Lead markets of London and Dubai markets ‘show signs of cooling’
Residential prime property markets in London and Dubai have led global sales in the last year, but sales activity is declining, says leading global agency, JLLLondon and Dubai are leading high-end residential sales – but both markets are showing signs of cooling, says a leading agent.
Dubai’s property market saw an “unsustainable” increase of more than 35% in the year to June 2014, but the market has cooled significantly in the last quarter with prices up 6%, says global property consultant, JLL.
“Sales activity has also declined significantly in recent months, particularly for existing villas, where many owners are now reducing asking prices,” JLL says in its Quarter 3,2014 Global Market Perspective.
Boosted by international demand, the prime London market has seen annual price growth of 18.7%, although growth has slowed from April-June and the new-build sector has shifted more towards domestic purchasers, says JLL.
“These areas have been far more sensitive to government policy announcements around the proposed ‘Mansion Tax’ on £2 million-plus properties and will experience some receding of demand in the run-up to the national elections next year. However, we do not believe that this will be sufficient to cause material price declines.”
With residential prices growing less steeply in the rest of the UK a house price ‘bubble’ is not a reality, says JLL. “Mid-single-digit annualised growth rates for most non-London regions are only modestly above average and are typical of a recovery cycle where demand is moving ahead of supply in both the new-build and second-hand markets. Transactions have begun to tick up across all regions of the UK.
“Equally, lending volumes have also continued to improve, showing signs of growing confidence despite some headwind from moderately tighter lending rules.”
In the United States, the outlook in the condo sector is more positive, despite concerns about a burgeoning supply pipeline and heated occupancy and investment markets and the sector has maintained its historic run of growth
Rental growth has averaged 3.1% with the Sunbelt markets, Pacific Northwest cities and Denver among the strongest performers. The tightest market conditions are in the gateway cities.
Aided by a national home ownership rate that has reached its lowest level since 1995, apartment vacancies have fallen to a record low of 4%.
Construction activity is set to accelerate, with the current number of apartment units currently under construction reaching 3.5% of national inventory and 4.2% in major metro areas.
“Even so, the for-sale housing market expansion has been somewhat slower than expected in recent quarters; however, with improved U.S. employment growth the near-term outlook for the United States apartment sector remains very positive,” says JLL.
Demand in Asia Pacific remains subdued, due to flat economic growth and policy restrictions.
The strongest capital value growth during Quarter 2 was recorded in Manila, Philippines, (+3%) which also shared the region’s strongest annual growth with Shanghai, China, at 10% and volumes in Hong Kong have improved, thanks to relaxed conditions associated with the double stamp duty.
During the rest of 2014, sales in the high-end residential segment in the region are likely to remain at similar to levels as the last 12 months. Prices are also expected to be stable in most markets, with small falls in Hong Kong, Singapore and Jakarta.
http://www.opp-connect.com/22/08/2014/lead-markets-of-london-and-dubai-markets-show-signs-of-cooling/