Number of million pound properties in UK expected to triple by 2030

House moneyThe number of million pound properties in the UK will more than triple by 2030 and one in four London homes will cost £1 million or more by 2030, new research shows.

Yet less than 1% of properties in the North East, Yorkshire and Humber, the North West, Scotland and the East Midlands will be in this price bracket, according to the study from Santander Mortgages.

Also, by 2030 the average property price in the UK expected to double, surpassing the half a million pound mark with prices set to soar to as much as 16.5 times average incomes.

Today, less than half a million homes in the UK are valued at £1 million or more, says the research done partnership with economist and London School of Economics professor of economic geography Paul Cheshire.

It says that 25% of housing stock in London is expected to be valued at £1 million or more, rising to 70% in two London boroughs, highlighting a stark geographical divide.

Overall, the average UK property price, which currently stands at £283,565 is expected to increase 23% by 2020 to £349,3000. Fifteen years from now in 2030, the average UK property price will have almost doubled with a 97% increase, surpassing the half a million pound mark at £557,444.

While property prices are expected to soar, predictions suggest that incomes will not keep pace, resulting in an overall decline in affordability. At present in the UK, the average property price is 7.9 times the average income, but by 2030, this is expected to hit a multiple of 9.7. Again, this trend is elevated in London, where prices are currently 11.5 times incomes and predicted to rise to an eye-watering 16.5 by 2030.

‘Property price inflation will tip many existing home owners into the million pound price bracket but could also price some aspiring buyers out of the market if they don’t have the right support. The current property market is buoyant and the deals available to new and existing owners are extremely competitive, so those wishing to buy or move shouldn’t be put off,’ said Miguel Sard, managing director of mortgages, Santander UK.

‘Regardless of the price point a buyer is considering, our advice remains the same; do your research, find a mortgage provider that offers competitive rates and a range of products to ensure that the right deal is secured, and above all, ensure the repayments are affordable,’ he added.

Cheshire pointed out that by 2030 the divide between housing haves at the top and the have nots at the bottom will be even wider than it is now. ‘More owners will enjoy millionaire status, as homes that many would consider modest fetch seven figure prices in the most sought after areas,’ he said.

‘Property price inflation is beneficial for existing owners who will see their net-wealth increase, but it will make entering the market more difficult still for new buyers, further highlighting the importance of the right timing, advice, support and financial planning; and not just having a mum and dad who bought a house but a grandparent too,’ he added.

Source: Property Wire

Advertisements

UK property asking prices up almost 3% month on month

Boards smlThe price of property coming to the market in the UK increases by a substantial 2.9% or £8,324 in January, hitting a new record of £299,287 and surpassing the record set in October 2015 by over £2,700.

Housing demand is higher than ever as the latest Rightmove report records that traffic to the property portal hits record levels, with visits up nearly 20% year on year in January.

It says that there has been an encouraging 5% uplift in new properties coming to the market compared to same time last year resulting in the highest total number of newly listed properties at this time of year since the 2008 credit crunch.

The firm is also predicting that 2016 will be the year of the first time buyer as Government initiatives and a low interest rate outlook are now aligning when there is more property choice for first time buyers, with a 10% year on year jump in the number of two beds or fewer coming to the market.

‘The new year’s market has hit the ground running in many locations, continuing last year’s momentum and resulting in the price of property coming to the market hitting a new high. Many agents reported high numbers of sales in November and December and properties selling more quickly, so it’s encouraging to see signs of replenishment of property, especially in the first time buyer sector,’ said Miles Shipside, Rightmove director and housing market analyst.

‘However, in spite of the apparent veneer of market buoyancy, those thinking of putting their property up for sale need to avoid being too optimistic with their initial asking price, as most buyers are still understandably being very selective about their future home,’ he added.

The previous record price high was set in October 2015 but this has now been exceeded by £2,738, pushing the average new seller asking price to £299,287.

Shipside pointed out that a continuing feature of the recovering market over the past few years has been the supply of property coming to market failing to keep pace with demand. There are now signs of fresh supply increasing with the volume of new properties coming to the market is at the highest level since the credit crunch of 2008.

However, he added that it should be noted that this is patchy by region with only four regions above the 5% year on year average uplift, namely London, South East, South West and Yorkshire and the Humber. In the West Midlands new stock is actually down by 0.3% and Wales and the North West have seen an uplift of 1% or less, restricting fresh choice for buyers in these regions.

