Gordon Dadds, the legal and professional services firm, is urging the UK property sector to get to grips on the 4^th EU Anti-Money Laundering Directive or face receiving a hefty financial penalty which could be unlimited.

The Directive which comes into force from today (26^th June 2017), combined with the new investigation power being introduced by the Criminal Finance Act 2017, is going to impact the UK property industry significantly with banks and estate agents having to carry out further due diligence on both the buyers and sellers of property which will slow down the buying process by up to 186 days. There will also need to be formal risk assessments and nominated officers will have to be re-appointed if not currently an executive sitting on a board (or equivalent) of the business.

Gordon Dadds predicts that the new regime will increase workloads due to the required volume of administration with all polices now needing to be tailored to each client case and for the usual terms of business to be updated. This doubling of the workloads will increase company costs with existing staff requiring training and in a high proportion of cases, estate agents needing to recruit staff in order to help with the administration burden. We estimate this could cost the largest estate agents a combined additional cost of £6million.

Alex Ktorides, Partner at Gordon Dadds, says: “The Directive is a shake-up of the way that banks, estate agents and other parts of the regulated sector apply a risk based approach to customers. They will now have to consider the characteristics of the customer, the product and its distribution and the jurisdictions involved in determining the lengths that they have to now go to in terms of conducting due diligence on their clients. There is even a new requirement to force overseas branches of UK parent companies to apply UK standards. This will cause huge concerns to international businesses and even encourage moving head office from the UK.”

The property sector now has to act quickly in order to ensure it complies with the Directive. The purchasers and the seller are both now included in the application of customer due diligence, meaning additional checks will need to be carried out by estate agents, auctioneers and surveyors.

Alex Ktorides continues: “This is going to create substantial challenges for the property sector especially given the final version of the directive has only been made public today which has left no time for banks, estate agents and the lending sectors among others to update their policies and processes alongside training staff on the new regime. Some agents have in excess of 100 branches and have received no prior time to implement the new processes in order to comply.

“For many smaller estate agents (and surveyors) this will be the first time they will have carried out checks on both the buyers and sellers and they are going to have to get up to speed with the regime as quickly as possible or risk facing an unannounced visit from the HM Treasury.”

Gordon Dadds is calling on the UK property sector to act fast and to start to get to grips with the Directive from today. For many medium to large sized estate agents Gordon Dadds recommend they appoint a money laundering officer and a deputy to help with the increased work load and to ensure they are compliant and not falling foul of the regime which could spark a warning or fine from the HM Treasury.

(Source: Gordon Dadds)

American household debt totalled a record $12.73 trillion as of March 2017, so cost of living concerns are more pertinent than ever.

Personal finance news and features website GOBankingRates conducted a study to identify which cities across America have seen the largest increase in cost of living expenses from 2016 to 2017. The study evaluated US cities based on two principal metrics:

• The increase in a city's cost of living index, which includes food, rent, utilities and transportation.
• The Increase in the amount of income required to "live comfortably," a concept used in GOBankingRates studies that combines the money needed to pay for necessities — including food, rent, utilities, transportation and healthcare — with the amount one should budget toward discretionary spending and savings.

GOBankingRates identified the cities where the cost of living index had increased by at least two points (out of a total 100) and the amount of income required to live comfortably had also risen. Combining these two metrics provides both the objective and more subjective side of cost of living expenses. Most cost of living indices do not account for the ability to save or pay for unnecessary purchases, and yet they're both important parts of people's financial lives.

5. Jacksonville, Fla. 

• Live Comfortably Amount Increase: $2,095
• Cost of Living Index Increase: 3.36 points

4. Austin, Texas

• Live Comfortably Amount Increase: $1,407
• Cost of Living Index Increase: 3.84 points

3. Louisville, Ky.

• Live Comfortably Amount Increase: $2,066
• Cost of Living Index Increase: 4.49 points

2. Seattle

• Live Comfortably Amount Increase: $3,190
• Cost of Living Index Increase: 7.32 points

1. Nashville, Tenn.

• Live Comfortably Amount Increase: $9,135
• Cost of Living Index Increase: 8.61 points

Additional Study Insights

• Home prices have been surging in Nashville. From April 2015 to April 2017, the median list price for a home rose by almost 30 percent, from under $260,000 to nearly $340,000.
• According to new income limits set by HUD, an individual earning $50,500 a year in Los Angeles County (#6 on the list) is now considered low-income.
• The cost of living has actually gone down in New York, San Francisco, and Honolulu — cities with notoriously high expenses.

(Source: GOBankingRates)

ONS figures show that the typical home in the UK cost £220,100 in April, with a rise of £3,500 on the previous month.

This equates to a £12,000 increase from the same month a year ago, the Office for National Statistics (ONS) says, despite banks and lenders reporting a stagnant property market period.

