UK house price growth continues in first month of 2016

halifax-logoHouse prices in the UK increased by 2.2% in the last three months compared with the previous quarter taking the average value to £212,430.

The January index data from lender the Halifax also shows that prices were up 9.7% year on year and up 1.7% in compared with December 2015.

Martin Ellis, Halifax housing economist, pointed out that the quarterly rate of change increased following two successive months below 2% and the annual rate has been in a narrow range between 8% and 10% for nearly the whole period since the start of 2015.

‘The imbalance between supply and demand continues to exert significant upward pressure on house prices. This situation looks set to persist over the coming months. Further ahead, increasing affordability issues, as price increases continue to exceed wage growth, are likely to curb housing demand and cause price growth to ease,’ he said.

He also pointed out confidence in the housing market remains strong, according to the latest quarterly Halifax Housing Market Confidence Tracker.  Despite declining steadily since last May, house price optimism in the final quarter of 2015 continued to show that a majority of people believe that average UK property prices will be higher 12 months from now.

Price growth is largely due to a lack of supply, according to Randeesh Sandhu, chief executive officer of residential development finance provider Urban Exposure. He also pointed out that there could be an increase in activity before the new second home stamp duty tax increases in April.

He said that the lack of supply continues to be constrained by developers having a lack of access to finance as well as a shortage of key materials and a skilled workforce. ‘Far more needs to be done to boost development, particularly in London where average house prices in over half of London neighbourhoods are now £500,000 or more,’ he added.

Rob Weaver, director of Investments at property crowdfunding platform Property Partner, also believes that supply is the main driver in the housing markets. He also explained that while sales in central London have dropped off the outer boroughs are seeing increased activity.

‘Potential buyers are hunting for more affordable housing, attracted by regeneration in places like Thamesmead and Woolwich, and of course, Crossrail. We’re also seeing a spike in activity in the market as buy to let landlords rush to seal deals before the stamp duty 3% hike in April,’ he explained.

‘After that it is less clear as the spectre of cuts in mortgage tax relief looms next year. But wage growth is just not keeping pace with house prices, and that raises the serious question of affordability. Demand may start to drop leading to a softening of prices. An eventual interest rate rise, possibly at the end of the year, may also lead to a correction in the market,’ he added.

Jonathan Hopper, managing director of buying agents Garrington Property Finders, pointed out that the buy to let rush will push demand higher in the next couple of months but it is short supply that is affecting the underlying market.

‘Britain simply can’t build homes fast enough to keep up with demand. With demand likely to be boosted even further by the Bank of England’s admission that an interest rate rise could remain firmly off the table for the rest of the year, 2016’s strong start is unlikely to be a blip,’ he added.

Further house price growth throughout 2016 is almost inevitable, according to Mark Posniak, managing director at Dragonfly Property Finance. ‘With interest rates unlikely to move for some time, and people generally confident about their jobs and the economy, demand is also very strong. People’s fear of being priced out of the market is tangible at present. This is especially the case in London and the South East,’ he said.

‘While logic suggests house price growth will ease as affordability issues increase, our relationship with the property market is nothing if not emotive. Prices rise in this way only adds to demand and so the growth continues,’ he added.

Source: Property Wire

Demand remains strong in all commercial property sectors in UK

rics_logo-300x150Commercial property prices in the UK continue to rise as demand remains strong in all sectors according to the latest survey from the Royal Institution of Chartered Surveyors (RICS).

UK Commercial Property is still seen as a safe haven for investors with rents and capital values set to continue rising despite macro concerns, the survey says.

With businesses across the UK thriving and employment data still strong, the industrial sector has the greatest momentum in occupier demand.

Some 43% more chartered surveyors are seeing a rise in demand for industrial space in the fourth quarter of 2015, compared to 29% more seeing a rise rather than fall in demand for offices and 26% more seeing a rise in demand for retail.

As demand increases, supply has continued to decrease across the UK with the survey recording the eleventh consecutive quarterly drop in available space across the commercial property market.

The survey report also says that development nationally has only increased marginally with anecdotal evidence suggesting that there is a lack of commercial construction activity in many locations.

It also explains that a deepening skills crisis is playing a key role in inhibiting development. One notable exception to the low level of new build across the UK is in the London office sector, where development has risen sharply over the last three quarters and 34% more surveyors saw a rise rather than fall in office development starts in the quarter.

In the face of continued demand and lack of supply, rent expectations for the next quarter are strongly positive across all sectors with 35% more chartered surveyors projecting a rise in rents across all sectors.

