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Research article

Chestertons Monthly Property Market Review November 2014

Monthly_Research

The rental market is starting to slow slightly after a very strong summer period, however rents look set to grow further in 2015.

David Ramsdale, Research Analyst

Report Highlights

  • Lending figures for Q3 were the highest seen since before the economic recession.
  • Both take-up and availability fell once again in October in central London.
  • The UK commercial property market remains in good health as annual capital
    growth grew further in October.
  • After an extraordinary first half of the year it appears that the London property market is starting to decelerate.

The first signs of a slowdown in the housing market appeared in September as house prices across England and Wales fell by 0.2% from August to an average of £177,299, according to the Land Registry. However, this still represents a 7.2% uplift on the same month in 2013. Seven regions saw a fall in average house prices in September with Yorkshire and The Humber seeing the sharpest fall of 2.2%, followed by a 1.3% reduction in the West Midlands. The best performing region in September was East Anglia where house pries improved by 1.4% from August and 10.9% on an annual basis, while the South East saw a 9.7% increase from last year despite a
slight drop of 0.2% on a monthly basis.

Despite lending for home-owner house purchase, first-time buyers and home movers falling in September on a monthly basis lending figures for Q3 were the highest seen since before the economic recession, figures from the Council of Mortgage Lenders show. A total of 56,000 loans were advanced in September for home-owner house purchase, down 7% on a monthly basis but up 8% on Q2. On a value basis loans in September were worth £10 billion, an 8% fall on August, while loans over the third quarter of this year totalled £32.4 billion, 13% higher than in the period April to June. Lending to first-time buyers’ in September dropped 3% to 26,000 loans while the value of loans fell by 2% to £4 billion. On a quarterly measure 84,100 loans were advanced at a value of £12.5 billion, up 3% and 7% respectively on the previous quarter.

Both take-up and availability fell once again in October in central London, with substantial decreases occurring at a sub-market level. Take-up in the City dropped dramatically in October and also declined in the West End and Mid-Town. Both the Southbank and Docklands saw large increases in take-up, with the largest deal of 324,500 sq ft taking place at Bankside. In regards to availability the West End and Docklands were the only markets to see an improvement in October.

IPD figures show the UK commercial property market remains in good health as annual capital growth grew further in October to an average of 12.95% across all property. Capital growth on office property is now at 18.89%, ahead of Industrial at 17.06% and substantially outperforming the retail market where growth increased to 7.87%. Rental growth has also been on an upward curve throughout this year albeit at a slower pace than capital growth. Across all property rental growth averaged 2.75% in October, still 1.26 percentage points below the previous peak in the market. Annual rental growth on office property advanced to 6.72% while the industrial sector saw growth move up to 2.59%. The retail property sector recorded annual rental growth for the first
time since November 2008, albeit negligible at 0.06%.

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David writes reports on the London, UK and international property markets.

Research David Ramsdale

David Ramsdale

St Magnus House

020 3040 8405