This does however oppose figures from Nationwide Building Society and Halifax Bank, which have proved a stalling housing market over the past few months.

This week Finance Monthly has heard Your Thoughts on the housing market and gathered some insight from the experts below.

John Eastgate, Sales and Marketing Director, OneSavings Bank:

House prices have been galloping upwards for the past five years, but it seems that softening demand might be starting to rein-in the pace of that growth. Mortgage approvals fell once again in April, reflecting falling consumer confidence that will hardly have been helped by the election outcome.

Until we get some clarity around how the political landscape will unfold, it is difficult to envisage a material change in consumer confidence, so we should expect the pattern of reducing house price growth to continue.  Falling real incomes will remain a challenge for affordability although we should expect to see mortgage rates remaining at record lows for some time to come and this will no doubt support a core level of demand and ensure a modest level of house price growth in the medium term.

Luke Somerset, Business Development Director, Contractor Mortgages Made Easy:

Whist housing sales are reported to have dropped by 19% across the UK since this time last year, there remains an overwhelming sentiment that we remain in a sellers’ market.  House prices remain incredibly resilient despite of Brexit uncertainty and the stamp duty levy introduced in April 2016. This has led to a substantial increase in the cost of an average house in the UK putting further pressure on first time buyers and next time movers. However, it is not all doom and gloom.

The number of mortgages that require just a 5% deposit have increased by 14% over the last 12 months and there are now 287 mortgage products available to these borrowers with minimal deposit. With increased competition amongst lenders, interest rates for younger borrowers are starting to fall, so in spite of an increase in house prices, the actual cost of funding a mortgage hasn’t increased proportionally, thanks to the drop in mortgage rates. This doesn’t however help young borrowers when it comes to saving a deposit and more should be done to assist young borrowers onto the property ladder.

Mark Noble, Managing Director, Castles Residential Sales and Lettings:

If you listen to media coverage, believe everything you read in the papers and listen to some local estate agents, you could be fooled into thinking that the housing market is in the doldrums and there seems to be surprise that house prices have risen fairly dramatically over the last 24 months.

However, if you are in the housing sector or scratch under the surface, you will quickly realise that the lack of good property inventory coming to the market in the right numbers has created a huge supply and demand problem, creating a situation of more buyers than property and ultimately, pushing house prices upwards.

At Castles we have sold 2 properties in the last few weeks at over the asking price, one came to the market at £189,995 and sold (stc) for £197,000 and the other came to the market at £200,000 and eventually sold (stc) at £212,000, this was as a result of mini open houses and best and final offers.

The simple facts remain, if you put your house on the market with the wrong agent, at the wrong price the property will remain on the market for weeks, if not months, creating the false impression of a stagnant market place.

Should you decide to employ the services of an agent with a proven track record in selling property in your area and price your home correctly, then a sale can be achieved in a reasonable timescale, some properties are still selling within days and before reaching the internet.

There is always a period of reflection before and after events like the recent election but we envisage the market will continue in the same vein for the foreseeable future, so if you are thinking of selling, chose your agent wisely as they really can make the difference to the price you achieve for your property and in some cases, whether your property sells at all.

Mark Homer, Co-Founder, Progressive Property:

Despite stories of a recent cooling in the UK property market the longer-term trend for U.K. Property prices is rosier. As the typical house price has increased by £12,000 in a year (ONS) it is clear that a lack of supply and continued population increases are still pushing prices higher.

As 2017 has developed it has become clear that a 2-step market has materialised as a result of government policy.

Coming off the back of seeds that were Sewn in 2016 when the government increased stamp duty on more expensive and buy to let properties sales of these types of properties have stalled. Many properties over £937k (on which stamp duty has increased with some now attracting 12%) are now sitting on the market and sellers are having to reduce the prices by up to 20% to get a sale. As interest rates are low however many are choosing to just sit on them hoping for a buyer to come along making this part of the market “gummed up”.

At the same time big incentives for first time buyers through the help to buy scheme coupled with low interest rates is fuelling demand from those looking to get on the first rung of the ladder. Small new build houses and flats are selling well because of this and have provided support to the lower end of the market. As these types of purchases are making up an increasing large proportion of sales they are contributing increasingly to transaction volumes which have faltered in many other parts of the market.

We expect once Britain’s place in Europe becomes clearer and uncertainty around a lack of government majority subsides the market will grow around 5% per annum overall once again.

David Martin, Chief Operating Officer, Hatched.co.uk:

Understandably, people casting an eye over the UK property market in recent months would be forgiven for being somewhat confused. Conflicting news stories are released on what seems like a daily basis. The difficulties start when we all compare house prices around the UK. When you look at a regional level, many parts of the north of England are still showing steady growth – Rightmove reported in their June 2017 House Price Index a 3% annual price change in Yorkshire and the Humber, compared with a 1.8% increase in the South East and an overall decline in London of -1.4%.

