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UK House Price Growth Remained Weak Last Month

Published On: May 2, 2019 at 10:32 am

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Categories: Property News

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While UK house price growth rose slightly in April, it remains weak on both a monthly and annual basis, according to Nationwide’s latest House Price Index.

UK house price growth stood at an average of 0.4% in the month to April, which is up from 0.2% in the previous month.

Year-on-year, the average UK house price increased by 0.9% in April – up from 0.7% in the year to March. This takes the typical property value to £214,920, which is higher than the £213,102 recorded in the previous month.

Robert Gardner, the Chief Economist at Nationwide, explains the figures in more detail: “UK house price growth remained subdued in April, with prices just 0.9% higher than the same month last year.

“Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, even though survey data suggests that sentiment has softened.

“Measures of consumer confidence weakened around the turn of the year and surveyors report that new buyer enquiries have remained subdued.

“While the number of properties coming onto the market has also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of supply and demand in favour of buyers in recent months. April marks the fifth month in a row in which annual house price growth has been below 1%.”

UK House Price Growth Remained Weak Last Month

However, first time buyer numbers are recovering.

Gardner says: “While the ongoing economic uncertainties have clearly been weighing on consumer sentiment, this hasn’t prevented further steady gains in the number of first time buyers entering the housing market in recent quarters.

“Indeed, the number of mortgages being taken out by first time buyers has continued to approach pre-financial crisis levels in recent months.

“First time buyer numbers have been supported by the strength of labour market conditions, with employment rising at a healthy rate and earnings growth slowly gathering momentum. 

“While house prices remain high relative to average earnings, low mortgage rates have helped to support mortgage affordability. Indeed, raising a deposit appears to be the major barrier for prospective first time buyers, since the cost of servicing the typical mortgage remains in line with or below long-run averages as a share of take-home pay in most regions of the UK.

“The exception is in London and parts of the south of England, where affordability pressures are more acute, and the monthly cost of servicing a mortgage, as well as raising a deposit, poses a greater challenge. 

“Indeed, comparing the incomes of actual first time buyers in 2018 with average incomes in each region highlights how affordability pressures vary across the UK. 

“In 2018, first time buyer incomes were in line with or below average incomes in most regions. However, in the East, South East and London, first time buyers’ incomes were significantly higher than average incomes in those regions (60% higher in London), illustrating the extent to which many prospective buyers are priced out of the market in those areas.”

Comments

Guy Harrington, the CEO of specialist property lender Glenhawk, is pleased to see first time buyers returning to the market: “The good news is that first time buyers are wading back in and hopefully picking up some good value stock. We need to end the perception, perpetuated by these reports, that the market is weak, and get used to stagnant house prices, not the rocket ship growth we have had in previous decades, which was simply just not sustainable.”

Conor Murphy, the CEO of mortgage advisor software Smartr365, agrees that slower UK house price growth is understandable: “Patchy house price growth is expected as the market continues its recent subdued performance. We could see transaction volumes increase as we move into the summer, however, as we approach one of the seasonal activity surges that have been a characteristic part of the UK property market in the past.”

Lucy Pendleton, the Founder Director of independent estate agent James Pendleton, is concerned that the market is relying on first time buyers: “At this point in the country’s property diary, the market has had a month to get used to Britain abandoning its abandonment of the EU. The pace of the housing market, however, remains the same. 

“The run of play is still slightly in the favour of buyers, but it is only really a buyers’ market in any real sense in London and pockets of the South East. 

“A lot of the activity supporting prices is being driven by first time buyers around the UK, their pockets still filled with Government cash encouraging them to transact. 

“What estate agents would like to see is a broadening out of demand and less dependency on this group. That’s happening to an extent in London, where prices have fallen significantly compared with the rest of the country over the last year.

“Any rebalancing in favour of owner-occupiers will point to better stock levels and more realistic pricing, both of which are better for the housing market in the long-run.”

Brexit Fails to Hinder the Scottish Rental Market

Published On: May 2, 2019 at 10:10 am

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Categories: Lettings News

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Brexit uncertainty is failing to hinder the Scottish rental market, according to the latest Quarterly Report from letting portal Citylets, covering the first quarter (Q1) of the year.

