Posts with tag: average house price

Buying is Cheaper than Renting in the Whole of the UK

Published On: December 14, 2015 at 10:38 am

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Prospective first time buyers would have lower monthly outgoings if they bought their own property as opposed to renting, according to a recent report from Santander.

In every region of the UK, the average monthly rent now exceeds the average monthly mortgage repayment.

The bank’s study found that hopeful buyers would save an average of £2,300 per year if they buy their own home. The average rent in the UK is currently £995 a month, compared to monthly mortgage repayments of £805 for the typical first time buyer household. This means that homeowners could save £190 a month.

The difference between renting and buying

Region

 Average house price Average rent per month Average monthly repayment with 21% deposit

Difference between rent and mortgage
South West £187,416 £902 £710 £192
Greater London £363,555 £1,555 £1,376 £179
Scotland £137,504 £678 £521 £157
Wales £129,582 £618 £491 £127
North West £137,874 £643 £522 £121
Yorkshire and the Humber £136,834 £631 £518 £113
West Midlands £151,224 £674 £572 £102
East Midlands £144,712 £636 £548 £88
North East £121,072 £541 £458 £83
South East £246,023 £959 £931 £28
East of England £215,082 £816 £814 £2
UK average £212,610 £995 £805 £190
Buying is Cheaper than Renting in the Whole of the UK

Buying is Cheaper than Renting in the Whole of the UK

First time buyers in the South West would make the biggest savings by purchasing a property, as the average monthly rent in this region surpasses mortgage repayments by more than £192.

Those in London, where rents are 56% higher than the UK average, would be £179 better off per month by buying.

However, buyers in the East of England would not see much difference, as the typical monthly mortgage repayments in this region is just £2 more than the average rent.

Managing Director of Mortgages at Santander, Miguel Sard, says: “People assume that buying a property will put them under greater financial pressure, but often the reverse is true. With annual savings averaging well over £2,000, this can really mount up over time and of course, once the mortgage is paid off, you have a valuable asset to show for it.

“Many prospective first time buyers see the cost of saving for a deposit as prohibitive, but there are many deals available for smaller deposits.”

He explains: “Buying a property is a big financial commitment and there are upfront costs to consider, but over the long term, the financial benefits can be very significant. Getting independent advice and looking for competitive rates either online or through a mortgage adviser is crucial to get the best mortgage to meet potential homeowners’ individual needs.”1

Santander found that the average first time buyer home costs £212,610 in the UK. This means that a buyer with the average deposit needed – 21% – must have £44,648 in order to get onto the property ladder.

1 http://www.propertyreporter.co.uk/property/buying-is-cheaper-than-renting-across-all-of-the-uk.html

 

 

 

 

 

 

 

 

 

 

 

 

House Prices Could Rise Faster if Base Rate Rise is Delayed

Published On: December 9, 2015 at 5:06 pm

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Categories: Finance News

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House prices could rise by almost 7% next year if an interest rate rise is postponed, according to BNP Paribas.

Researchers at one of the world’s biggest banks warns that while the delay of a rate increase until 2017 could be good news for homeowners, it might lead to higher property prices and force the Bank of England (BoE) to further restrict mortgage lending.

House Prices Could Rise Faster if Base Rate Rise is Delayed

House Prices Could Rise Faster if Base Rate Rise is Delayed

BNP Paribas expected house prices to rise by 4.4% in the UK in 2016 if the base rate started to increase slowly from its current rate of 0.5%, followed by 6.7% growth in 2017.

This level of growth would put the average house price, as measured on Nationwide’s monthly index, at £206,256 by the end of 2016, from £197,582 this year. It would then reach £220,116 in 2017.

BNP Paribas reports that improved household finances and confidence in the overall economy will strengthen demand for homes and the prices paid, but the lack of supply of property for sale continues to be “a serious concern”.

If the base rate rise is kept on hold, the bank forecasts a price rise of 6.9% in 2016 and 11.5% in 2017, putting prices at £211,215 and £235,500 respectively.

Head of Residential at BNP Paribas Real Estate, Adrian Owen, says: “While on the face of it a deferral would be good news for homeowners, we believe this scenario is a cautionary tale for the UK economy as a whole.

“There is already concern at the BoE over the pace of house price growth, and while the current lack of housing supply is a significant driver, the sustained low cost of finance is also a major contributor.”

Mortgage rates have dropped to record lows this year, with an average rate of 1.87% on a two-year fixed rate mortgage at 75% loan-to-value (LTV), and the average five-year rate is 2.78%.

In some parts of the country, house prices are now at a higher multiple of earnings than ever before. However, restrictions by the BoE in 2014 have reduced the amount of lending at more than four-and-a-half times an applicant’s salary.

Governor of the BoE, Mark Carney, has suggested that rates could remain as they are well into 2016 and that other measures could be introduced to cool the market.

Owen comments: “Even under our central scenario that base rates rise next year, it is likely that the BoE will seek to place a brake on house price growth by introducing further restrictions on the availability of finance.