Here at Hatched, we cover the whole of England and Wales and we’ve seen recent figures more comparative with the banks and building societies, rather than many of the ONS. For year-on-year activity to the end of May, we’ve seen a 18.5% increase in viewings booked, a 27.4% increase in the number of offers made and our average house price at point of sale-agreed is up 3% to £271,632.

Our number of house completions is up by 19.7% for the same period, with the average house price of those completions being £236,801 in 2016. Interestingly our average sale-agreed price in the same time period this year is £271,632, an increase of nearly 15%.

In June, we’ve continued to see a steady stream of viewing requests, in-line with the year so far. Ultimately if a property is priced correctly, presented in the best way possible and shown to as many buyers as possible, the best price for the client will be achieved more often than not.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!

Mortgage debt increased by 11%¹ to $201,000 last year and more than half (52%) of Canadian mortgage holders lack the financial flexibility to quickly adjust to unexpected costs, per a new Manulife Bank of Canada survey. This despite 78% of Canadians having made debt freedom a top priority.

The problem is most acute among Millennials, who saw their mortgage debt rise more than any other generation. Millennials are also most likely to have difficulty making a mortgage payment in the event of an emergency or if the primary earner in the household were to become unemployed.

"The truth about debt in Canada is that many homeowners are not prepared to adjust to rising interest rates, unforeseen expenses or interruption in their income," says Rick Lunny, President and Chief Executive Office, Manulife Bank of Canada. "However, building flexibility into how they structure their debt can help ease the burden."

Overall, nearly one quarter (24%) of Canadian homeowners reported they have been caught short in paying bills in the last 12 months. The survey also revealed that 70% of mortgage holders are not able to manage a ten% increase in their payments. Half (51%) have $5,000 or less set aside to deal with a financial emergency while one fifth have nothing.

¹ The percentage change in average mortgage debt controlled for regional, age and income differences between the samples. However, different research providers were used for each wave of the study which may impact trended results.

Millennials not alone

Despite generally having more equity in their homes, many Baby Boomers face the same challenges as Millennial homeowners. Some 41% of Baby Boomers said that home equity accounted for more than 60% of their household wealth and for one in five (21%) it makes up more than 80%.

This indicates Boomers may need to rely on the sale of their primary residence to fund retirement, since much of their household wealth is wrapped up in home equity. However, more than three quarters (77%) of Baby Boomer respondents want to remain in their current homes when they retire.

"Many Boomers approaching retirement share the same lack of financial flexibility as Millennials," said Lunny. "They want to remain in their current homes, but their home makes up a big part of their net worth. Instead of downsizing, or even selling and renting, homeowners in this situation could consider using a flexible mortgage to access their home equity to supplement their retirement income."

Helped into the housing market

Almost half (45%) of Millennial homeowners reported that they received a financial gift or loan from their family when purchasing their first home. By comparison, just 37% of Generation X and 31% of Baby Boomers received help from family members when they purchased their first home. Conversely,  almost two in five (39%) Boomers, many of whom are the parents of Millennials, still have mortgage debt.

The generational increase in new homeowners requiring family support comes despite a long-term trend toward two-income households. The number of Canadian families with two employed parents has doubled in the last 40 years, but housing costs are growing faster than incomes².

"With higher home prices and larger mortgages, it's more important than ever to find the mortgage that's right for you," says Lunny.  "A flexible mortgage that offers the ability to change or skip payments, or even withdraw money if your circumstances change, can help you ride out financial difficulties more easily."

Manulife Bank recommends that Canadians have access to enough money to cover three to six months of expenses.

² Statistics Canada. May 30^th 2016

Quebec homeowners most at risk

In addition, the Manulife Bank survey found that:

• Mortgage holders in Quebec (76%) would have the most difficulty with an increase of 10% to their mortgage payment and are more likely to be impacted should they have a fiscal emergency, as almost 30% have no emergency funds.
• British Columbia had the highest instance of homeowners getting help from family members when they purchased their first home, with almost half (45%) saying they either borrowed or were given money.
• Compared with other regions, homeowners in Manitoba and Saskatchewan (73%) prefer most to own and live in their current home when they retire.

Debt management should begin at an early age

More than two in five (44%) learned "a little" or nothing about debt management from their parents—and were also most likely to have been caught short financially in the past 12 months (28%).

"Kids who learn about money and debt management are more likely to become financially healthy adults," says Lunny. "One of the best lessons we can teach our children is the importance of saving for a rainy day. Being prepared for unexpected expenses is good for our financial health, good for our mental health and gives us the freedom and confidence to deal with the unexpected expenses and opportunities that come our way."

