Posts with tag: housing market

Is the Housing Market Starting to Rebalance?

Published On: September 26, 2017 at 9:40 am

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The latest high street banking data and mortgage market commentary from UK Finance suggest that the housing market may be starting to rebalance…

UK Finance estimates that overall gross mortgage lending in August stood at £24.2 billion, of which high street banks lent £15.1 billion. Accounting for seasonal factors, this figure is in the same ballpark as monthly lending over the course of 2017.

Is the Housing Market Starting to Rebalance?

Is the Housing Market Starting to Rebalance?

House purchase approvals by high street banks reached 41,807 in August, which is stronger than the monthly average of 41,133 over the last six months and 11% higher than in the same month last year, when the market was subdued following the EU referendum result.

The Senior Economist at UK Finance, Mohammad Jamei, is pleased to see the housing market starting to rebalance: “Housing market activity is in Goldilocks’ territory, growing only modestly since the start of the year, though the mix of activity has shifted towards first time buyers, away from buy-to-let and cash. There is also some rebalancing across regions, as activity picks up in the north of England, Wales and Scotland, away from London, the South East and East Anglia.”

John Eastgate, the Sales and Marketing Director of OneSavings Bank, also comments on the new figures: “Mortgage lending remains on a fairly even keel, if somewhat in the doldrums. Lack of confidence can be seen across the market, with the possible exception of first time buyers, who represent a Help to Buy-driven growth zone. The potential for a rate increase sooner rather than later might well stimulate some remortgage activity but, overall, the market remains relatively directionless.

“Meanwhile, the buy-to-let market faces up to yet more change. We have seen demand from many portfolio landlords seeking finance ahead of the PRA’s [Prudential Regulation Authority] next wave of changes to underwriting standards, although awareness is far from universal. It will take some time for the dust to settle and, in the meantime, the outlook for tenants is one of higher rents.”

The Marketing Director of Foundation Home Loans, Jeff Knight, continues: “Record low mortgage rates continue to sustain market activity but, given even the most dovish members of the Bank of England’s Monetary Policy Committee are now adding to the calls for an interest rate rise, this picture could very quickly change. A wait-and-see approach is best avoided for first time buyers and existing owners considering remortgaging.

“With the PRA changes for portfolio landlords fast approaching, we are likely to see a spike in activity from those hoping to finalise deals ahead of the underwriting changes coming in. While it will take some getting used to, the changes will go a long way to professionalise the sector and help to expel rogue landlords, so, in the long-term, it’s important that decent landlords are properly engaged and supported to ensure the rental sector remains a positive option for those not yet ready to buy.”

John Goodall, the CEO and Co-Founder of buy-to-let specialist Landbay, concludes: “Mortgage lending levels rose steadily in August, with borrowers continuing to reap the rewards of record low mortgage rates and loan-to-value deals. The Bank of England’s rate-setting committee has fuelled speculation that the first rate rise in almost a decade is now likely, and soon, so those looking to buy a property or remortgage their current property will now be moving fast to lock in a mortgage rate before the change.

“In the buy-to-let market specifically, October’s PRA changes are fast approaching, so some of this uplift is likely down to landlords making changes to their portfolios before the stricter lending and reporting criteria kick in. The changes are a good thing for the ongoing sustainability of the private rental sector, but many landlords are unaware of what the changes mean for them, so we could see a dip in Q4 [fourth quarter] lending levels while the industry adjusts to the new rules.”

28% of UK property prices in major locations are lower than a decade ago

Published On: September 14, 2017 at 1:24 pm

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Despite house pace growth in England and Wales being steady during recent years, new research suggests that some parts of the country have not recovered from the financial crash of ten years ago.

The two worst affected places were found to be Blackpool and Sunderland. Average house prices here were found to be 15.3% and 13.3% under their levels in 2007, according to new research from HouseSimple.

North/South Divide

Data from the research shows that the majority of areas where values have not recovered from these seen a decade ago are in the North. On the other hand, the largest rises have been seen in the South, led by London at 68.5% and Cambridge at 64.5%.

In order to compile the research, HouseSimple compared average house prices in June 2007 and June 2017 in over 60 major towns and cities across England and Wales. Nearly 1.5 million property transactions were completed in 2007, when property prices reached their peak levels.

Analysis from the report shows that in 28% of these towns and cities, average property prices are below 2007 values. Following Blackpool and Sunderland, Middlesbrough is seeing average prices 9.7% lower than ten years ago.

