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London property market booming

by International Commercial Investment on November 1, 2017

Source: The Express

LONDON’S property market is approaching all time highs as international investors shrug off Brexit fears to snap up both commercial and residential real estate.

Sales in London’s commercial property sector are to top £20 billion in 2017, putting the capital on track for a record breaking year.

Property adviser Savills says foreign investors are flocking into the British capital, with commercial property sales hitting £14.4billion in the first three quarters of the year.

The broker says buyers came from over 27 countries, contradicting predictions of a mass exodus of foreign investors from the UK property market following the Brexit vote.

Stephen Down, executive director at Savills, said: “UK real estate continues to appeal to a broad spectrum of international investors, while there is also demand from a broad professional investor base so long as properties are priced correctly.”

The strong growth in international investment could mean 2017 sales potentially beat a 2014 high of £21.4bn.

Meanwhile, figures from London Central Portfolio released today show that residential property prices in the capital are also on the rise again.

Following a brief period of decline, LCP reports that price growth in the mainstream prime residential sector (sub £1.2 million) is up 5.6 per cent on a year ago.

This has brought average prices in this band to £822,812. This is 15.6 per cent higher than three years ago, when stamp duty was changed from a ‘slab’ system to a graduated one which reduced charges on the lower end of the market.

However, a number of experts feel this didn’t go far enough, with economic think tank the Adam Smith Institute this morning calling on Chancellor Philip Hammond to scrap stamp duty altogether.

Policy advisers at the institute say stamp duty is “gumming up the housing market’ and keeping pensioners in houses that are too big for them. It estimated that the housing market would grow by £10bn if the Chancellor axes the tax in next month’s budget.

As well as growth in the mainstream property sector, more surprising were rising prices in ‘prime’ Central London property, which LCP says are up seven per cent over the past year and just 3.3 per cent below 2014 highs.

This follows a steep decline in the second quarter of last year when the government introduced extra taxes on the most expensive homes.

Commenting on the upward trend, Naomi Heaton, CEO of LCP, said: “We now see signs of recovery as buyers absorb the additional cost of investing into a world class, safe haven asset class.

“Brexit jitters also appear to be calming down as global political and economic uncertainty makes the UK an attractive place to invest in once more.”

Contrary to the Adam Smith Institute, however, Heaton called on the Chancellor to keep his nose out of the property market next month.

She warned: “There may be further volatility to come, particularly with the Autumn Budget on November 22.

“However, the Chancellor should take heed of the delicate position of the market which has recorded a 10.3 per cent decrease in Stamp Duty tax take, according to HMRC’s latest report. More tax meddling may tip the scales back in the other direction.”

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International Commercial InvestmentLondon property market booming

UK house price growth edges up in October, hitting three-month high

by International Commercial Investment on November 1, 2017


House prices in the UK saw a slight pick-up in growth last month, rising 0.2pc between September and October, according to Nationwide.

Annually, price growth edged up to 2.5pc from 2.3pc in September, taking the average property price in Britain to £211,085 and exceeding economists’ predictions of 2.2pc.

Nevertheless, the outlook for the housing market remained subdued, and it is far lower than last October’s rate of 4.6pc. While low mortgage rates and healthy employment are providing some support for demand, pressure on household incomes and falling real wages is weighing on confidence, Nationwide said.

The house price to earnings ratio, at 7.2 times, is almost at a record high.

Demand for property could take a further hit this week if the Monetary Policy Committee at the Bank of England increases the Bank Rate for the first time in 10 years. Even a marginal 0.25pc rate hike could put off potential first-time buyers, although some experts insist that a rate rise is unlikely to stifle growth.

Nationwide said that if rates increased from 0.25pc to 0.5pc, the effect would be smaller than in the past because more homeowners are on fixed-rate mortgages.

Samuel Tombs at Pantheon Macroeconomics said that the market is “resilient for now, but headwinds are building”, pointing to the fact that this index is based on mortgage offers for people who most likely started buying their home before the MPC warned in mid-September that interest rates would rise soon.

The Royal Institution of Chartered Surveyors reported that during that month, new buyer enquiries fell sharply.