(Source: Manulife Bank)

There were increased signs of a slowdown in the UK property market last month, as the number of sales has fallen dramatically and even less are taking out mortgages. Analysis by data firm Equifax claims mortgage sales dropped by over 15% between March and April. But why is this happening? Here Mark Homer, Co-Founder of Progressive Property explains more for Finance Monthly.

Mortgage transaction volumes have continued to reduce, dropping in excess of 15% in most regions of the UK in April 2017 versus March 2017. As new mortgages tend to mirror overall property transaction volumes the whole market appears to be taking a breather. Continuing uncertainty caused by Brexit, Britain’s relationship with the EU and more immediately the general election appears to have put buyers off at least for the short term.

House prices have continued to fall in Prime London and growth has continued to moderate outside of the M25 with the Midlands and North showing reduced growth too. Overall UK house price growth has slowed to 4.1% in the year to March 2017. With much of the rest of the UK playing catch up to the huge growth in Central London since 2010 the market appears to be taking a breather.

Increased Stamp duty on buy to let properties, 2nd homes and higher end properties from March 2016 has had had a further dampening effect on the market with many taking a “wait and see” approach to moving house. A new buy to let tax which sees mortgage interest become not 100% off settable against rent for many from April 17 has also contributed to a more negative mood.

Interestingly, first time buyer purchases have increased since the stamp duty changes showing that the government’s policies to encourage these purchases over those of landlords appear to be working. With some lender’s mortgage rates now reaching their lowest ever rates sub 1% buying a home has become more attractive.

House price growth seems set to return to trend with 5%+ growth once these uncertainties subside and wage growth catches up with prices following a period of increased inflation after sterling devalued immediately after the vote to leave the EU.

While challenges face commercial real estate markets, realtors specializing in the sector should have confidence that growth will continue. That's according to speakers at a commercial economic issues and trends forum at the REALTORS® Legislative Meetings & Trade Expo.

NAR Chief Economist Lawrence Yun led a panel discussion about the economic forces shaping commercial real estate markets; the panelists agreed that the market has improved and that continued growth in the economy will further drive activity, but difficulties remain regarding availability of financing for smaller commercial properties.

George Ratiu, NAR director of quantitative and commercial research, said that increased trade and the rise of e-commerce has boosted rents in the industrial and warehouse sector. "During a time of transformation in consumer shopping habit, vacancy rates will still continue to see a gradual decline in warehousing and strong rent growth will continue," he said.

Unemployment has declined to 4.4% and consumer confidence is at its highest point in 15 years. As the economy improves, the commercial real estate market has continued to improve as well, said Yun. "A rising interest rate environment is likely to halt commercial price growth or even cause a minor decline; that outlook is supported by the expanding economy and the over 2 million jobs gained in the past year," he said.

Looking at the global market, Ratiu explained that global commercial investors have hit the pause button on investments, which in the first quarter of 2017 decreased nearly 20% year-over-year; however, certain US markets are seeing good global cash flow with $76 billion flowing to the US. "Overall global investments are down, while the San Francisco, Dallas, Charlotte, Houston and Baltimore markets have experienced large sales volume gains," he said.

With the blip in overall global investments in the first quarter, international buyers are likely to play a greater role in the US market this year. “Over the past five years, a near majority of realtors experienced an increase in the number of international clients. We expect international buying activity to grow in 2017, which will have an overall positive impact on the commercial market's gradual recovery," said Yun.

One major hurdle that continues to affect the market is the lack of available financing to small commercial real estate investors, due in large part to regulatory uncertainty.

"Realtors are seeing evidence of markets being impacted by regulators' increased scrutiny of banks' balance sheet allocations to commercial real estate loans," said Ratiu. "Considering that 64% of Realtor® clients get their financing from banks, this is likely to impact deal flow as lending conditions tightened in 37% of Realtors' markets, a four% increase from last year."

John Worth, senior vice president of research and investor outreach at the National Association of Real Estate Investment Trusts, discussed the performance of commercial real estate investment and its status among other investment sectors. "Real estate investment is currently the best performing asset class. Strong returns and the level of new commercial supply we are seeing today is making up for a lot of missing sectors, following the economic downturn. The first quarter of this year saw a slight decrease, but 2017 is experiencing an overall healthy trend," he said.

(Source: National Association of Realtors)

US real estate markets are increasingly becoming international, and changing demographics brought forth by immigration and growing interest from foreigners are positioned to bolster home sales activity and prices. That's according to speakers at an international real estate forum organized by the REALTOR University Richard J. Rosenthal Center for Real Estate Studies session here at the 2017 REALTORS^® Legislative Meetings & Trade Expo.

NAR's Danielle Hale, managing director of housing research, was joined by Alex Nowrasteh, immigration policy analyst at the Center for Global Liberty and Prosperity at the Cato Institute, to share insight on the current and future impact of foreign buyers and immigration on the US housing market.

