Posts with tag: house price growth

Despite house price growth, mortgage approvals continue to rise

Published On: October 8, 2020 at 8:24 am

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Halifax House Price Index

Halifax has released its latest House Price Index, revealing that house prices continue to rise. Mortgage approvals have also increased, reaching the highest levels since October 2007.

Russell Galley, Managing Director of Halifax, comments within the report: “The average UK house price is now approaching £250,000 after September saw a third consecutive month of substantial gains. 

“The annual rate of change will naturally draw attention, with the increase of 7.3% the strongest since mid-2016. Context is important with the annual comparison, however, as September 2019 saw political uncertainty weigh on the market. 

“Few would dispute that the performance of the housing market has been extremely strong since lockdown restrictions began to ease in May. Across the last three months, we have received more mortgage applications from both first-time buyers and homemovers than any time since 2008. 

“There has been a fundamental shift in demand from buyers brought about by the structural effects of increased home working and a desire for more space, while the stamp duty holiday is incentivising vendors and buyers to close deals at pace before the break ends next March. 

“It is highly unlikely that the housing market will continue to remain immune to the economic impact of the pandemic. The release of pent up demand and indeed the stamp duty holiday can only be temporary fillips and their impact will inevitably start to wane. And as employment support measures are gradually scaled back beyond the end of October, the spectre of increased unemployment over the winter will come into sharper relief. 

“Therefore, while it may come later than initially anticipated, we continue to believe that significant downward pressure on house prices should be expected at some point in the months ahead as the realities of an economic recession are felt ever more keenly.”

Read Halifax’s full House Price Index report here.

Property industry reactions

Nicky Stevenson, Managing Director at national estate agent group Fine & Country, has commented: “The property market has been basking in its own economic microclimate lately, characterised by a relative feeding frenzy for larger, more expensive homes. 

“That’s unusual. Historically, the market has traditionally looked to first-time buyers for an indication of direction. However, it is existing homeowners with the buying power to spend more who have been driving house price growth over the past couple of months, fuelled by a desire for more space.

“The share of transactions being taken up by more expensive properties has grown and this role reversal has been responsible for the steep upward lurch in valuations. Increases in prices at this end of the property food chain have a disproportionate effect on house price statistics.    

“There will be a flip side though. When this extra demand for larger homes starts to return to normal, the annual rate of growth overall could sit down as quickly as it stood up. That said, demand is likely to continue to outweigh supply and significant outright falls in prices for any property category remain unlikely nationwide.

“The only caveat to that is the end of the furlough scheme. The Chancellor has been choosing his words carefully and seems deeply opposed to pulling the rug out from under the jobs market. That would be the biggest near-term source of weakness and it remains a larger threat than Brexit.”

Lucy Pendleton, property expert at independent estate agents James Pendleton, has said: “The often-frothy Halifax index has lived up to its reputation and is pushing the bounds of credibility here. 

“However, it underlines just how much the housing market has become the economy’s iron lung of late, while its other vital signs flash amber at best. 

“The market’s rate of climb has been as steep as it has been artificial so don’t expect this to last. The three main drivers remain in play for now — homeowners moving to larger properties, stamp duty relief and pent-up demand, which is still being felt because of delays to the conveyancing and mortgage approvals process. 

“Buyers at the upper end of the market are confident but not careless, and owners of poor-quality stock are having to increasingly watch from the sidelines as their properties sit on the market for extended periods. This is a house price boom fuelled by aspiration, not loose money.”

mortgage approvals
Despite house price growth, mortgage approvals continue to rise

Marc von Grundherr, Director of Benham and Reeves, commented: “It’s now abundantly clear that the market has not only shrugged off any pandemic induced symptoms but has also well and truly waved goodbye to the prolonged uncertainty caused by Brexit. 

“Of course, any knee-jerk restrictions imposed by the Government in the coming months could result in a case of one step forward, two steps back where price growth is concerned. 

“It’s therefore imperative that we allow the industry to remain operational to service the overwhelming levels of buyer demand seen in recent months. Failing to do so could leave many buyers in lockdown limbo and cause house prices to plateau.”