This resilience in prices has been due to low borrowing costs and strong employment, as well as a continued lack of homes for sale: the Royal Institution of Chartered Surveyors has said that stock per estate agent branch is hovering at record lows.

Alex Gosling, chief executive of online estate agents HouseSimple, said that this was a “housing market which feels flat and in need of a spark”.

Capital Economics has forecast that house prices will grow by 2pc next year, while JLL has said that the average UK property will rise in value by just 1pc.

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International Commercial InvestmentUK house price growth edges up in October, hitting three-month high

London’s airports will be ‘completely full’ in 20 years

by International Commercial Investment on October 25, 2017

Source: Financial Times

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London’s five airports will all be “completely full” by the mid-2030s, transport secretary Chris Grayling warned on Tuesday as the government published updated aviation demand forecasts.

Mr Grayling said the forecasts showed the pressing need to go ahead with Heathrow’s third runway, which would give “the greatest choice” in destinations and frequent long-haul routes.

The minister was speaking as he launched a consultation on the revised draft “Airports National Policy Statement”, which includes an updated air-quality plan suggesting the runway could go ahead without the UK breaching pollution obligations.

Mr Grayling also indicated the government would look beyond the Heathrow project to deliver an “ambitious long-term vision for the sector” to deliver economic growth for the whole country.

Heathrow has now effectively reached full capacity, while Gatwick is “operating at capacity at peak times”, according to the documents.

All of London’s airports apart from Stansted will be full by the mid-2020s, according to the official forecasts: Heathrow, Gatwick, Luton and London City.

There has been a combined increase of 13m passengers over the last five years at Stansted, London City and Luton combined.

John Stewart, chair of the HACAN anti-Heathrow group, called the forecasts “startling”, saying: “It is clear that demand over the next 15 years will come from London and the South East. This will add to the pressure to build a new runway somewhere in the region.”

Members of the public have until December 19 to respond to the draft national policy statement.

That will then pave the way for a final NPS which will be scrutinised by the transport select committee and then must pass a vote in the House of Commons before the Heathrow third runway can go ahead. The airport’s management wants to begin construction in early 2021 and complete the scheme by the end of 2025.

The vote is expected before next summer’s Parliamentary recess, and the government is expected to win with the help of the Scottish National party.

Alistair Watson, partner at law firm Taylor Wessing, said the process pointed towards a possible delay for the third runway.

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“If you then put into the mix the ongoing and successful litigation to the UK Air Quality Plan and the chance for objector groups and pro-Gatwick supporters (including the Mayor of London) to use this consultation period to create more delay, an adopted NPS via Parliament in spring 2018 looks romantic,” he said. “An adopted NPS being challenged in the high court in Summer 2018 looks more than realistic.”

But the Department for Transport said the plans were still on time and on schedule.

Heathrow said the consultation was a “key milestone” in the expansion of the airport: “A third runway will ensure Britain’s place in the world as an outward-looking trading nation”.

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International Commercial InvestmentLondon’s airports will be ‘completely full’ in 20 years

Business investment in the UK went up in the second quarter

by International Commercial Investment on October 4, 2017

Source: CITY A.M.

Business investment in the UK increased between April and June this year, the latest Office for National Statistics data shows.

Compared to the same period last year, business investment rose 2.5 per cent to £45.6bn, meaning firms bought more non-financial assets like machinery and property than they did last year.

It also edged up on the previous quarter, increasing 0.5 per cent.

This contributed to overall year-on-year growth of 2.4 per cent in the UK’s gross fixed capital formation (GFCF).

On a quarter by quarter basis, GFCF rose 0.6 per cent, with general government investment up 6.1 per cent.

More investment was put into ICT equipment and other machinery and equipment during the period, marking a jump of 8.1 per cent to £13.9bn.

But less investment in transport and buildings dragged the average growth down, while intellectual property products remained flat.

GFCF is now 6.1 per cent above pre-crash levels, and 35.7 per cent above levels seen at the financial crisis.

But business investment annual growth has been slowing since 2014. In 2016 investment actually shrank 0.4 per cent, marking the weakest growth since 2009, though this is a revised figure. Previously published estimates put decline at 1.5 per cent between 2015 and 2016.

