Birmingham house prices have increased by 16% since the referendum, in June 2016
The population growth of the city centre is the second fastest in the UK, at 163%
Extensive regeneration of the inner city has been driving the demand for housing
According to the latest UK Cities House Price Index, Birmingham has had a 16% rise in house price values. The December 2018 figures show that home values have increased more in Birmingham than in any other UK city since the EU referendum of 2016.
Managing Director of Surrenden Invest, Jonathan Stephens,
says: “In
terms of the residential property market, Birmingham has some outstanding
investment prospects. The regeneration work currently taking place in the B1
postcode zone is a prime example of urban planning at its best.”
Between 2002 and 2015, Birmingham’s city centre population increased by
163%, coming in as the second highest in the country, with the exception of Liverpool.
It’s known for being the youngest major city in Europe too, with 40% of its
population aged 25 or under.
In addition to its young population, the city also offers a huge range
of museums, art galleries and theatres, as well as a range of property
developments and growth for the market. Birmingham’s most expensive apartment
sold recently in a place called Concord House, the penthouse, for £1.8 million.
Stephens continues: “This rapid population growth is
contributing greatly to the success of Birmingham’s property market, with
demand for rental accommodation shooting up hand in hand with demand for homes
to buy. And with extensive regeneration work making city centre living more and
more desirable, we expect to see this demand continue to rise for a good number
of years, particularly as the hosting of the Commonwealth Games in 2022 will
place even more emphasis on what a great city Birmingham is.”
House prices have started to fall nationally, by an average of 0.2%, in the year to February, following 87 months of positive growth, according to the latest Asking Price Index from Home.co.uk.
Overall house price growth in England and Wales has not slipped into the red since November 2011, the report shows. In February last year, the average house price increased by 2.3% year-on-year.
The greatest monthly decline in February was recorded in the South West (0.6%), as supply outweighs demand.
Sliding house prices in London, the South East, South West and East of England have served to push down the national average into the red year-on-year, Home reports. London’s loss over the past 12 months has now edged up to 3.3%, and 6.9% since the start of the slide in May 2016.
Asking prices in the South East and East are now dropping faster, with losses increasing to 2.5% and 1.8% respectively. In January, the South West became the last domino to fall, with prices in the region now down by an average of 0.5% on February 2018.
These dreary national figures do, however, obscure significant growth in other regions further north and west. Growth has been nowhere more prevalent than in Wales and the West Midlands, where house prices are now 6.4% and 5.0% higher than they were a year ago, on average. The North West, and Yorkshire and the Humber have also pushed up their average asking prices by 4.3% and 3.4% respectively over the last 12 months.
However, the West and East Midland markets are slowing, as shown in their average time on market increases. Housing supply in these regions has risen by 10% and 13% respectively, with Home expecting this to increase further over the coming months, as investors attempt to cash out at the top. This indicates that these two regions will be the next dominoes to fall (the East Midlands first), and would be consistent with market behaviour observed previously when the East and South East markets peaked.
Overall, the supply of homes for sale in the UK rose by 4% in the year to February, with total stock up by 10.1%.
The largest supply increases were seen in the West Midlands (10%), Scotland (13%) and the East Midlands (13%).
Supply in London, on the other hand, has dropped by 13% year-on-year.
The typical time on market for homes in England and Wales rose to 114 days in February, which is six days longer than in the same month of 2018.
The average time on market continues to rise in London (16%), the South West (16%), South East (19%) and East of England (19%), as prices fall in each region.
26.3% more properties were reduced in price while on the market in January, compared to the same month of last year.
Annual house price growth in December (for which the latest data is available) was at the lowest level since July 2013, according to the Office for National Statistics (ONS).
In the year to December 2018, the average property value in the UK rose by 2.5%, which is down from 2.7% in the 12 months to November. This is the lowest annual growth recorded since July 2013, when house prices increased by 2.3%.
