Property Investment

London rents rising almost three times faster than wages, research finds

by International Commercial Investment on June 5, 2018

Source: The Independent
The price of renting a two-bedroom flat in London has risen at almost three times the rate of earnings growth since 2011, new research has revealed.

While the average rent for a two-bed in the capital soared 26 per cent to £1,500 in the six years to 2017, earnings grew just 9 per cent, research by the GMB union found.

In 16 of 33 London boroughs, rent on a two-bedroom flat jumped more than 30 per cent over the same period, while across England rents rose 18.2 per cent to £650 per month.

Greenwich experienced a 50 per cent rise in rents for the same type of property to an average of £1,350 a month – the biggest rise in the capital, while local wages increased just 7.2 per cent.

Warren Kenny, the GMB’s London regional secretary, said high wages were here to stay and warned that younger workers faced living in private rented accommodation for longer.

He called on employers to pay higher wages to staff to enable them to afford to rent.

“If employers don’t respond with higher pay they will face staff shortages as workers, especially younger people, are priced out of the housing market,” Mr Kenny said.

“It makes little sense for these workers to spend a full week at work only to pay most of their earnings in rents.

“There is a massive shortage of homes for rent at reasonable rents for workers in the lower pay grades.

“There is no alternative to higher wages to pay these higher rents, plus a step change in building homes at reasonable rents.”

read more
International Commercial InvestmentLondon rents rising almost three times faster than wages, research finds

Tax reform could boost London’s housing market

by International Commercial Investment on May 3, 2018

Source: Financial Times

For years, London’s property market has been a tale of rising prices and ever-increasing demand. But enthusiasm for housing in the UK capital appears to have plateaued. Similarly to the rest of the country, the combination of economic uncertainties and tax changes has resulted in a steady drop in purchases.

According to a new survey from the Royal Institution of Chartered Surveyors, demand for properties has fallen for the 12th consecutive month. The drop has been sharpest in London and the south-east of England. The report also said that prices across the whole of the country are flat, while new instructions from sellers have fallen for the seventh month in a row. Respondents expect the slowdown to continue.

Several factors could be responsible. The UK’s volatile political climate may have hit investor confidence. While the very top end of the market has stagnated for several years, the uncertainty of two general elections could have turned off other segments of the market, too. Brexit could also hold back transactions, as buyers wait to see the result of negotiations. A smooth departure from the EU is still far from guaranteed.

Interest rates have also hit the housing market. Last November’s rise in the Bank of England benchmark rate, to 0.5 per cent, was the first in a decade. The BoE’s Monetary Policy Committee has hinted that further increases are on the horizon. Inflation remains 1 per cent above the BoE’s target, so those with variable-rate mortgages are reluctant to contemplate further borrowing. The Rics report suggests the slowing housing market could even affect deliberations over another rate increase in May.

Although rates remain historically low, mortgage affordability is still a challenge. Until recently, increases in London housing prices came while banks could not make more than 15 per cent of their loans to highly stretched buyers.

Some sellers have also refused to accept that house prices are under pressure. So instead of settling for lower offers, owners are opting to take their homes off the market.

Another factor for the market slowdown is taxation changes. In 2014, then chancellor George Osborne revamped stamp duty to scrap the slab system and replace it with a sliding scale, based on the cost of the property. A tax-free bracket was introduced for homes up to £125,000, plus a new tax for the upper brackets.

The critical threshold was £937,000: purchases over that level paid more stamp duty under the new system. The average London property price is £486,000; all the same, a significant part of the capital’s property market was affected. A year later, Mr Osborne introduced an additional 3 per cent stamp duty tax on properties purchased for renting and second homes.

These changes were designed to balance the market. Their impact, however, was to create disincentives to sell London houses. Instead of trading up or down, homeowners appear to have opted to stay put.

Stamp duty, like other transaction taxes, is arbitrary and inefficient. It could be scrapped entirely and replaced with a reformed council tax that adequately reflects the true value of properties. Purchases of expensive properties still need to be taxed in some form: the housing market cannot be titled in favour of the high end.