“This may achieve the desired dampening effect, although does not address the underlying structural issue in the market of insufficient supply.”1

The bank forecasts house price growth of around 27% in the UK by the end of 2019. In the South West, researchers say that prices could increase by 40.2% by 2020. Meanwhile, in the South East (excluding London), the rise could be 36.1%. In the capital, values are predicted to grow by 25.1% over the same period.

Chancellor George Osborne’s recent announcement in the Autumn Statement – that buyers of a buy-to-let property or second homes will pay an extra 3% in Stamp Duty – has been factored into the forecasts.

The bank found that this measure would have little national impact, but could reduce house price growth in regional town centres and London. As a result, BNP Paribas has cut its house price expectations for the capital from 5.6% to 4.7%. It now forecasts the average London house price to be £468,893 in 12 months’ time.

Read more about the Stamp Duty changes here: /16883-2/

1 http://www.theguardian.com/money/2015/dec/07/holding-base-rate-house-prices-rising-faster-bnp-paribas-bank-of-england

House Prices Soar as Supply Declines

Published On: November 24, 2015 at 1:18 pm

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Categories: Property News

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House prices have increased by 10.5% in the past year, according to data from estate agent haart.

House Prices Soar as Supply Declines

House Prices Soar as Supply Declines

The average property sold through haart now costs £224,242, a record high for the firm.

The agent also reports that while housing demand has grown, supply has declined.

It found that the amount of new homes for sale is down 10.1% on 12 months ago.

Demand has risen by 6.4% over the year, despite a drop between September and October.

CEO of haart, Paul Smith, says: “UK house prices in October rose faster on a monthly and annual basis than they have since our records began, up 1.9% and 10.5% respectively.

“The surge has resulted in the average property price peaking at £224,242. This trend is the outcome of diminished stock levels, which are currently at their lowest since February, meaning there are now 12 buyers chasing every property to come to market.”

He urges: “The Government must take drastic action to encourage the release of homes suitable for families and prevent record high price rises in 2016 for the core of the UK property market.

“The new Help to Buy ISA should help first time buyers save for their deposit, but it is stimulating demand without addressing the underlying issue of lack of supply.”

Smith continues: “While house prices in the rest of the UK are likely to continue their current trajectory in 2016, the top end of the market, particularly in London, will see a price correction because of the impact of Stamp Duty – likely to consist of a 10% drop in value for homes currently priced over £1m.

“Our data is already beginning to show London falling behind the rest of the UK in terms of growth in house prices as a result of this.”1

1 http://www.propertyindustryeye.com/house-prices-shoot-up-while-supply-falls-over-10-says-haart/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

350,000 Households to be Priced Out of Market by 2020

Published On: November 18, 2015 at 3:09 pm

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Categories: Property News

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A shortage of affordable homes will exclude at least 350,000 households from the property market by 2020, insists a new report from Savills.

The data arrives as property portal Rightmove reports the smallest November decline in asking prices for four years, highlighting how the rising cost of private sector housing is pricing out households on low and middle incomes.

The report from Savills suggests that in the next five years, 70,000 new households per year will be unable to afford to rent or buy homes at market rates, unless they are assisted in some way. This means that by 2020, 350,000 will require housing priced at below market rates.

The firm has analysed current incomes and prices for buying and renting, assuming a household can pay up to 30% of its gross income on housing.

350,000 Households to be Priced Out of Market by 2020

350,000 Households to be Priced Out of Market by 2020

It does not include “any backlog of unmet need and the effect of falling stock levels due to Right to Buy and proposed sale of high value council homes”. This indicates that the actual impact of increasing prices could be even worse than expected.

The problem is most severe in London and the South East, where house prices have soared and sit above the peaks hit before the financial crisis. Savills reports that 26,000 new households in London and 11,500 in the South East will be priced out each year.

It says that while the median income of excluded households in London is £20,000, those earning up to £60,000 a year will not be able to afford housing costs in some parts of the capital.

Official data reveals that the amount of new homes built in England rose by 25% in 2014-15. However, there was also an increase in the number of properties sold off through the Right to Buy scheme.

Current Government schemes that allow house builders to avoid providing affordable housing in new build developments that include starter homes could cause further struggles for priced-out buyers.

Associate Director at Savills Research, Chris Buckle, states: “There can be no question that we need to boost house building volumes, but these new homes need to be built across a variety of tenures to put homes within reach of those in greatest need.

“Our concern is that new policy will result in a greater shift from sub-market rental products towards more expensive shared ownership and starter homes accessible only to those on middle incomes.”1

Rightmove’s report shows that the traditional winter drop in asking prices is less marked than usual, indicating that vendors are in no rush to move.

The average asking price for homes coming onto the market in November was 1.3% lower than that in October, compared with an average decrease of 1.9% over the last five years. The typical price of a property being put up for sale in England and Wales is now £292,572, a 6.2% increase on last year.

