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Annual House Price Growth Eases Again, to 3.3%

Published On: June 7, 2017 at 9:54 am

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Annual house price growth eased again in May, to 3.3%, according to the latest House Price Index from Halifax.

The rate of growth recorded last month was lower than in April and is the lowest annual rate seen since May 2013 (2.6%). It is around a third of the 10.0% peak hit in March 2016.

On a quarterly basis, house prices in the three months to May were 0.2% lower than in the preceding quarter. This is the second quarterly decline since November 2012 (0.3%).

Month-on-month, there has virtually been no change in prices, at 0.4%.

Nationally, house prices in May were 11% above their August 2007 peak. The average house price of £220,706 is now £66,043 (43%) higher than its low point of £154,663 in April 2009.

Annual House Price Growth Eases Again, to 3.3%

Annual House Price Growth Eases Again, to 3.3%

The House Price Index also found that sales dropped by 3% between March and April this year, to 99,910. This followed three successive months when sales were above 100,000. Nonetheless, sales in the three months to April were 2% higher than in the previous three months.

The volume of mortgage approvals for house purchases – a leading indicator of completed home sales – fell by 2% between March and April, to 64,600.

Approvals have been in a narrow range between 64,600 and 68,600 per month over the past six months, suggesting that home sales are unlikely to change significantly over the next few months.

Rising inflation and weak wage growth, alongside higher Stamp Duty rates for buy-to-let and second property purchases, have weakened market activity, reports Halifax.

However, supply still remains very low. The number of properties coming onto the market decreased for the 14th consecutive month in April. This kept the average stock level on estate agents’ books close to historic lows.

Nevertheless, a rise in private sector housebuilding has been recorded. Private enterprise new build housing completions rose by 12% in the first quarter (Q1) of this year, compared with the previous quarter. In contrast, completions by housing associations were 5% lower. All completions are 57% above the low seen in Q1 2013, but remain 18% lower than their Q1 2007 peak.

The Housing Economist at Halifax, Martin Ellis, says: “After reaching a recent peak of 10% in March 2016, the annual house price growth has since fallen to 3.3% in May.

“House prices have again fallen over the past three months. Overall, prices in the three months to May were 0.2% lower than in the preceding three months; the same rate as in April.

“The fact that the supply of new homes and existing properties available for sale remains low, combined with historically low mortgage rates and a high employment rate, is likely to support house price levels over the coming months.”

The Founder and CEO of online estate agent eMoov.co.uk, Russell Quirk, also comments: “Despite many predicting a second consecutive monthly drop in house price growth, the latest numbers by Halifax show that prices have, in fact, crept up ever so slightly during May, notwithstanding a marginal fall in the last quarter.

“The unpredictability of recent house price trends demonstrates the turbulent landscape that both the UK property market, along with the wider economy, have had to traverse over the last year or so. With the snap election looming imminently, the recent cool in price growth seems to be thawing and it is no coincidence that one of the overarching factors in the recent price growth slowdown has been a shortage of stock, more so than usual.”

He adds: “Tomorrow’s vote will be pivotal in shaping the future of the UK housing market. However, regardless of which way it goes, it is likely that the sector will receive a boost from the many home sellers and buyers who, until now, will have been putting their decision on hold until the election dust has settled.”

eMoov has recently accessed which political party has been best for the property market since 1970: /best-political-party-house-price-growth/

Property supply rises ahead of General Election

Published On: June 7, 2017 at 9:31 am

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The most recent report from HouseSimple has indicated that there was a 7% increase in property supply across the UK during May.

This increase comes after a 4% fall in April and suggests that sellers want to secure an offer before the impending General Election result in early June.

New Property Listings

Almost 80% of towns and cities covered by the report saw an increase in new property listings in May in comparison to April.

The largest rises were evident in Barnsley, Wolverhampton and Canterbury, with new listings here totalling 74.6%, 52.1% and 51.9% respectively.

However, the report does show that levels of supply have swung substantially in many areas during the last two months. Oldham and Northampton saw new listings rise significantly in April but drop in May.

In London, the ups and downs of new property supply in May across all 32 boroughs were less vivid than in April. New property listings here were up by 5.2% during the last month.

Two areas that did see significant swings were Newham and Sutton. Newham saw a rise of 23.5% in May, compared to a decline of 15.8% in April. On the other hand, Sutton saw falls of 28.1% in May, with a drop of 19.2% in April.

