Posts with tag: house prices

Annual House Price Growth Eases in June

Published On: July 7, 2016 at 8:36 am

Tags: average house price,Brexit,house price growth,house prices,Stamp Duty

Annual house price growth eased off in June, down from 9.2% in May to 8.4%, according to the latest House Price Index from Halifax.

The report found that the annual rate of house price growth seen in the three months to June is the lowest since July 2015, when it was 7.8%.

Over the quarter, house prices were 1.2% higher in the three months to June than in the preceding three months (January to March). This was slightly below May’s 1.5% increase and is the lowest

Annual House Price Growth Eases in June

rise on this basis since December 2014.

On a monthly basis, house prices rose by 1.3% between May and June, following a 0.9% increase in May. However, the report notes that month-on-month changes can be erratic, and the quarterly data is a more reliable indicator of underlying trends.

The average house price in the UK now stands at £216,823.

The Housing Economist at Halifax, Martin Ellis, comments on the figures: “There is evidence that the underlying pace of house price growth may be easing. House prices in the three months to June were 1.2% higher than in the previous quarter, down from 1.5% in May. The annual rate of growth fell from 9.2% in May to 8.4%, the lowest since July 2015.

“House prices continue to increase, albeit at a slower rate, but this preceded the EU referendum result, therefore, it is far too early to determine any impact since.”

The latest research by estate agents suggests that property sales and new instructions have surged since the Brexit outcome.

Halifax has found that home sales stabilised in May, following the introduction of the 3% Stamp Duty surcharge for buy-to-let landlords and second homebuyers in April.

A rush to complete sales ahead of the tax hike caused a sharp rise in March, followed by a significant decline in April. However, sales stabilised in May, rising by 1.5%. Despite this, the number of sales recorded over the month (89,700) remained 16% below the average over the six months to February.

The index also shows that mortgage approvals rose modestly in May, after the Stamp Duty change affected the market. The volume of mortgage approvals for house purchase – a leading indicator of completed property sales – rose by 1.3% between April and May. However, approvals in the three months to May were 6% lower than in the previous three-month period.

The founder and CEO of online estate agent eMoov.co.uk, Russell Quirk, comments on the data: “Today’s figures show, even in the wake of Brexit, that the UK housing market is fundamentally strong. With a continuing, acute shortage of new housing being built and a growing population, even if immigration numbers are now curtailed, the demand vs. supply imbalance and the prospect of even low interest rates will underpin the market – even if there are short-term confidence wobbles fuelled by a media hungry for bad news.”

House Price Growth Continues to Rise in June

Published On: July 1, 2016 at 9:38 am

Author: Em Morley

Categories: Property News

Tags: average house price,house price growth,house prices,north-south divide

Five-year fixed rate mortgages could bring good news for buy-to-let investors

Annual house price growth in the UK continued to rise during June, despite unpredictable demand levels and uncertainty surrounding the EU referendum, according to the latest House Price Index from Nationwide.

The building society reports that the north-south divide across the UK continued to widen during the second quarter (Q2) of the year, while the average rate of house price growth rose to 5.1%.

Over the past 12 months, annual house price growth in the UK has remained fairly stable, ranging between 3-6%. This trend was maintained in June, with price growth standing at 5.1% on average, up slightly from the 4.7% seen in May. The average house price in the UK is now £204,968, up from £204,368 in the previous month.

However, the Chief Economist at the Nationwide, Robert Gardner, notes that it has been difficult to record levels of demand: “It has become difficult to gauge the underlying pace of demand in recent months, due to the surge in house purchase activity in March ahead of the introduction of Stamp Duty on second homes on 1^st April.

“It will therefore be difficult to assess how much of the likely fall back in transactions in the quarters ahead is because buyers brought forward purchases to avoid additional Stamp Duty liabilities, and how much is due to increased economic uncertainty following the referendum result. Gauging the likely impact on house prices will be even more difficult.”

House Price Growth Continues to Rise in June

Gardner explains how the recent Brexit result will affect the property sector: “Ultimately, conditions in the housing market will be determined by conditions in the wider economy, especially the labour market. It is too early to assess the impact of the referendum vote on the economy. However, it is encouraging that the labour market had remained robust in recent months, with solid employment growth and the unemployment rate declining to an 11-year low in April. Borrowing costs also remained close to historic lows.