James Forrester, Managing Director of Barrows and Forester, commented: “Yet further signs of a monumental market revival and one that continues to be fuelled by heightened levels of buyer demand. The questions is how much fuel is left in the tank? 

“It’s very likely that we will see this strong level of growth sustained as we see out the remainder of the year. However, with the furloughs scheme coming to an end, this could be the final swan song before a period of muted market activity. 

“The Government has played its hand in anticipation of this with the promise of 95% mortgages for those struggling to get on the ladder. However, even a 5% deposit may prove financially unviable for those struggling to find work. 

“So, while the outlook is certainly a bright one at present, there may well be dark clouds on the horizon. There’s no doubt the market can weather this storm, but its the duration and initial damage of that storm that remains to be seen.”  

Hugh Wade-Jones, Managing Director of Enness Global Mortgages, commented: “Homebuyers continue to take advantage of great mortgage rates where they can and this is allowing them to buy bigger and better with more space both indoors and out. Naturally, these homes command a higher price tag and this is helping to contribute to a much more buoyant rate of house price growth. 

“This is certainly a trend that’s being led by the top end of the market and by those with the financial stability to transact on these larger homes at the drop of a hat. 

“As this demand is met and starts to subside we will see these huge levels of top-line house price growth follow suit and a more ‘normal’ market landscape return.”

Colby Short, Founder and CEO of GetAgent.co.uk, commented: “Home sellers continue to benefit from the uplift in buyer demand spurred by the current stamp duty holiday, with sold prices up across the board on a monthly basis with the exception of Scotland.

“This is being driven by the more affordable regions of the UK where the price threshold of £500,000 and the resulting stamp duty saving is more abundant and this is a trend that should remain consistent right through until next April.”

Matthew Cooper, Founder & Managing Director of Yes Homebuyers, commented: “It’s quite easy to get carried away with the huge house price growth being shown at the front end of the transaction process via mortgage approvals and asking prices. However, the reality is that the market is moving at a far slower rate where actual sold prices are concerned. 

“Although prices have still gained positive ground, this likely to be a temporary hoorah and there is a very strong chance that this growth will recede rapidly come April once the sun has set on the stamp duty holiday.”

Adam Pigott, CEO of OpenBrix, commented: “We’ve seen a huge boost to market sentiment as a result of the current stamp duty holiday and it seems as though a second adrenaline shot may be administered in the form of a potential 95% mortgage for struggling homebuyers.

“Should this be the case, house price growth should remain consistently strong although it’s yet to be seen to what extent the end of the furloughs scheme may dampen this appetite.  

“Until this impact is felt, the market continues to fire on all cylinders and we are a world away from the catastrophic declines that many predicted at the start of the year.”

House price growth slows to seven-year low, according to latest ONS report

Published On: December 19, 2019 at 9:43 am

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Treasury loses £1.5 billion since hike in rented housing tax

The latest UK House Price Index from the Office of National Statistics (ONS) has been released. UK house prices have shown a slight yearly increase, the lowest growth since September 2012.

The main points of the report include:

  • UK average house prices increased by 0.7% over the year to October 2019 to £233,000.
  • Average house prices increased over the year in England, to £249,000 (0.5%); in Wales, to £166,000 (3.3%); in Scotland, to £154,000 (1.4%); and in Northern Ireland, to £140,000 (4.0%).
  • The annual increase in England was driven by Yorkshire and The Humber (3.2%).
  • The lowest annual growth rate was in London (negative 1.6%), followed by the North East (negative 1.1%).

Andrew Southern, chairman of property developer Southern Grove, has shared his comments: “This is the first house price index since the election and it’s time to say farewell to a read-out that has been wracked by indecision and self-doubt for too long.

“The UK HPI has the longest lead time of all the indices and Boris Johnson has taken his boot and stamped a use-by date all over the Land Registry’s dial.

“You can expect the market to start deciding which way it really wants to move now and that new direction will show itself even more in the New Year. 

“One near certainty is that transaction volumes should start to recover, though first-time buyers may be a little afraid that prices could begin to advance again in tandem. 

“The basic equation here is that, with the exception of first-time buyers, there won’t be anyone sensible in the property world who won’t welcome the injection of certainty that the election has delivered, no matter what your political persuasion.

