UK House Prices Fall as London Decline Intensifies

U.K. House Prices Fall as London Decline Intensifies

U.K. house prices fell for the first time in seven months as sellers adapted to the reality of the weaker market.

Asking prices slipped 0.1 percent in July from a month earlier, property website Rightmove said on Monday. In London, prices slipped 0.5 percent, with smaller apartments falling faster than bigger homes.

The reduction in asking prices can “be a sign of a falling market,” Rightmove director Miles Shipside said. “With more price reductions at this time of year than in any of the last six years, there is likely to be a combination of both initial over-pricing and failure to react fast enough — or to reduce by enough — when initial buyer interest fails to lead to a sale.”

The British housing market is weakening after a three-decade boom amid slower economic growth and the uncertainty created by Brexit. London, where the average house price is more than double the national average, has been hit harder than the rest of the country. This month’s declines also reflect a normal summer slowdown in activity, Rightmove said.

A separate report by Acadata showed U.K. house prices fell 0.2 percent in June. Most regions in the U.K. still have higher house prices than a year ago, the property services firm said.

More Sellers

On an annual basis, Rightmove said house-price inflation slowed to 1.4 percent in July from 1.7 percent. In London, prices fell 1.7 percent from a year ago. The average U.K. asking price stood at 309,191 pounds ($400,000).

There are more sellers coming to the market than buyers, the report showed. The average number of houses in the window of each U.K. estate agency branch is at the highest since September 2015, meaning sellers are having to compete harder on price.

The slump is an opportunity for first-time buyers in London as properties with two bedrooms or fewer saw prices decline. The trendy borough of Hackney posted a 3.5 percent drop.

Made in Chelsea

House prices fell in half of London’s boroughs, but not its most expensive one

Source: Rightmove

Other reports on Monday were more positive for the U.K. economy. Business confidence has reached a two-year high since the U.K.’s vote to leave the European Union — and was strongest in London — according to Lloyds Bank Commercial Banking. At the same time, consumer spending saw its first back-to-back monthly increase since early 2017, Visa’s Consumer Spending Index showed.

Number of Build-to-Rent Homes Under Construction Up 47%

The number of build-to-rent properties either completed, under construction or planned has risen significantly across the UK in the past year.

Analysis by Savills, commissioned by the British Property Federation (BPF), reveals there were 117,893 build-to-rent homes recorded across all the stages of development in Q1 2018; a 30% increase on Q1 2017.

Completions, as well as build-to-rent homes under construction, have grown substantially by 45% and 47% respectively, whilst properties in the planning stage have increased by 19%.

Of all the new build-to-rent homes either completed, under construction or planned, 60,530 (51%) are in London, followed by 29,600 in the North West (25%), and 13,009 across the Midlands and Yorkshire & the Humber (11%).

Ian Fletcher, the director of real estate policy at BPF, commented: “The build-to-rent sector is evolving quickly, with significant delivery in the regions and more houses, rather than just apartments, coming forward.

“Policy is also adapting, as to date the sector has grown without a planning blueprint. This is now changing. With the draft revised National Planning Policy Framework, local authorities will now have to specifically identify how many new rental homes their respective areas need.”

Meanwhile, Housing Minister Dominc Raab said: “The 45% increase in completed build-to-rent homes is good news, but we’re restless to do more.

“Our revised National Planning Policy Framework is a crucial next step in supporting the build-to-rent sector, reforming planning rules, and helping to deliver 300,000 homes a year by the mid-2020s.”

Recent analysis from Landbay revealed that rental payments across the UK amount on average to 52% of a household’s disposable income.

Economy wobbles as factories and building sites stall – putting May interest rate hike in doubt

Economic growth slowed again in February as the construction and manufacturing industries both stalled, a pair of oil refineries closed for maintenance, and the export boost from the weak pound began to fade.

The Bank of England had already cut its first-quarter growth forecasts from 0.4pc to 0.3pc because the icy Beast from the East made families stay at home instead of hitting the shops. But now economists fear even this estimate is too high.

The new figures “look consistent with GDP growth slowing to 0.2pc in the first quarter – below the Monetary Policy Committee’s 0.3pc forecast – from 0.4pc in the fourth quarter, casting doubt over whether a May rate hike is as likely as markets currently expect”, said Samuel Tombs at Pantheon Macroeconomics.


“We estimate that economic growth nudged lower to 0.2pc in the first quarter of 2018,” he said.

“The main reason for the weakness was severe weather in March, which is likely to have disrupted activity in all major sectors of the economy.”

Manufacturing output fell by 0.2pc in February, the Office for National Statistics said, and January’s 0.1pc expansion was also revised down to zero.

Falling output of electrical goods, machinery, textiles and plastics hit the figures.