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International Commercial InvestmentBusiness investment in the UK went up in the second quarter

Spiralling rents mean Britain’s private landlords earn £54 billion a year

by International Commercial Investment on October 4, 2017

Source: Business Insider

Growing rents and a sharp rise in the number of people renting homes means private landlords are earning ever-increasing sums from renters, and deepening a financial division between those who own a home and those who don’t.

Estate agents Savills said landlords earned £54 billion in the year to June, according to a Times report — twice the total amount of interest homeowners paid on their mortgages, who currently benefit from record-low interest rates.

The private rental figure is up by £14 billion in five years, and represents a 35% increase from a 21% rise in the number of homes, Savills said.

The revenue is driven largely by the vast numbers of millennials who cannot afford to buy a property and are forced to pay increasingly expensive rents.

Around 5.3 million UK households are privately rented, of which those aged between 25 and 34 form the largest group at 1.5 million, according to government figures.

The chronic shortage of UK housing is currently an important political issue. Labour leader Jeremy Corbyn last week pledged to introduce rent caps if he becomes prime minister, and Theresa May pledged a further £10 billion for the government’s Help-to-Buy scheme which helps first-time buyers to purchase homes.

Lucian Cook, head of residential research at Savills, told the Times that high rents in London could push graduates away and threaten the city’s competitiveness.

“The risk is that this starts to become a threat to London’s competitiveness to attract young people into the city,” he said.

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International Commercial InvestmentSpiralling rents mean Britain’s private landlords earn £54 billion a year

Here’s how much property prices will rise in the next 10 years

by International Commercial Investment on September 1, 2017

Source: City A.M

Property prices are being tipped to soar over the next decade, even if they continue to increase at the sluggish rate experienced since Brexit.

House prices have risen by 0.37 per cent each month since the referendum – compared with 0.67 a month during the preceeding year. If the current rate of growth were to continue over the next 10 years the average UK house would be worth £347,757 – an increase of 56 per cent, Emoov estimates.

Given the extent to which the slowdown has affected London, the capital would see one of the lower rates of growth based on this measure, although properties would still be worth on average 24 per cent more by 2027.

This will result in prices being dwarfed by those in Oxford, where Emoov estimates average property values will jump 115 per cent to £888.542 – compared with a London average of £597,544.

Nottingham is tipped for the highest rate of growth across the UK. Since Brexit, house prices have grown 0.8 per cent. On eMoov’s calculations, this means prices could grow 160 per cent to an average of £346,592 by 2027. Glasgow is the second highest, with an estimated 131 per cent increase to an average of £285,487.

Those at the bottom end of the scale are Newcastle, where house prices will grow just nine per cent, Norwich (15 per cent) and London.

Emoov chief executive Russell Quirk said: “With latest industry figures indicating an end to the post-Brexit market slowdown that has seemingly plagued the market over the last 18 months, many UK homeowners will be breathing a sigh of relief, despite having still enjoyed a notable annual increase in their property’s value.

“Although these recent slower rates of price growth are unlikely to persist, and we are by no means predicting they will, this research demonstrates that the outlook would still be rather positive and far from the apocalyptic prophecy’s many have talked the market down with since the Brexit vote.”

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International Commercial InvestmentHere’s how much property prices will rise in the next 10 years

Housing market speeds towards ‘crisis point’ as average price rises £10,000 in a year

by International Commercial Investment on August 15, 2017

Source: The Telegraph

House prices in the UK increased by £10,000 in the last year on average, according to official figures, with estate agents warning that affordability of houses is reaching “crisis point”.

The average property price in June was £223,257, compared to £214,000 in June 2016, the Office for National Statistics said.

On a month-by-month basis, house prices were up nearly £2,000 on average.

Although the speed of growth has marginally slowed, with house prices increasing by 4.9pc in the year to June compared to 5pc in the year to May, the ONS said growth had remained flat in 2017 at around 5pc.

Paul Smith, chief executive of the UK’s largest independent estate agent, Haart, which is based mainly in London, said the rise in prices had caused a 20pc drop in first-time buyer registrations in its branches in the last year.

“Along with consumer price hikes and falling wage growth, unaffordability is reaching crisis point,” he said.

The biggest rise was in the east of England, where average prices climbed 7.2pc to £286,623. There was similar growth, of 7.1pc, in the East Midlands.