‘While more properties are coming to market there is little anecdotal evidence of tax shy landlords selling up. It is more likely made up of additional first-time sellers who are either hoping to bag a buy to let investor before the April stamp duty hike, or joining others who are deciding that 2016 is their year to trade up. Those trading up are no doubt encouraged by the stable interest rate outlook reassuringly communicated straight from the Governor’s mouth,’ Shipside explained.

The sector seeing the highest volume of new properties coming to the market is the typical first time buyer property with two bedrooms or fewer, up by 10% this month compared to the same month last year. It is suggested 2016 could be the year of the first-time buyer encouraged by low interest rates, initiatives such as Help to Buy, and buy to let investors facing increasingly adverse taxes.

‘For the second month running the highest increase in supply of homes coming to market is properties with two bedrooms or fewer, typically the target purchase of first time buyers or buy to let investors,’ said Shipside.

‘There is a 10% uplift in new supply compared to the same period in 2015, meaning all regions have more fresh choice in this sector than at this time last year. Regions outperforming the national average with over 10% more newly-marketed homes with two bedrooms or fewer are London, East, South East, South West, West Midlands, and Yorkshire and the Humber, and if this trend continues the increased competition among new sellers may help to temper price rises,’ he pointed out.

‘More and more agents are reporting a healthy return in first time buyer numbers, and with the cards increasingly stacked in their favour 2016 could prove to be the year of the first time buyer,’ he added.

Source: Property Wire

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

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

 

86% rise in volume of valuations for purchases of buy to let units

mortgage applicationThe number of valuations conducted for buy-to-let properties soared by 86 per cent between December 2014 and December 2015, according to Estate Agency and Valuation firm Connells.

“In an environment of competitive mortgage rates and strong demand for rental property from tenants, the buy-to-let sector is always going to be a popular option for investors with the time to devote to being a landlord. However, the added factor of the April 1 stamp duty increase has spurred many investors who might have been sitting on the fence to take the plunge and enter the buy-to-let market before its profitability takes a hit” according to John Bagshaw, corporate services director for the agency.

The buy to let increase came despite a one per cent dip in BTL valuations in the single month of December 2015 – a fall described as a typical seasonal variation by the firm.

The BTL increase over the past year far outstrips the rise in valuations conducted for remortgaging purposes – up 34 per cent over the 12 months.

“The remortgaging market has typically been a strong performer over the last year. A Bank of England rate rise now looks very likely at some point in 2016 – especially considering the US Federal Reserve has already raised their base rate. Many remortgagors realised this and, like buy to let investors, opted to take advantage of favourable borrowing costs while they lasted” says Bagshaw.

Across the whole market, valuations – for whatever purpose – were 29 per cent higher in December 2015 than in December 2014; the rate of annual growth of all valuations over the past year was nine per cent.

“There is a steady confidence in the market that wasn’t present in 2013, or even 2014. December’s results are also a reflection of the ever-increasing demand for homes as investment opportunities, as buy to let landlords join home movers seeking to make some sort of profit from their property” according to Bagshaw.

Source: Letting Agent Today

Scotland announces extra tax on second homes

ScotlandFlag400x310Private rented sector landlords in Scotland and second home owners face an extra 3% stamp duty tax from next year which will bring them into line with changes in England and Wales.

It was only a matter of time before the change came about after the UK Chancellor George Osborne announced the additional tax for England and Wales in his recent Autumn Statement.

Scottish Finance Minister John Swinney said that he would bring forward legislation on the new second home charge soon so that it could be in force by April 2016. ‘I am conscious of the issue of second homes. We need to ensure that the opportunities for first time buyers to enter the market in Scotland are as strong as they possibly can be and we need to make certain that tax changes elsewhere in the UK do not make it harder for people to get on the property ladder,’ he explained.

It means that an extra 3% rate will apply to the purchase of additional properties, such as buy to let and second homes from 01 April 2016 and be levied on the total price of the property for all sales above £40,000 on top of the current LBTT rates.

The Scottish Government has forecast that it will raise overall LBTT receipts in 2016/2017 by between £17 million and £29 million, rising to a possible £66 million by 2020/2021. Overall the Government expects LBTT will raise £295 million in 2016/2017.

John Blackwood, chief executive of the Scottish Association of Landlords, said that landlords will be disappointed and frustrated by the decision which will effectively ‘punish’ those who choose to invest in the private rented sector (PRS) Scotland.

