Year ends with high price growth almost everywhere says Nationwide

House prices ended the year with strong growth of 0.8 per cent in the month of December according to the building society Nationwide.

This took the average value of property in the UK is now £196,999, up 4.5 per cent compared with a year ago. London remained the strongest performing region for the fifth year running, with average prices up 12 per cent in 12 months.

London’s average values are now 50 per cent above their pre-crisis peak in 2007 – a sharp contrast to, say, Northern Ireland which remains 44 per cent below its pre-crisis peak, despite rising by 6.5 per cent in the last three months of the year.

But the capital will not be such a success in 2016 because of widespread unaffordability across boroughs, says the building society.

UK-wide, prices are around 7.0 per cent higher than a year ago with Scotland the only part that saw a fall, with values down 1.9 per cent in the three months to the end of December compared with the same period a year ago.

“Further healthy gains in employment and rising wages are likely to bolster buyer sentiment, while borrowing costs are expected to rise only gradually. However, the main concern is that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability” according to Robert Gardner, Nationwide’s chief economist.

On Twitter, Howard Archer – chief UK and European economist at IHS Global Insight – says the Nationwide figures back up his firm’s forecast house price growth of 6.0 per cent in 2016.

Meanwhile Jeremy Leaf, former RICS chairman and north London estate agent, says: ‘Supply is simply not increasing fast enough to keep house prices in check and is making it harder for first-time buyers to get on the ladder. The situation is likely to get worse before it gets better in view of the build up to the increase in stamp duty in April, particularly as these [Nationwide] figures are a little historic.”

Source: Estate Agent Today

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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

RICS reports surge in house price inflation

rics_logo-300x150According to the latest RICS Residential Market Survey, house price inflation is gathering pace, underpinned by the enduring mismatch between falling new instructions to sell and rising buyer demand.

As such, house price inflation has now quickened in each of the last seven months following a sustained period of easing towards the latter half of 2014. In net balance terms, the strongest growth came in East Anglia, Northern Ireland and Yorkshire & Humberside, although the vast majority of areas are seeing firm price momentum, according to the data.

The latest LSL house price index, released today, also shows that average house prices across England and Wales jumped £1,900 in August – the fastest rise seen for past twelve months. This takes property values to eighth peak this year, standing at £282,816 after a 4.1% annual increase.

The index also found that overall home sales have fallen behind 2013 levels for the first time this year, following a 14% monthly drop.

The RICS survey showed that new vendor listings declined for the seventh consecutive month, albeit the pace of decline did ease moderately. Nevertheless, new instructions have yet to record any meaningful uptick since the middle of 2013, pushing average stock levels to record lows.

“significant sales growth over the next twelve months”

With supply remaining tight, agreed sales showed only a modest increase for the fourth consecutive month. However, regional movements vary considerably from the national sales picture. The West Midlands, the North and the South West all posted solid growth in transactions, while East Anglia and the North West were reported to have seen a drop in sales volumes. Looking ahead, all areas of the UK are expected to chalk up significant sales growth over the next twelve months, with the outlook particularly upbeat in Wales and Scotland.

Adrian Gill, director of Reeds Rains and Your Move estate agents, commented: “House price growth now firmly has the bit between its teeth, and August witnessed the strongest monthly boost for a year. Average property values across England and Wales have jumped 0.7% (equal to £1,876) since July, which is the biggest monthly increase seen since August 2014. So far in 2015, monthly price rises had struggled to break above the 0.5%, so this clearly marks a step up in pace, as a shortfall of summer sellers puts buyers in hot contention for properties.”

Source: Property Reporter

Largest monthly rise for England and Wales house prices for a year

Land Registry logoProperty prices in England and Wales increased by 4.6% in July year on year, taking the  average property value to £183,861, according to the latest data from the Land Registry.

Month-on-month they increased by 1.7% with the East of England seeing the largest monthly rise of 2.8% and the biggest annual price increase with a rise of 8.9%, the data also shows.

The North East saw the lowest annual price increase of 0.4% and Wales saw the only monthly price decrease with a fall of 0.3%.

