A succinct weekly take on the London property market and a roundup of headlines from market observer John Lim. Subscribe to the Friday Roundup here: http://pbra.in/1Gli7UL
- The Royal Institute of Chartered Surveyors (RICS) October report on the state of the housing market, released yesterday, described the property drought as “dire”.
- More of its members reported a rise in home buyer interest for the second consecutive month, as house hunters returned to the market following the Brexit referendum. At the same time, the number of properties on the market has fallen, continuing a two-year trend.
- According to the RICS chief economist, the shortage of available housing across the UK will continue to push prices upwards regardless of the uncertainty linked to the ongoing Brexit discussions.
- So how bad is the housing shortage from a data perspective? I pulled up data on population growth and housing supply from the Office of National Statistics (ONS) and the Department of Communities and Local Government (DCLG) respectively, covering the period from 2000 to 2015.
- Population growth has doubled from 2000 to 2015, exceeding the half-million mark recently. This coincides with a fall in housing supply, particularly after the 2008 financial crisis which saw housebuilding fall by over 30pc to below 140,000, from a peak of 215,000 homes.
- Both the UK Housing Review and the House of Lords Economic Affairs report in 2016 recommend a forward target of 300,000 homes per year, about double the current levels, in order to meet current population growth as well as make up for the accumulated shortfall from decades of undersupply.
- What are the reasons for this continued supply shortage? Fingers have been pointed at the difficulty of getting planning permission, shortage of available land compounded by land-banking from developers, and shortages in construction resources.
- To tackle this, the government has recently launched a £3 billion Home Building Fund, £1bn of which would be for small builders, custom builders, and innovators to deliver 25,000 homes in the short term. The rest of the fund would be used to fund infrastructure to unlock a pipe line of up to 200,000 homes over the longer term.
Here’s a roundup of what we think are the big news stories this week:
- The British Pound to Dollar exchange rate shot up by 1.2% on Thursday 10th November on the back of Donald Trump’s election as President, gains which have been sustained to date. The move caught the market by surprise as there were no major U.K. or U.S. economic reports on the calendar.
- The Intermediary Mortgage Lenders Association have hit out at the ‘merry-go-round’ of housing ministers, which have resulted in inconsistency and a lack of direction when it comes to the housing market. Gavin Barwell became the sixth housing minister in six years when he was appointed in July.
- Super-prime lettings above £5,000 per week jumped by 16% in the year to September as top-end sales slow to a crawl, with surveyors reporting price drops for the eighth consecutive month.
- The proportion of international sorts has risen by 6% between the second and third quarters of the year, according to research by Hamptons International.
- Homebuyer demand across the country increased for the second month in a row, says the Royal Institute of Chartered Surveyors, but the number of properties on the market has fallen.
- Uncertainty in the wake of the EU referendum and the election of Donald Trump is causing developers and investors to hold off from bidding on development sites in Central London, reports Savills.
- London estate agents are anticipating more business from Americans fleeing a Trump-led USA. One London property firm, specialising only in the “prime” postcodes of the capital, said visits to its website from American users had risen by 300pc since the announcement of Mr Trump’s election.
- We acquired a flat in Central London off-market in April this year on behalf of a client. The flat was revalued this month by the bank at 21pc more than the initial purchase price, despite the recent uncertainty surrounding the London market.