News

Above:The average price of property in the UK has risen to £196,999, a 4.5% increase year-on-year, following a strong market showing in December.

Summary:

• Property prices in the UK rose by 0.8% in December, resulting in 4.5% year-on-year growth in 2015
• High demand is outstripping supply across the UK, with the number of new builds falling for the 15th time in 16 months
• Regions with higher rates of employment, such as Manchester, are experiencing stronger house price growth

UK property prices increased by 0.8% month-on-month in December and 4.5% on the year, reaching an average of £196,999.

The report by Nationwide showed that the increase seen in December was the strongest monthly rise since April, leaping from a 0.1% rise in November. Interest in properties has been sustained thanks to increased earnings growth, high and rising employment, elevated consumer confidence and low mortgage rates.

Robert Gardner, Nationwide’s Chief Economist, said: “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.”

Regions with higher rates of employment see significantly stronger house price appreciation and this is evident in Manchester, a city that created jobs at a faster rate in 2015 than London, offering some of the highest yields in the UK.

The latest survey from the Royal Institution of Chartered Surveyors (RICS) reported that new instructions fell for the 15th time in 16 months in November. The lack of supply, which is failing to keep up with high demand, has seen house price growth projected to reach 6% in 2016.

Source:Select Property

The number of property sales in Cyprus during December rose 13 per cent compared with the numbers sold in December 2014 according to official statistics published by the Department of Lands and Surveys.

During December a total of 513 contracts for the sale of commercial and residential properties and land (building plots and fields) were deposited at Land Registry offices across Cyprus, compared with the 454 deposited in December 2014.

Of those 513 contracts, 74% (378) were deposited by domestic (Cypriot) purchasers, while 26% (135) were deposited by overseas (non-Cypriot) purchasers.

While property sales in Paphos and Famagusta fell by 16% and 11% respectively, they rose in all other districts.

Sales in Larnaca rose 70%, sales in Limassol rose 33% and sales in Nicosia rose 2%.

Over the year property sales rose 9% reaching 4,952 compared with 4,527 in 2014.

Domestic sales

The number of properties purchased by Cypriots in December rose 6% compared to December 2014, with sales reaching 378 compared with 357 during the same period last year.

Although sales in Paphos, Nicosia and Famagusta declined by 21%, 14% and 5%, these falls were outstripped by rises of 84% in Larnaca and 16% in Limassol.

Sales to the domestic market over the year rose 8% to reach 3,603 compared with 3,334 in 2014.

Overseas sales

Property sales to the overseas (non-Cypriot) market rose 39% in December compared to December 2014 with sales reaching 135 properties sold compared with the 97 sold in December 2014.

With the exception of the once favoured hot-spots of Famagusta and Paphos, where sales to the overseas market fell by 75% and 4% respectively, they rose in the remaining three districts.

Sales in the predominantly business districts of Nicosia (the capital) and Limassol rose 400% and 119% respectively – and sales in Larnaca rose 43%.

Sales to the overseas market during 2015 rose 13% to reach 1,349 compared with 1,193 in 2014.

Source: Cyprus Property News

Above: Over half of 20 to 39-year-olds in Britain are expected to be renting in the next 10 years, so is the time to invest in build-to-rent now?

Summary:

• £50 billion worth of investment over the next four years will see the build-to-rent sector account for 5% of the rental sector by 2020
• UK-wide property shortages and changing generational attitudes towards home ownership means that an additional 1.8 million households will become private renters within a decade
• With increased rates of stamp duty for buy-to-let investors, should the focus now be on the build-to-rent sector?

Is the UK’s rental market on the verge of an investment revolution?

As Britain’s appetite for rented accommodation shows few signs of relenting, £50 billion is expected to be invested in the build-to-rent sector by 2020, the latest research from Knight Frank shows.

Build-to-rent (properties built specifically for rented living) accounts for 2% of the overall private rented sector in the UK. But this investment would see it increase its share to 5% at a time when the undersupply of rental stock has never been more pronounced.