Prices in the North East saw the smallest annual growth, at 2.5pc, while prices in London were up 2.9pc over the year.

On a monthly basis, the average London house price fell by 0.7pc in June, to £481,556. In the City of London, average house prices fell by more than 20pc in the year to June, to £723,576.

The region with the highest growth was the Orkney Islands, where the average price of £147,929 represented a change of 20pc.

“There has been much reflection about the 10-year anniversary of the global financial crisis and housing market performance over this period highlights the disparate performance across different parts of the UK,” said Richard Snook, senior economist at PwC.

The ONS figures, which tend to lag behind data from lenders such as Nationwide, is based on transactions recorded by the Land Registry.

The statistics follow a separate report from the Royal Institution of Chartered Surveyors last week, which found market activity was grinding to a halt as London and the South East pulled down the national trend.

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International Commercial InvestmentHousing market speeds towards ‘crisis point’ as average price rises £10,000 in a year

UK property prices edge up again month on month as lack of supply keeps values high

by International Commercial Investment on August 1, 2017

Source: Property Wire

Property prices in the UK increased by 0.3% in July and at an average of £211,671 are 2.9% higher than a year ago, according to the latest index data to be published.

Even although the annual rate has fallen from the 3.1% recorded in June, annual house price growth is only just outside the 3% to 6% range that it has been for most of the last two years, the data from the Nationwide index shows.

According to Robert Gardner, Nationwide’s chief economist, the figures show that the British housing market is broadly stable and he forecasts that this is set to be the case in the short term at least.

‘On the surface, this appears at odds with recent signs of cooling in the housing market. The number of housing transactions dipped to their lowest level for eight months in June, while in the same month the number of mortgages approved for house purchase moderated to a nine month low of around65,000,’ he explained.

‘But a lack of homes on the market appears to be providing support. Survey data point to relatively sluggish levels of new buyer enquiries, but at the same time surveyors report that relatively few properties are coming onto the market and at a time when the number of homes on estate agents’ books is already close to 30 year lows,’ he pointed out.

‘Ultimately, housing market developments will depend on wider economic performance. The UK economy slowed noticeably in the first half of the year and there has been little to suggest a significant departure from recent trends in the quarters ahead,’ he said.

‘While employment growth has remained relatively robust, household budgets are coming under pressure as wage growth is failing to keep up with the rising cost of living. This suggests that housing market activity is likely to remain subdued, with the balance in the market shifting a little further towards buyers in the quarters ahead,’ Gardner added.

‘Nevertheless, constrained supply is likely to continue to provide support for house prices and, as a result, we continue to expect prices to rise by around 2% over 2017 as a whole, only modestly lower than the levels recorded in recent months,’ he concluded.

Mark Weedon, head of institutional development at buy to let investment platform Property Partner, also believes the figures are a sign of stability. ‘Despite uncertainty across the political spectrum, with the realities of Brexit slowly starting to become more clear, house prices again demonstrate their resilience,’ he said.

‘Simply put this index highlights the strength and stability of the housing market. Mortgages look set to remain good value and the lack of housing stock nationally shows no sign of abating, something which will continue to support house prices,’ he added.

Lucy Pendleton, director of independent estate agents James Pendleton, believes there are signs of continued confidence in the housing market. ‘Prices fell for three straight months between March and May but before that you would have to go back to June 2015 to find the previous monthly fall,’ she pointed out.

‘These slight contractions were not dramatic however, particularly when you consider the traditionally slower summer months have often begun with more severe falls than this. Given there are other factors at play, including a squeeze in consumer spending, this could be seen as a sign of confidence among buyers,’ she explained.

Buyers have returned to the market after the snap election but they are price sensitive, according to Jonathan Hopper, managing director of Garrington Property Finders.

‘Limited supply is propping up prices, while the limited number of buyers is giving the astute house hunter the leverage to negotiate hard on price and secure sizeable discounts. With pragmatic sellers often willing to trade price reductions for the certainty of a sale, the market’s fundamentals remain in place even if the pace is slowing,’ he said.

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International Commercial InvestmentUK property prices edge up again month on month as lack of supply keeps values high