positioned to see a faster return to growth than most of its European counterparts.”

The Central London rental market continues to slow following the unsustainably high growth witnessed last year, but despite the current readjustment Cluttons remains positive about the medium term prospects for the sector. Demand is strong and the ongoing difficulties faced by prospective first time buyers in saving for a deposit and securing a mortgage, will support rental values. Cluttons expects rental growth in the prime market will increase by an annualised average of 3% over the next five years to 2016.

Source: PropertytalkLive!
 

Prime London property prices continue to soar

Prime Central London property prices increased by a further 1.1% in March, according to the latest data from Knight Frank.

Prices have now risen by 11.3% over the past 12 months, and by 2.7% in Q1 2012.

Sales subject to contract in the £5million-plus bracket are up 93% in Q1 2012 compared to the same period in 2011, and by 42% across the whole of Prime Central London.

Liam Bailey, Head of Residential Research at Knight Frank, said: “Prices for Prime London property have been rising strongly for three years on the back of foreign demand and London’s position as a safe haven for investors.

“Once again our research highlights the status of London property as a unique global asset class, which has gained the confidence of investors looking for strong returns.

“The rising level of speculation over a potential mansion tax or new wealth taxes appears to have failed to dampen demand for prime London property, with prices rising at 1.1% in March this year, the fastest rate since last May.

“In fact evidence from market activity confirms the market has so far shrugged off the impact of calls for new taxes on the sector. New applicant volumes rose 26% in the three months to March this year, compared to the same period in 2011, and sales being agreed rose by a strong 42% over the same period.”

 

Budget 2012 – Chancellor cuts 50p top tax rate

British Chancellor George Osborne has announced that the Government is to reduce the controversial 50p top rate of income tax to 45p from April 2013.

But his Budget has taken a swipe at the wealthy in a series of other tax and anti-avoidance measures.

Justifying the end of the 50p top rate of income tax paid on earnings over £150,000, Osborne said it damaged competitiveness and had only raised a third of the £3billion expected.

Instead, five times as much would be raised from the very rich by other policies in the Budget.

New “anti avoidance” tax rules would tackle the “morally repugnant” practice of people not paying the tax that they should.

Most notable of these is the plan for a staggering 15% stamp duty charge levied on people who buy expensive homes using offshore companies.

Individuals buying property costing more than £2million will also pay a new rate of 7%, up from the current 5%.

At the other end of the scale, the threshold at which income tax is paid – £8105 from next month – will rise to £9205 in 2013.

Osborne’s outlook for the economy in general saw the growth forecast for 2012 rise marginally from 0.7% to 0.8%.

He also said the Government was “on course” to eliminate the structural deficit by 2016-7.

And, while the UK was expected to avoid a “technical recession” the euro zone and oil prices remained a threat.

Unemployment is expected to peak this year at 8.7% before falling.

Osborne said it was a “Budget that rewards work”.

“Britain is going to earn its way in the world,” he said. “There is no other road to recovery.”

Source: Investor Today
 

27,000 more property millionaires created in 2011

Britain’s two-tier housing market has been laid bare by figures showing that 27,000 new property millionaires were created in 2011 despite prices overall falling by 3%.

Today’s UK newspaper, The Telegraph, reports that new figures from Zoopla.co.uk, an online valuation service, says 26,744 more home owners had properties worth £1m more at the end of 2011 than at the same time last year, although the average British property value fell by 3% to £221,128 over the same period.

“High prime demand” from equity-rich buyers and relatively low supply of large homes had created 73 new property millionaires every day in 2011, Zoopla said, and one in 108 homes was now worth £1m or more; at the peak of the property market in 2007 the figure was one in 97.

There are now 253,118 homes valued at more than £1m in Britain, the research found. The biggest rise in the number of property millionaires was in London, where the number grew by 18% over the past year. Four in five homes worth more than £1m in Britain were located in London and the South East, with London accounting for more than half the national total (55%).

London was also home to nine of the top 10 areas in Britain. The area with the highest proportion of £1m homes was Kensington W8, where 56% of all homes were worth more than £1m. The only area outside London making the top ten was Virginia Water in Surrey, where 30% of homes were worth £1 million or more.

Nick Leeming of Zoopla.co.uk said: “This data shows clearly how differently the top end of the market is performing from mainstream Britain.

“While most of the market is suffering from the impact of inflation, stagnant wage growth, the inability to secure mortgage finance and nervousness about the future of the economy, at the upper end of the market cash and equity rich buyers are enjoying some of the lowest mortgage rates in recent history.”

He added that “strong demand” from overseas buyers has boosted prices for homes in the capital.

See The Telegraph report here.