UK Research
UK House prices book record monthly fall in September
Analysts were cautious about reading too much into one month's data but noted that recent mortgage approvals data had also pointed to a weakening market and that fragile economic conditions meant the outlook was bleak.
However, the figures did little to alter the view the Bank of England will leave interest rates steady at 0.5 percent and the stock of its quantitative easing purchases on hold at 200 billion pounds when its monthly meeting concludes at noon British time..
Halifax said September's fall was the biggest since records began in 1983 and left house prices up 2.6 percent in the three months compared with a year ago, the weakest rate December.
In August, Halifax said house prices rose 0.4 percent on the month, for a three-month annual rate of 4.6 percent.
Analysts said September's surprisingly weak reading could just be a blip, especially as rival mortgage lender Nationwide reported last week that house prices rose 0.1 percent last month.
"While the September house price drop highly likely overstates the weakness of the housing market, there seems little doubt that the housing market is now in reverse," said Howard Archer, economist at IHS Global Insight.
"Rather than crash, we expect house prices to trend down relatively gradually over the final months of 2010 and in 2011 to lose around 10 percent in value."
Halifax economist Martin Ellis said it was too early to tell whether September's decline marked the start of a steep downward trend in prices.
He said the quarterly figures provided a better picture of the underlying trend, showing house prices were 0.9 percent down in the three months to September compared with the second quarter of this year.
"This rate of decline is significantly slower than the quarterly changes of between 5 and 6 percent that were seen in the second half of 2008," Ellis said.
"It is therefore far too early to conclude that September's monthly fall is the beginning of a sustained period of declining house prices."
(Reporting by Fiona Shaikh, editing by Mike Peacock)
Shocking Truth About Share Investment
I've got two questions for you. First, is the performance of your share portfolio satisfactory? Second, is the interest you earn in savings accounts, government bonds etc, enough?
If you are not happy, then the big question is how to do better in the future. Where should you invest your money for the highest returns?
Investment of the Decade Let's start by taking a look at the table produced by Barclays Capital that compares the performance of different asset classes over the last ten years.
Share investment comes out last, with a pathetic return of -14%! A loss after 10 years of investment. Scary! Most of our pensions and future wealth depends on the performance of shares. Cash deposits were also a poor choice.
Falling Share Price Given that the entire Financial Services Industry is geared towards investment that primarily focus on shares this is a travesty. So called 'investment advisors' work with a narrow range of assets and find every excuse to diss other oppportunities, whilst performing terribly themselves. If this sounds like it's my personal pet hate, you are right!
When it's time to review performance - whether it's your job, your business or your investments - I once heard this saying which I love. It's simply this... "Have you made reasonable progress in measurable time?" If not, maybe it's time to change tracks. And after 10 years of miserable performance I personally believe that share investments have had their day.
Is there a better option? Take your pick. Every other asset class delivered better results over the past ten years. What's worthy of consideration? We suggest the top performing investment, although not correctly reflected in the table because of flawed logic.
Property Is Number One!
Let's talk property, listed at Number 4. What's the problem? Simply that the table takes no account of the impact of gearing (borrowing). This is critical to a correct analysis of asset performance.
What's the effect of this mistake? Huge! Assume you gear your property portfolio at the realistic level of 75%, the 10 year return on property jumps from 109% to 436%! Property is clearly number one, delivering the largest return over 10 years. This superb return is after the fall in values due to the recent property crash!
Rod Thomas
Rod Thomas FCA
Central London prices looking rosy
15 Jun 2010
Residential prices in Central London are looking quite satisfactory after rising for 14 consecutive months and this market still leading the wider UK market.
The Knight Frank Prime Central London Residential Index results for May 2010 showed that central London prices rose by 1,4% in May, the fourteenth consecutive monthly rise. Prices are now 23% higher than they were at the low point in March last year.
However, prices are still 6,4% below the previous March 2008 market peak.
Overseas buyers have grown in number, led by a 112% growth in Russian applicants in the last two months.
