Posts with tag: buyers

Disappointing Spring for property transactions, says RICS

Published On: June 8, 2017 at 9:43 am

Tags: buyers,housing market,landlords,property,property market activity

The most recent data released from RICS and in general, it does not illustrate a great outlook for the UK housing market.

Data from the report reveals that new buyer enquiries, selling instructions and agreed sales slipped further during May.

What’s more, price growth also saw a loss in momentum and is forecasted to slow more over the next quarter.

Election Uncertainty

Respondents to the RICS survey feel that the declines could well be due to the General Election, with many investors are adopting a wait and see tactic.

During May, 25% of those questioned said that there was a decline in new listings, which in turn gave the most negative reading since July 2016. What’s more, new buyer enquiries fell across the UK, after remaining consistent over the previous six months.

Agreed sales also continued their decline, for the second straight month. The national indicator showed 8% less respondents seeing a slide in agreed sales. Expectations for the next three months have seen little change. However, for the next year, respondents seem more optimistic, with 26% believing that activity will increase.

Simon Rubinsohn, Chief Economist at RICS, said: ‘Although the latest survey suggests that uncertainty related to the General Election may have contributed to what appears to have been a disappointing level of transactions in the housing market over the spring, perhaps the most ominous signal emanating from the data released today is that contributors still expect house prices to increase at a faster pace than wages over the medium term despite the difficulty many first time buyers are clearly having in taking their first steps onto the property ladder.’

‘The increasingly tight second hand market remains a cause for concern with the RICS series tracking new instructions to agents recording its fifteenth successive negative reading. It is hard to see this as anything other a major obstacle to the efficient functioning of the housing market.’[1]

Disappointing Spring for property transactions, says RICS

Boost

Robert Grigg, Managing Director of Property Finance at Hampshire Trust Bank, observed: ‘To make homeownership a reality for more people, we need to boost housebuilding activity and we believe SME housebuilders are key to unlocking potential new developments across the UK. Smaller housebuilders not only help to increase housing stock, but with many based and operating within their local area, they are more attuned to ensuring the right properties are built in the right place. With our SME Growth Watch report highlighting economic uncertainty as the greatest barrier to growth for smaller construction firms, following the outcome of today’s General Election, we urge the government to work with SME housebuilders to create a stable environment for future growth.’[1]

Brian Murphy, Head of Lending at the Mortgage Advice Bureau, also stated: ‘What’s apparent from the report is that house price growth is still in positive territory with ‘modest gains’ in most areas – that’s hardly cause for concern and isn’t the same as the market seeing key indicators for a fall or sharp correction.’

‘The continuing lack of supply isn’t a surprise, with the current political goings on deterring those ‘discretionary sellers’ who normally add a valuable additional number of available properties to the Spring market, inevitably providing buyers with more choice,’ he continued.[1]

Concluding, Mr Murphy said: ‘It’s probably reasonable to suggest then that, when all is said and done, surveyors up and down the UK are observing on the ground what many others in the industry suspect; those who need to move are doing so, and those who are seriously considering it are just ‘holding off’ for a few weeks and then, regardless of the Election result, are likely to get on with it. Whilst that may mean the market has been slightly more subdued last month, there’s nothing to suggest that this is anything more than the normal pattern for the housing market around an Election, and that consumer confidence in UK property remains undeterred.’[1]

[1] http://www.propertyreporter.co.uk/property/spring-transaction-levels-disappointing-says-rics.html

Average House Purchase Deposits Pass £80,000

Published On: January 28, 2016 at 9:00 am

Author: Em Morley

Categories: Property News

Tags: Buy-to-Let,buyers,house prices,property

The latest report from the Mortgage Advice Bureau indicates that the average house purchase deposit increased to over £80,000 during December. This is the highest figure recorded by MAB’s Mortgage Index since it started in January 2009.

Rises

A typical purchase deposit rose by 15% yearly to reach £81,721 in December. Similarly, the average purchase price for a property in December increased to £252,990 from £231,487 a year previously. This represented an increase of 9.3% annually.

Borrower traits also played a key role in rising deposits. The average buyers LTV dipped to 68.2% in December, an annual decline of 1.1% and the lowest level seen since 2010.

‘An inevitable repercussion of rising house prices is that higher deposits are required,’ observed Brian Murphy, head of lending at Mortgage Advice Bureau. ‘Those who cannot afford to put up more may find their choice of properties limited. However, those who were able to make a house purchase in December opted to pay a larger amount upfront by taking out a loan with a lower LTV. There are significant benefits to borrowing a smaller proportion of the purchase price, as rates and monthly repayments will be lower.’[1]

‘Demand in the housing market is yet to come off the boil, despite the current dearth in property supply. As a result house prices are likely to continue rising this year, bringing about affordability concerns which will particularly affect first-time buyers. A significant boost to the construction of new homes is needed to prevent some buyers being priced out of the property market,’ he added.[1]

Average House Price Passes £80,000 barrier

Worsening affordability

With deposit sizes rising, December was the third consecutive month of lesser affordability based on a typical purchase buyer’s income as a percentage of property prices.