Following a non-seasonally adjusted rise of 0.2% in the average house price between November and December 2018, a typical property in the UK is now worth £230,776.
Annual house price growth was strongest in Northern Ireland at the end of last year, where the average value rose by 5.5% in the year to the fourth quarter (Q4) 2018. Wales and the West Midlands followed this, where house prices increased by an average of 5.2% over the 12 months to December.
The lowest annual growth was recorded in the North East, where prices fell by an average of 1.0% in the year to December, which is down from a rise of 1.7% in November 2018. London followed, with an average decrease of 0.6%. House prices in the capital have been dropping every month since July last year.
Scotland recorded house price growth of 2.4% in the year to December, while the average property value in England was up by 2.3% over the same period.
The ONS notes that the Northern Ireland figures represent a three-month change, and are not comparable with the other regions and countries included in the index.
Interestingly, the ONS House Price Index also looks at the difference in house prices for both first time buyers and existing homeowners. In December, the average first time buyer home was worth £194,237, while existing owner-occupiers paid an average of £268,067.
Comments
Conor Murphy, the CEO of mortgage platform Smartr365, says: “Modest house price growth is expected, as political uncertainty continues to weigh down on the property market. However, despite these circumstances, the mortgage market remains strong, and we are seeing borrowers take advantage of competitive deals and fixing for longer. As a result, though, each transaction and conversation is more crucial than ever for brokers – and this is where technology and end-to-end solutions can play a vital role in helping brokers retain business.”
Steve Seal, the Director of Sales and Marketing at Bluestone Mortgages, also comments: “Slower house price growth is no doubt a reflection of potential buyers choosing to adopt a wait-and-see approach before committing to the biggest purchase of their life – a home. To tackle this, lenders are offering near record low deals to reassure borrowers that there is still plenty of opportunity to lend.
House Price Growth at Lowest Level since 2013, According to Official Data
“However, there’s no doubt that there are borrowers out there who feel they can’t even secure lending due to their employment status or credit score – for example, self-employed workers, contractors or those with adverse credit. This is where specialist lenders come in, helping customers with unique financial circumstances step onto the property ladder and, in turn, making the market more financially inclusive.”
Danny Belton, the Head of Lender Relationships at Legal & General Mortgage Club, gives his thoughts on the market: “While some buyers and sellers may be hesitant to take any action in the current political climate, choosing to take the wait-and-see approach, there are still plenty of positives in the market to highlight. The ever-growing number of mortgage products available, combined with low interest rates and steadier house price growth, is good news to those who are looking to get onto or move up the property ladder.
“With all of the choice available, it may seem a little daunting to those wanting to buy their first property. For any buyers unsure of where to start, a mortgage adviser can provide a helping hand. Not only can these industry professionals provide bespoke advice, but their extensive knowledge of the market means they are best placed to find the right mortgage for a borrower’s needs.”
Lucy Pendleton, the Founder Director of estate agent James Pendleton, offers another standpoint: “Last year will go down as one of the hardest to read markets in recent memory, a real pea-souper. Prices in London began falling on an annual basis, while other parts of the country kept notching up solid gains.
“In the end, property just about triumphed over inflation and rose in value in real terms, but it was a close run thing, with inflation coming in at 2.1% over the year.
“Estate agents and economists desperately tried to read the tea leaves last year, blaming every backward step on Brexit and every bounce on lack of supply.
“In truth, the veil that has been drawn by politics across the housing market’s true condition will only be lifted once we know what the UK’s future relationship with the EU looks like.
“Ultimately, 2019 could be the year that we come to realise just how much the bellows of Help to Buy and Stamp Duty relief for first time buyerscan really stoke the market.”
Shaun Church, the Director at mortgage broker Private Finance, also responds to the report: “The house price blues have finally started to leak out from the capital. While London’s property market has been languishing under a dark cloud of Brexit uncertainty for the past year, the rest of the UK seemed to be immune. However, with the latest figures showing a slight drop in house prices in the North East, it’s likely other region’s property markets will soon catch London’s cold.