According to Nowrasteh, the rising US population is being bolstered by a growing number of immigrant households, and their presence will continue to transform the housing market. Referring to data from the 2015 American Community Survey, Nowrasteh said of the roughly 321.4 million residents in the US, 278.1 million are born here (natives) and the remaining 43.3 million – made up of 20.7 million naturalized citizens and 22.6 million non-citizens – are foreign-born.

"Immigration affects rents and home prices far more than it affects the labor market," said Nowrasteh. "An expected 1% increase in a city's population produces a 1% uptick in rents, while an unexpected increase results in a 3.75% rise."

Nowrasteh, pointing to studies conducted on immigration and housing, explained that the effects of immigration on real estate are localized, with most of the impact felt where immigrants tend to reside: low-to-middle income counties. Each immigrant adds 11.6 cents to housing value within that county. In 2012, 40 million immigrants added roughly $3.7 trillion to US housing wealth.

Referencing the Legal Arizona Workers Act that went into effect on January 1st 2008, Nowrasteh said the decline in population resulting from the law likely exasperated the drop in home prices the state experienced during the downturn. Fewer households purchasing or renting property subsequently lead to higher vacancies and lower prices. "Immigration is the best way to increase population, housing supply and prices," he said.

Presenting some of the key findings from NAR's 2016 Profile of International Activity in US Residential Real Estate released last July, Hale said foreigners increasingly view the US as a great place to buy and invest in real estate. She noted the upward trend in sales activity from resident and non-resident foreign buyers¹ in the past seven years, with total foreign buyer transactions increasing from $65.9 billion in 2010 to $102.6 billion in the latest survey.

"A majority of foreign buyers in recent years are coming from China, which surpassed Canada as the top country by dollar volume of sales in 2013 and total sales 2015," said Hale. "Foreign buyers on average purchase more expensive homes than US residents and are more likely to pay in cash."

Perhaps foreshadowing where a bulk of future home purchases from immigrants will come from, Hale said that in NAR's latest survey roughly over half of all foreign buyers purchased property in Florida (22%), California (15%), Texas (10%), Arizona or New York (each at 4%). Latin Americans, Europeans and Canadians – who tend to buy for vacation purposes in warm climates – mostly sought properties in Florida and Arizona. Asian buyers were most attracted to California and New York, while Texas mostly saw sales activity from Latin American, Caribbean and Asian buyers.

NAR's 2017 Profile of International Activity in US Residential Real Estate survey is scheduled for release this summer. Looking at the past year, Hale said monthly data from the Realtors Confidence Index revealed a rise in responses from Realtors^® indicating they worked with an international buyer.

"Chinese buyers are once again expected to top all countries in both total dollar volume and overall sales," said Hale.

¹The term international or foreign client refers to two types of clients: non-resident foreigners (Type A) and resident foreigners (Type B).
Non-resident foreigners: Non-US citizens with permanent residences outside the United States. These clients typically purchase property as an investment, for vacations, or other visits of less than six months to the United States.
Resident foreigners: Non-US citizens who are recent immigrants (in the country less than two years at the time of the transaction) or temporary visa holders residing for more than six months in the United States for professional, educational, or other reasons.

(Source: National Association of Realtors)

Mortgage sales for the UK fell by £2.62 billion in April, down 16.0% on the previous month, according to Equifax Touchstone analysis of the intermediary marketplace.

Buy-to-let figures plunged 20.4% (£0.55 billion) to £2.15 billion and residential followed suit, dropping by 15.1% (£2.07 billion) to £11.60 billion. Overall, mortgage sales for the month dropped to £13.76 billion.

Every region across the UK witnessed a slump in sales. The North and Yorkshire region led the way with the steepest drop of 18.5%, followed closely by London and the Home counties, with sales falling by 17.5% and 17.0% respectively.

John Driscoll, Director at Equifax Touchstone, said: “Mortgage figures have nosedived following a strong first quarter, with every single region experiencing a notable slump in sales. Government measures to cool buy-to-let property sales, including the phased cuts to mortgage interest tax relief which started on 1 April, have no doubt played a role in diminishing sales figures last month.

“This government intervention, coupled with uncertainty surrounding the election, means we’re likely to see more volatility in coming months. The big question is where figures will go from here – this time of year is traditionally fairly buoyant for house-buying, but there may be too much uncertainty on the horizon to see an immediate rebound.”

The data from Equifax Touchstone, which covers the majority of the intermediated lending market, shows that the average value of a residential mortgage in April was £198,347 (2016: £192,255) and £153,900 for buy-to-let (2016: £158,335).

Equifax Touchstone utilises intermediary and customer profiling tools to provide financial services providers with a detailed understanding of their marketplace and client base.

