Buyers are also increasingly deterred by the high cost of moving, choosing instead to make improvements to their current home and, as a result, the market is now becoming skewed heavily towards those who ‘need’ to move rather than those who ‘wish’ to move. On the other hand, competition is still strong with best bids, multiple offers etc commonplace.
Additionally, and significantly, we have seen a return to the ‘must have a foot on the property ladder’ mentality that has been prevalent during other recent times of strong price growth and this is further supporting price increases and the depth of demand today.
"Recent times have often seen inconsistent rental growth across Central London areas, but this is the first quarter for six years when each of our main market areas have experienced rental value growth in excess of 1%."
Rental values in Central London rose at their strongest rate since 1997 during the three month period to 1st September.Property laws for conveyancing in brisbane rental value growth was 3.2% in 2006Q3 with the quarterly growth rate more than twice the 1.4% seen in Q2.
Despite increasing every quarter for more than two years, average rents are still 7-8% below their 2000/2001 levels following rental declines between September 2001 and March 2004. Demand is at its highest level since mid-2004 (see chart) and is particularly strong from City financial employees as employment levels continue to surge.
Demand is also buoyed at this time of year by new graduates working in the City and Canary Wharf, and to a lesser extent by students, although demand levels would still be high even with these groups excluded. We also believe that rentals demand is being supported by a fallout from the sales market as people struggle to find something to buy due to a lack of properties on the market.
The excess of demand over available supply has been stretched further during the last three months and has clearly impacted on higher rental levels. Although many agents are being quite bullish when advising landlords on asking rents, these are still often being exceeded with demand and competition so strong.
Prices for large flats and for houses have risen fastest and by over 10% this quarter. The scarcity of properties for sale is acute in this part of Central London and is one of the areas where the situation has worsened over the past quarter. This part of London has had a particularly busy few months.
Demand has increased by over 25% in the last three months and is at its highest quarterly level for at least four years while the number of lettings agreed has also grown by over 25% over the past quarter Conveyancingthis has led to studio flats seeing the highest rate of rental value growth, at 3.3% during Q3, of any property size in Central South West.
Overall, available properties on the market are around half normal levels and this supply shortage is particularly acute for mid-priced properties at around the £500- £800 a week level. Prospective tenants have to upwardly review their Central South West quarterly rental value growth budgets in order to secure a suitable letting at these rental levels. Over the last six months the proportion of sales applicants prepared to pay above £2m for a property has increased by five percentage points.
There has been a real difference between central submarkets (including Marylebone and Mayfair) and western submarkets such as Nothing Hill and Holland Park, although all locations continue to see an acute shortage of stock to buy.
More western markets have seen a stronger market with a significant shortage of properties to buy. Prices have escalated by over 4% in these locations during Q3. Increases have been highest for smaller flats and for larger houses.
Despite the more balanced market in Central West, rental values have still risen by 1.8% in the latest quarter and are a notable 7.7% higher over the past year. Low-to-middle valued properties are seeing both strongest demand and lowest available supply.
Marketed one and two bedroom flats at £350-£450 a week and two-three bedroom apartments at £600-£700 a week are most scarce. The top-end of the market here is quite slow with demand and available supply low.
GM, However, with so few properties to choose from, rental values at the top-end of the market are still rising slightly faster than the Central West average E Conveyancing Adelaide proportion of buyers who do not require a mortgage has increased from 17% in September 2005, to 47% in September 2006. The average over the past four years has been 37%.
Available supply is low with many refraining from marketing their properties or withdrawing them from the market because there is so little for them to buy. Demand is also strong in this price range and the demand and supply imbalance has led to higher price growth for large houses as opposed to flats.
Prices for flats have risen by 2.6% on average in the past quarter compared to 4.0% for large houses. Excellent quality and well located houses have seen prices rise in the order of 10% in the past three months. The rentals market here has been particularly busy in recent months and demand has improved two-fold during the last quarter.
Although demand is boosted at this time of year by students there has still been an underlying increase in demand. Available supply remains low with particular shortages of one bedroom properties, many of which have been snapped up by students in recent weeks. Unsurprisingly, demand for smaller properties is lower in the sales market, comprising 50% of demand.
Although most indicators suggest a strong market in terms of price rises, limited numbers of properties on the market, best bids, high demand, bids over asking prices and plenty of competition for properties, there are also some less positive traits emerging. More properties are coming to the market now and there has also been some resistance to higher prices. Q3 is usually the peak in rentals demand but this year demand has been exceptional and is at its highest level for four years.
