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Research article

Chestertons Monthly Property Markets Review September 2014

Research_monthly

The immediate impact of the Mortgage Market Review appears to be rather muted.

David Ramsdale, Research Analyst

Report Highlights

  • Lending for home-owner house purchase was up 10% month-on-month in July
    to 67,700 loans, a 21% uplift on the previous year.
  • In the year to July house prices across England and Wales increased by 7.2%, and by 1.7% from June, to an average of £175,653.
  • The average monthly rent in London moved up 11.4% in the 12 months to August to a new average of £1,464.
  • Annual total returns across all property averaged 19.08% in August, up from 18.50% in July.

In the year to July house prices across England and Wales increased by 7.2%, and by 1.7% from June, to an average of £175,653, the latest house price index figures from the Land Registry reveal. All 10 regions saw annual house price increases above the rate of inflation with London topping the charts at 19.3%. For the first time since May 2010 a region, other than London, recorded double digit growth as house prices in the South East in July stood 10.2% higher than a year earlier. Elsewhere annual growth in East Anglia averaged 8.3% in July while in the midlands and the north growth was more modest, ranging from just 2.0% in the North East to 5.3% in the East Midlands.

Lending to home owners was up 15% on a monthly measure and 19% on an annual basis in July totalling 37,500 loans. At a total value of £7.2 billion home owner loans increased by a fifth from June and 31% from a year earlier. Despite a 4% improvement from June lending to home owners for remortgaging purposes fell by 15% in the year to July to 25,100 loans. On a value basis home
owner remortgage loans reached £3.9 billion, 3% higher than in June but down 5% from July 2013.

Based on rental data from Homelet and sales data from the Land Registry figure 4 shows the average gross rental yield for each region across England and Wales. As a result of substantial capital growth in the last few years it is not surprising that London offers the lowest average rental yield at 3.8%, with the South East fairing better at 4.7%. With more modest house price growth
the North West (7.1%), North East, Yorkshire & the Humber and Wales (all 6.1%) currently offer the best average rental yields for landlords and investors.

Annual total returns across all property averaged 19.08% in August, up from 18.50% in July, according to the latest IPD commercial property index. Annual returns on industrial property increased to 23.94% as retail also continued on an upward trajectory to reach 13.85%. Annual capital growth is also increasing across each sector with growth on industrial property now at
15.58%, 4.82 percentage points higher than the previous market peak. Retail property capital growth is also on the up but at a slower pace, standing at 6.43% in August and still 12.07 percentage points below the 2010 peak.

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

Research David Ramsdale

David Ramsdale

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