“Moreover, the lack of homes on the market – with estate agents continuing to report a record low number of properties on their books – will also provide underlying support for prices, even if demand softens.”

The latest index reveals that regional house price growth has also maintained the trend recorded in recent quarters, with southern parts of England seeing faster rates of growth than the north.

Nationwide reports that the outer metropolitan region again experienced the strongest rate of annual house price growth in Q2, at 12.4%, up from 12.2% in Q1. Despite a slowdown in Q2, London was still the second strongest region, with prices up by 9.9% to a new all-time high – some 54% above pre-recession levels, compared with 10% for overall UK house prices.

The north of England is the only area to record an average house price decline in Q2. As a result, it has replaced Northern Ireland as the UK’s least expensive place to live. Average prices in the north are currently 9% below their pre-crisis peak.

Gardner comments: “It remains the case that the pace of house price growth tends to decline as you move from the south to the north of the country, even though prices in the south are already well above pre-crisis levels, while in Northern Ireland, Scotland, Wales and the north of England, prices remain well below their 2007 highs.

“It remains unclear how long this pattern will persist, and whether the north-south divide in house price levels will continue to widen.”

So how will the London property market fare in the coming years?

“The outlook for London is even more difficult to assess, because landlords and overseas buyers play a larger role in the market, and the outlook for demand from these sources is particularly uncertain,” says Gardner. “It is unclear how recent Stamp Duty changes and upcoming changes to the tax deductibility of landlords’ expenses will affect investor demand in the years ahead.”

He continues: “Similarly, it is difficult to gauge how sentiment from overseas buyers will be impacted by increased economic uncertainty on the one hand, and the sharp decline in sterling on the other (which, if sustained, reduces the cost of UK property in foreign currency terms).

“Property prices in the capital have been supported by extremely robust labour market conditions, as well as strong investor demand in recent years. Employment is now over 17% higher than its pre-crisis peak, compared to 6% higher in the UK overall. How labour market conditions evolve will be key, though valuations in the capital are already stretched by historic standards – the price of a typical London property on our measure (£472,384) is 12 times average earnings in the capital.”

The CEO of online estate agent eMoov.co.uk, Russell Quirk, comments on the figures: “This month’s Nationwide House Price Index has shown that the housing market is sound and defined by a cemented imbalance between low supply and ever increasing demand, low mortgage costs and a deeply-ingrained aspirational home owning culture.”

eMoov Completes its Property-Based Euro 2016 Tournament

Published On: June 29, 2016 at 10:59 am

Author: Em Morley

Categories: Property News

Tags: EU referendum,Euro 2016,Europe,Football,house prices

With the knockout stages of the Euro 2016 championship in full swing, online estate agent eMoov.co.uk has completed its property-based tournament to reveal the winner.

After previously comparing each team in the group stages – awarding goals for the highest take home salary, lowest property price per square metre, lowest monthly utilities costs and the lowest cost of a monthly gym membership – eMoov has moved onto the last 16 teams in its alternative, property competition.

In the knockout stages, eMoov has removed the criteria for lowest gym membership cost. Goals have been awarded on which country has the higher take home salary, the lower property price and the lower cost of utilities.

The last 16

Although Poland has a higher take home salary, Romania took the first quarter-final spot with cheaper house prices and bills.

France beat Wales in a tight match to take the second quarter-final place. Although the cost of property per square metre is higher in France (£4,274) than Wales, the team did enough to secure the spot with a higher take home salary (£1,506) and marginally lower monthly bills (£116).

The Czech Republic lost out to one of the smallest nations in the tournament, Iceland, due to its lower take home salary and higher bills. However, the Czech Republic does offer a lower house price, securing them one goal.

eMoov Completes its Property-Based Euro 2016 Tournament

Albania secured a quarter-final position over Northern Ireland. With a property price of just £917 per square metre and monthly bills of £41, compared to Northern Ireland’s £79, Albania moves onto the next round.

Despite a take home salary of just £136, Ukraine beat Slovakia with a house price of just £899 and a cost of utilities (£36) almost £100 cheaper than Slovakia.

Sweden started a goal down against Hungary, which has the lower property price. However, it rescued the game with a much higher salary (£1,683 to £383) and utility bills of around £54 cheaper.