‘The supplementary tax on the purchase of second homes will have a huge impact on the buy to let market and exacerbate an already serious shortage of properties in many areas. We firmly believe that the biggest losers from today’s statement will be tenants who will now find it even harder to get the accommodation they want at a price they can afford,’ he added.

Oliver Knight, a senior analyst in Knight Frank’s residential research department, said that sales will be brought forward as landlords and others seek to minimise their property tax burden.

He added that buy to let property investors will also be able to continue offsetting all stamp duty against capital gains tax when they sell their property.

Bob Cherry, partner at property consultants CKD Galbraith, also believes that there will be a flurry of activity before the end of March 2016. ‘This new levy will have implications for current landlords looking to sell as well as act as yet  another deterrent to would be landlords thinking about the market as an investment opportunity,’ he said.

‘This measure, like the LBTT rises introduced earlier this year, is also a wealth tax on owners as buyers of buy to lets will seek to pass on the extra purchase costs by reducing the price they are prepared to pay,’ he added.

Source: Property Wire

Property prices rise again, with London average reaching £500,000

House moneyProperty prices in England and Wales increased by 1% in September, taking the average house price to £186,553, according to the latest Land Registry data.

Year on year prices have increased by 5.3% but in London it is much higher at 9.6% year on year and 1.8% month on month and the average price in the capital city is now a record £499,997.

The North East saw the only annual price decrease of 0.3% and also saw the only monthly price decrease with a fall of 0.3% as well.

But sales are down. From April 2014 to July 2014 there was an average of 78,330 sales per month but in the same months a year later, the figure was 71,766.

The data also shows that the number of properties sold in England and Wales for over £1 million in July 2015 was down 9% year on year and in London it was down 16%.

More than 93,000 residential property sales were lodged for registration in September.

The most expensive sale recorded last month was in Knightsbridge, London, where a flat at One Hyde Park sold for £17.5m.

The cheapest sale was in Pendle, Lancashire, at £12,000.

Analysts at Capital Economics questioned whether London would maintain such strong growth rates, as buyers are priced out and stamp duty changes take their toll. Under new stamp duty legislation, homes costing between £925,001 and £1.5m are subject to an additional 10pc bill, and properties above £1.5m have been hit with an extra 12pc charge.

“The breakdown of transactions by price range is revealing, highlighting a fragmented market in London with higher value properties struggling to sell. There were 288 £2m-plus purchases in July 2015, compared with 370 in the same month last year,” said Jonathan Adams, director of central London estate agency Napier Watt.

Manchester predicted to boom in the next ten years

axis-view-1
Axis Tower, Manchester

New research reveals the top 10 locations where property prices are likely to boom in the next decade, with Manchester taking pole position, while London fails to make the grade.

The research, conducted by online estate agents HouseSimple, reveals ten locations in the UK where property prices are likely to increase substantially – with Rotherham, Leicester and parts of Surrey making the top ten.

The locations – a mixture of cities and commuter towns – are all in England, and have a huge variation in house prices – from terraced homes selling for less than £90,000, to executive detached properties in excess of half a million.  The predictions for the hot spots were made using key indicators, including trendy eateries, good transport links, a young population – and the occasional celeb.

The Top Ten Hot Spots

1.   Manchester
2.   Rotherham
3.   Harborne, Birmingham
4.   Leicester
5.   Hythe, Kent
6.   Norwich
7.   Hove
8.   Ipswich
9.   Ilkley, Bradford
10.  Woking, Surrey

Peter Armistead of Armistead Property commented: “It’s no surprise that Manchester has come out on top thanks to the expansion of the MetroLink tram system, the trendy Northern Quarter and the BBC Media City.  Manchester has been voted, for a second year running, the best place in the UK to live.  It has an amazingly vibrant restaurant, bar, club and music scene, not to mention its galleries and museums.

We have an amazing student scene and our Universities and teaching/research facilities are truly world class.  Manchester is home to nearly 100,000 students, making it one of the largest student cities in Europe.  Oh and let’s not forget the amazing sporting scene here and the famously warm and friendly people.

Despite all of its many advantages and attractions, Manchester is actually a very affordable place to live and many students chose to carry on living here after they graduate, as well as graduates from other areas moving to Manchester.  There’s a very important young professional scene in Manchester.  The cost of wages relative to property costs is a very important factor in attracting these people.  House prices in London are about five times what they are in Manchester, but salaries are only 30% higher.