(Source: Equifax)

With a flurry of news breaking in Washington, US mortgage rates moved to the downside with the benchmark 30-year fixed mortgage rate falling to a five-month low of 4.15%, according to Bankrate.com's weekly national survey. The 30-year fixed mortgage has an average of 0.25 discount and origination points.

The larger jumbo 30-year fixed slid to 4.08%, and the average 15-year fixed mortgage rate dropped to 3.35%. Adjustable mortgage rates were on the decline as well, with the 5-year ARM sinking to 3.42% and the 7-year ARM reverting to where it had been two weeks ago at 3.62%.

There's nothing like a good old fashioned political crisis to make investors nervous and bring mortgage rates lower. Mortgage rates are closely related to yields on long-term government bonds, which have been in high demand amid the turmoil in Washington. While the White House scandal was the catalyst for a measurable drop in the past couple days, mortgage rates had already moved a bit lower thanks to a slower than expected rise in consumer prices. Another factor helping keep long-term yields, and mortgage rates by extension, in check is that the Federal Reserve seems poised to raise short-term interest rates as soon as June. An increase in short-term rates can be seen as good news by long-term bond investors as it keeps the inflation genie in the bottle.

At the current average 30-year fixed mortgage rate of 4.15%, the monthly payment for a $200,000 loan is $972.21.

SURVEY RESULTS

30-year fixed: 4.15% -- down from 4.22% last week (avg. points: 0.25)
15-year fixed: 3.35% -- down from 3.44% last week (avg. points: 0.21)
5/1 ARM: 3.42% -- down from 3.48% last week (avg. points: 0.30)

(Source: Bankrate.com)

Over the last few months, house price hiking has had a dramatic slowdown, highlighting a drop in gears for the property market in the UK. ONS statistics show that over the past 12 months, price increases have seen smaller figures in several UK regions.

Before the slowdown the average increase sat at around 15% yoy, however this is still much less than April 2000 when the yearly growth hit 28.3%.

This slowdown now has an effect on buyers who have until now been hit with steep prices and a lesser equal rise in savings interest.

This week Finance Monthly hears Your Thoughts on the slowdown and how it affects the public, the economy and the housing sector in the UK.

Jonathan Hopper, Managing Director, Garrington Property Finders:

This week’s official house price figures suggest the slowdown is sharper and started earlier than first thought.

April’s surprise election announcement applied a dab to the property market's brakes, but this data confirms it had already dropped down a gear in March.

While the speed and severity of the fall in annual price growth – down to its lowest level for more than three years – will alarm some sellers, such national averages mask the wildly different conditions at opposite ends of the market.

Properties in some regions continue to see double-digit price reductions, while at certain price points in the most in-demand areas, gazumping is back with a vengeance.

Nevertheless the broader trend is undeniable. East Anglia’s gravity defying, double-digit rates of price inflation are a thing of the past and it has been forced to share its ‘fastest growing region’ crown with the East Midlands.

Even London finds itself in a position it is unaccustomed to – close to the bottom of the pile.

The chronic shortage of supply is still propping up prices in many areas and mitigating the slowdown. But this snapshot of a slowing market – taken before the election announcement – confirms what many in the industry had feared. For the housing market, the snap election has come at just the wrong time – injecting an unwelcome dose of uncertainty into an already fragile market.

Nevertheless the lull could be short-lived. If the election delivers a clear result that puts Brexit firmly back on track, the property market could receive a huge boost, freeing up more supply and with greater levels of clarity spurring discretionary buyers into action.

Matthew Cooke, Residential Development Director, YOPA:

For me it’s a question of choosing the short or long game. Playing the short game is going to be challenging, until the fallout of Brexit becomes clear. However if you look at the history of the UK property market, it’s performed consistently as one of the most robust on the planet, just like the economy. Although we are in a soft patch the fundamentals remain the same - there are more buyers looking than quality stock available.

Investors - particularly Asian and Americans where the currency is strong against the GBP - have a superb opportunity to enter the UK market at a more attractive price. Although we are enduring turbulence presently, especially across London new homes and PCL, there are significant reasons to buy for those looking beyond the next two years. London remains a global financial, technology and cultural gateway city.

There’s a silver lining in the form of an advantage for first time buyers in this gear shift. Mortgage rates are low, and they aren’t fighting off as many investors as market reforms, Brexit and stamp duty changes on second homes make there presence known. Price increases have also reduced and sellers are more prepared to negotiate.

For upsizers - I think it’s still a good time to sell. Yes it’ll sting if you end up having to accept £10k less on your property than you’d hoped for, but you can always offset by passing the pain up the chain. Now is a superb time to negotiate yourself the dream family home.

Mark Homer, Co-Founder, Progressive Property:

House prices have continued to fall in Prime London and growth has continued to moderate outside of the M25 with the Midlands and North showing reduced growth too. Overall UK house price growth has slowed to 4.1% in the year to March 2017. With much of the rest of the UK playing catch up to the huge growth in Central London since 2010 the market appears to be taking a breather.