Growth in industrial production overall – which includes manufacturing as well as industries such as mining and quarrying, and utilities – slowed to 0.1pc for the month.

A major cause was that two of the UK’s six refineries were closed for refurbishment. However, growth was supported by February’s unusually cold weather, which boosted domestic energy consumption.

Mark Carney at the Bank of England is expected to raise interest rates to 0.75pc next month – but this weaker data could make him think again Credit: Simon Dawson/Bloomberg

At the same time construction output tumbled by 1.6pc in the month, defying expectations of a 0.9pc increase. This drop may not be entirely weather related. The ONS said maintenance work led the decline, even as residential building and infrastructure construction increased.

The trade deficit increased in the three months to February, rising by £0.4bn to £6.4bn, as a dip in imports was more than offset by a larger fall in exports – which the ONS said coincided with a strengthening of the pound.

However, the overall slowdown may only be a temporary wobble, rather than a longer-term slowdown in the economy.

“While a continuation of such news may generate some nervousness in markets about whether the Bank of England will deliver another rate hike next month, it is worth pointing out that there is another full round of economic news before the Bank announces its decision,” said George Buckley at Nomura.

“We continue to expect a 25-basis point move on May 10 on the assumption of better economic news to come.”

Chief economist Lee Hopley at manufacturing industry group EEF said: “The data looks more like a temporary wobble than a turn for the worse. Whilst other indicators may have softened since the start of the year, ongoing growth in the global economy should continue to spur growth across manufacturing in the coming quarters.”


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Tenant Demand Reached New Peak in September

Demand from tenants continued to increase in September, while new supply remained flat

The average number of new prospective tenants per lettings branch reached an average of 79 in September, according to the latest private rented sector report by the Association of Residential Lettings Agents (ARLA), the highest level of demand recorded for over two years.

While the number of new tenants has increased, the average number of properties managed by an ARLA member branch remained at 189, the same level as previous month.

Tenancy lengths also reported an upswing in September, averaging 19 months, which is one month longer than seen in August.

The number of lettings agents seeing rents rise has increased year-on-year, according to the organisation, with 27% of agents reporting a growth in rents in September 2017, compared to a year earlier, when just 24% reported increases.

Despite growing annually, September marks a slight decline from the 35% of agents who reported an increase in rents in August.

Commenting on the index, ARLA’s Chief Executive, David Cox, said:

‘As summer drew to a close in September, demand increased in line with our expectations, and while it’s too soon to see the effect of this on rent costs, we know that when supply and demand are conflicting, rent prices will just continue to rise.’

House Price Index Reaffirms North-South Divide

Property asking prices went up by 1.1% (+ ) this month, the largest October increase since the 1.4% rise in 2014. Eight out of 10 regions saw this increase, except for Yorkshire & Humber and East Midlands.


According to the latest house price index by Rightmove, the 104,000 new-to-market sellers may struggle to achieve a sale before Christmas as buyers are being cautious.

While the overall number of properties appearing on the market in England and Wales went up last month by 3.1%, compared with the same period in 2016, the number of sales agreed was down 5.9%.

However, the north is outperforming the south, with a fall of only 3.0% of sales, compared to the south’s 7.9%.

This is due in part to the increasing difficulty sellers of five-bedroom homes or four-bedroom detached properties are having, especially in London, where it takes an average of 86 days to find a buyer.

By comparison, sellers of three or four-bedroom homes, excluding four-bedroom detached properties, are typically sold in an average of 60 days. This suggests that second-steppers – typically couples and young families that are already on the property ladder and looking to move up – are the target audience for sellers that want to secure a sale before Christmas.

Rightmove’s director and housing market analyst, Miles Shipside, suggests sellers may want to price their properties competitively to achieve a sale:

“With buyers becoming more Scrooge-like with their cash, sellers who have undercut the average 1.1% rise in asking prices may stand a better chance of finding a buyer before Christmas”.

He goes on to say that “with buyers’ average wage rises often falling behind retail price inflation, and with a rise in interest rates being more heavily trailed by the Bank of England, sellers in these most popular sectors should still be wary of over-pricing.”

UK House Price Growth Rises to new 2017 Peak in July

Property values increased despite seeing a fourth successive quarterly fall.

The average value of a property in the UK rose by 0.4% last month – the largest monthly increase to date in 2017.

With the average home now worth according to the house price index published by mortgage lender Halifax, the increase partially offsets the 0.9% decline in house prices seen in June, where the average price fell to

However, while property prices rose on a monthly basis, July also marked the fourth successive month of quarterly decline in house price values for the first time since November 2012.

Property values in the past three months (May to July) fell by 0.2% on the values seen between February and April, maintaining the pace of quarterly decline seen in the market since April this year, where prices fell by 0.2% over the quarter.