Stamp duty reform would be hard to achieve. Even if it succeeds, it would not eliminate all the pain of deflating property prices. But unblocking the top end of the market will have benefits for all London property owners.

read more
International Commercial InvestmentTax reform could boost London’s housing market

UK house prices post biggest monthly increase for six months

by International Commercial Investment on April 10, 2018

Source: The Guardian

House prices strengthened in March to post their biggest monthly gain since August, according to surprise figures from the UK’s biggest mortgage lender.

The average price of a UK home rose 1.5% to hit £227,871, Halifax said. Prices in the three months to March were 2.7% higher than a year earlier, up from the 1.8% annual growth recorded in February.

The figures were an unexpected boost for the housing market after months of lacklustre growth and declines in December and January reported by Halifax, which is part of Lloyds Banking Group.

The role of the London housing market in the growth increase was not clear, because Halifax will not release a regional breakdown of the data until later this week.

Last month a survey showed that house prices in prime parts of the capital had tumbled heavily over the past year, with Wandsworth falling nearly 15%. By contrast, the figures from Your Move estate agents showed that the north-west was the fastest growing market in England and Wales with prices in Blackburn growing 16.4%.

Experts warned against predicting a prolonged revival in price growth based on the Halifax figures. Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said: “The jump in Halifax’s measure of house prices in March just looks like volatility, rather than the start of a strong upward trend. Halifax’s index is prone to large swings.”

Howard Archer, chief economic adviser at EY Item Club, the economic forecasting group, said: “The March spike in house prices reported by the Halifax does not change our view that 2018 will be a difficult year for the housing market. We still expect price gains over the year will be limited to a modest 2%.”

Russell Galley, Halifax’s managing director, said: “Activity levels, like house price growth, have softened compared with a year ago. Mortgage approvals are down compared to 12 months ago, whilst home sales have remained flat in the early months of the year. This lack of direction in the housing market is in stark contrast to the continuing strength of the UK jobs market.”

He said low unemployment, low mortgage rates and the ongoing shortage of properties for sale would underpin price growth in coming months. Halifax is predicting annual price growth to remain close to 3%.

Mortgages in Britain have reached their most affordable level in a decade, according to new research, also from Halifax. Typical mortgage payments accounted for 29% of homeowners’ disposable income in the fourth quarter of 2017, compared with 48% in 2007.

Jeremy Leaf, an estate agent in north London and housing spokesman at the Royal Institution of Chartered Surveyors, echoed Galley’s comments. “The increase in property prices is more to do with a shortage of stock, low mortgage approvals, and subdued activity rather than any great change in the market,” he said.

“What the results do show is that those who are actually looking to buy at this time of year are obliged to pay higher prices for properties in the areas they want to live in order to get what they want, which is what we are also finding on the ground.”

read more
International Commercial InvestmentUK house prices post biggest monthly increase for six months

London property is worth more than Bristol, Birmingham, Glasgow, Manchester, and Edinburgh combined

by International Commercial Investment on February 24, 2018

Source: Business Insider

London’s property market is worth a total £1.5 trillion according to new figures from Zoopla — more than twice the value of the nine other most valuable property markets in the UK combined.

Zoopla’s figures suggest that the value of London property is 13 times higher than that of its nearest rival, Bristol, which has a property market worth £115.2 billion. London represents just over 18% of the entire UK property market by value.

However, London property prices grew the slowest out of any of the top 10 hotspots last year, according to Zoopla’s figures. House prices in the capital rose by just 1.54% over the last 12 months.

Zoopla’s rival Rightmove said last week that London house prices have now moved out of their “boom” phase after nearly two decades of rapid price rises.

Lawrence Hall, a spokesperson for Zoopla, said in a statement: “It comes as no surprise that London is significantly more valuable as a residential property market than any other British city.

“However, the data does show that, in comparison to cities further north and across the Scottish border, the rate of growth in London has slowed. The capital may be worth almost 10 times more than Sheffield, but Britain’s Steel City wins in the growth rate stakes.”