An average residential property in Manchester is just £155,000, while a flat in a good area, costs as little as £120,000.  It’s not surprising that many investors, especially from the South, are targeting Manchester as a great place to invest.  A property in Manchester can provide a 5% minimum cash rental yield and a typical 12% total cash yield, including 7% capital appreciation.  Demand for rental accommodation is strong and by comparison with other regions, housing is cheaper.

Manchester is a great place for investors.  I have built a successful, mid-sized portfolio of buy-to-let properties in South Manchester.  Over the last 12 months I have enjoyed average rental yields of 6% per cent across my 80 properties.”

UKPI have access to some great residential investment deals in Manchester including the iconic Axis Tower with prices starting from just £165,000 and rental yields of between 6% to 8%. Contact us for details. 

Source: Property Reporter

UK property sales up to 16 month high, says RICS report

rics_logo-300x150Property sales in the UK have picked up across the country, reaching a 16 month high, according to the latest index report from the Royal Institution of Chartered Surveyors (RICS).

There were also further price increases nationwide in September, a modest improvement in mortgage availability but no improvement in the supply situation with new buyer demand continuing to outweigh instructions to sell.

Across the UK, agreed sales rose at the quickest pace since May 2014, with 14% more chartered surveyors seeing a rise. This is a 16 month high and the fifth consecutive month that sales have increased.

The North, East Anglia and Scotland posted the sharpest rises in activity over the month with the East Midlands the only region to see a material drop in sales albeit following an increase in the region in August.

The report says that the stronger sales trend in the UK is broadly reflective of an upturn in demand which has been visible in the data since the early spring. Indeed, the number of new buyer enquiries rose for a sixth consecutive month across the country with 18% more chartered surveyors reporting a rise in demand.

The pattern being seen by chartered surveyors echoes recent lending data including that highlighted by the Bank of England, showing mortgage approvals at an 18 month high and up 12% compared to a year ago.

As the availability of mortgage finance appears to be improving, the average ‘perceived’ LTV ratio captured by respondents to our survey edged up to 79.3% with first time buyers seeing credit conditions relax most noticeably over the month, the report also reveals.

Although activity is picking up, the ongoing lack of new instructions and the resulting limited stock on the market continue to be an issue for the sustainability of the market. The number of new instructions has fallen in 13 of the last 14 months.

RICS says that it is significant that 40% of respondents feel the biggest factor behind the negative trend in new instructions is the lack of stock already for sale which is deterring would be movers as they struggle to find a suitable property to move on to. The next most cited influence was economic uncertainty, followed by stretched affordability.

As a result of the persistent supply demand imbalance, the national house price indicator continues to rise strongly which is likely to be reflected in key house price indices over coming months and into the first half of 2016, according to the report.

In the lettings market, tenant demand increased once more continuing the pattern seen by respondents since December 2014, and while new landlord instructions increased slightly for the third month in a row, they were still significantly outstripped by tenant demand.

Indeed, over the next 12 months, chartered surveyors are forecasting rents to rise by 3% at the headline level.

Source: RICS

 

Flat prices rise 60% over the last decade

Research from the Halifax has revealed that the average price of a flat has risen £730 per month over the past decade from £145,874 in 2005 to £233,424 today.

The 60% increase in the average price of a flat is significantly higher than the 38% rise for all residential properties over the same period. However, a big proportion of the national rise in flat prices since 2005 is due to the rapid increase in flat prices in London (67%), where flats represent a relatively high proportion of the overall property market (49% of sales compared with the UK average of 17%).

Detached homes (21%) and bungalows (28%) have recorded the smallest rises over the last ten years.

Regional variations

A typical flat currently costs less than £120,000 in the North, East Midlands, Wales and Yorkshire and the Humber, and between £120,000 and £145,000 in the North West, West Midlands, Scotland and East Anglia. At £370,281, a typical London flat is considerably more expensive than flats anywhere else in the UK.

While flats have been the best performing property type over the past decade in Greater London, Scotland and the South West, there are regional differences.

Semi-detached properties have risen most in value in the South East, East Anglia and the East Midlands, whereas terraced homes have been the best performing property type in five of the 11 regions (North, North West, Yorkshire and the Humber, West Midlands and Wales).

The average price of a terraced home is between £119,000 and £143,000 in all regions outside southern England.

Source: Property Reporter