“Even they would do well to remember the effect so much uncertainty has had already on house building, trimming developers’ forecasts and, with it, their risk appetites. Seeing the back of that is just as important to today’s young.”

Andy Sommerville, Director at Search Acumen, comments: “Where there is growth there is life. And although we haven’t seen much in the way of house price growth, today’s statistics show life is returning to the housing market – particularly in areas outside of the Capital.

“These latest ONS statistics are from October and we expect to see an even greater uplift at the end of the quarter, particularly following the recent election. The stock market rally we have just witnessed and a majority government drawing a line under Brexit uncertainty could be the shot the housing market needs to get back to health.

“However, we must not be complacent – more of the same “wait and see” approach would jeopardise the recovery. Instead the Government and private firms needs to be forthright in their commitment to supporting smart solutions to advance the digitalisation of the property industry. Unleashing Britain’s potential needs more than fine words. It requires breaking down the barriers to data accessibility and investment.”

John Goodall, CEO and Co-founder of buy-to-let specialist Landbay, said: “Though another set of poor growth figures is disappointing and a seven year low is certainly cause for concern, now is the time to look to the future. Boris Johnson’s election victory should pave the way for a stronger UK economy, and thus a healthier housing market, as we break away from political ambiguity. 

“The ‘Boris bounce’ is expected to put an end to the recent stalemate in the property market, offering confidence to buyers and sellers alike to make a move. Demand has been humbled by instability, so 2020 should bring an early ‘spring bounce’ as those who have sat on their hands are spurred into action.”

Lucy Pendleton, founder-director of independent estate agents James Pendleton, comments: “The spinning compass of uncertainty and doubt have been dislodged by the north star of a new PM, and the market has reacted immediately. 

“As a result, the tired and frustrated reality that is still faintly visible in this Land Registry report reflects a status quo that is already a distant memory. 

“Not yet visible is the Boris bounce in house prices we all sense is already well underway. The UK house price index has well and truly been overtaken by events. 

“The index will now spend the next two months going through the motions while it catches up with history. Meanwhile, there’s every sign on the high street that buyers and sellers are returning to the fold. 

“The UK is certainly experiencing a resurgence in activity but we won’t know for a couple of months whether, on balance, this will begin to push prices higher or whether greater supply will have a moderating influence while brokers and agents enjoy a pick-up in volumes.  

“New enquiries for property picked up the day of the election result and foreign buyers are matching their domestic counterparts for renewed enthusiasm.”

Shaun Church, Director at Private Finance has said: “House price growth has almost ground to a halt, with the lowest annual increase in prices seen in more than seven years. 

“A slump in demand due to a wait-and-see approach in response to Brexit has stifled housing market activity throughout the year, with this having a direct impact on house prices. Though less comforting for homeowners looking to see a return on their investment, buyers will benefit from this long-awaited improvement in housing affordability.

“However, the property market could well be entering a new, more active phase of growth. Post-election, a degree of certainty has been injected back into the national psyche, and a release of pent-up property demand is expected as a result. 

“Those looking to make a move in the New Year should act quickly to snap up cut-price properties while they’re still around. Buyers should also consider locking into today’s record-low mortgage rates to guarantee affordable repayments for the foreseeable future, as these, too, aren’t guaranteed to last forever.”

Slowest Spring Property Market in Five Years Recorded

Published On: April 17, 2019 at 9:31 am

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The slowest spring property market in five years was recorded in April, due to housing pessimism and Brexit uncertainty, according to Home.co.uk’s latest Asking Price Index. 

Negative sentiment in a growing number of UK regions has applied the brakes to the normally surging spring property market. Both buyers and vendors are holding back, due to increased fear of price falls and the Brexit debacle. This wait-and-see attitude has translated into both falling supply and demand. Thus far, these factors have had little net effect on the established pricing trends, but homes are spending much longer on the market.

The typical time on market for unsold properties in England and Wales is now 93 days – 15 days longer than in April 2018. In fact, year-on-year increases in this measure are evident in seven of the nine English regions and Scotland. The greatest rises in marketing times are to be found in the regions where prices are undergoing a corrective phase (London, the East of England, South East and South West), but large increases are now also evident in the formerly booming North West and East Midlands.