Property supply rises ahead of General Election

Property supply rises ahead of General Election

Uncertainty

Alex Gosling, CEO of HouseSimple noted: ‘Political and economic uncertainty surrounding a General Election can often see sellers hold off marketing until after the result is known. However, the 7% rise in May suggests many sellers aren’t waiting and marketed their properties last month to try and secure an offer before the Election result.’[1]

‘There is something to be said for doing this. The Spring period, traditionally a buoyant time for the property market, has been knocked off kilter by Article 50 being invoked and the PM calling a General Election. As a result, we could see a late Spring bounce after the Election result, with a stampede of sellers putting their properties onto the market before the summer holidays. It doesn’t give home sellers a lot of time to secure a sale and the savvy and committed seller, willing to negotiate on price could well have seen an opportunity to beat this stampede and steal a march on their competition,’ he added.[1]

[1] http://www.propertyreporter.co.uk/property/general-election-sparks-rise-in-property-supply.html

 

Landlords Still have Appetite for Future Property Investments, Claims Study

Published On: June 7, 2017 at 9:25 am

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Although most have been affected by recent and ongoing restrictions to tax relief on finance costs, landlords still have an appetite for future property investments, found a recent study by Mortgages for Business.

Landlords Still have Appetite for Future Property Investments, Claims Study

Landlords Still have Appetite for Future Property Investments, Claims Study

Results from the latest Property Investor Survey show that the proportion of landlords seeking to expand their portfolios has grown to 48%, up from 45% in November last year and 41% a year ago, shortly after the 3% Stamp Duty surcharge on additional properties was introduced.

The survey was conducted over a two-week period in May this year, having been sent to Mortgages for Business clients, and advertised on social media and landlord forums. A total of 186 property investors completed the study, answering questions on their portfolios and how they are financed.

At the same time, landlords have been increasingly opting for five-year fixed rate mortgages, rather than three-year fixes. In May 2016, three and five-year fixed rate deals were each preferred by roughly one in five landlords (18% and 21% respectively).

In the time since, however, there has been a huge shift in investor preferences. Five-year fixed rate mortgages are now the preferred option for 42% of landlords, up from 33% in November last year and twice that of May 2016.

Three-year fixed rate deals, meanwhile, are now less popular than even ten-year fixes, being chosen by just 5% of respondents – less than a third of the proportion last year.

The COO of Mortgages for Business, Steve Olejnik, comments on the study: “Although we expect buy-to-let lending to reduce somewhat this year, these results demonstrate that landlords are a resilient bunch, capable of adapting their investment strategies to successfully accommodate the new fiscal and regulatory landscape. Incorporation is becoming a standard practice and the move towards five-year fixed rates allows landlords to maximise their borrowing options.”

When asked how investors were adjusting to the changing economic environment, 62% claimed to have consulted a professional tax adviser.

Of these, the majority (34%) had sought advice specifically because of the changes to tax relief on finance costs, while 28% said that they already had an existing relationship with a tax adviser.

Although it is positive to see many landlords seeking professional advice, Mortgages for Business urges the remaining 38% of investors to ensure that they understand how their tax liabilities may be changing.

Increased taxes pushing buy-to-let demand down

Published On: June 7, 2017 at 8:49 am

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Categories: Landlord News

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The number of buy-to-let landlords registering in order to purchase property in England and Wales fell by 3.7% month-on-month to May.

This was driven by a 9.6% fall in London, owing largely to the fact that landlords in the capital are now being forced to spend 13% more in order to obtain a buy-to-let property.

Significant Annual Falls

When looking at annual declines, the percentage is much greater, totalling 35.3% in England and Wales and a huge 52.6% in London.

In comparison to May 2016, buy-to-let sales are down by 7% in England and Wales and by 4.2% in the capital. Sale prices also fell in the same period, by 2% in England and Wales and by 4.4% in London, according to haart’s latest national housing market monitor.

Year-on-year however, these prices were actually up by 0.1% in England and Wales and by 13.7% in London.

Increased taxes pushing buy-to-let demand down

Increased taxes pushing buy-to-let demand down

Tenant Troubles

The number of tenants coming into the market in May fell by 8.3% month-on-month and by 34.7% annually across England and Wales. This in turn hat put downward pressure on rents, which have fallen by 1.6% on the month.

Average rents now total £1,268pcm across the whole of the UK.

In London, tenant demand has fallen by 13.6% over the month and by 34.8% over the year. As a result, rents here have fallen by 0.1% and the average rental price is at £1,788pcm in London.

David Cox, chief executive of ARLA Propertymark, said: ‘It’s been a year since the Government inflated stamp duty costs for landlords to 3% and it’s already made the Treasury £1.3bn. That’s more than changes to mortgage interest relief, which are now in force, are expected to make in its first three years. This will only further squeeze the sector and make buy-to-let a less attractive investment for landlords.’[1]

‘We’re facing a severe housing shortage at the moment and if the supply of rental stock falls any lower relative to demand for housing, we’ll fund ourselves in the midst of a real crisis,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/6/demand-for-buy-to-let-falls-as-higher-taxes-bite

 

UK Property Market Shows Momentum Pre-Election

Published On: June 7, 2017 at 8:14 am

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Categories: Property News

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The UK property market is showing momentum ahead of this week’s General Election (on Thursday 8th June), according to Agency Express.

