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Friday 27 May 2016

Demand for property at two-year low

During April demand for housing dropped to the lowest level recorded since March 2014, according to the National Association of Estate Agents (NAEA).
The organisation's latest Housing Market Report shows that there were 325 house hunters registered with the average estate agency branch, down from 417 in March. 
Last month's figure is the lowest level of demand recorded by the NAEA for more than two years – when agents had an average of 313 prospective buyers registered per branch.
The report shows that property supply also dropped by 35% last month, from an average of 54 properties available per branch in March to 35 in April. 
Just over a quarter of total sales made in April were to first-time buyers, down from 28% in March. However, a third of agents surveyed said they expect sales to first-timers to increase in the next few months.

“It’s no surprise that demand dropped significantly in April," says Mark Hayward, managing director of the NAEA. "Eight in ten agents saw an increase in purchasers trying to beat the stamp duty changes before the deadline, so we expected to see a slow-down immediately following the deadline."
"The number of house-hunters registered per branch dropped in April, the supply of available housing to buy also fell quite sharply, so supply and demand are still moving in the opposite direction, rather than balancing out," he says. 
Last week the NAEA and its sister organisation ARLA released a 23 page report on the upcoming EU referendum and how it could affect the property market. 
The NAEA says that 24% of the agents it surveyed expect house prices to decrease if the UK leaves the EU, while 23% expect demand to decrease. 
"The upcoming EU Referendum means we’ve entered a period of uncertainty, as buyers put off their hunt in anticipation of the result, and what might happen to prices as a result,” says Hayward.
Earlier this week, estate agency chain haart reported a 46% drop in buyer registrations during April. 
The firm's chief executive, Paul Smith, said sellers need to be more 'realistic' in the asking prices they're setting or they will struggle to sell.   

Tuesday 17 May 2016

UK house prices increased by 9.0% in the 12 months to March 2016

The Office for National Statistics House Price Index for March 2016 has just been released and the main findings are:
·         UK house prices increased by 9.0% in the year to March 2016, up from 7.6% in the year to February 2016.
·         House price annual inflation was 10.1% in England, 2.1% in Wales, -6.1% in Scotland and 6.4% in Northern Ireland.
·         Annual house price increases in England were driven by an annual increase in London (13.0%), the South East (12.2%) and the East of England (12.1%).
·         Excluding London and the South East, UK house prices increased by 5.9% in the 12 months to March 2016.
·         On a seasonally adjusted basis, average house prices increased by 2.5% between February 2016 and March 2016.
·         In March 2016, prices paid by first-time buyers were 9.7% higher on average than in March 2015.
·         For owner-occupiers (existing owners), prices increased by 8.7% for the same period.
·         UK average mix-adjusted house price in March 2016 was £292,000.
Annual house price rates of change, UK all dwellings from January 2004 to March 2016
12 month percentage change
The full report can be found here

Monday 16 May 2016

Interest in buy-to-let drops by over a quarter as tax changes begin

Some buy-to-let investors took a break from looking for new properties in March as the new tax changes deadline loomed, new data from Rightmove reveals.
Whilst Rightmove recorded its busiest ever Q1 for enquiries to estate agents, the intentions of buyers shifted in March, with the number of people saying they were planning to buy a property to rent out dropping by 27% compared to the same month last year. This contrasts with the increase in interest seen from investors between December and February (+24% year-on-year) as they tried to make last minute purchases before April’s additional 3% tax deadline.
Sam Mitchell, Rightmove’s Head of Lettings, comments: “This waning of interest definitely seems to predict a slowdown in the buy-to-let market, but what’s not yet clear is if this will only turn out to be a short-term pause. It could be that some investors are waiting until the tax changes have some time to bed in before they review their business and continue to make purchases. If this removes some of the competition for smaller properties, then it could spell good news for many first-time buyers with a deposit ready as they may find now is the ideal time to make a move.”
Buy-to-let investors not deterred by the tax changes and looking for the best yields could consider buying in areas in the north such as Durham and Merseyside. The top four locations for best yields are all in these counties, with Peterlee in Durham highest at 9.1%, followed by Bootle in Merseyside at 8.6%. In third place is the neighbouring town of Birkenhead offering a yield of 7.8% and fourth is Stanley in Durham at 7.7%.
Mitchell observes: “These areas where you can buy a two bed property for around £60-70k seem to offer a sound investment as long as the demand is there from tenants, so it’s worth speaking to local agents about what the rental market is like.  Whilst the highest demand for rental properties is often in the South and the East of England, this quarter’s data shows demand is growing in Manchester in places like Ashton-Under-Lyne and Stalybridge so they’re worth considering this year as well.”

Greater London (+1.3%) and the North West (+1.1%) were the strongest performing regions this quarter for rental increases, with the South East and East of England both falling by 0.1%, though the East of England’s annual increase of 5.9% still sees it outstrip all other regions.

Thursday 5 May 2016

Southampton 2 bed flat will yield 6% - a good buy 2 let.