Overall, annual house price growth in England and Wales remained in the red in April (-0.3%), despite a muted monthly increase of 0.2%. Spring optimism has, in fact, managed to lift prices in the northern and western English regions, Wales and Scotland. However, increased negative sentiment in the south and east meant no change for Greater London, and declines for the East of England (of 0.1%) and the North East (of 0.2%). The South East and South West did manage small rises (0.2% and 0.4% respectively month-on-month), but have remained in negative territory on a yearly basis.

London’s annual losses have notched back again from 3.2% to 3.1%, although the average price remains 6.9% lower than the peak set in May 2016. Asking price falls in the South East also continue to ease (now 1.7% year-on-year), but worsened in the East of England (2.9%), where the post-boom price correction is fully underway.

Overall, the supply of property for sale entering the UK market is down by 8% (owing to higher levels of caution on the part of vendors), while the total stock for sale has increased by a mere 3.7% annually, thus indicating that supply and demand remain reasonably balanced.

In April 2018, the annual rate of house price growth stood at an average of 1.3%. Today, the same measure is -0.3%.

Property Sales Supporting House Price Growth in UK Cities

Published On: October 26, 2017 at 8:01 am

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House price growth in UK cities is currently running at an average of 4.9%, supported by high levels of property sales, according to the latest UK Cities House Price Index from Hometrack.

The annual rate of house price growth across the 20 cities included in the index was 4.9% in September – down from 6% in the same month last year. The quarterly rate of growth, however, is at the highest level for 14 months, supported by a nationwide increase in housing sales over the last quarter compared to the previous 12 months.

This unseasonal rise in sales is likely a result of households delaying purchases earlier in the year at the time of the snap General Election.

In September’s index, annual house price growth ranges from -1.8% in Aberdeen to +6.7% in Edinburgh. This is the smallest variation in growth since July 2015 and is a result of a marked slowdown in price inflation across all cities in southern England.

There are five cities where the current level of nominal house price growth is below the rate of consumer price inflation – Aberdeen, Cambridge, Oxford, London and Cardiff.

Scottish cities outperforming the rest

While most cities are registering house price growth below that of a year ago, there are six cities where the annual rate of inflation is higher, most notably in Scotland. Residential transactions data from HM Revenue & Customs (HMRC) shows that there has been a 20% increase in the monthly run rate of sales over the past quarter in Scotland.

Increased activity has supported an acceleration in the rate of house price growth in the country. Edinburgh is the fastest growing city covered in the index (6.7%), overtaking Manchester (6.5%) and Birmingham (5.9%), where the rate of inflation has moderated slightly.

Glasgow has also recorded a marked rise in the rate of house price growth, from 1.8% a year ago to 5.3% today. While Aberdeen has registered a 15% decline in average prices since 2015, the rate of annual growth has slowed to -1.8% – the lowest level for exactly two years.

London house price growth at 2.3% 

Property Sales Supporting House Price Growth in UK Cities

Property Sales Supporting House Price Growth in UK Cities

The annual rate of house price inflation in the capital has stabilised at an average of 2.3%. This is well down, however, on the 8% rate of growth seen since 2010.

Across the markets covered by London, house price growth ranges from +4% in Epping Forest and Gravesham, to -5% in the City of London. There are six markets where house prices are falling in nominal terms, primarily in inner London.

Real term price falls in London

However, low nominal rates of house price growth mean that average property values are currently falling in real terms across 85% of markets in London. Further price declines in real terms are inevitable, as prices re-align to what buyers are willing to pay.

Concerns over Brexit and its impact on jobs and employment are weighing on market sentiment, while low gross yields and a weak outlook for house price growth are impacting the case for property investors. Hometrack expects nominal house price inflation in the capital to remain in the 1-3% range for the next six to 12 months, as volumes contract further.

Moderation in headline growth rate

The firm expects house prices to continue to rise in regional cities, where values are still growing off a low base and affordability remains attractive. The rate of growth is likely to moderate around its current level, tempered by economic and sentiment factors, such as the squeeze on incomes from rising inflation and concern over the economic outlook.

