We may well be experiencing tectonic shifts (and I'm not just talking about my head this morning, after yet more Christmas partying yesterday!). No, the major shifts to which I refer are in property investment trends.
First, there was widespread reporting this week on the trend towards less investment in house-building firms. Citigroup revised its "buy" recommendation in both Barratt Developments and Bovis Homes, prompting share prices in both companies to fall.
First, there was widespread reporting this week on the trend towards less investment in house-building firms. Citigroup revised its "buy" recommendation in both Barratt Developments and Bovis Homes, prompting share prices in both companies to fall.
But then, in another part of the forest, the FT blazed a headline
"Insurers and banks plough £2.2bn into housing" with property correspondent, Ed Hammond reporting that "British banks and insurers are
pouring billions into the country's housing stock as they look to cash
in on rising rents and find wealth stores away from the turmoil rippling through the
markets".
Apparently financial institutions ploughed £2.2bn into houses and apartments in the UK during the 12 months to April this year, according to data released by HMRC.
What is going on? Well, of course, the secret is in the word "rent". While models of home ownership continue to limp along with limited access to mortgages, rental growth in the UK residential sector has been steady during the year as the country's housing shortage, coupled with the self-same constrained mortgage market, drove up demand for rented accommodation.
Average rental values climbed for nine consecutive months to November to stand at £720 per month, according to data from law firm Wedlake Bell. However, as with spending by private individuals, most of the investment in residential properties was targeted at London and the south-east.
"There has been a startling jump in purchases of UK residential property by institutional investors. Institutions are being attracted to residential property because of improving market fundamentals, including high tenant demand, high rents and a supply shortage that shows no immediate signs of abating," said Jeremy Raj, head of residential property at Wedlake Bell. "It will be interesting to see whether this sudden surge is able to maintain its momentum in the year ahead."
Of course, student housing has long been an area which has seen a high level of interest by institutions. But now, as well as interest from pension and insurance funds (who always favoured the long-term, stable revenue streams offered by student housing) the sector has generated interest from private equity buyers.
The government's plans for residential real estate investment trusts, which would give tax breaks on capital gains for companies buying residential property, is all grist to the mill of course.
It is all pretty stark in my view: I genuinely believe we are seeing a seismic shift here. 2012 is sure going to be an interesting year.
Apparently financial institutions ploughed £2.2bn into houses and apartments in the UK during the 12 months to April this year, according to data released by HMRC.
What is going on? Well, of course, the secret is in the word "rent". While models of home ownership continue to limp along with limited access to mortgages, rental growth in the UK residential sector has been steady during the year as the country's housing shortage, coupled with the self-same constrained mortgage market, drove up demand for rented accommodation.
Average rental values climbed for nine consecutive months to November to stand at £720 per month, according to data from law firm Wedlake Bell. However, as with spending by private individuals, most of the investment in residential properties was targeted at London and the south-east.
"There has been a startling jump in purchases of UK residential property by institutional investors. Institutions are being attracted to residential property because of improving market fundamentals, including high tenant demand, high rents and a supply shortage that shows no immediate signs of abating," said Jeremy Raj, head of residential property at Wedlake Bell. "It will be interesting to see whether this sudden surge is able to maintain its momentum in the year ahead."
Of course, student housing has long been an area which has seen a high level of interest by institutions. But now, as well as interest from pension and insurance funds (who always favoured the long-term, stable revenue streams offered by student housing) the sector has generated interest from private equity buyers.
The government's plans for residential real estate investment trusts, which would give tax breaks on capital gains for companies buying residential property, is all grist to the mill of course.
It is all pretty stark in my view: I genuinely believe we are seeing a seismic shift here. 2012 is sure going to be an interesting year.
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