Miles Shipside, Housing Market Analyst at Rightmove, comments: “Those looking to market their property as Christmas gets closer often have a greater sense of urgency to find a buyer and sensibly recognise that trimming their asking price will provide an incentive to potential buyers more focused on seasonal Christmas trimmings.

“Buoyant market conditions and a confident outlook for 2016 mean that the reduction, while no doubt welcome to hard-pressed buyers, is the most Scrooge-like since 2011. It’s likely to be a short-lived respite as the combination of high confidence and low interest rates is a recipe for higher prices next year.”1 

The portal reports that a survey of 23,000 homeowners found that people are feeling confident about their finances for 2016. Most (85%) said they do not think their financial situation will worsen in the next 12 months, despite the possibility of an interest rate increase.

Just over two-thirds expect house prices to continue rising in the next year, with only 7% predicting a fall in prices.

1 http://www.theguardian.com/money/2015/nov/16/lack-affordable-homes-exclude-350000-by-2020

 

Monopoly Makeover Reveals Real Price of Property

Published On: November 15, 2015 at 12:16 pm

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Categories: Property News

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As Monopoly celebrates its 80th birthday, just how inaccurate are its prices in today’s market?

An estate agent has given Monopoly a makeover to reveal the real price of buying a property in London today.

While Old Kent Road may still be the cheapest place to buy, it will cost a lot more than £60 to purchase a home there.

The average house price on Old Kent Road is now £261,499. The other brown location, Whitechapel, costs even more, with the typical property valued at £379,000.

Vine Street, one of the orange spaces on the board, has dropped to the third cheapest (cheaper than the light blues – The Angel Islington, Euston Road and Pentonville Road). On the board, you can buy a property on Vine Street for just £200, but in reality, the average home costs £539,663.

Its orange neighbour Malborough Street, costing £180 on the Monopoly board, has become the third most expensive location, with house prices averaging a huge £2.5m.

Mayfair, which takes the top spot on the board, at £400, is still the most expensive place today, where house prices are £3.5m on average.

Hanover estate agent has used house price data for October 2015 to compile the new board to celebrate the game’s anniversary.

Director at Hanover’s West End office, Richard Douglas, comments: “We anticipated that there would be differences in the property market from 80 years ago, however, the extent to how much it has changed is suprising.”1

See an enlarged image of the board here.

1 http://www.independent.co.uk/news/business/news/london-house-prices-monopoly-board-makeover-shows-true-price-of-property-a6731381.html

Average London Home Now Costs Half a Million Pounds

Published On: October 29, 2015 at 4:50 pm

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The average London house price has risen to almost £500,000, according to official statistics that highlight the north-south divide in the property market.

Data from the Land Registry found that the average price in the North East of England has dropped below £100,000.

Average London Home Now Costs Half a Million Pounds

Average London Home Now Costs Half a Million Pounds

House prices in England and Wales increased by 1% in September, reaching an average of £186,553. This is about £6,000 higher than the average selling price recorded at the peak of the last property boom in late 2007.

However, London’s shocking house prices are disguising wide regional variations. While the typical home has risen in value by 5.3% in the past 12 months, the average London property has experienced 9.6% growth to hit £449,997.

Ten London boroughs have recorded annual price growth of at least 10%, including Newham at 13.6% and Greenwich at 12%. However, prices are steady or falling annually in a few boroughs, including Camden and Hammersmith & Fulham.

In the South East, excluding London, and the East of England, prices have increased by 8.5% and 8.3% respectively over the last year. Huge rises have been seen in Reading at 15%, Luton at 14% and just under 11% in Thurrock, Essex.

Contrastingly, in the North West of England, the annual rate of price growth is just 2.5%, taking the average value to £115,594.

The North East is the only region to have recorded price declines over the year. Last month, the average house price in the region fell by 0.3%, taking it to just £99,559.

Managing Director of buying agents Garrington Property Finders, Jonathan Hopper, believes that London’s “half-million milestone” was inevitable.

He adds: “The average London property price won’t stay at £500,000 for long. Bullish sentiment has driven annual price inflation in the capital close to double digits again, and the half-million mark could soon be forgotten.”

He also says that the data reveals how strong the north-south divide is: “Even though the North West has reversed the sudden month-on-month drop in prices it saw in August, prices in the North East have slipped back into negative territory. By contrast, much of the south and east looks like one giant hotspot, as the national picture returns firmly to type.”1

Chief UK Economist at IHS Global Insight, Howard Archer, expects house prices to increase by around 6% in 2016: “We believe house prices are likely to see pretty solid increases over the coming months, but will not race ahead.

“Higher interest rates are unlikely to have a major dampening impact on housing activity for some time to come. Interest rates look increasingly unlikely to rise until well into 2016, while the Bank of England is stressing that when interest rates do start to rise, they will only move up gradually and to a limited extent.”1 

1 http://www.theguardian.com/money/2015/oct/28/average-london-home-500000-in-north-east-england-100000