welcome
play

Welcome Henry Galbraith, Senior Investor Relations Residential - PowerPoint PPT Presentation

Jun 13, 2023 •142 likes •440 views

Welcome Henry Galbraith, Senior Investor Relations Residential Property Market Update Mark Weedon, Head of Research UK Residential Property The Headline Rollercoaster Financial Times, 07-06-2018 Guardian, 16-04-2018 Financial Times,

  1. Welcome Henry Galbraith, Senior Investor Relations

  2. Residential Property Market Update Mark Weedon, Head of Research

  3. UK Residential Property – The Headline Rollercoaster Financial Times, 07-06-2018 Guardian, 16-04-2018 Financial Times, 14-06-2018 BBC, 12-07-2018 Financial times, 08-05-2018 Capital at Risk

  4. UK House Price Growth UK Land Registry House Price Index 6% 5.1% 4.8% 5% 4.8% 4.8% 4.7% 4.6% 4.5% 4.4% 4.3% 4.3% 4.3% 4.2% 4.1% 3.9% 4% 3.7% 3% % change 2% 1.6% 1.3% 1.2% 1% 0.8% 0.6% 0.6% 0.4% 0.4% 0.2% 0.1% 0% -0.2% -0.3% -0.3% -0.4% -0.7% - 1% Feb- 17 Mar - 17 Apr - 17 May- 17 J un- 17 J ul - 17 Aug- 17 Sep- 17 O ct - 17 No v- 17 Dec- 17 J an- 18 Feb- 18 Mar - 18 Apr - 18 Mont hl y change Ann ual change Capital at Risk Sources: ONS Land Registry HPI

  5. UK House Price Growth by Region High value London property has experienced pressure on prices, outer London residential remains more resilient 5.6% The South West is the strongest performing part of the country Capital at Risk Sources: ONS Land Registry HPI, ONS Private Rental Housing Prices Index

  6. UK House Price Growth 1952 – 2017 UK house prices over time £250, 000 50% Peak-to-trough % house Peak-to-trough % house 1955 to 1989: no quarter where 225,998 price fall from Q3 1989 to price fall from Q3 2007 to house prices had fallen over the Q1 1993: -20.2% Q1 2009: -18.7% previous 12 months £200, 000 40% Average annual house price growth 1952 to 2017: 7.5% £150, 000 30% Average UK house price Annual house price growth £100, 000 20% £50, 000 10% £0 0% 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 £50, 000 - 10% Annual house pr i ce gr ow t h Aver ag e UK ho us e pr i ce £100, 000 - 20% Capital at Risk Source: ONS Land Registry HPI (1995 – 2017), Nationwide HPI (1952 – 1995)

  7. UK Residential Rental Value Growth Rental value growth versus inflation to May 2018 114 112 Index values (January 2012 = 100) 110 108 106 104 102 100 J an- 12 May - 12 Sep- 12 J an- 13 May - 13 Sep- 13 J an- 14 May - 14 Sep- 14 J an- 15 May - 15 Sep- 15 J an- 16 May - 16 Sep- 16 J an- 17 May - 17 Sep- 17 J an- 18 May - 18 Rent al val ue gr ow t h CPI i nf l at i on • Rental growth remains steady in face of economic uncertainty Capital at Risk Sources: ONS Private Rental Housing Price Index, ONS CPI Annual Rate

  8. Housing Market Activity – Transaction levels stable UK Residential transactions over 12 months 1.2m transactions in the 12 months to 1, 500 1,405 May 2018 1,300 1,204 - 1.5% above previous 12 months 1,189 1,186 1,168 1, 200 - Second higher 12 month period on Annual transactions in 000's 953 925 917 record since financial crisis 871 900 739 600 300 M ay- 08 M ay- 09 M ay- 10 M ay- 11 M ay- 12 M ay- 13 M ay- 14 M ay- 15 M ay- 16 M ay- 17 M ay- 18 Capital at Risk Source: HMRC UK Property Transaction Count – May 18, RICS residential sentiment survey

  9. Housing Market Supply and Demand Housing surplus / shortage as % of households post financial crisis Housing surplus / shortage by location 5% 4.4% 4% 3.8% 3% 2% 2.1% 1% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 - 1% - 2% - 3% -3.0% - 4% Engl and London • Housing construction is increasing but still more than 30,000 units per year short of 250,000 requirement • UK 10% below EU average for dwellings per population, 14% below Germany and 17% below France • 80% of housing stock held by owner occupiers and social landlords, not trading as assets, prices are “sticky” Capital at Risk Sources: DCLG number of households and number of dwellings by local authority area, Euromonitor International

