UK Property Favoured by Investors Amid Political Uncertainty

Traditional asset classes, such as UK real estate, continue to be seen as ‘safe havens’ for investment.

 

Commissioned by peer-to-peer group Kuflink, a survey of over 1,100 investors across the UK shows that more than a third of respondents, or 34%, believed Brexit to have had an impact on their investment strategies.

Britain’s decision to exit the European Union appears to have particularly impacted millennials, or those aged between 18 and 34, and London-based buyers, with this figure increasing to 61% and 71% respectively.

The survey, which assessed investor sentiment towards property and alternative finance in the current political and economic landscape, also revealed that 30% of investors are favouring the property market due to its perceived strength – the equivalent of nearly 9 million people.

However, figures indicate that the majority of investors have also adopted a degree of caution, as 38% of respondents cited to be waiting until after the results of the UK’s snap General Election on June 8 to take new investment opportunities.

Commenting on the results, Kuflink’s CEO, Tarlochan Garcha said:

“The EU referendum has set in motion a number of political and economic shifts that are inevitably impacting the way the UK’s investors think and act. Today research has underlined the faith people place in property as an investment vehicle.

“With a huge number of investors gravitating towards this safe haven asset amidst the uncertainty caused by Brexit and the approaching General Election. There is undeniable investment value in retrospective data and historical evidence to support the strength of any investment class.

“For this reason, I have great faith in the resilience and strength of the UK property market and take confidence in the fact that UK investors agree.

Earlier this week, newly released data by Rightmove showed that asking prices in May saw a significant monthly increase, due to rising demand.


Accessibility to UK Mortgages Peak to a 3-Year High

The latest research by the Intermediary Mortgage Lenders Association (IMLA) shows that fewer brokers are facing obstacles in sourcing mortgages of any type since the introduction of the Mortgage Market Review (MMR) in 2014.

Figures show 30% of brokers encountered no problems in finding a mortgage product for borrowers in the second half of 2016 – marking an improvement from the 26% recorded in 2016’s H1.

Designed to strengthen the UK’s mortgage regulatory framework, the policies introduced under the MMR, such as the provision of a credible repayment strategy in mortgage applications, were expected to weight on those looking to step onto the housing ladder, according to IMLA.

However, with more brokers reporting fewer hurdles to source mortgages, the IMLA believes lending conditions in the UK are improving, as a result of greater collaboration between lenders and brokers.

Self-employed borrowers and those with irregular incomes are also finding it easier to get a mortgage, with the rate of brokers that are unable to find a mortgage for this group falling from 50% in 2016’s H1 to 25% in the second half.

Similarly, obstacles for those looking to borrow beyond their retirement have also reduced, with the rate of brokers that were unsuccessful at sourcing mortgages of the sort declining from 43% in the first half of last year to 29% in the second.

Elsewhere in property, figures released by the Office for National Statistics revealed the pace of annual house price growth stood at 5.8% in February across the UK.


International Buyers to Drive Commercial Property Investment in 2017

Investors from overseas are expected to be the dominant force in the UK commercial property market this year, says a new survey.

Investors from overseas are expected to be the dominant force in the UK commercial property market this year, says a new survey.

The decline in the value of sterling, following the UK’s decision to leave the European Union last June, and the strength of the dollar have been key factors in seeing rising demand in recent months, according to the survey from the Royal Institution of Chartered Surveyors (RICS).

With confirmation from the Prime Minister that the UK will also be leaving the European single market, the wave of interest seen from overseas investors in the final quarter of 2016 is expected to continue.

Whilst the majority of the UK has seen demand increase, London’s commercial market has seen growth slow, said respondents, as the market anticipates the potential departure of firms from the city following Brexit.

The survey revealed that 18% of respondents believe that there are companies in their region considering relocation, dependent on the nature of the UK’s post-Brexit deal.

Despite the prevalent concerns, the survey also indicated that demand from international investors is expected to remain high, with 28% of respondents stating that they anticipate an increase in property values over the next year – driven by overseas buyers.

Earlier this week, consultancy group Arcadis announced that enquiries from China increased by a third in Q4 2016, as far eastern investors look to capitalise on weak sterling, with interest set to continue this year.

Commenting on the results of the survey, RICS chief economist, Simon Rubinsohn, said:

‘… the commercial property market is continuing to attract investor interest despite ongoing concerns about pricing in the capital and the prospects for the economy more generally. Indeed, the feedback RICS has received is consistent with a renewed appetite from overseas buyers for UK assets.’

Last week, Deloitte revealed that construction companies are increasingly focusing on the UK’s regional cities, in order to meet demand from investors exploring their options outside of the capital.


Rental Growth in Southern Regions Outshined by a Rising North Once More

A new rental index has revealed that rents across regions in the North of the UK grew at a faster rate than in the South over the course of December.

Analysing the UK’s private rented sector, tenant referencing firm HomeLet found that rents grew most quickly in Northern Ireland, the North East & Scotland, rising by 6.4%, 4.9% and 3.8% respectively.

Comparatively, the Greater London region, the South East and the South West experienced more modest growth of 2.0%, 1.7% and 1.6% – significantly lower than in the North.

Greater London, in particular, experienced much slower annual rental growth following the Referendum in July last year when compared to 2015. However, rental values in the capital remain significantly higher than the rest of the UK, with average rents in December standing 69% above the UK average at PCM.

The southern regions, which saw rental inflation rise considerably in the first half of 2016, experienced a ‘more marked pull-back in the second six months’ said HomeLet in a separate press release, indicating that rents in these areas could be facing an affordability ceiling.

 

HomeLet’s findings are echoed by earlier research from property investment platform Landbay, which showed that rents grew the fastest in the Midlands & North across the last 5 years.


Manchester to Lead Northern Powerhouse Growth for 2017-19

Economic growth in the North of England will be led by Manchester over the next three years, according to new research.

The global service provider, Ernst & Young Global Limited (EY) released their latest growth projections, with Manchester’s Gross Value Added (GVA) set to increase by 2.0% between 2017 and 2019 – surpassing the UK average by 0.5%.

EY states that the city is set to experience the second largest employment growth of all of the locations covered in their report, with work opportunities set to increase by 0.7% over the three-year period.

The projections follow EY’s forecasts of a 3.0% increase in GVA for Manchester throughout 2016, significantly outpacing the 1.2% rise seen in the north west and the national average for this year of 2.0%.

The report highlighted how substantial investment in modernising Manchester city centre made over the course of the last decade, in addition to the financial backing given to the city’s infrastructure, have had a positive impact on the city’s reputation and has served as a catalyst for further growth.

The UK’s growing technology sector has also played a key role in the rise of new economic hubs such as Manchester and Leeds, with companies from around the world expressing interest in investing in these areas through new industries.

Earlier this week, former Chancellor, George Osborne, restated the government’s commitment to the Northern Powerhouse following the announcement of various new housing initiatives throughout the North of England.