Rent prices in the Scottish rental market continued to edge upwards in Q1, despite the political landscape, which has affected markets in other sectors. The average home to let in Scotland now costs £793 per month, following a 1.7% rise.

One and two-bedroom properties charted a familiar course, both recording positive annual growth in rent prices. However, mixed signals at the local level were recorded, especially in Scotland’s central belt.

Overall, the market operated at the same speed as in Q1 2018, with the average property taking 37 days to let.

Gillian Semmler, the Communications Manager for Citylets, comments: “Scotland’s private rented sector operated broadly to expectation against the underlying political chaos defining the Q1 period. There have been indications of a slower moving market, especially in Edinburgh, but certainly not as marked as in other property or, indeed, business sectors. More choice for tenants in the capital sees more tenants taking time to view multiple properties before committing. As a result, average time to let has increased by three days.”

Edinburgh

It now costs a record high of £1,115 per month to rent a home in Edinburgh, with a backdrop of lengthening time to let. This is consistent with anecdotal evidence from local agents of tenants shopping around and taking advantage of the increase choice in the market.

Q1 2019 saw properties take an average of 30 days to let – three days longer than in the same quarter of last year. 

Rent price growth of 5% will once again cheer landlords and concern tenants, however, this is a lower rate of growth than previous quarters, with the time to let hinting at a possibly softening market, after more than nine years of annual growth each quarter.

Scotland
Brexit Fails to Hinder the Scottish Rental Market

Glasgow

Tenants in Glasgow have also been reportedly shopping around before committing to a rental home. Nonetheless, the figures for Scotland’s largest city remain stable, with rents up by a modest 2.9%, to an average of £771 per month, while the typical time to let was unchanged on last year, at 31 days.

Rents on three-bed properties rose by a significant 8.6% on Q1 2018, whereas four-beds fell, by 7.1%. Volatility in the data for larger properties, however, is not uncommon, given the lower volumes reported each quarter.

Glasgow’s main one and two-bed property markets continued to record strong rent price growth, at 5.3% and 3.0% respectively. 58% of all Glasgow properties are currently let within one month.

Aberdeen

Falls in rent were reported for all property types in Aberdeen in Q1 2019, however, at -3.5%, the rate of decline continues to ease. With re-let times continuing to reduce, it is fair to view the figures for Q1 as positive overall for landlords.

One-bed homes fared best over the period, with rent price growth of -2.5%, an average time to let of 49 days and 41% of properties let within one month. 

A typical property in Aberdeen now costs £710 per month and takes 54 days to let – four days faster than in Q1 2018.

Dundee

Dundee started 2019 where it left off, as rents continued to move upwards, albeit at a modest 1% rise over the past year. The average property costs £620 per month and takes around a month-and-a-half to let, at 43 days. 

As with other cities, the market data for Dundee was conflicting, recording declining rents for one and two-bed homes, but improved re-let periods. Rent prices for three and four-bed properties continued to climb annually.

West Lothian

Rental properties in West Lothian continue to enjoy strong demand, seeing average prices rise once again – by 3.5% in the year to Q1, to reach £710 a month. 

The signs for this popular commuter belt region look positive for landlords, with the time to secure tenants falling notably, to just over a month, at an average of 34 days.

Andrew Meehan, of estate agent Rettie & Co., assesses the Scottish rental market: “The rental markets in Scotland’s two largest cities continue to experience high levels of demand, driving continued growth in achievable rental values at the start of 2019. Over the first quarter of the year, despite increasing stock levels in both markets, enquiry levels, especially in city centre locations, continue to outstrip supply, fostering market competition and supporting values. 

“In the rural rental market in Central Scotland, demand from families, who in recent years have been increasingly considering renting over buying, have continued to seek out the right family home for longer tenancies.”

RLA Warns of Rental Housing Crisis, as Landlords Sell Up

Published On: May 2, 2019 at 9:00 am

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The Residential Landlords Association (RLA) is warning of a rental housing crisis, as a quarter of private landlords are looking to sell at least one property over the next year.