"The London residential market is continuing to lead the wider UK market. The weak pound is having the effect of pulling in demand from overseas buyers, who view London as offering good value, with prices still 34% lower in dollar terms from the 2008 peak,” says Liam Bailey, head of residential research, Knight Frank.
“House price growth in Chelsea, Kensington, Notting Hill and Knightsbridge has led the market over the past 12 months, but now Mayfair, Kensington and Knightsbridge are rising strongly – with price growth of 14% across these locations over the last six months. There has been fairly consistent price growth across all the price ranges.
"Russian buyers have become very noticeable over the past two months and have bucked the trend set by domestic buyers who became less committed in the run up to the election. Russians and most other nationalities buying in London are fairly unaffected by political upheaval and have remained by far the most confident and proactive buyers in the market.
"There is no doubt that the current global financial market upheaval has unsettled buyers and sellers, the proposed CGT changes have also unsettled some sellers in particular, and there has been a sharp uplift in prospective vendors looking to test the market, our data reveals a growth of 64% in requests for pre-sale advice and valuations, but this is not yet turning into hard instructions to sell.
"There is growing evidence in the wider UK market that residential sales volumes and even prices are coming under pressure, London will not escape this entirely over the next few months, but the impact of strong and resilient demand from overseas will support the market.”
“Buyers from Russia and the CIS states have increased their interest in London’s luxury market on the back of recent events in the Eurozone which has prompted the strengthening of the rouble against the pound. The ongoing recovery in prime London prices has also created additional interest in London as buyers now believe that the market is likely to continue to strengthen,” says Elena Norton, Head of Knight Frank’s Russia & CIS Desk.
“I can see a clear shift in demand towards single house refurbishments and even larger development opportunities where Russians can be investors or co-developers. Increasingly, they are looking to add value over the longer term, which proves that Russian buyers consider London property a safe and attractive investment.
UK House prices in February rose by 1.9%
House prices in February rose by 1.9% Page 4
The average price of all residential property transactions completed in England & Wales in February 2010 was 1.9% higher than in January. This is the tenth month in succession in which AcadHPI has increased on a monthly basis. This figure is at odds with other indices which show a fall, a point we explore later.
- Annual price increase is 9.7% Page 4
On an annual basis, in February, the average price of all residential property transactions in England & Wales was 9.7% higher than a year ago - a significant market recovery. It is the fourth consecutive month in which the annual rate of change in house prices is positive.
- January housing transactions fall by more than 50% from December levels Page 3
The housing market in England & Wales got off to a very slow start in January 2010 with an estimated 36,000 transactions in total. This is a fall of 52% from the December 2009 level of activity and is the second lowest level of sales in January in the last 16 years.
Dr Peter Williams, Chairman of Acadametrics, said
“The average price of a home rose again in February 2010 and, at £222,008, is back to where it was in April 2007, three years ago. The increase of 1.9% is the tenth in succession and a further step up from the previous month of January at 1.4%. Given that the two lender mortgage approval based indices for February showed falls of -1.0% and -1.5%, we have a clear tension as to what is really happening in the market. The AcadHPI for the latest month is forecast on a mix of data but, as prior months show, when more data becomes available is impressively stable and reliable. In seeking answers to the current divergence we would stress AcadHPI is a completion based measure, it covers England and Wales rather than the UK and it includes all properties sold including cash purchases and homes sold for over £1 million. All of these will be factors in explaining the difference.”
Click below to download the full document...
Spotlight on London Prime Residential East of City market - April 2010
Savills residential research predicts the prime east of City market to outperform the mainstream markets of Greater London over the next five years, much in the way that it did in the early 1990s.
Please find attached our latest research paper: 'Spotlight on Prime Residential east of City markets'.
Download - Spotlight on east of City markets - April 2010
Key findings:
Values in prime residential markets of the Docklands and Canary Wharf increased by 4.6% in the second half of 2009 and by a further 3.3% in the first quarter of 2010.
Rental demand is increasing with rents up 3.6% in the last six months.
With a significant amount of residential development having already taken place in areas such as Canary Wharf, looking ahead Stratford will form a key part of future housing delivery in east London, much of which forms part of the Olympic legacy.
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