Talk of a potential increase in interest rates, with a knock-on for mortgage rates, is likely to further temper demand.

Impact of interest rate rise

A modest increase in mortgage rates will initially impact sentiment and levels of market activity, Hometrack believes. Mortgage rates remain low by historic standards and, for the last three years, all homeowners buying with a mortgage have had to prove that they can afford a much higher mortgage rate, of around 7%. Recent sales levels already reflect the ability of buyers to afford higher borrowing costs.

Households are already responding to low mortgage rates, with almost 90% of new mortgages written in the second quarter (Q2) of 2017 taken at fixed rates. Three-fifths of outstanding mortgage balances are also at fixed rates, providing some insulation to any increase in interest rates in the near term.

Investor buying power 

Higher borrowing costs would also affect demand from investors, who account for around 20% of all housing sales per year. In the face of an increase in borrowing costs, rational investors should either seek property with higher yields, or look to pay less for properties to generate a higher yield.

This means bidding less for housing than they would have if rates stayed low. This would compound the impact of recent tax changes and further moderate investor demand, and, with it, the rate of house price growth in markets where landlords have been most prevalent.

The Founder and CEO of online estate agent eMoov.co.uk, Russell Quirk, comments on the report: “As the final stretch of 2017 comes into view, a late flurry of city-based property transactions has seen a degree of stability return to the market. Due to the generally higher price tag of city living, it is these areas that have been impacted by recent market uncertainty the most and, although growth is still down year-on-year, it will be a promising sign for these homeowners.

“Unfortunately for London, it continues to be last year’s must-have, waning in popularity amongst buyers due to the high price of the capital’s property, while the hottest trend for 2017 is currently tartan, as Edinburgh shows extremely strong growth to overtake Manchester for the top spot.”

He continues: “That said, poor Aberdeen remains the toffee penny in a seasonal box of Quality Streets. Once such a firm favourite, it is now consistently last where demand is concerned, left in the box long into the New Year, chosen by just a few who remember the glory days. Much as tastes for sweets today have shifted, it is unlikely Aberdeen will find any newfound popularity amongst buyers, and it continues to suffer from the decline in the oil industry.

“Despite the overall renewed level of confidence, the market should continue to tread cautiously at least until the year is out. However, growth will remain subdued but consistent across the more affordable options, such as Manchester, Birmingham, Leicester and so on.”

Quirk concludes: “London, along with the other over-inflated cities, such as Oxford and Cambridge, will no doubt continue to struggle due to their much higher price tags, and these areas will be the last to see any meaningful return of buyer demand.”

Scotland Leading House Price Growth Across the UK

Published On: October 20, 2017 at 8:05 am

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The Scottish property market continues to defy the slowdown elsewhere in the UK, with Scotland now leading house price growth across Britain, reports Your Move.

The average house price grew for the seventh consecutive month in August, by 0.5%. On an annual basis, house prices have risen by 4.8% since August 2016, compared to a rate of 2.1% in England and Wales.

Only the East of England (4.5%) comes close to the annual growth seen north of the border, while the average house price in London is down by 0.7% on last year.

These changes leave the average property value in Scotland at £176,876 – up from £168,726 in the same month last year.

Scotland Leading House Price Growth Across the UK

Scotland Leading House Price Growth Across the UK

On a monthly basis, Scotland’s local authority areas continue to experience mixed fortunes. Exactly half of the 32 locations in Scotland saw prices rise in August, headed by the Scottish Borders, where the average value was up by 5%, to reach £187,879. West Dunbartonshire, where the average house price is just £115,208, was next, up by 4.2%.

At the other end of the scale, prices in Angus dropped by an average of 4.7%. The Shetland Islands saw a greater decline, of 5.1%, but low transaction volumes there often mean big swings in monthly prices.

Year-on-year, however, there’s much more consistency, with just four areas seeing prices drop. The greatest fall (of 2.7%) was recorded in Inverclyde, following a strong 2016 as a result of sales of new build detached houses.

By contrast, there’s been good growth for a number of areas. Prices rose by 8.8% in the City of Edinburgh – the most expensive location to purchase a property in Scotland, at an average value of £262,092 – while the Scottish Borders saw an average increase of 9.7%. Prices were up by 8% in the Orkney Islands and South Lanarkshire, while Clackmannanshire saw growth of 20.5% – although this again reflects that the area has few sales.

