Some Signs of Optimism in the UK Housing Market
The UK’s largest housebuilder, Barratt reported an increase in new home reservations for January due to the stabilisation of mortgage rates and the expectation that energy costs will reduce in due course. Virgin money became the latest lender to offer five-year fixed rates below the 4% level after HSBC led the way earlier. Whilst these rates are much higher than recent years, they are similar to historic rates and although expected to reduce slightly next year represent a return to normality which should bring stability to the market in the long run. As for expectations of pricing pressure on new builds, one analyst noted that Barratt has some £1bn in cash so would not easily come under pressure to discount prices. The same can be said for the other major UK builders such as Persimmon, Taylor Wimpey and Berkeley Group.
Posted by: Kelvin Tayfield, Sun, Feb 12th 2023
Manchester and Birmingham Property Markets Remains Bullish
Despite the negative short-term outlook for UK property in general, Manchester and Birmingham remain bright spots for investors. Property expert JLL predicts growth of 5% in 2023 for Manchester which is highly positive given the aforementioned scenario thanks mainly to the ongoing business and employment activity in the tech industry. The only other major UK city expected to see positive growth is Birmingham at 1% as it benefits from increased financial services activity. These cities continue to attract investment from London due to the lower real estate costs as well as the much-awaited HS2 rail link.
Posted by: Kelvin Tayfield, Sun, Feb 5th 2023
Middle East Investors Still Bullish on London
According to VisitBritain, flights from the Middle East are at 96% of 2019 levels with many more expected this year as the UK has dropped visa requirements for GCC Nationals replacing them with an Electronic Travel Authorisation (ETA) system. Whilst GCC visitors are known for shopping on the high streets, Knight Frank have noted that they are also spending on bricks and mortar with Middle Eastern buyers in Central London hitting a four year high in H2 2022. Savvy investors are taking advantage of the weak pound and accounted for more than one in ten transactions in London’s most prestigious post codes.
Posted by: Kelvin Tayfield, Sun, Jan 29th 2023
London Property Prices Show Resilience
Whilst everyone agrees there will be a general decline in property prices in 2023, London seems to have shown signs of stabilising. House price index figures released by the government for November 2022 show that London prices rose 0.1% after falling 0.9% in October. Worst performer for the month was the Northeast with a 2.6% fall, noting that this region has the lowest average prices in England. It is true that London showed the lowest year to date growth at 6.3% versus the average of 10.9% which seems to support the view of some analysts that the nations’ capital will see less pricing pressure than some areas that saw double digit growth over the year.
Posted by: Kelvin Tayfield, Mon, Jan 23rd 2023
The UK’s Acute Housing Shortage Is Not Being Resolved
In 2017 the UK’s Conservative Government set a target of 300,000 new homes per annum. 2019-20 saw 242,700 additional homes whilst this fell to 216,490 in 2020-21 due to the pandemic, leaving a cumulative shortage of approximately 140,000. The 2021-22 figure has not been released but it is likely to be short once again. According to Sky News, the population grew faster than the number of new homes in 150 out of 309 local authorities. This has resulted in only 1% of residential properties being vacant versus 8.2% on average in the rest of Europe. Whilst the government is yielding to pressure to water down these targets, the fact remains that there is a severe housing shortage which is likely to worsen in the near term.
Posted by: Kelvin Tayfield, Sun, Jan 15th 2023