House prices in Sheffield grew by 5.63% last year according to Zoopla. Here’s Zoopla’s full table of the top 10 cities by property market worth:

read more
International Commercial InvestmentLondon property is worth more than Bristol, Birmingham, Glasgow, Manchester, and Edinburgh combined

Average price of newly marketed home rises above £300,000 again

by International Commercial Investment on February 20, 2018

Source: The Guardian

The average price of a UK property coming on to the market has risen by more than £2,400 in a month to just over £300,000 amid evidence of “record” levels of house-hunting activity, according to Rightmove.

The website, which tracks 90% of the UK property market, said the national average asking price for a home had increased by 0.8% during the past month, following the 0.7% rise it reported in mid-January.

However, some sellers may be over-pricing their properties: the average time to sell has risen once again and is now 72 days, compared with 67 days a month ago and 55 during the summer of 2017. In London, the average has climbed to 83 days.

Rightmove said that while it was the norm for new sellers’ asking prices to be buoyant at the start of a new year, “this first complete month in 2018 is seeing more pricing optimism than the comparable period in 2017”. In general, however, sellers were not being over-ambitious or setting too high a price, it added.

The website, which claims to display a stock of more than one million properties to buy or rent, said the average asking price now stood at £300,001, compared with £297,587 a month ago. It described January as its “busiest month ever”, with a record 141m website visits.

In all the UK regions it tracks, the typical price of a newly-marketed property rose during the past month, with the exception of south-west England, where the figure slipped back slightly. Scotland saw the biggest monthly increase, at 5.1%, while the north-east and Wales managed 3.6% and 3.5%.

However, on a national basis, the annual rate of price growth “remains subdued” at 1.5%, said the website.

Separate Rightmove data for London show that the city’s 32 boroughs have enjoyed mixed fortunes. In Lambeth, asking prices have fallen by 1.4% during the past month, and are down 7.3% on 12 months ago. The average price there is £635,376.

Other London boroughs where typical asking prices have fallen during the past four to five weeks include Tower Hamlets (down 1.2%), Hounslow (down 0.8%) and Brent (down 0.6%).

The figures may also indicate that the areas of London that are home to the most expensive properties are bouncing back from some of their lows; or that some sellers are being greedy. In Westminster and Kensington and Chelsea — the two boroughs where the typical price tag is above £1m — asking prices jumped 3.8% and 2.5% during the past month.

read more
International Commercial InvestmentAverage price of newly marketed home rises above £300,000 again

U.K. House Prices Surged in January as Few Homes Come to Market

by International Commercial Investment on February 1, 2018

Source: Bloomberg

U.K. house prices rose in January as a shortage of properties coming up for sale offset an underlying slowdown in the market.

Values increased 0.6 percent from December, lifting the annual gain at 3.2 percent, Nationwide Building Society said on Thursday. While that’s more than the December rate of 2.6 percent — and the fastest since March — it’s still well below the pace of recent years.

The property market has been hurt by slower economic growth and a squeeze on consumers’ incomes since the referendum to leave the European Union in 2016. The Royal Institution of Chartered Surveyors said last month that activity remains subdued, and mortgage approvals fell to a three-year low last month.

“The acceleration in annual house price growth is a little surprising,” said Robert Gardner, chief economist at Nationwide. “The lack of supply is likely to be the key factor providing support to house prices.”

The average house price in the country rose to 211,756 pounds ($300,000) from 211,156, the report showed.

read more
International Commercial InvestmentU.K. House Prices Surged in January as Few Homes Come to Market

London Beats New York Among Foreign Investors in Real Estate

by International Commercial Investment on January 8, 2018

Source: Bloomberg

New York City took a double hit in an annual survey of real estate investors, which saw London overtake it in first place globally and Los Angeles tie it for top U.S. city.

The annual survey of the Association of Foreign Investors in Real Estate asks its members, who are estimated to have more than $2 trillion in real estate assets under management, to rank markets by various measures, such as stability and opportunity for capital appreciation. This year’s poll, the 26th, also saw pricey San Francisco, which had been one of the top five global cities since 2011, fall to 11th place, and Washington, D.C., skid to 25th from 15th place last year, part of a long slide.