Industrial space was again the strongest performer with 43% more surveyors envisaging a further rise rather than fall in rents.

Looking at the investment market, buyer enquiries have risen in each sector albeit less than previously and the upward trend in foreign buyers has noticeably flattened. Notwithstanding this, capital values are forecast to rise further in all sectors of the market in both the near and longer term with prime office and industrial sectors most likely to outperform.

Looking further forward, all sector rents are set to continue to rise both in the medium and longer term. Over the next 12 months, respondents are most confident of seeing rental increases in the prime industrial market with 87% more respondents foreseeing a rise as opposed to a fall.

At the other end of the scale, secondary retail space exhibits the most modest reading on a sectoral comparison, but still posted a relatively healthy balance of +51% expecting rents to grow.

Regionally price expectations are positive across the UK, with the strongest performers expected to be London and the East, however, 81% of respondents in the capital now view commercial real estate in central London to be overpriced, slightly up on the 77% who took this view in the third quarter survey.

The report also points out that there is a lack of incentives available. The value of incentive packages on offer from landlords to tenants fell across each sector in the final quarter of 2015 a trend in place for much of the past two years.

Source: Property Wire

Average home let within 20 days as rent rises go on

Countrywide logoBritain’s largest letting agency says rents grew by an average of 3.1 per cent in 2015, taking the average monthly rent to £919pcm. 

Rents rose in every region of Britain with the East of England seeing the highest growth – 6.5 per cent – and Central London the lowest with a mere 0.5 per cent.

Some 34 per cent of tenants who renewed their tenancies faced higher rents, an increase of seven per cent from 2014. However, the average rent for renewing tenancies only grew by 1.3 per cent, much less than for those moving into a new home.

The continuing imbalance between supply and demand has intensified competition for homes in the market, says Countrywide.

The average property is now let within 20 days of being instructed – two days quicker than it was in 2014.

Greater London as a whole saw a slowdown in rental growth in 2015 compared with 2014 yet rents still rose by 4.7 per cent on average. Affordability issues have kicked in across London; the proportion of under 25s living in the rental sector in the capital fell by four per cent in 2015, the continuation of a longer term trend.

Surrounding regions in the South of England have seen small growth in the proportion of under 25s in their market, as Londoners look further afield for more affordable markets.

“2016 looks to be a complicated year for landlords as the government focuses its efforts on boosting homeownership. The additional 3% stamp duty charge, stricter regulation and changes to tax relief from 2017 onwards will all take their toll on investor sentiment and impact behaviour” admits Johnny Morris, research director at Countrywide.

“With stock at a premium, the smaller landlords who decide to sell up will add upward pressure to rents, although any rises will be tempered by affordability pressures” he warns.

Source: Letting Agent Today


House price growth confidence hit new high in UK after general election

Boards smlConfidence in the outlook for house price growth in the UK hit its highest level in four years following the general election in May, but dropped back last month.

The dip in confidence in June comes despite continued rise in real wage growth, together with record low numbers of homes available for sale pushing average house prices over £200,000 for the first time ever, according to the Housing Market Confidence Tracker report from the Halifax.

House Price Optimism (HPO) hit +68 in May 2015, and although it slipped back slightly in June to +64 it remains substantially higher than at the beginning of the year when it was +52 in the January survey.

Nevertheless, while the May high was short lived, the percentage of Britons predicting an increase in the average property price of more than 5% over the next 12 months has still risen from 34% to 38% in the last quarter, comparing the March and June 2015 measures, respectively.

This increased optimism also corresponds with a fall in the net figure for buying sentiment from +35 in February 2015 to +25 in June 2015. Some 56% said in June they think it will be a good time to buy property over the next 12 months, compared to 61% who said this in February 2015. At the same time there’s been an increase in the net figure for selling sentiment from +27 in February 2015 to +32 in June 2015.

With the Governor of the Bank of England saying improving economic figures means an interest rate rise has moved closer, 48% expect mortgage interest rates to be higher in 12 months’ time compared to 45% in the first quarter of the year.

Londoners are less likely than those in any other region to say it is a good time to buy at 38% compared with 56% of Britons overall, making it the only region where the proportion who think the next 12 months will be a bad time to buy exceeds the proportion who think it will be a good time.

Those in the South East are more confident than in any other region that house prices will be higher in 12 months’ time at 90% compared to 69% of Britons overall, with those in the North East and the West Midlands the least likely to say this, both at 59%.