Following a slowdown across the UK property market in April, the latest Property Activity Index from Agency Express shows that the pace picked up during May.

UK Property Market Shows Momentum Pre-Election

UK Property Market Shows Momentum Pre-Election

Monthly data shows nationwide increases in both new property listings, up by 9.6%, and the number of properties sold, at 12.3%.

On an annual basis, new listings have continued to rise, while the amount of properties sold has declined.

Regionally, Agency Express found that nine of the 12 regions included in its Property Activity Index saw growth in new property listings in May, while ten recorded increases in the number of properties sold.

May’s most prominent performers were London and the South East, with both regions recording robust growth in May.

New listings in the capital were up by 24.6%, with the number of properties sold rising by 21.3%. In the South East, new listings increased by 23.5%, while property sales rose by 22.5%.

Other hotspots in May’s Property Activity Index include:

New property listings 

  • Scotland: +28.6%
  • Central England: +11.4%
  • East Anglia: +8.9%

Properties sold 

  • North East: +20.1%
  • North West: +19.4%
  • East Anglia: +11.9%

The greatest decreases in May’s index were recorded in Wales. The number of properties sold fell for a second consecutive month, by 3.5%, as did new property listings, by 0.9%. However, the Property Activity Index’s rolling three-monthly data shows more stability, with new listings up by 2.3%.

The Managing Director of Agency Express, Stephen Watson, comments on the figures: “During May, we traditionally see a slower pace throughout the UK property market and, with the imminent General Election, a slowdown on some level was anticipated.

“However, this month’s figures have exceeded our expectations and activity is more robust compared to figures recorded in 2015. Looking forwards, we won’t see the full impact of the General Election until June’s figures are collated, so it will be interesting to see if and how the usual trends of the market are affected.”

Calls for £30,000 fine for larger agents who flaunt proposed fees ban

Published On: June 6, 2017 at 1:17 pm

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The more larger letting agents found to be in breach of the proposed ban on letting agent fees should receive fines of up to £30,000 to ensure compliance.

That is the view of the Chartered Institute of Environmental Health, which has revealed what was in its submission under the Government’s consultation process around the ban.

Ban on Fees

The proposed ban on fees was outlined in last year’s Autumn Statement. The CIEH has given its backing to the ban on all letting agent fees, arguing that this would get rid of some barriers facing tenants in moving out of a sub-standard home.

Representing the workforce of environmental health professionals that undertake inspections in the private rental sector, the CIEH has recommended fines of up to £30,000 for big property managing agents.

In addition, the membership body has recommended that holding deposits should not be exempt from any ban, as this could cause issues with loopholes to exploit tenants. An example of this could be agents holding onto more than a single tenant’s deposit for the same property.

It notes that holding deposits pose an extra barrier to tenants wishing to move home, as they heighten the amount of money required to secure a new tenancy. Should these be allowed, the CIEH wants to see them registered under a mandatory client money protection compensation scheme in order to avoid any abuse.

Tenant Rights

Also in its submission, the CIEH suggests that tenants should be given accessible information surrounding their rights and obligations on letting agents. These should include information on how to lodge a complaint with the correct enforcement body.

CIEH believe that the ban on agent fees should apply to landlords and third parties, in order to avoid any additional charges to the tenant through a different route. It suggests that premium sections of the market should not be exempt.

The only reason for exclusions to the ban, the organisation suggests, should be due to malicious tenant actions.

Calls for £30,000 fine for larger agents who flaunt proposed fees ban

Calls for £30,000 fine for larger agents who flaunt proposed fees ban

Standards

Tamara Sandoul, CIEH policy manager, feels that the underlying point behind the suggestions is to help improve standards and conditions in the sector, while protecting tenants at the same time.

Sandoul said: ‘The private rented sector is such an important part of the housing market, providing homes for people who otherwise cannot afford to buy their own, especially the vulnerable and those on low incomes.’[1]

‘While the vast majority of letting agents are responsible, there are those who exploit tenants by charging them extortionately high fees. A comprehensive ban on letting agents’ fees is a very positive step forward. It will give tenants greater freedom to move out of properties that are hazardous and in poor condition, which in-turn should drive up standards and quality of rented housing,’ she continued.[1]

Concluding, she noted: ‘We do not expect to see higher rents because of the ban as the cost of referencing new tenants is likely to be small in comparison to the costs of maintaining a property to a good standard. At the moment managing agents are charging both the landlord and the tenant fees, but this ban should help to increase competition between letting agents and help to drive the total costs down.’[1]

[1] http://www.propertywire.com/news/uk/call-fines-30000-flout-upcoming-lettings-fee-ban-england/