Weekly Property Round Up
Due to the recent rise in the housing market, London experts from UBS have suggested that London is in serious danger of ‘substantial price correction should the fundamentals for estate investment deteriorate’.
London has become the second most unaffordable place in the world, behind Hong Kong. A report by Nationwide has also revealed that the average property price in the UK has risen 0.6% to £196,807 for the month of October, leading to a 3.9% rise in the year. This is however still bad for first time buyers who are struggling to get their first step on the property ladder, with many still living at the ‘Hotel of Mum and Dad’ until they are at least 26.
This week CBRE announced huge profits for the year with year-on-year growth of 20%, with revenue topping $2.7 billion. The EMEA region increased between 7% or 20% depending on local currencies with France, Germany, Spain and the UK performing strongly. This was followed by JLL and Colliers International also posting strong third quarter results, with revenue growth of 17% ($1.3bn) and 25% ($420.3m) respectively.
£1m home sales drop
The number of homes sold for £1 million or more in the first half of the year dropped by 11% according to the Guardian, dropping from 6,303 in 2014 to 5,599 in 2015, due to higher stamp duty and uncertainty over the general election.
These results lead to speculation about the Chancellor’s changes to the Stamp Duty regime, which has increased the amount paid for those properties sold over £1m. Savills has recently stated that the London property prices in the most lucrative areas are expected to end 2% down by the end of the year, but by 2020 expects that prices would have risen by more than 20%.
Rent on the up
According to the Office of National Statistics (ONS) this week, the average British renters are paying an extra 2.7% more than last year, with London facing the highest hike with 4.1% price hike. For example a tenant in September 2014 paying £500 per month would now be paying £513.50 per month. This was mainly due to the increased demand for rented property.
This rise in rent has outstripped inflation and with mortgage rates being at a record low, landlords are unlikely to have seen the cost of their loans rise. The ONS has also suggested that landlords are likely to continue to prosper next year, even if interest rates rise, due to the massive demand for rented property, especially for young professionals who want to move closer to work.