Posts with tag: house prices

NAEA and ARLA’s Housing Market Predictions and How to Overcome the Crisis

Published On: December 17, 2015 at 9:36 am

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The National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents (ARLA) have joined together to set out their housing market predictions for the next ten years and suggestions for overcoming the current crisis.

The organisations report that house prices and rent prices will soar over the next decade, while buying a property will become further out of reach for many.

NAEA and ARLA's Housing Market Predictions and How to Overcome the Crisis

NAEA and ARLA’s Housing Market Predictions and How to Overcome the Crisis

The NAEA and ARLA predict that homeownership will decline by 7% by 2025, while the number of people living in rental accommodation will increase by 9%.

ARLA believes that rents will rise by over a quarter, while the NAEA expects house prices to surge by 50%.

The sister bodies state that a “drastic and immediate” overhaul is needed to fix the current housing crisis.

The report, compiled with the Centre for Economics and Business Research, suggests what can be done to repair the broken market.

The average house price in the UK is currently about £280,000, with the Housing 2025 report forecasting that it will rise to £419,000 over the next ten years.

In London, prices are expected to almost double in the next decade, from an average of £515,000 at present to £931,000.

Rent prices are predicted to grow by 27% from the current average of £134 per week to £171 in 2025.

Again, those in the capital will face higher rises, paying an extra 34% in rent per week by 2025, from £234 to £314.

The study states that the current level of homeownership amongst the working population of around 62% will drop to 55%, while those living in rental housing will rise from 20% to almost 29% in the next ten years.

David Cox, Managing Director of ARLA, says: “Buying and renting a home is a giant step, and is out of reach for many. Rent costs are already growing at a rate that people are struggling to keep up with and they’re due to become even less sustainable over the next decade.”

Mark Hayward, Managing Director of the NAEA, also comments: “House prices are only going to go one way and unfortunately, that is up. For so many already priced out of the market, this is news aspiring house buyers will not want to hear.”

The organisations are calling for a number of measures to be introduced. These include:

  • Building on some parts of the greenbelt.
  • Mandatory licensing of landlords and letting agents.
  • Encouraging institutional investment in the private rental sector.
  • Encouraging more construction workers from outside the EU to work in Britain.
  • A Stamp Duty exemption for pensioners looking to downsize.

The managing directors say: “The housing crisis Britain is facing is deep-rooted, and if it is to be solved will require finance, suitable land, time, new skills and most importantly, the appropriate national regulation of the key stakeholders, not least the estate agents and letting agents that form our membership. We are calling for change, and it needs to happen soon.”1 

1 http://www.propertyindustryeye.com/do-something-about-it-naea-and-arla-say-housing-market-is-broken/

Rightmove Reports Strongest December for Nine Years

Published On: December 14, 2015 at 1:41 pm

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This month has been the strongest December for the housing market since 2006, according to Rightmove’s latest data.

Rightmove Reports Strongest December for Nine Years

Rightmove Reports Strongest December for Nine Years

The property portal expects to see further rises in property prices next year, as the International Monetary Fund (IMF) warns that increasing house prices are posing a threat to the UK economy.

However, property expert Henry Pryor believes that we could be witnessing the height of the market at present. He tweeted: “When they ask you ‘How did you know the market had peaked?’ say ‘2 beds in SW8 for £3.15m’.”

Pryor was referring to a two-bedroom apartment in Nine Elms, Battersea that has been put up for sale for £3.15m.

Rightmove has reported the lowest December drop in asking prices for new homes on the market in nine years, with a monthly decline of 1.1%. Annual house price growth is now 7.4%.

It found that buyer inquiries to agents since the start of October were up 37%, while the amount of properties coming onto the market has fallen by 5% compared to the same period last year.

The portal’s average new asking price is £289,452 and it expects this to rise by 6% next year.

Director and Housing Market Analyst at Rightmove, Miles Shipside, comments: “Whilst a fall in new asking prices is the norm at this time of year, this is December’s best post-financial crash performance, signalling another round of price rises in 2016.

“Despite the shortage of suitable stock in many parts of the market, demand for housing is on the up.

“Although the average price of property coming to market is already up by a hefty 7.4% compared to a year ago, Rightmove forecasts that prices will reach and breach new records next year.”

On the extra Stamp Duty costs for buy-to-let properties and second homes – coming into force from 1st April – Shipside says: “Those looking to expand their property portfolios will be trying hard to find suitable properties to buy and then complete the purchase before the April deadline.

“Those selling for the first time are likely owners of properties suitable for renting out, so they may be best advised to take advantage of any surge in investor activity and market as soon as possible.

“Given that the legal process could take six weeks or so once a buyer is found, they only have between now and the middle of February to take advantage of this artificially-induced boost to buyer demand.”1

1 http://www.propertyindustryeye.com/this-is-the-strongest-december-for-nine-years-says-rightmove/

Buying is Cheaper than Renting in the Whole of the UK

Published On: December 14, 2015 at 10:38 am

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Prospective first time buyers would have lower monthly outgoings if they bought their own property as opposed to renting, according to a recent report from Santander.