But transactions are down. The number of completed house sales in England and Wales decreased by 15% to 65,619 compared with 77,488 in May 2014. From February 2014 to May 2014 there was an average of 70,029 sales per month. In the same months a year later, the figure was 61,283.

The Land Registry figures also shows that the number of properties sold in England and Wales for over £1 million decreased by 21% to 878 from 1,113 a year earlier.

John Eastgate, sales and marketing director of OneSavings Bank, pointed out that it is the biggest monthly rise in house prices for a year and he believes it is driven by positive sentiment continuing after the general election and also by the lack of houses on the market for sale.

“The simple fact that demand exceeds supply will continue to push house prices upwards and as long as that is the case, it’s hard to see prices moderating. The mortgage market remains supportive, and low rates aren’t going anywhere.” he explained.

“If economic turbulence from China pushes back a base rate rise until late 2016, as it appears to be doing, we may well see even more people capitalise on low mortgage rates to take their first step on the ladder.” he added.

Adrian Gill, director of Your Move and Reeds Rains estate agents, pointed out that there is still a considerable gulf between the rates of growth in the East, South East and London and other regions, but this hasn’t knocked confidence nationwide.

What happens in London is being affected by outside factors, according to Peter Rollings, chief executive officer of Marsh & Parsons: “As the first port of call for international investors and prime property purchases, the housing market in London is more exposed to regulatory and stock market turbulence than the rest of the country.” he said.

“We’re still experiencing tremors from the new Stamp Duty banding, and as demand for million pound homes has eased, the harsher taxes at the top end may continue to rock the boat in London for the coming months. But this all needs to be kept in perspective. London is still achieving significantly above average house price growth, and retains its position at the top table.” he explained.

“In addition, the Chinese stock market slump may present more of an opportunity than a threat to the London property market as while it’s made property more expensive for Chinese buyers, those looking for a secure capital investment in these volatile times will still be attracted to the stability of the returns to be made in the capital.” he added.

Jonathan Hopper, managing director of the buying agents Garrington Property Finders, believes there should be concerns about supply with the fall in sales demonstrating that buyers outnumber sellers by far: “The result of this is a rise in prices almost across the board, although the notable exception is the prime property market, which is still reeling from the rise in the top rate of Stamp Duty. Mortgages remain cheap and real wages are growing briskly, all of which is stoking buyer confidence and spurring on demand.” he said.

“The stock market turmoil and the deflationary pressure of falling oil prices mean the Bank of England will be in less of a hurry to raise interest rates. So with the cost of borrowing likely to stay low for a while longer, some buyers may be tempted to stretch themselves.” he explained.

“But sellers should resist the temptation to see the current constrained supply as a licence to keep increasing asking prices. For all their enthusiasm, buyers remain astute and sellers must be wary of letting their pricing ambitions run away from what the market will tolerate.” he added.

Source: Property Wire

Regulation ‘favours Buy-To-Let investors’

Couple browsingIndependent mortgage broker Private Finance has said that mortgage market regulation has created a bias in lending which favours investors over residential homebuyers; most especially in areas where property prices continue to rise.

Figures have shown that the Mortgage Market Review, introduced in late April 2014, has caused a general slowdown in the residential mortgage market. Private Finance has said that capping mortgages at a certain income multiple combined with limiting the Help to Buy scheme is therefore not supporting home ownership and suggests that MMR might be having a negative impact on the most vulnerable section of the market.

In contrast, the broker has said that whilst the buy to let  sector continues to succeed in providing a ready supply of generally well managed property, it remains non-regulated with lenders being ‘free from the constraints of MMR’ and able to advance up to 85% LTV interest only mortgages to BTL landlords.

Simon Checkley, Managing Director of Private Finance says:

“The outlook for house price growth remains heavily influenced by the BTL sector. Therefore, we are calling on regulators and policy makers to consider the effects of MMR on residential lending levels which, if maintained at their current level, could potentially exclude an entire generation of home buyers from the property market and force them into the private rental sector for years to come.

“Stifling activity in the housing market increases house prices by reducing supply; if existing homeowners had access to mortgage products which promoted affordability they might be inclined to bring their properties to the market thus increasing supply. These measures coupled with policies promoting development and house building could stimulate an otherwise lacklustre property market whilst simultaneously stirring up general economic activity.