250,000 new homes are needed each year to meet demand from a generation that no longer equates success with homeownership. Over 50% of 20 to 39-year-olds in the UK will be renting by 2025, meaning that the time for investment is now.

“There is a generational shift in the market both amongst renters and investors which stands a good chance of both stabilising the volatility of the housing market and satisfying some of the structural shortfall in supply,” said Tim Hyatt, Head of Lettings at Knight Frank.

Chancellor George Osborne has used his last few budget speeches to curb buy-to-let lending. Not only could this help free up more stock for those Britons looking to get onto the property ladder, it should also increase the emphasis on build-to-rent. This sector improves the rental experience for tenants, and also creates a huge opportunity for UK property investors.

Source: Select Property

Above:The yield of the average UK property could rise by as much as 25% over the next five years.

Summary:

• A combination of high yields and capital growth can result in UK property generating total annual returns of around 14%
• Over the next five years, investors have been told that rents could rise at a faster pace than house price growth
• Currently, yields in some regions of the UK are as high as 8%
• Investors need to place more emphasis on the amount a property yields rather than its potential for capital growth.

New research from Royal Institution of Chartered Surveyors (Rics) predicts that over the next five years, rental rates will outpace house price growth.

Although around five million households are now living in the private rented sector, the supply of high-quality rental accommodation is very limited. As even more people opt to live in rented homes, Rics predicts tenancies could become 25% more expensive over the course of the next five years.

Simon Rubinsohn, Rics Chief Economist, said: “Critically our principal concern with the measures announced by the government is that they are overly focused on promoting home ownership, at the expense of other tenures.

“Discouraging buy-to-let could see private rents take even more of the strain.”

Yields in the UK have already reached record highs this year. Recent figures from HSBC show that investors can achieve gross yields of around 8% in cities such as Manchester where there is a growing workforce and high demand for accommodation. As long as investors attract a tenant, the potential ROI associated with property is much higher than any other asset.

Rics found that average house prices in the UK will rise by 6% over the course of 2016. As with yields, there is plenty of regional variation for investors to navigate and London is no longer the top-performing market. Four regions in the UK, including East Anglia and the north-west, will record higher capital growth than London next year.

Source: Select Property

Above:Stamp duty reforms and low oil prices are making real estate in the capital unaffordable for more investors.

Summary:

• The total value of property transactions in some of London’s most expensive postcodes has fallen nearly 25% in 2015
• Stamp duty reforms, low oil prices and changes to the non-dom tax status are contributing to the slowdown in what was already one of the world’s most expensive property markets
• Areas such as Manchester have seen huge levels of institutional investment over the last 12 months as more investors realise the potential in buying in high growth areas outside of London

Is demand for luxury London real estate now past its peak?

The total value of property transactions in some of the city’s most desirable locations has declined by almost 25% over the last year, according to the latest data from LonRes. £3 billion was spent on homes and apartments in addresses such as Chelsea, Kensington and Westminster, down by 24.5% on 2014’s total, while average property prices in these areas also fell by 1.4%.

Already a market approaching an affordability ceiling, the rising cost of stamp duty, changes to the non-dom tax status and poor performance in global stock markets such as China is now making London out of reach for many more investors, reducing the number of transactions and stunting the market’s growth.

Anthony Payne, Director at LonRes, simply stated that “those people who were awash with cash don’t have as much cash to spend.”

“The top end of the market in the last few years has been reliant on foreigners, but a series of things are affecting them that are out of the government’s control — the strength of the pound, the weakness of the oil prices, the state of Chinese markets”, he added.

2015 has been a year where many investors have begun to realise the opportunity of acquiring assets in other UK cities on the verge of a new growth. Manchester, for example, has been named as one of the main beneficiaries of £30 billion the British Property Federation estimates is ready to be invested in the build-to-rent property sector.

Source: Select Property