Many are speculating that stagnant wages and rising house prices have caused the housing market to hit an affordability ceiling point as price growth fell from 3.4% to 3.2% in September for residential property sales. Whilst residential property sales begin to decline, commercial property is beginning to boom. Simon Bath, CEO of digital conveyancing platform, When You Move, commented: “The House Price Index shows a north-south divide: housing markets in London and the South-East have slowed. London still remains the most expensive region in the country to purchase a home and therefore, the financial commitment of buying in London can be off-putting for both domestic and international investors and first-time buyers. “Housing markets in London and the south-east have slowed: prices in London fell 0.7 per cent in the year to June, according to the ONS, coupled with transaction levels in the capital down by 20 per cent year on year. The prices are heftier, the commitment is more taxing, equally, the number of homes being placed on the market for £2m or more was down 25 per cent in the third quarter of 2018 compared with a year before.” Commercial property lending increased by 27% in the first half of 2018 according to Cass Business School’s latest UK Commercial Real Estate Lending Report. From January to June, £22.5 billion worth of lending in commercial real estate was enjoyed; a 27% rise on the same time last year. Although investment was down 2% based on 2017 figures, the £25.4 billion worth of investment highlights a real appetite for commercial property in the uncertain property market. 53% of the agreed lending in the opening six months of 2018 came from acquisition finance and 14% of loans went towards financing property portfolios. Whilst residential buyers are struggling to buy in London or put off by the potential property affordability ceiling point, 61 per cent of newly originated loans have targeted London and South East England. Ion Fletcher, Director of Finance Policy at the British Property Federation, said: “The UK’s commercial property lending market was “in fairly good shape,” particularly in light of ongoing political uncertainties surrounding Brexit.” Neil Odom-Haslett, President of the Association of Property Lenders, added: “Overall the headwinds have got a little bit stronger and its testament to the current lending culture that as a real estate lending community we are managing them appropriately.” Have you noticed an increase in commercial property transactions? Is this positive for the property market?
While residential property sales in London and south-east England are starting to drop, the commercial property market is on the rise. House prices in the capital fell by 0.7% in H1 2018 and transaction levels decreased by 20%, year-on-year. The number of properties marketed above £2m ($2.6m) in Q3 2018 was 25% lower than Q3 2017. In London, there were more new listings for sale last year than at any time since 2011, with a total of 1,598,700 homes sold – up from 979,500 units in Q1 2017 Of the lending, 53% was from acquisition finance and 14% of loans financed property portfolios.