Belgium lost out to Turkey due to its property prices being double its competitor’s, as well as a much higher cost of utilities – £105 to Turkey’s £64.

Finally, Russia secured the last quarter-final place against Portugal in one of the tightest games so far. Despite having a lower take home salary (£368) than Portugal (£618), Russia has the lower house prices (£1,206) and beats Portugal with lower utilities (£62).

The quarter-finals

In the first game, Iceland narrowly beat Romania. At £908 per square metre, Romania’s lower house prices put them one nil up. However, with a salary of just £352 to Iceland’s £1,611, the game was tied. With its utilities being just £1 cheaper, Iceland snatches the lead at the last minute.

Sweden came out on top of the host nation, France, with a higher take home salary and lower utility bills (£60), despite a property price (£5,199) of almost £1,000 per square metre more than France.

The Ukraine sent Turkey home with a lower house price and utilities, although Turkey was awarded a goal for a higher take home salary, of £469 – more than three times that of the Ukraine.

Albania knocked Russia out of the competition to secure a place in the semi-finals, beating it on both property prices and utility costs. Russia did manage a goal, however, thanks to its higher take home salary.

The semi-finals

Iceland just fell short of a place in the final, offering a considerably cheaper property price (£2,137) than Sweden, but having a lower take home salary and higher utility costs, giving Sweden a spot in the last game.

In the other semi-final match, Albania also fell short to the Ukraine. The Ukraine’s cheaper house prices and lower utility bills beat Albania’s higher take home salary.

The final

The Ukraine takes on Sweden. At £5,199, the price of property per square metre in Sweden is almost six times that in the Ukraine, giving the Ukrainians an early lead. However, Sweden levelled the game with a take home salary of £1,683 – £1,547 more than the Ukraine. But late into the game, Ukraine took the lead with utility costs of just £36 – £24 cheaper than Sweden’s.

The founder and CEO of eMoov, Russell Quirk, comments: “Forget Ronaldo, Gomez or Pogba, all you need to come out on top of the Euros is an affordable property price, good take home salary and low cost of living – something the Ukraine has across the board.

“Obviously, this knockout stage will look completely different to the world football powers that are likely to dominate the actual Euros, but it does offer a good insight into how countries across Europe match up when it comes to property price and the cost of living.

“What with the outcome of the Brexit vote, we could see masses of remain campaigners flee to remaining EU member states for sanctuary based solely on this research.”

House Price Growth in Bristol Surpasses London

Published On: June 29, 2016 at 9:35 am

Author: Em Morley

Categories: Property News

Tags: average house price,Bristol,EU referendum,house price growth,house prices

Bristol has become the first city outside of the South East to record greater house price growth than London for more than six years, according to the latest UK Cities House Price Index from Hometrack.

House Price Growth in Bristol Surpasses London

Annual house price growth in Bristol reached 14.1% in May, surpassing London (13.8%) and Cambridge (13.4) to top the chart.

Hometrack reports that this trend has seen large regional cities experiencing the highest growth rates over the past three months, led by Liverpool (5.4%), Bristol (4.2%), Manchester (3.9%) and Leeds (3.7%), driven by an improving economic outlook and strong demand from landlords ahead of the 1^st April Stamp Duty deadline. Overall, city level house price growth rose from 10.8% in April to 11.2% in May.

However, London was one of eight cities to record slower annual house price growth, down from 14.2% in April to 13.8% in May.

House price growth across UK cities

[table id=18 /]

Hometrack expects to see a rapid deceleration in house price growth over the next six months, particularly in the capital, as buyers approach a wait-and-see approach to assess the short-term impact of the Brexit.

The Insight Director at Hometrack, Richard Donnell, comments: “House price inflation in major cities outside of London and the South East, such as Bristol and Liverpool, has been accelerating, but it is now expected to slow towards low single digits in the coming months, as demand cools on the back of the EU referendum result. At present, we expect housing market turnover to bear the brunt of increased uncertainty rather than house prices.

“Standing back from the immediate turmoil in financial markets, the reality is that the fundamentals of the housing market remain unchanged, with record low mortgage rates and a wide imbalance between supply and demand. The UK doesn’t have a problem with housing demand – the more important question is how many buyers and sellers feel confident to participate in the market in the near term.”

He adds: “Market sentiment can change quickly, and the sooner a clear picture emerges over the likely impact on the economy and the outlook for jobs and mortgage rates, the sooner transaction volumes should stabilise and more buyers return to the market.”