In every region of the UK, the average monthly rent now exceeds the average monthly mortgage repayment.

The bank’s study found that hopeful buyers would save an average of £2,300 per year if they buy their own home. The average rent in the UK is currently £995 a month, compared to monthly mortgage repayments of £805 for the typical first time buyer household. This means that homeowners could save £190 a month.

The difference between renting and buying

Region

 Average house price Average rent per month Average monthly repayment with 21% deposit

Difference between rent and mortgage
South West £187,416 £902 £710 £192
Greater London £363,555 £1,555 £1,376 £179
Scotland £137,504 £678 £521 £157
Wales £129,582 £618 £491 £127
North West £137,874 £643 £522 £121
Yorkshire and the Humber £136,834 £631 £518 £113
West Midlands £151,224 £674 £572 £102
East Midlands £144,712 £636 £548 £88
North East £121,072 £541 £458 £83
South East £246,023 £959 £931 £28
East of England £215,082 £816 £814 £2
UK average £212,610 £995 £805 £190
Buying is Cheaper than Renting in the Whole of the UK

Buying is Cheaper than Renting in the Whole of the UK

First time buyers in the South West would make the biggest savings by purchasing a property, as the average monthly rent in this region surpasses mortgage repayments by more than £192.

Those in London, where rents are 56% higher than the UK average, would be £179 better off per month by buying.

However, buyers in the East of England would not see much difference, as the typical monthly mortgage repayments in this region is just £2 more than the average rent.

Managing Director of Mortgages at Santander, Miguel Sard, says: “People assume that buying a property will put them under greater financial pressure, but often the reverse is true. With annual savings averaging well over £2,000, this can really mount up over time and of course, once the mortgage is paid off, you have a valuable asset to show for it.

“Many prospective first time buyers see the cost of saving for a deposit as prohibitive, but there are many deals available for smaller deposits.”

He explains: “Buying a property is a big financial commitment and there are upfront costs to consider, but over the long term, the financial benefits can be very significant. Getting independent advice and looking for competitive rates either online or through a mortgage adviser is crucial to get the best mortgage to meet potential homeowners’ individual needs.”1

Santander found that the average first time buyer home costs £212,610 in the UK. This means that a buyer with the average deposit needed – 21% – must have £44,648 in order to get onto the property ladder.

1 http://www.propertyreporter.co.uk/property/buying-is-cheaper-than-renting-across-all-of-the-uk.html

 

 

 

 

 

 

 

 

 

 

 

 

House Prices Continue to Rise as Lack of Homes to Sell Hits Record High

Published On: December 10, 2015 at 2:39 pm

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November saw house prices continue to rise as British property valuers reported a record shortage of homes for sale, according to the latest research from the Royal Institution of Chartered Surveyors (RICS).

Some members of the organisation believe that incentives for first time buyers could lead to more sales in the coming months.

House Prices Continue to Rise as Lack of Homes to Sell Hits Record High

House Prices Continue to Rise as Lack of Homes to Sell Hits Record High

LSL Property Services and Acadata also released their house price index for England and Wales today, reporting a new record high in house prices. The study found that the average property value in November was £290,640, a 6% increase on last year and 0.6% up on October.

The report also says that home sales dropped by 15% in November compared to October, with completed sales for the past 12 months sitting 3.4% behind the same period in 2014.

The RICS found that high demand for homes is not leading to greater supply, as the number of homes for sale per surveyor has continued to decrease for the tenth consecutive month to a new record low.

Chief Economist at the RICS, Simon Rubinsohn, says: “I can’t recall a set of comments which have so frequently drawn attention to lack of stock on the market. Given this, it is hard not to envisage prices continuing to climb upwards.”

Official data shows that house prices rose by 6.1% in the year to September and last week, Halifax predicted that they could rise by as much in 2016. Read more: /house-price-forecast-for-2016/

House prices have risen more slowly in London, where the RICS reports the rate of growth has slowed for a fourth consecutive month, as last year’s increase in Stamp Duty for properties worth more than £925,000 cools the top end of the market.

Most economists agree that Britain’s property market is suffering from a long-term lack of house building, particularly in the south of England, fuelled by planning constraints and a shortage of skills and finance.

In his Autumn Statement, Chancellor George Osborne revealed that he will support builders in selling 200,000 new homes at 20% below market value over the next five years.

First time buyers in the capital will get access to larger Government-funded loans and loans will also be offered to those buying a shared ownership property.

The RICS says that this has led to its members predicting the greatest increase in sales in over two years. Initially, it believes this will lead to higher prices, not a rise in construction.

