Written By Em

Em Morley

Average Price of a First Time Buyer Home in London Rises by £28,000

Published On: August 17, 2015 at 4:55 pm

Tags: buying a home in London,first time buyers London,London property market,starter home London

If anyone wondered if London’s first time buyers are struggling, new research can confirm that they are. According to Savills, the price of an average starter home in the capital has risen by £28,000 in a year.

This means that buyers priced out of full ownership and looking for a shared ownership deal still need £67,000 for a home, up £7,000. This is for a quarter share in a property.

Savills suggests that first time buyers stay away from Hammersmith and Fulham, Lambeth, Barnet and Ealing. All four boroughs have experienced a 20% increase in the price of starter homes in the last year; this is more than double the London average.

Average starter home prices in London

Borough	Average price April 2014-2015	Average price April 2013-2014	Annual change
Barking and Dagenham	£180,000	£162,000	11.1%
Bexley	£203,000	£177,000	14.7%
Havering	£215,000	£189,000	13.8%
Croydon	£218,400	£191,995	13.8%
Newham	£220,250	£185,000	19.1%
Sutton	£233,000	£195,000	19.5%
Enfield	£238,000	£210,000	13.3%
Redbridge	£240,000	£222,500	7.9%
Greenwich	£247,000	£215,000	14.9%
Lewisham	£250,000	£214,625	16.5%
Hillingdon	£250,000	£220,000	13.6%
Waltham Forest	£250,000	£220,000	13.6%
Hounslow	£250,000	£225,000	11.1%
Bromley	£257,000	£231,000	11.3%
Harrow	£273,000	£249,950	9.2%
Brent	£275,000	£250,000	10%
Merton	£299,713	£297,500	19.9%
Ealing	£299,950	£250,000	20%
Barnet	£300,000	£250,000	20%
Kingston upon Thames	£305,000	£269,950	13%
Tower Hamlets	£309,746	£272,000	13.9%
Haringey	£310,000	£259,950	19.3%
Southwark	£320,000	£265,000	20.8%
Lambeth	£330,000	£275,000	20%
Hackney	£336,350	£297,500	13.1%
Richmond upon Thames	£390,000	£330,000	18.2%
Wandsworth	£401,625	£350,000	14.8%
Islington	£410,000	£347,625	17.9%
Camden	£470,000	£420,000	11.9%
Hammersmith and Fulham	£480,000	£400,000	20%
City of Westminster	£572,625	£485,000	18.1%
Kensington and Chelsea	£740,000	£623,750	18.6%

As starter home prices in Hammersmith and Fulham have grown from £400,000 to £480,000, a quarter share would be £120,000.

Average Price of a First Time Buyer Home in London Rises by £28,000

In Lambeth, a quarter share would cost a first time buyer £82,000, £75,000 in Barnet and £35,000 in Ealing.

Associate director in Savills’ residential research department, Sophie Chick, says that increasing prices and lender demands for high deposits have caused many prospective first time buyers to be trapped.

She comments: “They cannot find the deposit, but with the current low interest rates, owning a home is often within affordable levels.”¹

Barking and Dagenham is the only borough where a property costs less than £200,000. A typical first time buyer property is £180,000, up from £162,000 a year ago. A quarter share in a starter home is now £45,000, up £4,500 in the past year.

Kensington and Chelsea is still the most expensive area for a starter home.

The data is based on the annual change in the average price of a first time buyer home in the year to April. These are the most recent figures available.

¹http://www.homesandproperty.co.uk/property-news/news/london-house-prices-average-price-first-time-buyer-home-has-risen-ps28000-year

Mortgage lending forecasted to hit £286.8bn by 2019

Published On: August 17, 2015 at 4:43 pm

Author: Em Morley

Categories: Finance News

Tags: interest rates,Mortgage lending,mortgages

There is to be a growing demand for mortgage lending over the next four years, driven by a wider economic recovery, greater housing construction and more-tempting incentives.

That is the result of a report from a report by Timetric, which suggests that there is to be a boom in the coming years.

