London property

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London pips HK as priciest city to rent homes, offices
Singapore drops a spot to No 6 in Savills study of 12 global cities

Singapore is in sixth position in the latest ranking of 12 global cities as at June 2014 - unchanged from the December 2008 list - PHOTO: ST
[SINGAPORE] London has become the world's most expensive city for companies to locate employees, overtaking Hong Kong, which had previously topped the list for an unbroken five-year period, according to property consulting group Savills.
Singapore is in sixth position in the latest ranking of 12 global cities as at June 2014 - unchanged from the December 2008 list.
Savills compares the cost of renting living and working space for a group of employees in the financial sector and the creative industry, stated in US dollar terms.
The total costs for each city reflect not only the strength of its residential and office markets and the level of occupier taxes and costs (such as service charges), measured at the local level, but also the impact of exchange rates on doing business on a world stage, Savills said. "It is this that has contributed in large part to London's recent ascendency in the rankings."
BoE seeks new tools to curb property

The Bank of England Thursday asked the government for powerful new tools to curb real-estate lending, underscoring officials' concern over the potential risk to the UK economy from the housing market.

The request, from the central bank's Financial Policy Committee, which safeguards financial stability, follows a move in June to curb riskier types of mortgage lending in response to deepening concern the UK economy was at risk from a potentially destabilising housing bubble.

Rapidly-rising prices had fueled concern at both the Treasury and the central bank that Britons were at risk of taking on debts they may have struggled to repay.

Chancellor of the Exchequer George Osborne in June asked the FPC to set out the tools it thought it needed to curb housing-market risks.

In response, the FPC said Thursday it has asked the Treasury to grant it control over loan-to-value ratios, allowing it to cap how much home buyers can borrow relative to the value of the property they wish to buy.

The panel also asked for the power to set a limit on overall household debt relative to income -- not just mortgage borrowing -- including the ability to set an interest-coverage ratio for landlords, limiting the size of their loan repayments relative to the rent they charge.

"The FPC judged that, taken together, these instruments were necessary, and should be sufficient, to tackle risks to financial stability," the panel said.

The Treasury will now consider the BOE's request.

Mr Osborne this year also asked the FPC to make an annual assessment of his Help-to-Buy scheme, which subsidizes mortgages, in case it threatened to undermine financial stability.

The FPC said Thursday it won't recommend any changes to the program. "Under current market conditions," the panel said, "the scheme does not pose material risks to financial stability."
UK house prices tipped to slip in 2015
AFP OCTOBER 07, 2014 5:30PM
British property prices will fall in 2015 following a steep rise over this year, according to a leading forecaster the Centre for Economics and Business Research (CEBR).

Researchers predict prices to fall 0.8 per cent year-on-year in 2015, as the Bank of England is widely expected to raise interest rates from a historic low base level of 0.5 per cent.

CEBR said it expects a "correction" rather than a slump to follow a forecasted 7.8 per cent growth over 2014, the strongest progression since 2007 and more than double the rate of the previous year.

"Price falls next year will be modest and we shouldn't be too worried about this, we are not anticipating a crash," said CEBR head of macroeconomics Scott Corfe.

"The market is adjusting after getting ahead of itself at the start of 2014."

Tougher requirements for buyers to get mortgages and demands for higher deposits will also dampen the market, Corfe said.

Prices will then increase 2.6 per cent year-on-year in 2016, with gains of around 3 per cent in the following years, according to the researchers.

After average house prices reached record highs over the northern summer, the market is showing signs of slowing with estate agents reporting fewer enquiries and indications of a cool down in London, which has driven growth.
UK house price growth loses steam: Halifax

House prices in the UK continued to rise in September but at a slower pace, a survey from building society Halifax showed on Wednesday.

According to the lender, which is owned by Lloyds Banking Group, British house prices grew by 9.6 per cent compared with September 2013, down from 9.7 per cent in August. However, prices still went up by 0.6 per cent in monthly terms, meaning that the average house rose by £1,087 ($US1,750) to £187,188 between August and September.

These figures indicate the housing market in the UK remains strong, underpinning consumer confidence and driving households to spend more, but at the same time ease concerns of a housing bubble flagged by the Bank of England earlier this year.

Martin Ellis, housing economist at Halifax, highlighted that stagnating salaries and the possibility of an early rise in interest rates have helped to slow an overheated market.

"A moderation in growth looks likely during the remainder of 2014 and into next year, as supply and demand become increasingly better balanced," he said.

The trend suggested by Halifax confirms figures from other lenders: Nationwide house price data for September pointed to an even larger moderation and showed a 0.2 per cent monthly drop in house prices, the first since April 2013.

Contributing to the slowdown are tighter rules imposed on lenders during the first half of 2014 that have led to a fall in mortgage approvals for house purchases. According to the BOE's quarterly survey of credit conditions, released Tuesday, banks and building societies were less willing to extend riskier loans during the third quarter of the year.

However, there are signs that buyer interest has ebbed, regardless of tighter credit conditions.