Increased Stamp duty on buy to let properties, 2nd homes and higher end properties from March 2016 has had a negative effect on transaction volumes along with the uncertainties which have been created around Brexit and the UK's future relationship with Europe.

Interestingly, first time buyer purchases have increased since the stamp duty changes showing that the government’s policies to encourage these purchases over those of landlords appear to be working. With some lender’s mortgage rates now reaching their lowest ever rates sub 1% buying a home has become more attractive.

We expect house price growth to return to trend with 5%+ growth once these uncertainties subside and wage growth catches up with prices following a period of increased inflation after sterling devalued immediately after the vote to leave the EU.

James Trescothick, Global Strategist, easyMarkets:

The threat of the sterling losing its role as a reserve currency due to the Brexit is looming over many investors’ minds.  Though the GBP is only the third most held global reserve currency, dropping further in the rankings or even losing that status all together, could really have a massive impact on the UK property market.

First of all, the sterling would lose its prestige and would most likely fall against the USD and EURO. In theory, this could encourage investment due to cheaper exchange rates, however the safe haven appeal which the UK housing market uses to attract foreign investors would be lost.  The UK relies heavily on this foreign investment to maintain prices. This and the levy on landlords and second-home owners which were introduced last year, are combining together to pressure house prices.

Holly Andrews, Managing Director, KIS Finance:

With regards to house prices in London, what we are seeing is due to a number of factors:

1. Stamp duty increases – In particular the increase in stamp duty for properties over £1.5m, with buyers having to pay 12% on any amount over £1.5m. Many people feel it is better to stay or keep existing properties and improve them, saving on the large amount of stamp duty that they would have to pay if they sold and purchased another property. In particular properties worth over £4m have seen a 12% fall in their values, the increases in stamp duty playing a major role.
2. Changes in the domicile and non-domicile rules – this has created a feeling that London is an increasingly harder place to reside long term, in particular amongst high net worth individuals. This is another major contributing factor as to why properties in London worth over £4million have seen a 12% fall in value
3. Local opinion – the view of the man on the street is very important, and in London, for the first time in 8 years, over 50% of people feel that house prices are going to drop. This low confidence also has an effect on property prices.
4. Mansion Tax - Although no mansion tax has been introduced, it is still on the table and a strong possibility in the future. It is therefore still in many peoples’ minds.
5. Brexit – A significant decrease in foreign investors buying property in London. Previously buying property in London was seen as an excellent investment for many foreign investors, but with Brexit there is much more uncertainty, leading foreign investors to invest their money elsewhere.
6. Investing elsewhere – Property investors nervous of London property values are investing in other parts of the UK such as Manchester and Liverpool. This has a negative effect in London prices, yet a positive effect elsewhere.
7. Low interest rates but difficult to obtain funding – The high end properties in London have been worst hit. Properties worth over £4million have seen a 12% fall in their values. Buyers are particularly concerned about this area of the market, making it very difficult to sell these properties, made worse by the high stamp duty charges that these properties attract. Lenders are also nervous about using these properties as security, making it difficult to borrow against them.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!

Morguard Corporation recently released its 2016 Sustainability Report, demonstrating positive results across environmental, social and governance (ESG) indicators. Understanding the priority investors place on Responsible Property Investing (RPI), Morguard's approach was a key driver in its successes in sustainability.

Morguard's approach to RPI is a best practice in the Canadian real estate industry. Incorporating environmental, social and governance indicators into property business and capital plans, provides investors with critical insights and allows Morguard to manage and operate efficient buildings. With a direct correlation between RPI and investment performance, this process results in value creation and operational excellence.

Demonstrated Results Over Time

Sustainable Morguard, the company's sustainability program, established in 2009, has produced numerous successes. In its first five years, from 2010 to 2015, Morguard's property management teams achieved a 14% reduction in energy consumption, a 24% reduction in greenhouse gas emissions and a 19% reduction in water consumption.

In 2016, Morguard adjusted to a 2015 baseline and continued to reduce environmental impacts including energy consumption (2.8% reduction), Greenhouse Gas (GHG) emissions (3.3% reduction), water consumption (1.1% reduction) and waste to landfill (2.0% reduction).  These results saved an estimated $1.6 million in operating costs for office and retail tenants over a one-year period.

Morguard is committed to investor disclosure and was an early adopter of the Global Reporting Initiative (GRI) G3 sustainability reporting framework in 2010, including the Construction and Real Estate Sector Supplement (CRESS). For 2016, Morguard updated its framework to the new 2017 "GRI-Standard" and refreshed its materiality assessment to ensure sustainability programs and disclosures meet the needs of key stakeholders.