Optimism

The greatest growth in mortgage lending is expected in 2017, with a forecasted rate of 11.7%. This prediction coincides with the Office for Budget Responsibility also suggesting that the largest rise in British property prices will occur during the same period.[1]

Timetric expect that gross lending will hit £218.6bn by the end of the 2015, before rising further to £241.6bn in 2016, eventually reaching £286.8bn in 2019.[1]

However, mortgage outstanding balances are expected to grow at a slower pace. Repayments are also likely to increase as a broader economic growth generates a rise in the official Bank of England policy rate and an increase in banks’ mortgage interest rates. Outstanding balances are tipped to hit £1.33 trillion by the end of this year, rising to be £1.39 trillion by 2019.[1]

Mortgage lending forecasted to hit £286.8bn by 2019

Rising rates

Ben Carey-Evans, Analyst at Timetric, commented, ‘rising interest rates, combined with reduced growth in the UK housing market, is set to stunt increases somewhat from the 15% and 22% rates seen in 2014 and 2013 respectively. Improving economic conditions, however, particularly the continuation of improving real wages – due to extremely low inflation – should see gross lending rising at a steady rate up to 2019.’[1]

‘Growth in the mortgage market will be supported by rising house prices necessitating larger-value loans, and regional variations in house prices will continue to influence the distribution of mortgage lending,’ Carey-Evans concluded.[1]

[1] http://www.propertyreporter.co.uk/finance/mortgage-lending-to-reach-2868bn-by-2019.html

August House Prices strongest for 8 years

Published On: August 17, 2015 at 4:05 pm

Author: Em Morley

Categories: Finance News

Tags: home values,househunters,property prices

The typical hunt for a bargain property in the summer months has been found to have been elusive for many, with asking prices for UK property at an eight-year high in August.

Property website Rightmove has indicated that prices dipped by just 0.8% this month, far less than the typical average and the lowest decrease since the recession.

Strong

Data from the report conducted by Rightmove shows that asking prices are currently 6.4% greater than they were one year ago, bringing the average value of a home in England and Wales to £292,284. The firm attributed the slight decline to a lack of new sellers, combined with stronger house hunting activity.[1]

‘The underlying shortage of property coming to market, compared to buyer demand has helped to deliver the strongest August price performance since before the credit crunch,’ observed Miles Shipside, director of Rightmove.[1]

‘Buyers can normally pick up some bargains in August as sellers who are marketing their homes when they should be holidaying often have a pressing need to sell and mark their prices down pretty aggressively,’ Shipside continued. ‘At 0.8% down on the previous month, this is the least generous that sellers have had to be for eight years and a clear sign of upwards price pressure in the pipeline,’ he added.[1]

Staying put

Further research shows that the main factors behind people’s hesitancy to sell their own homes were the lack of suitable properties in which to move into at a desired price. In fact, Rightmove’s data indicates that asking prices increased across a number of areas in England and Wales in August.

Asking prices were up by 1.2% in the North East of England, by 0.5% in the North West and by 0.1% in the West Midlands. In Wales, process grew by 0.2%, meaning that average home prices currently stand at £177,709.[1]

Falls in asking prices were recorded in the East of England (1.2%) and in the East Midlands and South West (1.4%).[1]

Mark Manning, director of Manning Stainton in Leeds, Harrogate, Wetherby and Wakefield commented, ‘in July, the number of appraisals that we carried out was 21% higher than usual, so there’s definitely a sense that there are a greater number of people who are considering selling, but not yet coming to market.’[1]

‘With regards to stock level in the market it’s not that there’s no stock, it’s just that when good property does come on the demand is so high that it’s selling much more quickly than usual,’ he added.[1]

August House Prices strongest for 8 years

Demand

Alastair Hilton, manager of Winkworth in Chiswick, said that his own company had, ‘seen strong demand and growth in prices in the past few months, especially for one and two bed flats. Quite a few sellers in Chiswick are looking to trade up and move out of London, and when they’re not able to find a suitable property this is having a knock-on effect on the flats they’re selling, increasing the demand for the smaller properties further.’[1]