In Preston, they are 8.1% below the average seen in 2007, Stockton on Tees 5.7% and Gateshead and Rotherham 3.8%. Other towns and cities where prices are lower include Bolton, Newcastle, Blackburn and Liverpool.

28% of UK property prices in major locations are lower than a decade ago

28% of UK property prices in major locations are lower than a decade ago

Rises

On the other hand, Stevenage has seen rises of 58.5%, Slough 55.9%, Oxford 55.4% and Luton 47.5%.

Alex Gosling, the firm’s chief executive officer of HouseSimple, said: ‘The last 10 years has been a golden period for many UK home owners who have sat back and watched the value of their homes rise to record levels. Unfortunately, there are pockets of the UK where property prices have been literally stuck in the past. Many of these home owners will have been in negative equity for a decade.’

‘It must be galling for anyone who bought a property 10 years ago, at the top of the market, and are sitting in a home that is still worth less today than it was when they bought it pre-2008. Worse still, any hope they have of drawing a line under their misfortune, and moving on, is most likely on pause as selling up would mean losing money. Finding the funds for a house deposit is difficult enough without having to cover losses on a house sale as well.’[1]

 

 

[1] http://www.propertywire.com/news/uk/average-prices-28-towns-cities-england-wales-values-decade-ago/

 

 

Stamp Duty is ‘stunting the mobility of an entire generation’

Published On: September 13, 2017 at 10:41 am

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Ahead of last year’s historic vote to leave the European Union, then Chancellor George Osborne warned that any such result would lead property prices to fall significantly in the short-term.

In fact, Osborne claimed that any UK departure from the EU could cause UK house prices to fall by as much as 18%. This was good news for many would-be homeowners stuck in the rental market due to affordability issues.

Stamp Duty

The average price of a UK property at the time of the EU vote meant that Mr Osborne’s prediction meant the average residential property could fall in value by over £50,000, within two years of the vote.

Mr Osborne’s predictions seemed extremely bold, given the housing shortage in the UK – and so it has proved!

Alongside uncertainty, another issue playing a major part in prospective purchaser’s attempts to get onto the property ladder is Stamp Duty. These reforms, introduced by Osborne, have contributed to a slowdown in the market and a sharp fall in property sales in London.

Paul Smith, CEO of haart estate agents, noted: ‘Stamp duty is stunting the mobility of a whole generation. Until Government revises this regressive tax we cannot hope to solve the affordability crisis.’

Property Prices

The Office for National Statistics yesterday released its latest house price data, which showed that the average price of a property in the UK is up by 5.1%, or £11,000, year-on-year.

Of course, these figures suggest that the aforementioned ‘housing crash’ seems very unlikely- bad news for renters holding aspirations of owning their own property.

Stamp Duty is 'stunting the mobility of an entire generation'

Stamp Duty is ‘stunting the mobility of an entire generation’

Continuing, Mr Smith said: ‘How can economists and industry commentators alike claim we are experiencing a Brexit induced downturn in the property market, when the average buyer is having to pay £11,000 more to buy a home than they did in the month of the vote to leave [the EU]?’

‘London experienced weaker house price growth again in July, but it would have done little to relieve aspiring buyers in the region, as the average house price continued to creep up to the half a million pound mark.’

‘Our latest branch data shows that the number of first-time buyers registering in London is down 27% on the year. Salaries simply cannot keep pace even with more subdued growth, and being stuck in a never ending rental trap is becoming the reality for increasing numbers.’.’[1]

 

[1] https://www.landlordtoday.co.uk/breaking-news/2017/9/a-growing-number-of-tenants-are-stuck-in-a-never-ending-rental-trap

 

How do iPhone price rises compare to that of UK housing in the last decade?

Published On: September 12, 2017 at 12:01 pm

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Today is set to see the latest version of the iPhone announced to the public, in Apple’s latest conference scheduled for this evening.

The model is expected to retail at a cool $969 (£734), meaning the price has risen by 94% since the original iPhone came onto the market in January 2007.

But just how does this staggering rise compare to that of the housing market during the same period?

Price Rises

Well, there is no comparison, with prices in the UK housing market rising just 26% on average over the decade.

However, both have seen a fall in price in the last 10 years, with the iPhone 3G (June 2008), 3GS (June 2009) and 4 (June 2010) all seeing a lower price point of $299 when introduced.