"These results recognize the strong partnership we have with investors, clients, tenants and employees" said K. Rai Sahi, Chairman and CEO, Morguard Corporation. "There is a strong commitment from our key stakeholders to invest time and effort in sustainable initiatives to achieve positive environmental and community benefits."

Green buildings benefit stakeholders through lower costs for tenants; improved health, safety and welfare of employees, tenants and visitors; protection of the environment; and contributes to strong financial performance for investors and shareholders.

2016 Report Highlights

Energy

• Reduced consumption by more than 16 million ekWh, enough to power 1,450 homes for a year
• Benchmarked portfolio energy use, enabling recognition for top performers included 333 Seymour (28% reduction), Northgate Shopping Centre (25% reduction) and Bramalea City Centre Office (18% reduction)

Greenhouse Gas

• Reduced emissions by over 4050 metric tonnes in 2016, which is equivalent to eliminating the annual GHG emissions from over 750 passenger vehicles

Water Use

• Reduced usage of over 21,000 m³ of water, which is the equivalent of 8.5 Olympic swimming pools

Certifications

• 12 LEED certified green buildings in operations
• 18 BOMA BEST green buildings re-certified in 2016

Occupational Health and Safety

Morguard is proud to be named one of Canada's Safest Employers for four consecutive years. The recognition is a clear indication of the strong employee and tenant engagement with its Occupational Health and Safety (OH&S) strategy. Morguard develops its programs internally to facilitate greater control, customization, and clear lines of accountability. Investment in these programs ensures the company maintains the highest standards of health and safety in its owned and managed real estate portfolio.

Community Involvement

In addition to efforts in environmental and health and safety, Morguard also plays an active role in supporting the communities in which it operates. In 2016, Morguard participated in several community improvement projects, such as park and playground rebuilds, pedestrian walkways, bike paths and public space. Morguard also supports its communities through charitable giving and food drives.

In 2016, Morguard launched a national social cause marketing campaign, BeYou, at its 21 owned and managed shopping centres in Canada. In partnership with Big Sisters of Canada, the goal for the campaign was to increase self-esteem, personal growth and self-worth and empower young girls aged 9-16.  A total of 12,861 girls registered and participated in events across the country, and the campaign successfully achieved more than 81 million media impressions.  This engagement will provide long-term positive benefits in our local communities.

(Source: Morguard Corporation)

Commercial real estate industry leaders participating in The Real Estate Roundtable's Q2 2017 Economic Sentiment Index report that market conditions are stable and will maintain slow, but steady growth over the next several months – yet many respondents are also less optimistic about future conditions due to uncertainty in domestic policy and the geopolitical landscape.

"As the Trump Administration and Congress continue to consider ideas for tax reform, infrastructure investment and financial regulatory overhaul, The Roundtable's Q2 Sentiment Index is tempered by anticipation about what consequences the details of any eventual legislation could have on commercial real estate," said Roundtable CEO and President Jeffrey D. DeBoer. "We continue to remain engaged on the policy front to communicate the vital economic role that CRE provides to communities throughout the country and the industry's ability to create jobs."

A recurring concern among respondents to the Q2 Sentiment Index released today is uncertainty about the prospects for domestic policy and how volatile geopolitical situations may influence the economy.

The Roundtable's Q2 2017 Sentiment Index registered at 52 — three points down from the last quarter. [The Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive.] This quarter's Current-Conditions Index of 53 decreased two points from the previous quarter, but rose two points compared to the Q2 2016 score of 51. However, this quarter's Future-Conditions Index of 50 dipped five points from the previous quarter – but is up two points compared to the same time one year ago, when it registered at 48.

The report's Topline Findings include:

• Many participants suggested they view market fundamentals as stable, despite potentially destabilizing factors, and predicted a continued period of slow but steady growth.
• With the new administration in Washington encountering challenges implementing their policies, there is not the same level of economic optimism as was expressed in the Q1 report. However, participants were nearly unanimous in their belief that the current real estate cycle has room left to run.
• In certain markets, asset pricing is at or near equilibrium. Retail stands out as the most challenging property type to price, followed by multifamily, which is seen to be near peak pricing.
• Capital is plentiful for the best deals. Equity and debt sources are employing greater levels of discipline for riskier investments. In what many feel is a healthy market environment, riskier deals are more expensive and may require multiple sources of capital.

Although 31% of survey participants report Q2 asset prices today are "somewhat higher" compared to this time last year, only 15% of respondents said they expect values to be somewhat higher one year from now — reflecting the view that the current market cycle is reaching a state of equilibrium. Additionally, 48% of Q2 survey respondents said they expect asset values in one year to be "about the same" as today. Many also noted a healthy availability of capital, predicting that inflows of private capital one year from now will be similar to today's healthy conditions in the equity and debt markets, dependent on the quality of the property.

(Source: Real Estate Roundtable)