In a separate data release, housebuilder Bovis has revealed that they experienced a 9% pre-tax profit of £53.8bn, completing a record number of house sales in the first half of the year. The group sold 1,525 properties at an average price of £264,200, 10% more than the average sale prices recorded in the first six months of 2014.[1]

Commenting on the figures, David Ritchie, managing director of Bovis, said, ‘We anticipate that the addition of around 40 sites per annum will support our medium term growth strategy to deliver volumes of between 5,000 and 6,000 new homes each year.’[1]

[1] http://news.sky.com/story/1536927/house-hunters-fail-to-bag-a-summer-bargain

Drop in Asking Prices, But Homeowners Won’t Move

Published On: August 17, 2015 at 3:51 pm

Author: Em Morley

Categories: Property News

Tags: buying a home,home asking prices,mortgage terms,selling a home

Homeowners awaiting the traditional huge summer decrease in house prices will be disappointed by Rightmove’s latest report, which reveals that asking prices for homes coming onto the market dropped by just 0.8% in August.

In England and Wales, the annual summer fall was much less sharp that at any point since the recession, according to the property portal.

Drop in Asking Prices, But Homeowners Won’t Move

The average August decline in asking prices is 1.5%.

Rightmove also found that the main reason prospective vendors are not selling is because they cannot find anywhere to buy, stated by one in five respondents. A similar number said moving is too expensive and 15% said they couldn’t find an affordable property.

One in ten are waiting for house prices to rise in their area before selling.

Director of Rightmove, Miles Shipside, explains: “While new seller asking prices have been muted by the traditional summer holiday property slowdown, the underlying shortage of property coming to market compared to buyer demand has helped to deliver the strongest August price performance since before the credit crunch.

“Buyers can normally pick up some bargains in August, as sellers who are marketing their homes when they should be holidaying often have a pressing need to sell and mark their prices down pretty aggressively.

“At 0.8% down on the previous month, this is the least generous that sellers have had to be for eight years and a clear sign of upwards price pressure in the pipeline.”¹

In a separate study, the Mortgage Advice Bureau (MAB) found that increasing house prices and new affordability criteria by lenders are encouraging borrowers to apply for loans covering a longer period.

The MAB said that one in five homebuyers sought a mortgage lasting 30 years or more in the second quarter (Q2) of this year, double those looking for this term last year.

By taking out a mortgage over a longer period, borrowers can reduce their monthly repayments and pass affordability checks introduced in spring 2014.

Despite smaller monthly costs, the overall price of borrowing over this period is much higher. The MAB stated that on an average £151,668 home loan on a two-year fixed rate of 1.87%, borrowers with a 25-year term would pay £634 per month. Over a 30-year period, this drops to £551 and over 35 years to £493.

However, over a 35-year term, the mortgage would cost around £50,000 more in interest payments.

¹http://www.theguardian.com/money/2015/aug/17/less-than-1-august-drop-in-asking-prices-fails-to-excite-homebuyers

Rightmove Reveals Drop in New Instructions

Published On: August 17, 2015 at 2:57 pm

Author: Em Morley

Categories: Landlord News

Tags: buying a house,housing supply and demand,moving home,new home instructions,selling your home

Rightmove has revealed that estate agents have 8% fewer new instructions than this time last year, as a lack of supply is causing possible vendors to stay put.

Director and Housing Market Analyst at Rightmove, Miles Shipside, says there is a “vicious cycle of not enough property on the market to meet demand, increasing prices and a reluctance among homeowners to come to market if they think the prospects of finding and funding their next move are severely compromised.”

Rightmove’s report states three reasons that prospective vendors are not putting their homes on the market.

Rightmove Reveals Drop in New Instructions

Having studied homeowners who were seriously considering selling their home, Rightmove found that they either cannot find anywhere they want to buy, property is too expensive or the cost of moving is too high.

Shipside adds: “[The prospective vendors] could be helping to get the country’s limited property stock circulating, but they have concerns about coming to market, deepening the supply shortages affecting many areas.”¹

The report also claims that the difference between supply and demand has caused the strongest August price performance since 2007.