This proportion stood at 15.3% in December, after a 2% yearly decline from the 17.3% seen in December 2014, with house prices overtaking salary increases.

In addition, the Mortgage Advice Bureau recorded a 2.9% slip in the average salary of homebuyers, from £39,983 in December 2014 to £38,820 in the last month. On the flip side, house values rocketed by 9.3% from £231,487 to £252,990 over the same period.

Access

Mr Murphy added that, ‘the fall in average salaries over the past year suggests those with slightly lower incomes are still able to access the housing market, despite the significant rise in house prices. This has been helped by rock bottom mortgage rates, which have fallen steadily over the past year. However, these low rates won’t last forever and if prices continue to rise faster than wages those with lower incomes may find it more of a challenge to become homeowners.’[1]

‘Government initiatives such as more affordable housing and the Help to Buy schemes go some way in helping those who are finding it difficult to fund a house purchase. However, income and house price growth needs to be more aligned to make homeownership a more realistic dream,’ Murphy concluded.[1]

[1] http://www.propertyreporter.co.uk/hero/average-house-deposit-passes-%C3%A3%C3%A2%C2%A280k.html

Mortgage lending at seven-year high-reaction

Published On: January 21, 2016 at 2:18 pm

Author: Em Morley

Categories: Finance News

Tags: buyers,house purchases,Mortgage lending,property market,Stamp Duty

New research from the Council of Mortgage Lenders (CML) suggests that gross mortgage lending reached £19.9bn in December 2015.

This was a 3% month-on-month dip on the £20.5bn recorded in November, but was a huge 23% greater than the £16.2bn in December 2014.

Seven-year high

The estimated total of gross lending in 2015 is £220.3bn, an 8% increase on the £203.3bn in 2014 and the largest annual gross lending figure since 2008.

In the final quarter of last year, gross mortgage lending totalled £62.3bn, a 1% increase on quarter three and a 23% rise from the final quarter of 2014.

‘House purchase lending has been rejuvenated over the past year and with the second half of 2015 looking stronger than the first in lending terms, the trend looks positive,’ noted Richard Sexton, director of e.surv charterted surveyors. ‘Small-deposit lending has been transformed by a renewed enthusiasm to help first-time buyers cross the threshold of homeownership, as evidenced by the number of higher LTV products available.’[1]

‘Supply issues have become more of a factor in some areas as we head towards the turn of the year, as both growing demand and house prices finally get the attention they deserve from the Government but limited choice of affordable homes is certainly proving challenge to some buyers. Alongside this obstacle, higher stamp duty changes are finally making their mark upon the top end of the market, Sexton added.[1]

Better than expected

John Phillips, group operations director of Spicerhaart and Just Mortgages noted, ‘in July last year, the CML revised its forecast of gross mortgage lending in 2015 to £209bn from £222bn. However, the latest figures show the total for 2015 was in fact £220.3bn, the highest figure since 2008. The total lending figure is significantly higher than the CML’s previous estimation.’[1]

‘It is promising to see that gross mortgage lending increased by eight per cent last year and the underlying picture is one of modest recovery. The level of demand is likely to be a result of low inflation, strong wage growth and competitive mortgage deals, but there is still an element of uncertainty as demand continues to outstrip supply,’ he continued.[1]

Shaky

Brian Murphy, Head of Lending of the Mortgage Advice Bureau, believes, ‘as well as new entrants to the market, activity has also been stoked by homeowners cashing in on the rising value of their home to climb to the next rung of the property ladder. According to HMRC, housing transactions reached a near two-year high in December.’[1]

Mortgage lending at seven-year high-reaction

Murphy believes however that, ‘this growth is being built on shaky foundations.’ He said, ‘with scarce new homes being brought into the market, housing transactions are largely dependent on homeowners moving and selling their homes. Property turnover has slowed significantly in recent years and this is an unsustainable path for a housing market which urgently needs an increase in the construction of new homes.’[1]

Impressive

Peter Rollings, CEO of Marsh & Parsons, believes the, ‘steady build-up of activity and buyer confidence is even more impressive when you consider some of the adverse changes the housing market has had to stomach over the past twelve months. While the shakeup of stamp duty was indeed a welcome tonic for many first-time buyers and those purchasing property at the lower bands, it has been harder to digest at the middle and top-end, where the increased levy is particularly onerous.’[1]

‘With an additional 3% of stamp duty coming into effect for second homeowners in April, 2016 may well see an opposite trend- and a growth spurt in the early stages of this year that could then taper off in the short-term while the market retunes,’ he continued.[1]

Henry Woodcock, Principle Mortgage Consultant at IRESS, agrees, stating, ‘we expect 2016 to continue in the same light initially, although regulatory change may take its toll eventually. Demand will be bolstered by fast movement in the buy-to-let market ahead of April’s deadline and with a rise in interest rates near enough ruled out for 2016, affordable finance will remain in place for borrowers and prospective buyers.’[1]

[1] http://www.propertyreporter.co.uk/finance/gross-mortgage-lending-reaches-seven-year-high.html