This ground floor 2 bed flat has just come on the market at offers inexcess of £180k. It is in a great location on Hill Lane close to the Central Train Station and the City Centre. Both Universities and the General Hospital are a short distance away. The property has an en-suite to the main bedroom and also has allocated parking. Service charge and lease length are good as the building is relatively new. We already rent two units within this block and they rent at the £850 /£875 pcm level. Based on £850pcm gross yield is good at 6% and the unit will attract a wide professional tenant pool. If you would like more information on buy 2 let in Southampton please do drop me a line.

Wednesday 4 May 2016

Rents increase 2.8% in England over the last 12 months

  • Private rental prices paid by tenants in Great Britain rose by 2.6% in the 12 months to March 2016, unchanged when compared with the year to February 2016.
  • Private rental prices grew by 2.8% in England, 0.2% in Wales and 0.6% in Scotland in the 12 months to March 2016.
  • Rental prices increased in all the English regions over the year to March 2016, with rental prices increasing the most in London (3.7%).

IPHRP indices: Great Britain, January 2011 to March 2016

Index values (January 2011=100)

The rental market in Great Britain continued to show signs of strength in the year to March 2016, as prices grew by 2.6%, unchanged on the January and February 2016 rates. This stable rate of rental price growth at the UK level was broadly replicated at the regional level. Rental price inflation remained strongest in London (3.7%), the East (3.0%) and the South East (2.9%) and weakest in Wales (0.2%), Scotland (0.6%) and the North East of England (0.8%).
Conditions in the housing market as a whole may have been supporting rental price growth. Data from the ONS House Price Index release for February 2016 shows that house price growth has typically been stronger than rental price growth for a number of years. Demand in the housing market continues to strengthen, with RICS’s Residential Market Survey for March 2016 noting that tenant demand grew for the 15th month in a row. The strength in demand is in contrast to supply: the latest RICS survey found that despite a second consecutive increase in supply, this is still being outstripped by demand. The Association of Residential Letting Agents (ARLA) also reported that supply in February 2016 increased slightly from its one year low in January. However, there are marked regional patterns in conditions, as noted by ARLA. In London, where they found demand above the UK average and supply is the weakest, price growth has been relatively high at 3.7% in the year to March 2016. In Scotland, by contrast, where demand is weaker and supply is the strongest of any region, price growth has been more subdued at 0.6% over the past year.
Broader economic indicators suggest that the economy has continued to grow relatively strongly over recent periods, with output increasing 0.4% in Quarter 1 2016, although this is a slowdown compared to 0.6% growth in Quarter 4 2015. Labour market conditions have continued to improve as unemployment fell to 5.1% in the 3 months to February 2016. These improvements, along with falls in the inactivity rate over recent months and tightening more widely suggest confidence in labour market outcomes remains high. Regular pay also grew by 2.2% in the 3 months to February 2016 compared with the same period a year ago – continuing the run of revived real earnings growth, although rental prices have been growing at a slightly faster rate than real wages in recent months.

Rents set to rise further as demand grows and supply falls

Rents will continue to rise over the next few months, owed in part to a reduction in housing supply in the private rented sector (PRS), as more buy-to-let landlords exit the market as a consequence of recent tax changes, according to a leading letting agent.
Adrian Gill, director of lettings agents Your Move and Reeds Rains, believes that tenants will be the losers from the extra stamp duty on buy-to-let landlords, as the additional levy looks set to exacerbate an already chronic shortage of properties in many areas reducing choice and driving up rents.
“Ultimately this will only punish tenants, driving out buy to let landlords will reduce supply leading to lower choice and higher rents for those that can least afford them,” he said.
Gill believes that early spring is just the “calm before the storm”, as demand for homes in the PRS is driven by the flow of jobs and the flux of a generally more mobile workforce looking for a place to live.
“This reflects the strengths of private renting, the opportunity for young independent adults to strike out on their own, or for families to move across the country and earn the best possible livelihood. In the towns and cities with the biggest renting populations it is a constant struggle for supply from landlords to match demand from tenants. With a surge in jobs and local economic activity, rents rise. Keeping pace will not be easy, and will depend on the freedom to invest as a landlord.”
A survey conducted by the Association of Residential Letting Agents (ARLA) last week found that two thirds (65%) of landlords will refrain from acquiring more properties for buy-to-let following the recent surcharge on stamp duty and the cap on tax relief for buy-to-let mortgages, which in turn will reduce the supply of rental properties.

Three in five (61%) of ARLA agents now believe that rents will rise further as a result of the changes.
David Cox at ARLA said: “Whilst landlords adjust to the increase in costs we can expect to see one of three outcomes prevailing in the buy to let market: landlords absorbing the cost and taking the hit; landlords withdrawing from the market causing supply to fall; or landlords regaining those costs through hiking rents. Next month we can start to assess the damage.”

The latest data from the Office of National Statistics (ONS) shows that rental prices in the PRS rose by an average of 2.6% over the year to March 2016, unchanged when compared with the previous month.