Foreign investors are less worried about the impact of Britain’s exit from the European Union than they were a year ago, association Chairman Edward M. Casal said in a statement, referring to London’s jump from third to first place — although Britain did fall from third to fifth among countries offering the best opportunity for appreciation.

The U.S. was first for planned real estate investment in 2018, followed by the U.K., Germany, Canada and France. And New York is no slouch, as the chart shows.

New York’s tie with Los Angeles was a surprise, association Chief Executive Officer Jim Fetgatter said. It was L.A.’s first time in the top spot for U.S. cities, while New York had been named the top U.S. city for the last seven years. Los Angeles can thank its mighty port for the honor.

“With the growth of online shopping, foreign investors continue to rank industrial/logistics properties as their No. 1 investment opportunity,” Fetgatter said in the statement.

In an interview, he said that the recent U.S. tax overhaul is “not necessarily a boon” to real estate, preserving much of the status quo for the industry, but is generally a positive development. Investors will benefit from the far lower corporate tax rate, which will create jobs and increase income, he predicted.

The survey was conducted in the fourth quarter of last year by the James A. Graaskamp Center for Real Estate, at the Wisconsin School of Business.

read more
International Commercial InvestmentLondon Beats New York Among Foreign Investors in Real Estate

House prices continue to rise as homeowners reap rewards of high demand

by International Commercial Investment on November 30, 2017

Source: The Express

HOUSE prices remained steady from October to November according to the influential Nationwide November House Price Index released today.

The news defies the doom-laden expectation of economists who cited ‘Brexit uncertainty’ and interest rate rise as potential triggers for a slowdown.

House prices increased a steady 2.5 per cent in November from the same month in 2016. However this is a significant decline to the 4.4 per cent rise recorded last November.

The monthly price rise percentage in the UK was 0.1 percent for November and 0.2 percent for October, with the year on year price rise taking the average worth of a British home from £209,988 to £211,085, according to the index.

Robert Gardner, Nationwide’s chief economist, said: “Low mortgage rates and healthy rates of employment growth are providing support for demand, but this is being partly offset by pressure on household incomes, which appears to be weighing on confidence.”

Mr Gardner adds the scarcity of homes on the market is boosting house prices adding the big Budget news to abolish stamp duty for first time buyers will only have a “modest impact on overall demand”.

Jonathan Samuels, CEO of the property lender Octane Capital told Express.co.uk: “Despite the uncertainty of Brexit, prices overall are being supported by strong employment, cheap mortgages despite the recent rate rise and the ongoing shortage of homes for sale.

“Compared to the volatility of Bitcoin, the UK’s property market is starting to look positively Victorian.”

Paresh Raja, CEO of MFS told Express.co.uk Britain’s property prices remain “impressive, given the uncertainty gripping all markets at present as a result of Brexit and this year’s general election”.

The news comes in wake of research by Halifax claiming that the total value of Britain’s privately owned housing stocks has reached over £6trillion for the first time.

The value of housing stock has grown by close to £2trn over the last decade and the research also points to an ever-widening gap between the south and the rest of the country.

Properties in London are now worth a staggering £1.3trn of the £6trn sum and the value of homes in the capital is now greater than the combined total worth of every house in Scotland, Wales and the north of England.

In the long-term Nationwide index highlights the work needed to be done to tackle the UK’s housing supply issues.

With construction of new homes still “too low”, Nationwide argue for swelling Britain’s living abodes through “change of use” – chaining offices and shops to home – as “providing the biggest boost, driven by a shift in government policy”.

Since 2014 “change of use” or “office-to-resi” conversions has provided 18,000 much-needed homes merely by making it easier for developers to cut through the thicket of red tape and allow people to live in the UK’s vacant spaces.

Mark Dyason, managing director of Thistle Finance told Express.co.uk that: “So called ‘office-to-resi’ conversions have breathed life into the London market in particular. Change of use is delivering real change across the capital.

“The reduction in red tape on ‘change of use’ developments has been a green light for developers across the country,” Mr Dyason said.

read more
International Commercial InvestmentHouse prices continue to rise as homeowners reap rewards of high demand