Annually, house price growth continues to slow, with the year-on-year increase in July standing at just 2.1% – down from the 8.4% seen in the same month last year and falling half a percentage point from the 2.6% seen in June 2017.

Commenting on the market’s movement in July, Russell Galley, Managing Director of Halifax Community Bank, said:

‘House prices continue to remain broadly flat, as they have since the start of the year. Prices in the three months to July were marginally lower than in the preceding three months, while the annual rate of growth has edged down from 5.7% in January to 2.1% in July; the lowest rate since April 2013.

‘However, a continued low mortgage rate environment, combined with an ongoing shortage of properties for sale, should continue to support house prices over the coming months.’

Elsewhere in the market, housing supply continued to struggle, said Halifax, as new home instructions fell for the 16th consecutive month and average stock levels experienced another slight decline to push them to a new record low.

Global Appetite for Real Estate Assets Due to Increase

Public sector investors plan to increase their exposure to real estate assets over the upcoming year

Independent think tank the Official Monetary and Financial Institutions Forum (OMFIF) has surveyed chief investment officers and reserve managers at 31 public sector institutions, such as central banks and sovereign funds, with total holdings estimated at $33 trillion.

Of the respondents, 24% intend to increase their allocations of real estate assets over the next 12 months and 37% aim to invest into infrastructure, whilst 36% plan to cut their share of government bonds.

The research highlights investors’ continued search for ‘real assets’, or assets that are illiquid and deliver steady, predictable returns, as opposed to more traditional instruments for capital growth, which tend to be more vulnerable to volatility, such as equity markets.

Writing in the OMFIF report, former president and CEO of the Federal Reserve Bank of Atlanta Dennis Lockhart, said investors’ shift in focus towards new asset classes “is a trend likely to persist for some time”.

David Green-Morgan, Global Capital Markets research director at JLL, also remarked on the results, claiming that with more investors opting for stable returns over volatility, the scale and variety of opportunities will continue to expand.

“[…] We have seen the nature of real estate investing broadening in developed market to encompass student housing, aged care, data centers and other niche sectors”, he noted.

“This has been more challenging in emerging markets, where much of the increase in investment has been into the traditional sectors, although residential development is one sector that has proved popular across all markets.”

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.

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.

EPH2 Launched

Empire Property Holdings was incorporated as a special purpose vehicle, to acquire commercial properties for development into residential accommodation by the Developer, Empire Property Concepts.

Empire Property Holdings is born out of Empire Property Concepts. Empire Property Concepts was set up by Director, Paul Rothwell, in September 2009.

Having already completed his first property investment at University & developed a portfolio with his brother Adam, Paul wished to make his property development formal as a company but also seek investors to provide his services to.

Empire’s progress has been strong, even against the backdrop of difficult economic & property market conditions respectively. The company has continued to market itself well & attract new investors to aid its growth.

Since its inception Empire has grown the product offering to consultancy, Joint Ventures (JVs) and Loans for Property. The latter is used to facilitate the development of projects to be retained as an investment within a special purpose vehicle, and then refinanced to return investors funds.

Empire seeks to market to new investors, and deal with the administration & development cost collection only. Empire has also expanded its team in terms of management, build management, accounts & administration.

Empire is currently developing & managing properties for Paul, his family, DPIL & DPDL, & private consultancy clients. He currently has 600 units under management to include the various aforementioned portfolios & consultancy clients.

Empire has recently developed a 25 unit permitted development conversion called Britannia Inn in Balby, Doncaster, 12 months after acquisition.

EPH2 Investment Profile

0817 Halifax House Blackwall Halifax Cgi03
Halifax House

Development 2 – Halifax House

A commercial to residential conversion via full planning permission which will create 65 one bedroom & two bedroom apartments. The development will provide private letting accommodation in a prime location with parking.

  • £1,250,000 – Purchase
  • £2,275,000 – Development
  • £3,525,000 – Total Cost
  • £456,300 – Income (65 x £135 x 52)
  • £5,700,000 – Value based on 8% yield
0793 The Globe Works Bolton Exterior Cgi01 Rev Bprint1
Globe Works

Development 1 – Globe Works

A former mill to residential conversion via full planning permission, which will create 24 one bedroom, 90 two bedroom & 10 three bedroom apartments.

  • £1,700,000 – Purchase Price
  • £6,200,000 – Development Cost (124 x £50K)
  • £7,900,000 – Total Cost
  • £1,024,800 – Income (24 x £600 x 12) + (90 x £700 x 12) + (10 x £800 x 12)
  • £12,800,000 – Valuation based on 8% yield
  • £8,960,000 – Refinance exit (70% LTV)