Posts with tag: house prices

While UK house price growth rose slightly in April, it remains weak on both a monthly and annual basis, according to Nationwide’s latest House Price Index.

UK house price growth stood at an average of 0.4% in the month to April, which is up from 0.2% in the previous month.

Year-on-year, the average UK house price increased by 0.9% in April – up from 0.7% in the year to March. This takes the typical property value to £214,920, which is higher than the £213,102 recorded in the previous month.

Robert Gardner, the Chief Economist at Nationwide, explains the figures in more detail: “UK house price growth remained subdued in April, with prices just 0.9% higher than the same month last year.

“Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, even though survey data suggests that sentiment has softened.

“Measures of consumer confidence weakened around the turn of the year and surveyors report that new buyer enquiries have remained subdued.

“While the number of properties coming onto the market has also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of supply and demand in favour of buyers in recent months. April marks the fifth month in a row in which annual house price growth has been below 1%.”

However, first time buyer numbers are recovering.

Gardner says: “While the ongoing economic uncertainties have clearly been weighing on consumer sentiment, this hasn’t prevented further steady gains in the number of first time buyers entering the housing market in recent quarters.

“Indeed, the number of mortgages being taken out by first time buyers has continued to approach pre-financial crisis levels in recent months.

“First time buyer numbers have been supported by the strength of labour market conditions, with employment rising at a healthy rate and earnings growth slowly gathering momentum. 

“While house prices remain high relative to average earnings, low mortgage rates have helped to support mortgage affordability. Indeed, raising a deposit appears to be the major barrier for prospective first time buyers, since the cost of servicing the typical mortgage remains in line with or below long-run averages as a share of take-home pay in most regions of the UK.

“The exception is in London and parts of the south of England, where affordability pressures are more acute, and the monthly cost of servicing a mortgage, as well as raising a deposit, poses a greater challenge. 

“Indeed, comparing the incomes of actual first time buyers in 2018 with average incomes in each region highlights how affordability pressures vary across the UK. 

“In 2018, first time buyer incomes were in line with or below average incomes in most regions. However, in the East, South East and London, first time buyers’ incomes were significantly higher than average incomes in those regions (60% higher in London), illustrating the extent to which many prospective buyers are priced out of the market in those areas.”

Comments

Guy Harrington, the CEO of specialist property lender Glenhawk, is pleased to see first time buyers returning to the market: “The good news is that first time buyers are wading back in and hopefully picking up some good value stock. We need to end the perception, perpetuated by these reports, that the market is weak, and get used to stagnant house prices, not the rocket ship growth we have had in previous decades, which was simply just not sustainable.”

Conor Murphy, the CEO of mortgage advisor software Smartr365, agrees that slower UK house price growth is understandable: “Patchy house price growth is expected as the market continues its recent subdued performance. We could see transaction volumes increase as we move into the summer, however, as we approach one of the seasonal activity surges that have been a characteristic part of the UK property market in the past.”

Lucy Pendleton, the Founder Director of independent estate agent James Pendleton, is concerned that the market is relying on first time buyers: “At this point in the country’s property diary, the market has had a month to get used to Britain abandoning its abandonment of the EU. The pace of the housing market, however, remains the same. 

“The run of play is still slightly in the favour of buyers, but it is only really a buyers’ market in any real sense in London and pockets of the South East. 

“A lot of the activity supporting prices is being driven by first time buyers around the UK, their pockets still filled with Government cash encouraging them to transact. 

“What estate agents would like to see is a broadening out of demand and less dependency on this group. That’s happening to an extent in London, where prices have fallen significantly compared with the rest of the country over the last year.

“Any rebalancing in favour of owner-occupiers will point to better stock levels and more realistic pricing, both of which are better for the housing market in the long-run.”

Annual house price growth edged up in March, but is down on a monthly basis, according to the latest House Price Index from Halifax.

Annual house price growth stood at an average of 3.2% in March, taking the typical property value in the UK to £233,181.

While house price growth also rose on a quarterly basis (1.6%), the average property value fell by 1.6% month-on-month.

Halifax also looks at housing activity across the UK market, using the latest industry figures.

UK home sales remained steady in February, with 101,780 transactions, which, as for January, was very close to the five-year average of 101,135. When comparing sales in December-February against September-November, there was a 0.4% drop. Home sales in February were 2.8% higher than the previous 12-month average.

In February, mortgage approvals fell compared to January. Bank of England figures show that the number of mortgages approved to finance home purchases – a leading indicator of completed property sales – dropped by 3.5%, to 64,337. This compares to an increase of 3.6% in the previous month. As a result, the mortgage approval figure is back to being very close to that recorded in December. The February rate is 1,892 lower than the five-year monthly average of 66,229, and is down by 740 on the previous 12-month average.

The UK Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS) again showed a decline on almost every measure reviewed. The average stock per surveyor is now 41.7 – its lowest ever level. New enquiries, instructions and sales all fell again in the month. Price and sales expectations showed a small improvement compared to January, but both expectations remain firmly negative.

Comments

Russell Galley, the Managing Director of Halifax, says: “The average UK house price is now £233,181, following a 1.6% monthly fall in March. This reduction partly corrects the significant growth seen last month and, again, demonstrates the risk in focusing too heavily on short-term, volatile measures. Industry-wide figures show that the number of mortgages being approved remains around 40% below pre-financial crisis levels, and we know that lower levels of activity can lead to bigger price movements.

“The more stable measure of annual house price growth rose slightly to 3.2% and is still within our expectation for the year. The need to build up a deposit before getting a mortgage is still a challenge for many looking to buy a property. However, the combined effect of fewer houses for sale and fewer people looking to buy continues to support prices in the long-term. 

“These conflicting challenges, when combined with the ongoing uncertainty around Brexit, have had an impact across the country, but, most notably, in London, meaning that we continue to expect subdued price growth for the time being.”

Conor Murphy, the CEO of mortgage software provider Smartr365, responds to the report: “Continued price growth indicates a resilient housing market, despite uncertainty around Brexit. Depending on if, and when, there is greater clarity, transaction volumes will likely increase as we move into spring.

“It’s essential that advisers have the tools in place to deal with a seasonal increase. Using end-to-end platforms is one solution. By reducing admin processes, this frees up time for advisers to focus on what matters most – providing advice and generating new business. 

“Wider-scale uncertainty could alter the mortgage landscape in the coming months, so borrowers need to make sure they’re getting expert advice from brokers to help navigate the market and choose the best deal for them.”

Lucy Pendleton, the Founder Director of independent estate agent James Pendleton, also reacts: “The UK housing market is proving as unpredictable at the moment as the daily Brexit negotiation updates. 

“Last month’s figures totally blindsided all commentators, and even stoked a little controversy with concerns aired over the credibility of the index. 

“It’s no surprise to see prices fall back this month, as low stock levels and general buyer malaise plagues the market. 

“The annual figures are a more reliable indicator of market conditions, with much of the growth in house prices figures outside London. There are few signs of improvement in the number of transactions across the capital. 

“Buyers are understandably showing caution while we remain in this period of limbo, possibly in the belief there will be better opportunities to broker a deal after we leave the EU.”