Of almost 2,500 landlords who responded to the latest RLA survey, just over 25% said that they were planning to sell at least one property over the next year – the highest proportion since the organisation began asking this question regularly in 2016.

The same study shows that 23% of landlords reported an increase in demand for rental housing over the previous three months, while 57% described it as stable.

However, more than a third of landlords reported low levels of confidence in the private rental sector over the next 12 months.

The results arrive following the publication of Government data earlier this year, which found that 10% of private landlords (representing 18% of tenancies) plan to decrease the number of properties they let, while 5% of landlords (representing 5% of tenancies) plan to sell all of their properties.

The Royal Institution of Chartered Surveyors has warned that the imbalance between supply and demand of rental housing is expected to see rent price growth average 3% per year over the next five years.

Amidst the rental housing supply crisis that tenants now face, the RLA argues that it is vital that landlords retain confidence to provide the homes to rent that are desperately needed. This means ensuring that new regulations, governing how landlords can regain possession of their properties in legitimate circumstances, are fair and effective, both for landlords and tenants.

David Smith, the Policy Director of the RLA, says: “All the talk of longer tenancies will mean nothing if the homes to rent are not there in the first place.

“The Government’s tax increases on the sector are already making it difficult for tenants to find a place to live, with many landlords not renewing tenancies. If rushed and not thought through, planned changes to the way landlords can repossess properties risk making the situation even worse.”

He adds: “Action is needed to stimulate supply with pro-growth taxation and a process for repossessing homes that is fair to all.”

Brexit has Created a Buyers’ Market for Buy-to-Let in London

Published On: May 2, 2019 at 8:00 am

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Although many reports are pointing the finger at Brexit for causing delays in the property market, London is starting to show some positive signs, becoming a buyers’ market for buy-to-let investors, new data shows.

Ongoing political uncertainty is clearly causing some buyers and sellers to adopt a wait-and-see approach towards property sales. However, with Brexit uncertainty continuing to hit house prices, a growing number of buy-to-let landlords are starting to see it as a good time to purchase.

New figures from specialist buy-to-let broker Commercial Trust Limited reveal that London regained its position as the leading region for buy-to-let business applications during the first quarter (Q1) of the year.

The number of submitted purchase mortgage applications for the capital in the 12 months to April rose by 4% on the previous quarter, to hit 15.8% of overall business. The South East was close behind, at 14.5%.

In Q4 2018, the South East had overtaken London for the first time.

Commercial Trust’s data ties in with a recent report from London estate agent Chestertons, which claimed that London is starting to offer improved rental yields, as the market shows signs of bottoming out.

The East of England and North West also enjoyed an increase in the proportion of buy-to-let applications submitted during Q1, with this type of business accounting for 12.5% of all applications in both regions.

The same two regions shared the top spot for buy-to-let completions over the quarter, with both contributing 13% of overall completions.

In total, remortgage buy-to-let applications continued to dominate in Q1, with 60% of business coming from landlords looking to refinance.

Andrew Turner, the Chief Executive of Commercial Trust, says: “The effects of Brexit have been keenly felt in London, and, perhaps, the stalling of house price growth has to some extent created a buyers’ market for buy-to-let.”

He believes that the firm’s latest figures underline the importance of London and the South East within the buy-to-let sector.

Turner explains: “For Q1 2019, these two regions contributed over 30% of our buy-to-let purchase applications, an increase from the 26% recorded in Q4 2018.

“Whilst it is good news to see increased activity in London, movement is not restricted to that area, and both the North West and East Anglia have also increased their proportion of overall purchase business during the quarter.”

He is positive about the future: “With Brexit now pushed back to later in the year, the combination of low interest rates, a wide variety of mortgage product choice, stalling house prices and soaring tenant demand, many investors are of a mind to invest in the private rental sector.”

Average Cost of Renting a Room Up by 3% on 2018

Published On: May 1, 2019 at 9:12 am

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Categories: Tenant News

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The average cost of renting a room in the UK has increased by 3% (£15 per month) since the first quarter (Q1) of 2018, taking a typical rent to £582 a month, according to SpareRoom’s Q1 2019 Rental Index.

