Posts with tag: housing demand

Housing Demand and Supply are Both in Decline, Reports RICS

Published On: May 12, 2016 at 8:35 am

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Housing demand has fallen for the first time since March 2015, according to the latest Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS).

Housing Demand and Supply are Both in Decline, Reports RICS

Housing Demand and Supply are Both in Decline, Reports RICS

The organisation believes that the market has cooled after landlords rushed to beat the 1st April Stamp Duty deadline and the EU referendum approaches.

The survey found that interest from buyers dropped in April, with 22% more chartered surveyors reporting a decrease in demand.

The RICS claims that there is little prospect of the market improving, with 8% more surveyors reporting a fall in new instructions in April and the lack of housing stock looking unlikely to ease in the short term.

Of the 303 surveyors polled, 22% more respondents in London expect property sales to drop over the next three months.

Despite a fall in demand, prices are still rising outside of central London and parts of the North of England. Over the next 12 months, prices are forecast to increase across the whole of the UK, with 61% more surveyors expecting prices to go up in England and Wales.

Regionally, London has lower price growth expectations over the next few years than the rest of the UK, with prices likely to remain steady. However, surveyors expect prices to go up in each part of the UK by between 3-5.5% per year in the next five years.

Surprisingly, following the recent surge in demand from buy-to-let landlords, there has not yet been a noticeable increase in new landlord instructions.

The survey suggests that recent policy changes in the buy-to-let sector are causing landlords to reconsider their position in the market. As tenant demand rises – 22% more surveyors have seen a rise rather than a fall – rent prices are more than likely to increase further. Due to a lack of stock for all tenures, rental growth is expected to rise at an average rate of 4.6% per year over the next five years.

The Chief Economist at the RICS, Simon Rubinsohn, comments: “Uncertainty is a word that features heavily in the feedback we are receiving from members responding to the survey and is contributing to the flatter trend in the latest data.

“More ominous is the expectation that both prices and rents will head materially higher over medium term, despite existing affordability concerns with the supply pipeline continuing to fall short of household growth, notwithstanding the various levers the Government is pulling to try and drive development.”

House price growth slows in April

Published On: April 28, 2016 at 1:22 pm

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The latest data released from the Nationwide Building Society shows UK house prices slowed in April, following a surge in activity during March.

Annual house price growth was revealed to have slowed to 4.9% in April, in the comparison to 5.7% recorded in the last month.

Slow growth

April has seen house price growth of just 0.2%, which is the lowest monthly rise since November 2015.

In addition, the Royal Institution of Chartered Surveyors has also suggested that demand for commercial property has dropped to a record low. The institution concluded that international investors have been deterred by the uncertainty caused by the pending EU referendum.

Nationwide noted that April’s slowdown in house prices comes after the highs in March, which were caused by residential landlords rushing to beat the additional stamp duty deadline.

During March, there were 165,400 transactions, according to official data from HM Revenue and Customs.

Robert Gardner, chief economist at the Nationwide, said, ‘it may be that the surge in house purchase activity resulting from the increase in stamp duty on second homes from 1 April provided a temporary boost to prices in March.’[1]

Highs

Figures from the report show that the average price of a flat or UK increased to a new high of £202,436 in April.

Gardner observes, ‘house purchase activity is likely to fall in the months ahead given the number of purchasers that brought forwards transactions. The recovery thereafter may also be fairly gradual, especially in the buy-to-let sector, where a wealth of other policy changes, such as the reduction in tax relief for landlords from 2017 are likely to exert an ongoing drag.’[1]

House price growth slows in April

House price growth slows in April

Uncertainty

The survey from RICS underlines that uncertainty being created by the Brexit vote. RICS said that demand from foreign investors for UK commercial property is at its lowest for three years.

Simon Rubinsohn, chief economist at RICS, feels, ‘there is no doubt that since the EU referendum became a certainty following the general election last May, we have seen a decline in interest from overseas investors in UK commercial property.’[1]

‘At least in the short-term, we know that international retailers and service providers are finding the UK market less attractive,’ he added.[1]

[1] http://www.bbc.co.uk/news/business-36153571

Demand for Homes Drives 30% Rise in Mortgage Lending

Published On: March 20, 2016 at 8:27 am

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Demand for homes has driven a 30% rise in mortgage lending in the 12 months to February, reaching a total of £17.6 billion, according to the latest figures from banks and building societies.