Rubinsohn adds: “With the best will in the world, it is likely that the boost to demand will come through rather more rapidly than the expansion of the development pipeline.”1

1 http://uk.reuters.com/article/uk-britain-houseprices-rics-idUKKBN0TT00420151210

 

 

How have house prices changed since last White Christmas?

Published On: December 10, 2015 at 9:00 am

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Come on, admit it. We’ve all got at touch of the Bing Crosby’s when it comes to throwing back the curtains on Christmas morning.

However, despite dreams of a blanket of snow, the chances of the white stuff coming on Christmas Day are realistically very slim.

This said, for those who fancy a flutter on a flutter, bets are being taken for just a single snowflake to fall in the 24 hours of December 25th at a specified location.

Previously, the location was the Met Office building in central London. Now, due to a surge in betting activity on the weather for the big day, the number of locations has increased. One bookmaker is taking bets on snow falling on Buckingham Palace, the Millennium Stadium and even Coronation Street!

According to official weather folk, the last 5 official White Christmases took place in:

  • 2000
  • 2001
  • 2004
  • 2009
  • 2010
How have house prices changed since last White Christmas?

How have house prices changed since last White Christmas?

At the time of the last White Christmas back in 2010, the average price of a property was £162,971, according to the Nationwide. In the present day, this value has risen to £196,807, meaning the average house value has risen by £33,836 in the past five years.

The building society has also looked at how property prices have risen over the period:

  • 2000-£81,628
  • 2001-£92,533
  • 2004-£152,464
  • 2009-£162,116
  • 2010-£186,466

Despite not being as predictable as a tragedy in Eastenders, White Christmases seemingly do happen. So go on, put your money where your mouth is. If we all invest a pound, it might just come true.

 

House Prices Could Rise Faster if Base Rate Rise is Delayed

Published On: December 9, 2015 at 5:06 pm

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House prices could rise by almost 7% next year if an interest rate rise is postponed, according to BNP Paribas.

Researchers at one of the world’s biggest banks warns that while the delay of a rate increase until 2017 could be good news for homeowners, it might lead to higher property prices and force the Bank of England (BoE) to further restrict mortgage lending.

House Prices Could Rise Faster if Base Rate Rise is Delayed

House Prices Could Rise Faster if Base Rate Rise is Delayed

BNP Paribas expected house prices to rise by 4.4% in the UK in 2016 if the base rate started to increase slowly from its current rate of 0.5%, followed by 6.7% growth in 2017.

This level of growth would put the average house price, as measured on Nationwide’s monthly index, at £206,256 by the end of 2016, from £197,582 this year. It would then reach £220,116 in 2017.

BNP Paribas reports that improved household finances and confidence in the overall economy will strengthen demand for homes and the prices paid, but the lack of supply of property for sale continues to be “a serious concern”.

If the base rate rise is kept on hold, the bank forecasts a price rise of 6.9% in 2016 and 11.5% in 2017, putting prices at £211,215 and £235,500 respectively.

Head of Residential at BNP Paribas Real Estate, Adrian Owen, says: “While on the face of it a deferral would be good news for homeowners, we believe this scenario is a cautionary tale for the UK economy as a whole.

“There is already concern at the BoE over the pace of house price growth, and while the current lack of housing supply is a significant driver, the sustained low cost of finance is also a major contributor.”

Mortgage rates have dropped to record lows this year, with an average rate of 1.87% on a two-year fixed rate mortgage at 75% loan-to-value (LTV), and the average five-year rate is 2.78%.

In some parts of the country, house prices are now at a higher multiple of earnings than ever before. However, restrictions by the BoE in 2014 have reduced the amount of lending at more than four-and-a-half times an applicant’s salary.

Governor of the BoE, Mark Carney, has suggested that rates could remain as they are well into 2016 and that other measures could be introduced to cool the market.

Owen comments: “Even under our central scenario that base rates rise next year, it is likely that the BoE will seek to place a brake on house price growth by introducing further restrictions on the availability of finance.

“This may achieve the desired dampening effect, although does not address the underlying structural issue in the market of insufficient supply.”1

The bank forecasts house price growth of around 27% in the UK by the end of 2019. In the South West, researchers say that prices could increase by 40.2% by 2020. Meanwhile, in the South East (excluding London), the rise could be 36.1%. In the capital, values are predicted to grow by 25.1% over the same period.

Chancellor George Osborne’s recent announcement in the Autumn Statement – that buyers of a buy-to-let property or second homes will pay an extra 3% in Stamp Duty – has been factored into the forecasts.

The bank found that this measure would have little national impact, but could reduce house price growth in regional town centres and London. As a result, BNP Paribas has cut its house price expectations for the capital from 5.6% to 4.7%. It now forecasts the average London house price to be £468,893 in 12 months’ time.

Read more about the Stamp Duty changes here: /16883-2/

1 http://www.theguardian.com/money/2015/dec/07/holding-base-rate-house-prices-rising-faster-bnp-paribas-bank-of-england