‘Economic growth, together with increasing real earnings growth and historic low mortgage rates are all supporting the continued rise in house price optimism. It’s not been a smooth increase though as while there was a noticeable spike in optimism straight after the General Election result, this has now fallen off slightly,’ said Martin Ellis, housing economist at the Halifax.

‘A key factor in maintaining optimism over house price growth has been the fact that the stock of homes available for sale is currently at record low levels. If this growth is to be sustainable then we need to see a comprehensive house building plan rolled out across the UK, and soon,’ he added.

The research also shows that raising a deposit is still seen as one of the main barriers to home ownership with 55% mentioning this, followed by 47% saying it is job security and for 35% it is rising property prices.

While concerns over raising a deposit have fallen in the last quarter, cited by 61% of Britons as a being a barrier to buying, this is still higher than the proportion who said this in the first quarter of 2011 when it was 50%.

At the same time concerns about rising prices have continued to increase, with 35% citing this as a barrier to buying compared to just 15% in 2011.

Source: Property Wire

Mortgage market waking up as summer bounce beckons

Lending for house buying is still down compared to this time last year but there are signs that the market is at last awakening in time for a modest summer bounce, according to the Council of Mortgage Lenders.

It says home owners took out 49,000 loans in May, the highest number since December. That compares with 48,300 loans taken out in April.

“House purchase lending in May was slightly up on the previous month, suggesting the market might be waking up after a subdued first quarter. Activity has broadly been down on last year but we expect it to rise in the summer months as, with historically low interest rates and a competitive lending environment, borrowing conditions are relatively favourable” says Paul Smee, director general of the CML.

“But we cannot ignore the continuing affordability constraints caused by high house prices relative to earnings which will work in a contrary direction” he adds.

First-time buyers saw a decline in lending volumes compared to last year, but up slightly on the previous month. Home mover lending saw a similar trend with volumes up slightly on April but down year-on-year.

Home-owner remortgage activity declined compared to the previous month and compared to the same period last year.

Buy-to-let continues to grow year-on-year, mainly driven by remortgage activity, but also saw a slight month-on-month increase due to higher buy-to-let house purchase lending activity.

Source: Estate Agent Today

Buy to let boom continues with new mortgage highs

The buy to let sector is at its strongest for six years according to data released by the Bank of England. 

Lending for buy to let mortgages jumped to a whopping £8 billion in the third quarter of this year – the highest quarterly lending volume since 2008 and up from £5.9 billion in the same period of 2013.

These are just the latest figures to show the private rental sector going through a boom.

According to the Council of Mortgage Lenders lending in September – its most recent data – is 24 per cent higher by volume than in the same month last year, and 32 per cent by value. Paragon, one of the country’s chief buy to let lenders, says it has this year seen an 82 per cent rise in completions by investment purchasers.

Source: Letting Agent Today

UK house prices set to rise 17% by 2018

House moneyNational house prices will rise 17% during the next five years as the economic recovery gets underway, according to CBRE.

The news follows an increase in optimism which has fed through to the national housing market, with mortgage approvals at their highest level since 2008, leading to more than 62,000 requests approved during August 2013.

The market will be boosted by help to buy, low interest rates and improvements in the mortgage market. With most favourable economic conditions in Southern England, CBRE expect house prices in London, the South East and East of England will witness the most significant growth throughout the next five years.

Jennet Siebrits, Head of Residential Research at CBRE, said: “The continued improvement in lending conditions has been a significant factor in the increased demand across the UK property market. Notably, the Funding for Lending and Help-to-Buy equity loan schemes have proven particularly successful.

“The first phase of Help-to-Buy has achieved its objective of stimulating the UK property market, through delivering over 15,000 reservations since April of this year. We expect the second phase of Help-to-Buy to become a ‘game changer’ and therefore anticipate it will help in the region of half a million prospective buyers who are seeking to enter the property market.”

London – The capital continues to witness an inflow of investment from overseas purchases, resulting in land across the region offering ‘easy trade’. While Government backed funding schemes have improved domestic mortgage markets and accessibility for all pricing levels, an emergence of house-builders and registered providers entering the market has made it all the more competitive, leading to an upward pressure on regional land values.

South East – When compared with Q2 2013, activity in the land market throughout the South East of England has continued to increase. While previously unviable land is re-entering the market, coupled with the National Asset Management Agency (NAMA) releasing further land opportunities, competition for target locations has generated a considerable increase in land values.

South Central – The South Central market remains active with house-builders continuing to re-evaluate margins and hurdle rates with the objective of acquiring strategic prime sites for residential development. The continued importance of Return On Capital Employed (ROCE), has affected those larger schemes where the majority of non-stressed vendors have been unable to meet the demands for a reduction in land offer coupled with increasing payment profile.