Despite a monthly decline of 5% from January’s total, the Council of Mortgage Lenders (CML) has reported strong annual growth, as low mortgage rates and high demand for homes fuelled lending.

The £17.6 billion total was up from £13.6 billion recorded for February last year and was the highest lent in any February since 2008, when the financial crisis was starting to take hold.

The CML’s figures detail gross lending during the month, not taking repayments into account.

Recent months have seen strong levels of remortgaging activity, as borrowers take advantage of fixed rate mortgages at record lows.

Mohammad Jamei, an economist at the CML, states that the annual rate of growth was in line with the figures for the last months of 2015.

“The recovery is being underpinned by market fundamentals in the UK, as wages grow and unemployment falls, helped by Government schemes and competitive mortgage deals.”

Demand for Homes Drives 30% Rise in Mortgage Lending

Demand for Homes Drives 30% Rise in Mortgage Lending

The forthcoming change to Stamp Duty for buy-to-let landlords and second homebuyers, which comes into effect on 1st April, has caused a 40% increase in buy-to-let loans for house purchase in January, and it is likely that this surge will have continued into February.

However, Jamei does not believe that the figures point to a significant acceleration in lending: “While there may be a slight current boost to lending as some transactions seek to complete before the 1st April tax changes in the buy-to-let sector, this is likely to be followed by a slight fall in activity.

“Affordability pressures continue to weigh on activity, as does the low number of properties coming on the market, though this has been improving very recently.”1

Wednesday’s Budget confirmed that all property investors, including corporate landlords, will face the 3% Stamp Duty surcharge.

The new tax rate will add £6,000 to the cost of purchasing a £200,000 rental property.

The Chief UK Economist at IHS Global Insight, Howard Archer, says that lending was likely to have been boosted by both remortgaging and purchases.

“Housing market activity is seemingly getting some boost at the moment from increased activity from buy-to-let and second home purchases ahead of April’s rise in Stamp Duty,” he observes.

“This could exert limited upward pressure on house prices in the near term. Post April, a likely waning of buy-to-let interest may modestly dilute housing market activity and ease upward pressure on prices.”1

Many industry experts have reported a boom in the buy-to-let market ahead of the Stamp Duty change.

The main house price indices suggest that the cost of buying a home has risen more quickly than earnings in the past year.

Jeremy Duncombe, the Director of Legal and General Mortgage Club, which works with advisers and lenders, claims buyers are being forced to take out larger loans to cope with growing house prices.

He claims: “These high prices, combined with a lack of affordable housing, puts owning a property out of reach for many first time buyers. Initiatives that can aid the delivery of the 250,000 extra homes needed annually should be thoroughly explored by the Government, with all options considered.

“As the Chancellor himself conceded in his Budget, more needs to be done to speed up the realisation of these new properties if the housing market and the wider economy is to return to full health.”1 

1 http://www.theguardian.com/business/2016/mar/17/demand-for-homes-fuels-30-rise-in-mortgage-lending

Supply of Properties For Sale has Almost Halved in Ten Years, Reports NAEA

Published On: January 28, 2016 at 12:55 pm

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The National Association of Estate Agents (NAEA) has released figures that suggest the supply of properties for sale has almost halved in the last ten years.

It reports that the average estate agent branch had 37 homes on its books last month, compared with 72 per branch in December 2005. Last month’s figure is also

Supply of Properties For Sale has Almost Halved in Ten Years, Reports NAEA

Supply of Properties For Sale has Almost Halved in Ten Years, Reports NAEA

down from 45 properties in December 2014.

In December 2015, there were 360 applicants registered per branch, compared to 302 in December 2005.

The NAEA also found that 44% of its members are witnessing a rise in buy-to-let and second home purchases, as buyers try to beat the 1st April deadline for increased Stamp Duty.

From this date, landlords and second homebuyers will be charged an extra 3% in the tax on properties worth over £40,000. Read more: /16883-2/

Over 2015, there was a 6% increase in mortgage lending by the big high street banks, with a particularly strong end to the year.

In December, mortgage lending by both value and number was 24% higher than in December 2014.

In total, there were 75,745 mortgage approvals, of which 43,975 were for house purchases.

The average size of a mortgage for house purchase was £177,000, according to the British Bankers’ Association.

Nationwide reports that the average house price is currently £196,829 – only slightly down on December’s £196,999.

The building society has put annual house price growth at 4.4%.

The Chief Economist at Nationwide, Robert Gardner, says that looking forwards, “the risks are skewed towards a modest acceleration in house price growth”1.

