Week commencing 31 May 2016

In today's bulletin

• House prices stable in May
• Construction output slows ahead of EU referendum

• London continues to attract lion’s share of commercial property lending
• Families pay £44,000 extra to live near good schools

Property, Planning and Regeneration

House prices stable in May

The latest Nationwide House Price Index has revealed that the annual pace of house price growth stayed broadly stable in May, slowing slightly to 4.7 per cent compared with 4.9 per cent in April. Overall, annual house price growth has remained between three and five per cent for much of the past 12 months. However, Nationwide’s chief economist, Robert Gardner, warned
that the strength of the housing market had been made “difficult to gauge” by recent stamp duty changes, which caused an all-time high in property transactions in March 2016 as buyers rushed to purchase buy to let properties and second homes.

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Families pay £44,000 extra to live near good schools

Families in the UK pay an average premium of £43,373 to live in the catchment areas for England’s top 50 state funded primary schools as measured by Ofsted, according to research by online estate agent
HouseSimple. Average property prices in streets closest to the best schools were found to be 18 per cent higher than average prices for the area’s postcode.

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Turkey sees soaring property prices since 2012

Figures from property firm Knight Frank have revealed rising house prices across all but six of the nations competing in this summer’s European football championship. Turkey came out on top, seeing prices soar by 65.6 per cent since 2012. The Republic of Ireland saw growth of 34.3 per cent, while the UK experienced a rise of 29.7 per cent, buoyed by ultra-low mortgage rates and
strong economic growth between 2013 and late 2014. However, the data highlighted a marked contrast between northern and southern Europe, with house prices in Spain, France and Italy falling by 7.2, 5.7 and 13.1 per cent respectively.

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Construction output slows ahead of EU referendum

UK construction output growth slowed to its weakest rate of increase in almost three years in May while new work rates fell for the first time since April 2013, according to the latest Markit / CIPS UK Construction Purchasing Managers’ Index (PMI). Survey respondents cited a general market slowdown and a reluctance among clients to place orders and confirm contracts ahead
of the EU referendum on 23 June. However, firms were optimistic in the medium-term, with more than half expecting to see a rise in output over the next 12 months. Job creation also increased in May, reaching a four-month high.

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London continues to attract lion’s share of commercial property lending

Lending to commercial property grew 1.9 per cent year-on-year in 2015, with London continuing to account for the largest share of the pot, according to the latest De Montfort Commercial Property Lending Report published on 24
May. The total amount of year-end debt for 2015 stood at £168.4 billion. Northern cities retained their share but failed to keep pace with the capital, which accounted for 43 per cent of outstanding property debt last year.

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Sadiq Khan to protect office space for small businesses

The Mayor of London, Sadiq Khan, has announced plans to protect and increase office space for small businesses, start-ups and entrepreneurs in the capital. Speaking on 3 June, Mr Khan critiqued the amount of office space lost
through residential conversions using the Government’s ‘permitteddevelopment rights’ and promised to deliver new homes for the capital without infringing upon workspace for smaller businesses and start-ups.

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Northern Powerhouse cities must boost productivity

A new report comparing the Northern Powerhouse to the Randstad and Rhine-Ruhr has found that individual cities in the regions are 40 per cent more productive than their English counterparts. Published on 1 June by think tank Centre for Cities, Building the Northern Powerhouse: lessons from
the Rhine-Ruhr and Randstad argues that this increased productivity is the key to the German and Dutch cities’ success and should be the focus of the Government’s powerhouse initiative over improved connectivity and transport links.

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Confidence among PRS landlords remains low

Buyers are returning to the private rental sector following government changes to stamp duty on buy to let homes, although confidence among landlords remains low. According to new research from BDRC Continental on behalf of Paragon Mortgages published on 3 June, only 41 per cent of landlords rated their business prospects for the next three months as ‘good’ or
‘very good’, down from 65 per cent last year. However, the survey revealed that more landlords are now looking to buy property than sell – a reversal from the last quarter of 2015 and a suggestion that falling levels of confidence may be stabilising.

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DfT to launch aviation noise consultation

The Parliamentary Under Secretary of State for Transport, Andrew Jones MP, has confirmed in Parliament that a consultation on national airspace and noise policy will be launched later this year. Among other issues, the consultation will examine the potential to create an independent noise authority, as recommended in the final report of the Sir Howard Davies’
Airports Commission in July2015. The Department for Transport assured the aviation industry that the consultation would not cause any delays to the ongoing decision-making process about runway capacity expansion in the South East.

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ORR releases first rail industry consumer report

The Office of Rail and Road (ORR) has conducted research and a series of workshops with rail operators to assess for the first time how the rail industry is living up to its consumer responsibilities. Published on 2 June, the Measuring Up report found that the number of public complaints about rail services is falling overall and highlighted improvements in the provision of
travel information via digital platforms as well as increased numbers of passengers using the ‘Passenger Assist’ service to book station assistance. The ORR is now monitoring the industry’s performance on an ongoing basis, publishing its findings once a year.

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Energy and environment

Record 2015 for renewable energy

Renewable energy capacity grew at its fastest rate ever in 2015, according to the Renewables 2016 Global Status Report released on 1 June by renewable energy policy organisation, REN21. 147 gigawatts was added to renewable
power capacity last year, with China, the USA, Japan, the UK and India all making substantial investments.

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Renewable energy is a ‘luxury’ say one in four Brits

One quarter of British people believe renewable energy is a “luxury”, according to a YouGov poll conducted on behalf of independent energy supplier Bulb. The results, released on 31 May, revealed that 23 per cent of respondents believe that green energy is not something that ought to be
supported more, indicating that a significant proportion of society is yet to be won over. However, 71 per cent of those polled favoured greater support, rising to 81 per cent among 18-24 year olds.

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Other News

EU jitters dampen services sector

The UK services sector saw subdued growth last month, experiencing one of its weakest levels of increase in three years, according to the latest Markit/CIPS Purchasing Managers’ Index (PMI). The monthly barometer registered 53.5 in May, rising 1.3 points on April’s 38-month low but remaining
below the index average of 55.2. New business growth and workforce growth were both down on previous months, with more than one third of companies surveyed citing the forthcoming EU referendum for the slowdown.

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