South West – The house-builders’ appetite to acquire immediate development sites with consent in areas where underlying demographics and sales rates are strong continues to increase. However, due to limited supply, these sites are harder to source, making strategic land and off market sites the key focus.

Midlands – The reformed national planning and policy framework, the Help-to-Buy initiative, and improved sentiment for owner occupation have been the leading factors in contributing to an increase in activity across the Midlands house building sector. When compared to Q2 2013, land values throughout the region have risen 5% for those best sites, with consented land in areas which offer £200psf and above receiving the strongest demand.

North – The housing building sector in the North of England remains fundamentally PLC driven as those regional players remain reluctant to re-enter the market due to ongoing funding restrictions.While government assistance is providing developers with sufficient sales confidence to activate land buying across the sectors, the primary focus for the region remains on first and second time buyer markets.

Scotland – Overall, demand and values have continued to rise with house builders remaining focused on the Central Belt and Aberdeen. Similarly, house-builders are also considering secondary sites on commuter belts, helped by planning authorities actively reviewing historic planning consents and renegotiating the Section 75 agreement.


Budget 2012 – Property industry reaction

Chancellor George Osborne has spoken. Here, key members of the British property industry deliver their  verdict on yesterdays Budget…

The British Property Federation said it had enjoyed lobbying successes in areas such as stamp duty land tax, which would not extend to commercial property, a consultation on the simplification of green taxes, and the NPPF, which retained the “presumption in favour of sustainable development” – all policies the BPF had championed ahead of the Budget.

However the BPF said the property industry was left disappointed by “small beer” tax increment financing proposals, the lack of Mortgage REITs to support bank deleveraging, and the Chancellor ignoring calls from his own backbench to provide empty property rate relief.

Liz Peace, chief executive of the British Property Federation, said: “We asked the Chancellor first and foremost to do no serious harm in his Budget to an industry that is still struggling – by and large we’re satisfied this is the case. It certainly could have been a lot worse.”

Adrian Coles, Director General of the Building Societies Association said: “Although we are not surprised, given how well trailed the content of this Budget has been, we are disappointed that there is precious little in it for ordinary savers and aspiring borrowers.

“The Chancellor has failed to take an easy opportunity to help UK savers by allowing them to use their whole ISA allowance in a cash ISA. He hasn’t helped those nearing retirement by permitting transfers of ISA money from stocks and shares to cash either. It is also a shame that the focus on stamp duty has been at the top end of the market, ignoring the cost of this tax for first-time buyers.”

David Salusbury, Chairman, National Landlords Association, said: “Regrettably, there has been no recognition in the Budget statement of the barriers to investment presented by the current system of property taxation.

“While the NLA believes the Government is justified in closing the Stamp Duty loophole to prevent tax avoidance, the Treasury should not ignore the impact these measures will have on legitimate companies which buy property to let as their primary business activity.

“This is likely to adversely influence investment decisions made by landlords who operate as small businesses and provide much needed housing.

“The NLA will seek discussions with the Treasury to see whether it is possible to differentiate genuine property businesses from companies set up purely for tax-avoidance.

“Calls for a comprehensive review of Stamp Duty continue to be unheard. This could have been a good opportunity to stimulate more investment and encourage growth in the residential property market.”

John Whiting, Tax Policy Director at the Chartered Institute of Taxation, said: “Nobody can be surprised at the decision to take action against SDLT avoidance. The targeting of ‘non-natural persons’ for both SDLT and CGT additional charges is an understandable attempt to catch all manner of vehicles but the legislation will need careful drafting to make sure the measures are practical and workable.

“It is also interesting to note the clear warning about retrospective action if people attempt to sidestep these new rules. The Chancellor is building some solid walls around the SDLT system and wants to make sure the foundations are equally watertight.”

Suren Thiru, Lloyds TSB housing economist, said: “The impact of the increase in the stamp duty rate for homes sold for over £2million on the housing market is likely to be very limited. However, strong demand from wealthy cash rich buyers, as well as limited supply of such properties, is likely to continue to boost the level of activity at this end of the housing market.”

Richard Gordon of UKPI said: “Overall this Budget has been well received within the property sector. However, as far as the UK property market is concerned, it is felt more could have been done in certain areas, particularly in the way Stamp Duty Land Tax (SDLT) is applied. The banding of SDLT means those buying or selling a property priced just above a particular threshold are disadvantaged.