First Time Buyer House Prices Now at Record High

Published On: June 29, 2016 at 8:51 am

Author: Em Morley

Categories: Property News

Tags: Brexit,first time buyers,house prices,private rental sector,property ladder

The average house price for a first time buyer has risen to a record high, despite uncertainty hitting the wider market ahead of last week’s EU referendum, according to the latest research by estate agents Your Move and Reeds Rains.

In May, the average first time buyer paid £173,282 to get onto the property ladder, up by 2.7% from £168,656 in April and by 15.8% from May last year. First time buyer house prices have now surged by more than £23,000 in the past 12 months, with the current average price being the highest on record.

Across the whole property market, house prices dropped slightly in May ahead of Thursday’s EU referendum, with the latest report from Your Move and Reeds Rains showing a monthly fall of 0.4%. However, the bottom of the market defied this trend, with strong demand from first time buyers.

Completed first time buyer sales totalled 24,900 in May, just 0.8% lower than the 25,100 recorded in April, despite many first time buyers being held back by a lack of homes coming onto the market ahead of the Brexit vote. The general trend remains strong, however, with first time buyer numbers now 13.2% higher than the 22,000 seen in February, and up by 5.1% on last year.

The Director of Your Move and Reeds Rains, Adrian Gill, comments: “May saw a crunch in the number of homeowners putting up a for sale sign, as many sellers held back to see the result of the EU referendum. But Brexit worries haven’t dented first time buyers’ appetite to own their own home. Many still want to capitalise on the record low mortgage rates available at the moment, which means that monthly mortgage repayments are increasingly affordable.

First Time Buyer House Prices Now at Record High

“The Brexit result won’t change the fact that huge numbers of aspiring first timers want to buy a first home, and lots won’t want to wait out the two years until the renegotiations over the EU have been completed. In the short-term, the wider market wobbles may benefit first timers, giving them the leverage to negotiate harder and get a good deal on purchase price. Canny first timers will use any Brexit lull as a chance to snap up a good deal and get on the housing ladder.”

He continues: “New builds still have a part to play in absorbing first time buyer demand. But the biggest and most immediate improvement would come from stimulating more activity from the top of the tail of the housing market. Just as many first timers can’t find the one-bed flats or two-bed houses they are typically looking to buy, some second steppers can’t find the three-bed homes they want to move into to suit their growing families. Even last time buyers looking to downsize and free up their larger family homes are often struggling to find suitable properties for sale. Housing chains are clogged up right the way through, from first time to last time buyers. The Government should support our sellers, making it cheaper to move house and adding much needed energy back into the market. Houses for sale are getting snapped up very quickly in this climate, but many more sellers are needed.”

First time buyer mortgages

The average mortgage rate for a first time buyer dropped further in May, to 3.08% – a new record low – following a fall of 0.37 percentage points over the past year.

Despite rising house prices, these cheaper rates mean that mortgage repayments have not increased significantly as a proportion of a first time buyer’s income. As of May, mortgage costs accounted for 21.1% of income – just 1.7 percentage points higher than a year ago.

Meanwhile, the average first time buyer deposit currently stands at £27,669, up by 12.8% (£3,146) from £24,523 last year. When compared to the average first time buyer income of £39,651, this represents an extra 29 days’ salary. As a proportion of income, the average deposit has risen by 6.1 percentage points over the past 12 months.

Gill says: “High LTV [loan-to-value] mortgage options like the Help to Buy schemes are giving more first time buyers a fighting chance of getting on the housing ladder. But putting together a chunk of cash to put down on a property remains problematic for many. Some first timers are helped by the bank of mum and dad, or through an inheritance or gift from a family member. Others are forced to move home with their parents while they save. But most continue to struggle to save while paying a considerable proportion of their income on rent.

“This highlights the importance of the rental market to first time buyer prospects. Maintaining a healthy private rental sector (PRS) is absolutely key to achieving homeownership aspirations. The Government’s current agenda – managing landlord demand by taxing the PRS more heavily – is likely to filter through to tenants in the form of higher rents, making the challenge of saving for a deposit even more difficult. The new PRS policies may well hurt the very demographic they are trying to help – first time buyers.”