While house prices are coming down, rent prices are on the up in all regions of the UK. London, Northern Ireland and the West Midlands recorded the greatest jumps in the year to Q1, at an average of 4%. Despite its proximity to the capital, the South East saw the lowest growth (2%), followed by the South West (3%).

Looking on a town/city level, the greatest surges in the cost of renting a room were seen in the north of England, with Lancashire’s Preston taking first place. Rent prices in the city rose by an average of 8% (£30) on Q1 2018, bringing a typical rent to £378 per month. York and Stockport were close behind, with average increases of 7%. 

At the other end of the spectrum, Southend-on-Sea, Aberdeen and West Bromwich were at the bottom of the table, with declines of 5%, 3% and 3% respectively.

Oxford follows London as the UK’s second most expensive location to rent a room, at an average of £572 per month. This follows a modest 1% rise on Q1 last year. University hotspots Reading and Edinburgh were third and fourth, with average prices of £530 and £519 respectively. 

Contrastingly, the cheapest rents can be found in Belfast (£312), Sunderland (£319) and Middlesbrough (£327).

Contrast to the traditional north-south divide seen in England, London has its own east-west divide, with many of the capital’s cheapest room rents located east and southeast, while the more expensive rooms are located in the west and southwest. 

Unsurprisingly, central St Paul’s (EC4) is the most expensive location to rent in London (£1,336 per month), despite the cost of renting a room falling by an average of 7% over the past year. South Kensington/Knightsbridge (SW7), at £1,177, and the Stand/Holborn (WC2), at £1,157, were close behind.

However, there’s still hope, as the cost of renting a room varies widely across London, with 17 areas available for under £600 per month, including Abbey Wood (£531), Manor Park (£541) and Chingford (£542).

Matt Hutchinson, the Communications Director for SpareRoom, says: “House prices may have stalled, but rents are on the up again. The ongoing Brexit mayhem might be putting people off buying or selling, but renters still need to move. 

“With that in mind,it’s no surprise London continues to show solid growth, but if this 4% rise is a reflection of what’s to come, we’ll see renters hit their affordability ceiling and be forced further out the capital, especially as Crossrail, when it’s finally complete, likely to drive rents up in the east and southeast of London.”

Homes are Selling Faster in 1 in 5 Areas, Despite Brexit

Published On: May 1, 2019 at 8:50 am

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Brexit may be causing some turbulence in the UK property market, but homes are actually selling faster in one in five towns and cities across the country, Gatehouse Bank has found.

Analysis by the home purchase plan provider shows that homes on the sales market have been available for an average of two weeks longer than a year ago (162 days, compared to 148), but this slowdown is absent in 19.6% of locations across the UK.

Gatehouse Bank assessed time on market data from home.co.uk, finding that property sales sped up in 24 of the 122 towns and cities in the survey, with homes for sale in Oldham marketed for 27.7% less time than the previous year on average.

Stirling followed, with a decline of 24.5% in the time to sell, to 114 days on average, while Sale, Greater Manchester, wasn’t far behind, with a drop of 19.5%, to an average of 95 days.

The fastest markets in which to sell a home are Rugby (85 days), Sale (95 days) and Edinburgh (97 days). On the other end of the spectrum, the most sluggish are Aberdeen (320 days), Sunderland (279 days) and Durham (264 days).

The greatest slowdown was recorded in Padstow, where homes have been on the market for an average of 56.6% longer than a year ago – 238 days. Homes in Woking have been on the market for 50% longer, while marketing a Hemel Hempstead property has increased by 48.7%.

Charles Haresnape, the CEO of Gatehouse Bank, says: “A slowdown in sales across the country reflects the wait-and-see approach exacerbated by these marathon Brexit negotiations, but it’s not a reality for everyone. 

“Robust demand means buyers across a healthy cross section of Britain are ensuring homes aren’t hanging around for long in relative terms.”

He continues: “We know that first time buyers are still active, and that’s thanks in no small part to Stamp Duty reliefsand Help to Buy. This new blood is helping to keep the market turning over, not just in the fastest markets, but equally so in those areas where a slight slowdown means they are being encouraged to drive a harder bargain.”