  10. Housing Affordability House prices versus income and mortgage affordability Average cost of mortgage debt repayment as % of household income –“stress test” 1 6. 0x 30% 28% 26% 5.0 5. 0x 25% 4.7 23% House price to household income ratio 23% 23% 20.4% 20% 20% 20% 4. 0x 20% 19% 19% 19% 18% 18.1% 17% 16% 16% 16% 15.9% 16% 15% 15% 15% 15% 15% 15% 15% 15% 14% 14% 3. 0x 15% 14% 14% 13% 12% 12.2% 2. 0x 10% 1. 0x 5% 0. 0x 0% 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 1. 4% 3% 4% 5% 8 8 8 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2-year mortgage rate Aver ag e cos t of m or t gage debt r epaym ent a s % of hou s ehol d i nc om e House pr i ce t o househol d i ncom e r at i o Capital at Risk Sources: ONS and Bank of England 1 Based on 2017 house price and income figures

  11. UK Economic Outlook – 5 year Growth Forecasts Forecast percentage change in economic variables April 2018 to April 2023 16% 14.2% 14.0% 14% 12.1% 12% 10.4% 10% 8% 7.0% 6% 4% 2% 1.5% 0% GDP CPI i nf l at i on Wage gr o w t h House pr i ce gr ow t h Rent al val ue gr ow t h Bank of Engl and base r at e Capital at Risk Source: OBR UK Economic Forecasts

  12. Property Investment performance by sector

  13. Investment Performance by Property Sector in 2017 Total return by property sector, 12 months to December 2017 20% 20.0% 15% 11.3% 10% 9.6% 7.9% 6.3% 5% 2.6% 0% Ret ai l O f f i ce I nd us t r i al Al l com m er ci al pr oper t y Pr i vat e r ent ed r esi dent i al PBSA Capital at Risk Sources: IPD Annual Property Index

  14. Investment Performance by Property Sector 1997 to 2017 20-year annualised performance by property sector 11.8% 12% 10.0% 10.0% 10% 8.8% 5.7% 8.5% 2.5% 7.8% 8% 2.6% 2.4% 5.6% 2.0% 6% 7.4% 6.2% 6.0% 6.0% 4% 5.6% 4.1% 2.7% 2.6% 2.2% 2% 1.8% 1.7% 1.5% 0% Ret ai l O f f i ce I nd us t r i al Al l com m er ci al pr oper t y Resi dent i al PBSA* ncom e I r et ur n Capi t al gr ow t h Tot al r et ur n Rent al val ue gr ow t h *PBSA records began in 2011, showing 6 years of data Capital at Risk Sources: IPD Annual Property Index, ONS Land Registry HPI & ONS Private Rental Indices, CBRE Student Accommodation Total Return Index

  15. Long-term outperformance of other asset classes by UK residential 20-year total return index by asset class to 2017 1, 400 Average annualised return 20- 1, 200 years to December 2017 London residential 13.6% property 1, 000 Residential 10.0% Index values (January 1997 = 100) property 800 Commercial 8.5% property Equities 6.5% 600 Gold price 6.5% 400 Cash savings 3.7% 200 Inflation 1.9% 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 FTSE al - shar e Cash savi ngs CPI i nf l at i on Gol d pr i ce Resi dent i al pr oper t y London r esi dent i al pr oper t y Com m er ci al pr oper t y Capital at Risk Sources: FTSE Russell, Bank of England, World Gold Council, ONS Land Registry HPI & ONS Private Rental Indices, IPD Annual Property Index

  16. Risk reward by property sector 1997 to 2017 Risk reward by asset class, 20-year annualised total return and volatility to end December 2017 12 PBSA* Risk adjusted return p.a. (Sharpe ratio)** 10 Industrial Residential Residential 0.86 High return, Higher risk High return, Lower risk Office All commercial property Industrial 0.64 8 Retail Annualised total return % All commercial 0.52 Gold FTSE all-share Office 0.49 6 Retail 0.42 4 FTSE all-share 0.16 UK savings interest rate Low return, Higher risk Low return, Lower risk Gold 0.16 2 0 20 18 16 14 12 10 8 6 4 2 0 Volatility Sources: IPD Annual Property Index, ONS Land Registry HPI & ONS Private Rental Indices, FTSE Russell, World Gold Council, Bank of England average cash deposit rate, CBRE Student Accommodation Total Return Index. *PBSA records began in 2011, showing 6 years of data Capital at Risk **The Sharpe ratio shows the performance of an investment over a period of time, over and above the risk-free rate, adjusted for the volatility of its performance. In this case the risk-free rate is the average annual return on cash savings. The ratio shows the level of return generated for the risk taken and is the industry standard measure of comparing the risk / reward characteristics of different asset classes.

  17. Investment Strategy Robert Weaver, Director of Property

  18. Property Partner Portfolio at June 2018 Portfolio Segmentation Average Number of Value of Commercial dividend yield 1% properties properties at launch 106 £122.7m 4.0% PBSA 20% London 27% Ø Choose from more than 100 hand picked property investment North East opportunities 2% East of England 3% Ø Build a diversified portfolio across South West 3% regions and property types West Midlands 4% South East Yorkshire & Humber 16% 6% North West 8% East Midlands 10% Capital at Risk

Recommend

More recommend