A number of other spots also saw significantly higher than average rises, including North Lanarkshire and East Ayrshire (both up by 7.8%), and Midlothian (up by 7.6%).

Your Move reports that low interest rates and unemployment at a 42-year low are supporting a market that doesn’t suffer from the same affordability problems as London and the South East, which both lower the average in England and Wales.

To date, Scotland has also avoided a slowdown in property sales. May, for which the latest Office for National Statistics (ONS) figures are available, saw 8,241 homes sold in Scotland. That means that, for the first five months of the year, sales were 2% higher than in the same period of 2016 and up by 6% on 2015.

The Managing Director of Your Move Scotland, Christine Campbell, says: “Housing
 in Scotland continues to shake off the uncertainty we’re seeing elsewhere in the UK economy. Here, low interest rates, high employment and prices that are still affordable are supporting continued robust growth.”

Alan Penman, a Business Development Manager for Walker Fraser Steele, one of Scotland’s oldest firms of chartered surveyors, adds: “Scotland’s housing market is now leading Britain, and that simply reflects very strong fundamentals. It’s always dangerous to speak too soon, but the market currently looks in good shape.”

It may be wise to consider a property purchase north of the border for strong capital growth!

House Prices in 28 Locations Fail to Recover to Pre-Crisis Levels

Published On: October 19, 2017 at 8:04 am

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House prices in 28 towns and cities across the UK have failed to recover to pre-financial crisis levels, a decade after the market crash.

Property owners in these locations have suffered a lost decade of house price growth since the start of the crisis on 9th August 2007.

House Prices in 28 Locations Fail to Recover to Pre-Crisis Levels

House Prices in 28 Locations Fail to Recover to Pre-Crisis Levels

The latest Office for National Statistics (ONS) and Land Registry house price figures, for August 2017, sparked fears of a two-speed economy, as it emerged that the only places to suffer this fate outside of Wales were in the north of England, analysis by housebuilding investment platform Homegrown shows.

The most recent data gives us a clear picture of the devastating impact of the crash in the ten years since the start of the crisis on 9th August 2007 – the day when BNP Paribas froze three of its funds, suggesting that it could not value the sub-prime loans contained in the complex financial instruments on its books. Doomed Northern Rock chief Adam Applegarth later described it as “the day the world changed”.

Since then, house prices in Belfast, Hartlepool and Blackpool have suffered worse than anywhere else in the UK.

The average house price in the Northern Irish capital is now 43.7% lower than it was in August 2007, at just £120,351. Hartlepool has also failed to recover, with a 19.5% drop to an average value of £100,957, while prices in Blackpool are still 16.4% down, at an average of £105,057.

Even Liverpool and Newcastle – two of the cities centred in the idea of the Northern Powerhouse – never recovered. Liverpool is still 1.7% down, with an average house price of £126,862, while Newcastle is 1% down on ten years ago, at £162,876.

A stark north-south divide means that properties in the North East are still worth 5.6% less than they were a decade ago, while the North West is struggling with growth of just 5.5% over the past ten years.

Meanwhile, London, the South East and South West are 62.7%, 37.7% and 19.2% higher on average respectively.

Bradford, Oldham, Lancaster and Falkirk only just escaped lost decades of house price growth, recovering their ground to finish just £1,039, £1,765, £235 and £196 higher on average in the last decade respectively.

The Founder of Homegrown, Anthony Rushworth, says: “This is two-speed Britain in action. It’s now clear that great swathes of the UK have suffered terribly in the aftermath of the financial crash, while areas in high demand have shrugged it off and surged ahead.

“We are too reliant as a country on a small number of densely populated areas, particularly in London and the South East. The technology exists to take a much more balanced approach to where Britons live and work.”

He continues: “The Northern Powerhouse promised exactly that, but it will take more than a marketing campaign by one chancellor to really shift the balance and create a more stable property market for future generations.”

Landlords, do you own property in one of the locations that have failed to recover to pre-crisis levels? How has this affected your investment plan?