Between July and August, the price of new homes on the market dropped by only 0.8%, breaking the eight-year trend of huge summer holiday price decreases.

The national average asking price for new properties on the market is £292,284, from £294,542 in July. However, it is still 6.4% higher than August 2014’s figure.

The typical estate agent in the UK has 65 homes for sale on their books, with the average time on the market standing at 65 days.

Regionally, asking prices have generally fallen monthly in the south and risen in the north.

Between July and August, prices declined by 1.2% in the East of England and the South East, 1.3% in Greater London and 1.4% in the East Midlands and the South West.

In the West Midlands, prices increased by 0.1%, by 0.2% in Wales, 0.5% in the North West and 1.2% in the North East.

However, many agents believe homeowners wish to sell, even if they are held back by Rightmove’s suggested factors.

Director of Manning Stainton in Leeds, Harrogate, Wetherby and Wakefield, states: “In July, the number of appraisals that we carried out was 21% higher than usual, so there’s definitely a sense that there are a greater number of people who are considering selling.

“With regards to stock level, it’s not that there’s no stock, it’s just that when good property does come on, the demand is so high that it’s selling much more quickly than usual.”¹

¹http://www.propertyindustryeye.com/rightmove-reveals-extent-of-drop-in-new-instructions/

Homebuyers looking for longer mortgage terms

Published On: August 17, 2015 at 2:23 pm

Author: Em Morley

Categories: Landlord News

Tags: homebuyers,Mortgage Advice Bureau,mortgages

An investigation from the Mortgage Advice Bureau has found that a growing number of homebuyers are looking for mortgage terms over 30 years, in an attempt to make monthly payments more affordable.

Increase

Just over 20% of buyers looking for a mortgage during the second quarter of 2015 looked for a deal for a minimum of 30 years, a rise of 8% at the same period one year ago.[1]

On the other hand, people looking to remortgage are more interested in shorter-term deals. 13% of people looked for a mortgage term between 15-24 years during Q2 of this year, up from 9% in 2014.[1]

Changes in mortgage trends have seen interest in the typical mortgage term of between 25 to 29 years drop by 14% year-on-year and by 3% since the first three months of the year.[1]

With homebuyers increasingly looking to repay their mortgage over a longer period of time, this means that the overall mortgage repayments are becoming higher during the total period of the loan. For example, given today’s typical rates, the cost of repaying a loan over a 30-year period is £23,297 greater than over 25 years, with 25% more interest due. This is despite saving £83 per month in repayments during the initial fixed-rate time frame.

Differences

In addition, the difference between lending over 35 years in comparison to 25 is much greater. Over the total lifetime of the loan, an additional £47,707 will need to be repaid.[1]

Homebuyers looking for longer mortgage terms

Current homeowners driving up interest in repaying loans over a shorter term coincides with remortgage lenders having the greatest housing equity ever recorded. On average, equity stood at £122,052 in Q2, up by nearly £8,000 year-on-year. This puts remortgagers in a good position to take advantage of the best deals and possibly look to repay over a shorter period, of they choose to maintain or increase their current payments.

‘For those fortunate enough to own their home, it is unsurprising that they are looking to capitalise on the profit levied from record house prices by remortgaging,’ noted Brian Murphy, head of lending at the Mortgage Advice Bureau. ‘Even more so, they can get rid of their debt quicker and reap the benefits of smaller total repayments as homeowners can often access lower rates thanks to their equity gains.’[1]

Murphy continued by saying, ‘with a base rate rise coming into play soon, homeowners who haven’t yet reviewed their existing terms should make the most of the current mortgage climate to secure the best deals.’ Concluding, he said that, ‘on the other hand, homebuyers are tearing up the rule book by searching for longer term mortgages to secure cheaper monthly repayments. However, in the long run this can add up to an extra outlay of thousands with the added interest that comes with borrowing for longer.’[1]

[1] http://www.propertyreporter.co.uk/property/buyers-look-for-longer-mortgage-terms.html