“I am also concerned about the effect the 15% SDLT rate will have for Companies whose business is investing in blocks of apartments for buy-to-let. The additional tax could make certain deals financially nonviable. We await further clarification on this point.”

NewBuy Guarantee scheme launched by UK Government

Details of two ambitious schemes that are aimed at unlocking the aspirations of a new generation of home buyers, and get Britain building thousands of new homes, were unveiled today by Prime Minister David Cameron and Housing Minister Grant Shapps.

Mr Shapps declared the NewBuy Guarantee open for business – a scheme that will enable an estimated 100,000 prospective and existing homeowners to buy their dream home with much smaller deposits than currently required.

At the same time, the Minister announced details of the reinvigorated Right to Buy, which will give up to two million social tenants the opportunity to buy their council home with a discount of up to £75,000 and, for the first time, ensure that additional properties sold are replaced with new affordable homes for rent.

The NewBuy scheme means that from today, three leading high street lenders and seven of the country’s biggest house builders will begin to offer mortgages on newly-built properties to people with just a five per cent deposit; a financial product not available anywhere else in the market. Other leading names are expected to follow.

Today’s deals will mean that instead of a typical buyer requiring a £40,000 deposit for a £200,000 property, they will now only need £10,000. The government and housebuilders will help provide security for the loan, so if the house is then sold for less than the outstanding mortgage total the lender will be able to recover its loss.

The scheme, which has attracted strong support from many of the country’s biggest house-builders and mortgage lenders, will offer help for up to 100,000 buyers who would otherwise be frozen out of the market.

The deals will include:

  • Barclays – who will offer 95 per cent Loan-to-Value mortgages on properties built by Barratt, Bellway, Bovis, Persimmon, Redrow and Taylor Wimpey at just 4.99 per cent fixed rate for two years and 5.89 per cent fixed rate for four years.
  • Nationwide – who will offer 95 per cent Loan-to-Value mortgages on properties built by Barratt, Bovis, Bellway, Persimmon, Redrow and Taylor Wimpey at just 5.69 per cent fixed rate for three years and 5.99 fixed rate for five years.
  • NatWest – who will offer 95 per cent Loan-to-Value mortgages on properties built by Barratt, Bellway, Bovis, Linden Homes, Persimmon, Redrow and Taylor Wimpey at just 4.29 per cent fixed rate for two years and 4.99 per cent fixed rate for five years.

However, the scheme is not without its critics. Some feel that the scheme is just following the same principles of creating high levels of property based debt that caused the financial crisis in the first place. Others believe it is wrong for the Government and therefore the taxpayer to underwrite mortgages.

Richard Gordon of UKPI said: “The NewBuy scheme could boost home ownership and help kick-start the building industry which would of course be good for Britain’s economy.

“However, I am concerned that it could keep prices of new homes artificially high and drive people back into high levels of borrowing. Banks have been criticised for offering 90% or 95% loans during the boom years and now the UK government is encouraging exactly the same thing again.

“Having said that, mortgages for new homes account for only around 10% of the overall market so the impact on the wider housing market is likely to be fairly limited.”

Value of UK housing soars by £1.8 trillion in past decade

New research from Halifax shows that the value of the UK’s private housing stock rose by £1.8 trillion (84%) in the decade to 2011.

The value of the housing stock at the end of 2011 is estimated at £3.9 trillion, up from £2.1 trillion in 2001.

The increase of £1.8 trillion over the decade is equivalent to £68,500 per household – in the owner-occupied and private rented sectors – in the UK. The value of the UK private residential housing stock has grown at more than twice the rate of any increase in overall consumer prices, with the retail price index up by 38% over the past ten years.

However Halifax says the picture changes when looking at the value of housing stock since 2007. Over the past five years the value of the UK’s housing stock has declined by 5%, or £187 billion.

This reflects the reduction in house prices since autumn 2007: a decline Halifax says is more than compensated for by the significant increases in the half decade prior to 2007.

All 12 regions of the UK have seen a significant increase in the value of their private housing stock during the last ten years.

“The decline in house prices seen since autumn 2007 notwithstanding, the value of UK’s housing stock has soared in the decade to 2011, rising by 84% to just under £4 trillion at the end of 2011.” said Martin Ellis, housing economist at Halifax.

“Whilst outstanding mortgage debt has more than doubled over the last ten years, the value of the housing stock has risen by more in monetary terms.

“As a result, the total value of housing equity has shown a healthy increase. For most homeowners housing is still very much the main store of private wealth.”