"The fact that mortgage approvals currently remain limited compared to early-2014, after lenders have now likely got to grips with the new mortgage regulations, suggest that there has been some underlying moderation in housing market activity," said Howard Archer, economist at IHS Global Insight.

The British housing market is still expected by analysts to keep rising, as wages are set to start growing in 2015 and banks are likely to expand lending to creditworthy home buyers in the near future, according to the BOE survey.
London house prices to rise 33% by 2019: report

Average house prices in England and Wales are set to jump 30 per cent in the next five years, a study by property website Rightmove and forecaster Oxford Economics concludes.

Prices in London are set to rise 32.5 per cent, while South East values would increase 37 per cent by 2019, it forecast.

Areas to show the greatest gains were within easy commuting distance of London, such as Southampton, Luton and Brighton which were all expected to see over 40 per cent price growth over the period. Prime central London would have “a period of much slower growth after the frenetic increases of 2014,” Rightmove, which is listed on the London Stock Exchange, said.

Prices in West London and the northern UK cities of Carlisle and Manchester were predicted to show five-year growth between 14 per cent and 19 per cent.

The forecast is based on property and economic data, incorporating both asking and sold prices, surveyor valuations and analytics from the Oxford Economics’ Global, Industry and Regional forecasting models.

Earlier this week, a survey from building society Halifax showed house prices in the UK continued to rise in September but at a slower pace than earlier in the year. British house prices grew by 9.6 per cent from a year earlier in September, according to the lender which is owned by Lloyds Banking Group.

Nationwide house price data for September pointed to an even larger moderation, showing a 0.2 per cent monthly drop in house prices, the first since April 2013.
Flow on effects from FED.

Fed stop printing -> less money for investment into china -> less credit produced in china -> less $$ for Chinamen -> less money smuggled overseas to London for property -> London bridge is falling down...

Poor Kate is so sick whilst the Chinamen are plundering UK Property.
Virtual currencies are worth virtually nothing.
Foreigners own 24% of commercial property in UK16 Oct5:50 AM

OVERSEAS investors own almost a quarter of income-producing commercial property in the UK after more than doubling their holdings in a decade, Property Industry Alliance said.

Buyers from abroad held 24 per cent of the shopping malls, warehouses, hotels and office buildings in Britain at the end of 2013, making them the biggest group of owners for the first time, the industry group said on Wednesday in a statement. UK insurers and pension funds are the second-biggest set of landlords with 19 per cent.

Britain's political stability, legal system and infrastructure helped drive a 129 per cent increase in foreign-held property to £94 billion (S$191 billion) in the 10 years through 2013, the group said. About three-quarters of the foreign-held assets are in London, it said.

"With the political uncertainty caused by an upcoming general election and a possible European Union referendum, it is important that politicians of all parties avoid measures that could dent investor confidence," said Liz Peace, chief executive of the British Property Federation, which is a member of the lobby group. "Sudden or unexpected changes to our taxation system could make the UK lose its competitive edge."

Last year, a unit of Kuwait's sovereign wealth fund bought the More London office complex for £2 billion and Singapore's GIC Pte purchased Blackstone Group LP's stake in the Broadgate office complex. Blackstone agreed to sell the holding for more than £1.7 billion, Bloomberg News reported in August 2013.

Insurers and pension funds cut their UK holdings by 16 per cent to £75 billion from 2003 through 2013, according to the report. Managed funds, property unit trusts and limited partnerships are the third-largest owners of the real estate, the report said.

The value of commercial property in Britain stood at £683 billion at the end of the year, the lobby group said. About £385 billion of the assets are income producing.

London accounts for 35 per cent of the total value of UK commercial property, while it generates 23 per cent share of gross domestic product, after values in the capital rose faster than in the rest of the country, according to the report.

Total return on UK commercial property, which combines changes in value and rental income, was 19.7 per cent in the 12 months through September, Investment Property Databank reported on Tuesday. BLOOMBERG
London homes' asking prices rise most in year
Capital's property values gain 7% in October on seasonal demand: website

Prices in London have stood still over the last four months, indicating a slowing market in parts of the city, says Rightmove. PHOTO: BLOOMBERG


LONDON home-sellers raised asking prices by the most in more than a year this month as a seasonal surge in demand led a rebound in the capital's property market.

Values in the city increased 7 per cent from September to a record average £596,692 (S$1.23 million), the biggest jump since October 2013, property website Rightmove plc said on Monday. The gain left prices 0.6 per cent higher than in May, when they were at their previous high, after falling in three of the previous four months.

"This is not a resurgence of the London boom," said Miles Shipside, a director at Rightmove. "Prices have effectively stood still over the last four months, an indication of the slowing market in some parts of the capital."

Some reports have indicated a loss of momentum in the London market in recent months after prices surged more than 20 per cent in the preceding year, twice the national average, and Bank of England financial-stability officials took measures to prevent overheating. Mr Shipside said that demand is showing signs of slowing and may continue to weaken during the winter.