“Though nothing is certain, a sudden pick-up in housing activity as soon as we officially exit the EU may be overly-optimistic. It’s likely to be a matter of months, if not years, before confidence is fully restored in the UK property market. For the millions of borrowers across the country that have been out-priced by the UK housing market, this uncertainty marks a time of significant opportunity. Easing house price growth, combined with near record low mortgage rates, means first time buyers are in a good position to make their first step onto the property ladder.
“Borrowers ready to buy should shop around to secure the most competitive mortgage deal on the market. While further rate rises may look unlikely in the short term, locking into a long-term deal now can cushion against rate increases when they do eventually happen.”
First time buyer appetite to chase the market has collapsed in the last 12 months, according to analysis by home purchase plan (HPP) finance provider Gatehouse Bank.
Gatehouse used Land Registry data to assess the percentage changes in the average price paid by first time buyers compared to those already on the property ladder across more than 100 major UK towns and cities in the past two years.
The study found that the number of areas where first time buyers were willing to chase the market and pay proportionately more than home movers has plummeted by 98.8% year-on-year, from 81 areas to just one.
This decline has been blamed on affordability and Brexit uncertainty, which are likely to have played a major role in first time buyers’ appetite to keep pace with the rest of the market. Their decisions not to chase the market are also likely to be a factor in the continued slowdown in house price growth across the country, Gatehouse believes.
House prices are still rising in the vast majority of areas, but, in the last 12 months, just one town saw first time buyers pay proportionately more than existing homeowners a year on – Doncaster in South Yorkshire.
This represents a significant drop (98.8%) from the 81 locations recorded in the 12 months to November 2017, when 76.4% of areas saw first time buyers chasing the market.
Charles Haresnape, the CEO of Gatehouse Bank, says: “First time buyers are an interesting group, because they are a bellwether for affordability and the wider housing market.
“In the round, they are acutely sensitive to whether they are getting good value, because it can have a significant impact on how quickly they are able to lower their finance costs and move up the ladder in the future.”
He continues: “If first time buyers are chasing the market to a larger degree than homeowners, it is a bullish sign for prices. When they do a volte-face like this, people should take notice, because first time buyers are the new blood that keeps a market on its feet higher up the ladder.
“This trend could right itself over the next year, but only if wage growth continues to beat inflation and there is confidence in the economic outlook.”
Annual house price growth slowed to 0.8% in the three months to January, from 1.3% in December, according to Halifax’s latest House Price Index.
On a quarterly basis, house prices in the latest quarter (November-January) were down by an average of 0.6% on the preceding three months (August-October).
Month-on-month data also showed declines, at an average of 2.9% in January, following a 2.5% increase in the average house price in December. This took the typical property value in the UK to £223,691 in January.
Russell Galley, the Managing Director of Halifax, says: “Attention will no doubt be drawn towards the monthly fall of 2.9% from December to January – the second time in three years that we have seen a drop as a new year starts. However, the bigger picture is actually that house prices have seen next to no movement over the last year, with annual growth of just 0.8%.
“This could either be viewed as a story of resilience, as prices have held up well in the face of significant economic uncertainty, or as a continuation of the slow growth we’ve witnessed over recent years.”
Using HM Revenue & Customs data, Halifax also reports that 102,330 home sales were recorded in December (for which the latest data is available), which is very close to the five-year average of 101,515. This was the fourth consecutive month where over 100,000 homes were sold, while quarterly data shows a 2.7% rise, when comparing transactions in October-December to July-October. Annually, home sales in December were up by 3.2%.
Bank of England industry-wide figures show that the number of mortgages approved to finance a home purchase – a leading indicator of completed sales – saw a flat 0.2% rise to 63,793 in December. This is still not far below the 2018 average of 64,913, but is 2,694 lower than the average of the last five years.