He adds that with interest rate rises likely to stay on hold for longer than previously expected, demand for property is likely to grow in the coming months.

1 http://www.nationwide.co.uk/~/media/MainSite/documents/about/house-price-index/Dec-Q4-2015.pdf

 

 

Fall in construction ‘will raise property prices’

Published On: January 27, 2016 at 11:33 am

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A fall in construction activity will serve to increase house prices still further, according to Nationwide.

The building society noted that prices continue to increase during January, but that any rises will be modest.

Gradual

Prices are up 0.3% during this month, in comparison to a sharper increase of 0.8% recorded in December. Annual growth is more stable, standing at 4.4%, in comparison to 4.5% in the previous month.

In fact, the average property value is currently £196,829, slightly down on that recorded in December.

However, Nationwide warns that the demand for property is likely to increase over the coming months. The firm believes that a strong labour market, in conjunction with wages rising at a steady pace and interest rates remaining static, will drive the upturn.

Fall in construction 'will raise property prices'

Fall in construction ‘will raise property prices’

Concerns

‘As we look ahead, the risks are skewed towards a modest acceleration in house price growth, at least at the national level,’ said Robert Gardner, chief economist at Nationwide. ‘The labour market appears to have significant forward momentum. Employment has continued to rise at a robust rate in recent months and, while the pace of earnings growth has slowed somewhat, in inflation-adjusted terms regular wages continue to rise at a healthy pace.’[1]

‘The concern remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability,’ he continued. ‘Indeed, the market is already characterised by a shortage of stock, with the Royal Institute of Chartered Surveyors reporting that the number of properties on estate agents’ books remains close to all-time lows.’[1]

Adrian Whittaker, Sales Director at New Street Mortgages, also noted, ‘these figures show an unseasonal increase in house prices resulting from a market that is characterised by rising demand and limited supply. The mortgage industry has been slow to keep up with a new technology and if we are to satisfy the demand for faster mortgage applications and adapt to the rising competitiveness of the market, it is crucial that as an industry, we look to keep systems and processes up to date.’[1]

[1] http://www.propertyreporter.co.uk/property/nationwide-predicts-modest-acceleration-in-house-price-growth.html

 

Rental Property Supply to Decline

Published On: December 23, 2015 at 10:18 am

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Two in five letting agents expect rental property supply to decline over the next five years, according to the latest report from the Association of Residential Letting Agents (ARLA).

Rental Property Supply to Decline

Rental Property Supply to Decline

The organisation expects the changes to Stamp Duty for buy-to-let investors – as announced in the Autumn Statement – to hit landlords’ confidence in the sector.

Managing Director of ARLA, David Cox, comments: “This month’s findings are triggered by the Chancellor’s announcements around buy-to-let tax in his Autumn Statement.

“When the rabbit was first pulled out of the hat, we said these changes would be catastrophic for the rental sector and this has been echoed by letting agents across the country. The new Stamp Duty increases will make owning a buy-to-let unprofitable for a lot of landlords and certainly make new investors think twice about purchasing a buy-to-let property.”

Under the changes, buy-to-let investors and second home buyers will be charged an extra 3% in Stamp Duty on purchases over £40,000.

The ARLA study also found that tenants are experiencing fewer rent rises, with under one quarter (23%) of agents reporting rent increases for tenants in November, down on October’s figure of 25% and the lowest this year.

Demand for rental homes rose slightly last month, likely a result of renters preparing themselves for Christmas and New Year.

ARLA member agents registered an average of 34 new tenants per branch in November, up from 33 in October.

Supply of rental housing was also on the up last month, a 9% rise from October’s 173 properties per branch to 189. However, tenants in London are continuing to struggle finding properties, with just 121 homes managed per branch – 36% less than the UK average.

Cox continues: “It’s promising to see that the number of agents reporting rent increases is continuing to decline and this should spread some Christmas cheer amongst renewing tenancies or looking for a new property to rent.

“However, just under a quarter of tenants are still unfortunately seeing hikes in their monthly rent payments. But if we continue to follow trends we’ve seen in previous months, we should see fewer tenants experiencing increases as we welcome in 2016.”1

Do you agree with Cox? Or are the changes to Stamp Duty enough to stop you investing further in the sector, or make you put your rents up?

1 http://www.propertyreporter.co.uk/landlords/btl-stamp-duty-causing-gloominess-among-letting-agents.html