In addition, the typical UK house price also dropped between June 2008 and June 2009, by roughly -12.25% as a result of the economic crash.

Since then, the UK market has enjoyed steady growth across each annual Apple iPhone release announcement. Whilst Apple kept their prices frozen at $399 between 2011 and 2013, there has been a notably-larger price rise in the UK housing market.

From March last year, when Apple announced the iPhone 7 and 7S, property prices have risen by 8%.

How do iPhone price rises compare to that of UK housing in the last decade?

How do iPhone price rises compare to that of UK housing in the last decade?

Costs

Russell Quirk, founder and CEO of eMoov.co.uk, commented: ‘The escalating cost of getting on the UK property ladder is one that is often highlighted, alongside the lack of growth where wages are concerned and the increasing cost of living.’

‘It makes it even harder for those of us loyal to the iPhone cult when each year the latest product released escalates at an extraordinary rate. It highlights the impossible task faced by younger generations in terms of keeping up with two fast paced areas of modern life, property, and technology.’[1]

[1] http://www.propertyreporter.co.uk/property/how-much-has-price-increases-of-iphone-outstripped-the-uk-housing-market.html

 

 

£2.5bn per year being given to landlords letting substandard homes

Published On: September 4, 2017 at 8:34 am

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Categories: Landlord News

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A recent report has revealed that rogue landlords receive around £2.5bn per year for renting out unfit and unsafe properties.

The investigation carried out by The Independent uncovered that some landlords are still letting properties that do not meet basic health and safety standards.

Housing Benefit

In addition, the report shows that unscrupulous landlords are set to obtain over

£12bn in housing benefit during the next five years. The ongoing housing shortage is leaving a number of renters with little alternative but to accept homes that are in disrepair.

Last month, The Independent revealed that almost one-third of private rented homes in England (around 1.4m properties) are currently in a sub-standard condition. 17% were found to contain the most dangerous type of safety hazard.

Commenting on the figures, shadow housing secretary John Healey, said: ‘The number of families renting from a private landlord has soared by more than a million since 2010, but decisions made by Conservative ministers have made it easier for a minority of bad landlords to fleece the system.

‘Most landlords provide decent homes that tenants are happy with, but these rogue landlords are ripping off renters and taxpayers alike by making billions from housing benefit on substandard homes.’

£2.5bn per year being given to landlords letting substandard homes

£2.5bn per year being given to landlords letting substandard homes

Broken

Continuing, Mr Healey said, ‘Theresa May declared the ‘housing market is broken’, but Tory ministers won’t act to make the market fairer or work better for private renters. After seven years of failure, the Conservatives have no plan to fix the housing crisis.’

‘The next Labour government would call time on bad landlords and bring in a New Deal for private renters to establish new consumer rights.’[1]

 

[1] https://www.landlordtoday.co.uk/breaking-news/2017/9/around-2-5bn-a-year-handed-out-to-landlords-renting-out-non-decent-homes

PCL rents fall despite increased activity

Published On: August 24, 2017 at 8:46 am

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The Prime Central London lettings market has seen gradual improvements during the opening two quarters of the year, according to new research released by JLL.

This report indicates that transaction levels increased by 3% in the opening quarter of the year and by another 1% during the second. In turn, this has boosted the annual turnovers to over 9,670 – the highest amount in nearly three years.

Activity Increases

The reported activity recovery has been led from the lower-end of the market, according to the data. Lettings in the below £500 per week market – accounting for nearly 30% of all transactions in the region – were up by 16% in the year to the second quarter of 2017.

On the other hand, the volume of new tenancies agreed in higher price brackets was just 1.9% across the same period.

Despite a slight increase in tenant demand, oversupply of property on the housing market has led to further rental value slips during the second quarter.

Price slips for rentals below £1,000 per week have averaged out at 0.9% during Q2, while the upper-end of the market has seen rents fall roughly 10% in the year to Q2 2017.

PCL rents fall despite increased activity

PCL rents fall despite increased activity

Subdued

JLL said that subdued turnover during the past two years, coupled with weaker demand and several owners renting out properties having been unable to sell have all contributed to increased levels.

The agency moved to warn that: ‘Furthermore, tenants are bargaining with the choice available to them. The gradual increase in transactions witnessed during the course of the past two quarters will help to lower available supply in the coming quarters, but the very steady increase will take some time to have a meaningful impact.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/8/rents-fall-up-to-10-in-prime-london-despite-increased-activity