Nationally, prices rose 2.6 per cent in October from the previous month, taking the annual gain across Britain to 7.6 per cent, compared with 7.9 per cent in September. Out of the 10 regions tracked by Rightmove, seven posted monthly increases, led by London, while three had declines.

The south-east of England overtook London as the region with the fastest annual increase, with asking prices in the area surrounding the capital up 10 per cent from a year earlier compared with the city's 9.6 per cent.

UK gross home lending fell one per cent to £17.8 billion in September from August, the Council of Mortgage Lenders said on Monday. That's up 10 per cent from a year earlier.

"Recent indicators and policy actions corroborate our view of a gentle easing in market conditions," said Bob Pannell, chief economist at CML. "There is growing evidence that mortgage lending activity, and the housing market, are sitting on a plateau." BLOOMBERG
UK needs extra 60,000 new homes a year: Lloyds

RAISE THE ROOF: Lloyds will set up a £50 million equity fund next year for smaller house builders to help increase supply. PHOTO: BLOOMBERG
22 Oct5:50 AM

LLOYDS Banking Group has said that at least 60,000 new homes need to be built in Britain every year above the current level of supply to ease the country's housing shortage.

Lloyds, Britain's biggest retail bank and home lender, said on Tuesday that it will set up a £50 million (S$103 million) equity fund next year for smaller house builders to help increase supply. The bank said that it could expand the funding and potentially work with investment partners or government schemes.

Lloyds chief executive Antonio Horta Osorio will say in a speech later on Tuesday that a public policy goal is needed to increase housing supply. He will say that an increase of at least 60,000 new homes each year is needed, over and above current numbers, in order to help tackle the supply challenge.

Other options to improve supply and affordability include freeing up more public land for housing projects, or making construction on former industrial or commercial sites more economically viable, he will say. Reuters

Luxury London property sees further decline
Holly Ellyatt | @HollyEllyatt
1 Hour Ago

Simon Dawson | Bloomberg | Getty Images
The overall transaction value of luxury homes in prime central London locations has fallen by over 20 percent, according to a U.K. estate agent, signaling that a correction in the capital's booming housing market could be afoot.

The data, collected by high-end estate agent Strutt and Parker, showed that the overall value of properties transacted was down 21.1 percent in the third quarter of 2014, compared with the same period in 2013.

In the same timeframe, the value of properties under £2 million ($3.23 million) saw a decrease of 20.8 percent and properties in the £2 to £5 million price bracket saw prices fall 27.1 percent.

Homes worth over £5 million performed slightly better but still saw a decline of 15.2 percent.

As the U.K. heads into an election year in 2015, the uncertainty over the country's political future could deter buyers further. There is already a controversial proposal from the opposition Labour party for a "mansion tax" on all properties worth £2 million. The details of the proposal are still being worked out but shadow chancellor Ed Balls has said the levy would begin at £3,000 a year.

A similar pattern emerged in terms of volume sales, which were down 26.8 percent overall, with all price bands seeing a reduction in the number of transactions, the estate agent noted Tuesday.

Lulu Egerton, Partner at Strutt & Parker in Chelsea – one of the areas defined as "prime central London" (PCL) along with Knightsbridge, Kensington and Belgravia among others - said "there is no doubt that PCL property is in the midst of a price correction."

"After a spectacular year in 2013, asking prices had become inflated and they are now in a period of correction where prices are being adjusted down by around 5 percent to 10 percent as buyers become far more price sensitive."

Read more: UK house prices show further signs of cooling

Foreign buyers previously drawn to London property as a perceived "safe-haven" asset have retreated from the market, Knight Frank estate agents said in a report this summer. The high-end agent said that international buyers in 2014 have accounted for under half (47 percent) of the super-prime market so far this year, down from 64 percent in 2013 and 73 percent in 2012.

The data follows a period of sharp house price increases in the U.K -- particularly in London and the south-east. There are signs that the overall market is starting to cool down, however.

Read more: Appeal of London property wanes for foreign buyers

The Centre for Economics and Business Research forecast in a report earlier this month that U.K. house prices would grow by 7.8 percent this year but fall by 0.8 percent in 2015. In London, the CEBR predicted house prices would decline by 2.9 percent in 2015, the first decline since 2009.

The slowdown could have an impact on the U.K. economy as a whole, which is estimated by the IMF to grow 3.2 percent in 2014. Its recovery had been partly attributed to the boom in the property market so a slowdown could affect growth.

The slowdown should be kept in perspective, however, according to the head of Research at Strutt & Parker. "Whilst total values transacted in central London are markedly down on this time last year, we must have a sense of perspective. It is really not surprising that prices are stabilizing after the dramatic price increases we saw over the past 12 months," Stephanie McMahon said in the report.

She added a decline in prices had been seen before in the run up to a general election. "It is a recognizable pattern and we do not believe it spells doom for the property market in the long term."

Clarification: This story has been updated since it was first published to show that the overall transaction value for luxury properties has fallen.

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt

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