Regional differences

In four UK regions, the average first time buyer house price now tops £150,000, including the East of England (£161,088), the South West (£165,068) and the South East (£229,828).

London remains the most expensive region to buy a first home. First time buyers in the capital now pay an average of £338,074 to get onto the property ladder, saving an average deposit of £84,138 and taking out a mortgage worth £153,936. Despite these high costs, a total of 11,700 first time buyers in London purchased a property between March and May this year.

The North East and Northern Ireland are the cheapest areas for first time buyers to purchase a home. The average first time buyer home in the North East – currently the cheapest region – stands at £106,022, less than a third of the cost of the average price in London. These cheaper costs allowed 3,300 first time buyers to purchase a property in this region between March and May.

With many homeowners said to be discouraged from selling following the Brexit vote, the number of properties coming onto the market may dwindle, which could lower first time buyer levels. If you are considering an investment in the buy-to-let sector, use this period of uncertainty to purchase a lucrative property asset.

Half of Working Britons Have Seen No Rise in Living Standards Since Early 2000s

Published On: June 28, 2016 at 8:45 am

Author: Em Morley

Categories: Finance News

Tags: Brexit,house prices,housing,housing crisis,living standards

Around half of working Britons have seen no rise in living standards since the early 2000s, as a squeeze on earnings and rising housing costs hit household budgets.

A major new report from the Resolution Foundation shows how weak income growth and increasing housing costs have effectively wiped out any gains for low and middle income working age families since the early 2000s.

By considering the impact of rising housing costs on living standards, the report found that family budgets have been more squeezed than standard measures of incomes suggest. The organisation warns that this squeeze started well before the financial crisis and has continued despite post-crisis record low interest rates putting downward pressure on housing costs. The report adds that since the early 2000s, rising housing costs have had severe effects on low to middle income households.

Looking at the impact of housing costs on living standards amongst different groups, the report found that from the start of the income slowdown in 2002:

Half of Working Britons Have Seen No Rise in Living Standards Since Early 2000s

Over half of households in the working age population have experienced falling or flat living standards – equivalent to almost 11m families.
Two-thirds of the growth in average working age income has been wiped out by rising housing costs.
More than all of the growth in private tenant income has been wiped out by rising housing costs.
The same is true for households headed by someone aged between 25-44.

Although the report shows that London is a standout case in terms of how housing costs have dragged down living standards – the proportion of income spent on housing has risen by almost a third in the capital since the early 2000s – it is not just a southern problem.

The Resolution Foundation says that the north is catching up with the south, with Scotland, the North West and the East Midlands all experiencing sharper increases in housing costs as a proportion of income than the South East and South West.

The report claims that regional differences in the strength of leave votes in Thursday’s EU referendum were rooted in long-term, geographical economic inequality, rather than shorter term trends, and that explanations for last week’s outcome go far beyond economic concerns. However, it adds that the widespread squeeze on living standards for working Britons since the early 2000s has affected all parts of the UK, which has increased dissatisfaction with the status quo.

As politicians from all parties consider how to respond to last week’s vote, the Resolution Foundation insists that they will need to understand these trends and respond to them, with a renewed focus on housebuilding.

It adds that while many aspects of incomes are difficult for the Government to directly influence, the failure on housing is home grown, and tackling it is well within the power of the Government.

With the short-term e conomic uncertainty caused by the Brexit vote likely to increase inflation, the report believes that now is not the time to press ahead with large cuts to working age benefits, which would further dampen living standards for lower income families.

The Director of the Resolution Foundation, Torsten Bell, says: “There were many factors – both cultural and economic – behind Britain’s decision to back Brexit last week.

“But stagnating living standards have been an important background to rising dissatisfaction with the economic and political status quo, particularly among poorer households. The fact that the British people have seen successive governments fail to seriously address problems that are well within their control, such as housing, has only reinforced that feeling.”

The Senior Policy Analyst at the organisation, Lindsay Judge, also comments: “Britain’s stagnation in living standards has a range of roots – from low pay growth to high inflation during the financial crisis. But rising housing costs have played a much bigger part than is normally appreciated.

“And while it’s not possible for Government to solve all the living standard challenges we face, the failure to address our housing crisis is a long and sustained home grown public policy failure. Finally getting to grips with our housing crisis would help to boost living standards for millions of people and have the added benefit of helping young people, many of whom have been hit hardest in recent years.”