Annual House Price Growth Slows to 0.8%, Halifax Reports
As in November, the December 2018 UK Residential Market Survey from the Royal Institution of Chartered Surveyors showed a drop on nearly every measure recorded. New buyer enquiries fell for a fifth month in a row, while stock levels of property to sell remained low, at an average of 42 per branch. Near-term sales expectations were either flat or negative across all parts of the UK, however, the sales projection for the 12-month outlook was positive for the first time since May 2018.
Galley comments on the data: “There’s no doubt that the next year will be important for the housing market, with much of the immediate focus on what impact Brexit may have. However, more fundamentally, it is key underlying factors of supply and demand that will ultimately shape the market.
“On the supply side, the most constraining factor to the health of the market is the shortage of stock for sale, although this does support price levels. On the demand side, we see very high employment levels, improving real wage growth, low inflation and low mortgage rates; all positive drivers tempered by the challenges of raising deposits. On balance, therefore, we expect price growth to remain subdued in the near-term.”
Lucy Pendleton, the Founder Director of independent estate agent James Pendleton, also responds to the report: “This is a handbrake turn, as the monthly course of house prices reaches new heights of volatility.
“The rarified air of political uncertainty and low supply is sending the market into a bit of a spin.
“The long-term holding pattern in prices ahead of Brexit is abundantly clear and overall measures of consumer confidence have been scraping five-year lows. However, if the UK does enjoy a good EU exit, then a relief rally could be in store, given the plentiful Government support for buyers, cheap borrowing and rising wages, coupled with low supply.”
Some property values across the country are falling faster
than the well-documented decline in Bitcoin, according to research from
AnyVan.com.
Over the past 12 months, Bitcoin’s value has dropped by 65%,
with a 40% decrease recorded since the summer heatwave of 2018 alone.
Demand in the housing market also has a winter chill, with
property values falling as Brexit uncertainty deters buyers.
The removal company found huge discounts being applied to
property values across the UK. London was the most commonly affected, with
prime central London hit the hardest.
AnyVan.com highlighted a number of properties that have seen
their values crash by a half within two months, which is more than the fall in
Bitcoin’s value.
Bitcoin’s price is currently around £2,745, following a 45%
decline since November 2018, which is a long way off its record value of
£14,759 in December 2017.
However, AnyVan.com found that property values are also
falling at drastic rates. A two-bedroom flat in Haringey, for example, is now
50% cheaper than it was when it was listed at the start of December last year.
Another flat in Norwood Junction has seen its price drop by
47%, while a two-bed apartment in Canary Wharf has declined by more than 45%
compared to its original listing price.
A three-bed house in Stamford Brook, west London is now
listed for 38% less than its original £1.6m listing price. Bitcoin has seen
similar drops since autumn 2018.
It’s not just in the capital where property values are
plummeting. AnyVan.com found that homes up and down the country are being
affected. Scotland, Wales, Cornwall, Birmingham, Manchester and Norfolk have
all seen greater declines than the Bitcoin crash.
The research indicates that large properties are more likely
to face the drop.
A five-bed home in Trowbridge, listed for £1.9m by its
estate agent, has now had half its price slashed off in just three months. A
six-bed in Norfolk, which hasn’t sold since being put up for sale ten months
ago, has seen half a million pounds taken off its value.
Another example in Grimsby, an area where the average house
price is just £147,518, has had £550,000 taken off its original asking price.
In Cornwall, a renovation project to a 16-bed bungalow has dropped in value by
40%, to just £225,000, since it was listed back in June 2018.
Angus Elphinstone, the CEO of AnyVan.com, says: “Our latest
research shows just how bad the property market currently is for some. Unable
to sell their home to move, they’re forced to dramatically drop their price to
attract hard-to-find buyers.
“The last year was certainly a brutal year for the majority of
Bitcoin investors, but it’s frightening to see the value of peoples homes fall
by such levels in a quick period.”