"This area is very popular with lower-end and new starters in the City and demand is currently being led by these groups. Available properties to rent are quite limited across the board, as it is in most areas, but here there is a particular shortage of one and two bedroom flats. Conveyancing technique is Supply shortages are combining with high demand to generate strong competition. Many properties are achieving over asking rents with multiple offers also prevalent.
South West of the River, UK sales applicants account for approximately 93% of demand with just 7% coming from overseas. For Central London as a whole, UK applicants make up 61% of all demand with a far more significant 39% from abroad. Demand is at its second highest level for five years with this area in particular benefiting from the growing financial workforce dominated by the City and Canary Wharf.
Prices have risen fastest for two bedroom flats, typically 4-5% higher in the last quarter, compared to either one bedroom or studio apartments, where growth has been 3.0-3.5%. Demand here has been very strong from the financial sector, and especially so at the lower-end from new graduates.
Availability is low across the board, in all submarkets and all property types, and this, combined with strong demand, has forced rental values significantly higher.
Over the last two years South Bank, City and Docklands has enjoyed a growing popularity among lettings applicants. This is exemplified through the increasing number of applicants who are only willing to consider renting within the area.
The proportion of lettings applicants looking only to rent in South Bank, City and Docklands has increased to 91% from 50% in September 2004. Price growth accelerated to 3.4%, up from 2.7% in the preceding quarter (see chart). All areas of Central London experienced significant price rises of 2% or more in the past three months with exceptionally strong growth in the South West of the River area (around Battersea and Clapham) where prices soared by over 9%.
But deals in the latter part of August suggest an improvement is imminent. Take-up of Grade A space rose to 26,000 sq m and take-up of Grade B space fell to 2,500 sq m. Availability of ready to occupy space fell to 370,000 sq m by mid-August.
Availability in Grade A space fell to 237,000 sq m and available Grade B fell to 133,000 sq m. Space under construction has increased to 219,000 sq m. Of this, 155,000 sq m (71%) is being built speculatively. Outstanding applications have increased by 26% to 96,000 sq m the highest level since May 2004. There was 12,000 sq m of space completed in the three months to mid-August.
Mayfair take-up fell to 1,600 sq m in the three months between mid-May and midAugust. A supply shortage has led to a rise in typical headline Grade A rental values in Mayfair to £72.50 a sq ft from £67.50. Availability in Grade A space fell to 60,000 sq m and available Grade B rose, but remains less than 18,000 sq m.
Residential conveyancing sydney Space under construction increased over the latest three month period, to 23,000 sq m, 19,000 sq m (82%) of which is being built speculatively. The value of investment transactions has increased in the three months to mid-August to £223 million.
A total of 8,400 sq m began construction in St James's in the three months to midAugust. The only building currently under construction in St James's is the speculative 198-202 Piccadilly, due to deliver 8,400 sq m of new space to the market by spring 2006.
The value of investment transactions increased to £494 million in the three months to mid-August. All take-up of over 500 sq m over this period was of Grade A specification.
Typical headline rents in Marylebone have risen to £39.50 a sq ft from £37.00 a sq ft. Availability in Grade A space rose to 24,000 sq m offset by a fall to 21,000 sq m of available Grade B space. 35-38 Portman Square, a 6,000 sq m Grade A secondhand building is the largest office space currently under construction in Marylebone. Michael House, 55 Baker Street, is the largest building under construction in Marylebone, with an estimated floorspace of over 43,500 sq m.
"The value of investment transactions increased over this three month period to £171 million. Space under construction has remained constant at just over 6,500 sq m over this latest three month period, all of which is being built speculatively. 2004 was another good year for tenanted farmland (including transactions), recording an annual total return of 18.6%.
This was the third successive year in which let land returns including transactions have been above 18.5%.Held properties (those without any parts having been purchased, sold or developed during the year) also produced robust returns (17.8%), following the trend set in recent years.
Buying a social settlement was the fifth highest return for held properties since the index began in 1981. The 10-year annualised return for let land (including transactions) was 14.9% at the end of 2004. Over the last 24-year period the annualised real return is just 3.8% per annum, due to higher rates of inflation in the 1980s. Once again total returns in 2004 were driven by strong rates of capital growth; although this was lower than those achieved in 2003.
Income returns fell to 2.5% (for tenanted farm land including whole and part sales or purchases and reversions to vacant possessions), this was 0.1 percentage points below the 2003 figure.2004 has been the lowest income-producing year since the index began in 1981.
For held farms only, the income return was 0.1 percentage points higher at 2.6%.Investment activity in 2004 was yet again dominated by part sales. In 2004, turnover increased to 7.9% of the year end capital value, this figure was at 6.7% in 2003.