“Not allowing first time buyers access to mortgage products similar to those available to buy to let investors snapping up the same properties that first time buyers would choose to buy if they could afford them, also seems rather unfair. In theory, property prices and rent should rise in line with inflation and therefore owning a property with a mortgage which allows for interest only payments for an initial period is still preferable in many cases to being forced to rent property from the landlords fuelling the market.

Source: Property Reporter

Demand for 2 bed homes rises amid new price high

rightmove-logo200New analysis from Rightmove shows the biggest gap between demand and supply is in the first-time buyer sector, with the number of enquiries per property for two bedrooms or fewer 24% higher than for larger properties of three bedrooms or more.

The price of property coming to market has hit a new record high for the second consecutive month, albeit only a small 0.1% (+£191) increase on the month before.

The average new seller asking price is now £294,542, though given the sharp drop in the number of properties put up for sale it is somewhat surprising that the increase is so modest.

Likely influences are the onset of the seasonal summer slowdown, and buyers’ constraints in affording record prices.

The latter underlines the need for more new build homes – affordable, of the right type and in the right locations – and emphasises the importance of the recent government announcement on speeding up residential planning permissions aimed at boosting supply.

The shortage is most acute for smaller homes with two bedrooms or fewer, where Rightmove sees the biggest demand in excess of supply.

Miles Shipside, Rightmove director and housing market analyst comments: “Another month, and another record high in the price of property coming to market. While the monthly increase is very modest, the same period a year ago saw a monthly fall of 0.6% which is more the norm given the onset of the summer holiday season.

“However, given the widely acknowledged supply crisis and a sharp drop in new seller numbers this month compared to this time last year, it is somewhat surprising that the rate of increase has slowed to such an extent. Recent government announcements including relaxing residential planning requirements on brownfield land are an important part of the mix in improving affordability if they follow through to cheaper land prices.”

Source: Property Reporter

Investors urged to snap up property

Telegraph logoA report in today’s Telegraph newspaper suggests now is the time to invest in property.

The report states that according to a growing number of professional investors, among them Henderson’s multi-asset manager James de Bunsen, who is a believer in bricks and mortar for the first time, now is the time to invest in bricks and mortar.

“It’s a valuation story – if you look at the cost compared to the income you can get, property looks compelling,” he said. “Property funds are yielding 4.5pc, compared to gilts at around 2pc and corporate bonds at not much higher.”

Mr de Bunsen said property also added diversification, and while he would never hold more than 4pc of a portfolio in property, having an alternative source of steady income was invaluable.

Trevor Greetham, portfolio manager of Fidelity’s multi-asset funds, is also keen.

“Property’s income is attractive, borrowing costs are falling and exposure is primarily to economies in the US and Asia, where credit is flowing freely,” he said.

Property investments also offer some protection from inflation. As anyone who has been a tenant knows, rent does not stay the same year after year – it tends to rise in line with other price increases. It is the same for commercial property.

Many investors are concerned that the Government’s attempt to kick-start growth through quantitative easing will create greater future inflation. The trick is to find assets that grow in value enough to offset this or pay income that exceeds inflation.

According to George Shaw, manager of the Ignis Property fund, commercial property is attractive because of the high and stable income it pays. Between 2001 and 2012, for example, income accounted for 6.2pc of the 6.4pc annual return.

Mr Shaw forecast a total return of around 6pc for 2013 and 7.2pc a year for the next three years – with commercial property demonstrating less volatility than shares, cash and bonds.

The report continues: The London market keeps rising with the arrival of more foreign buyers, but better income yields can be found elsewhere. A combination of low property prices and a strong local rental market – often driven by student demand – means that Southampton, Blackpool, Slough, Coventry and Portsmouth provide some of the best rental yields in the country.

See the full Telegraph report here.

Housing market ‘at three-year high’, says RICS

rics_logo-300x150Activity in the UK housing market has hit a three-year high, surveyors report, supporting hopes of a revival that would help the economic recovery.

Chartered surveyors reported selling an average of 17.4 homes over the three months to March, the highest number since March 2010. Confidence has been slowly returning to the UK housing market since the end of 2012 and transactions have also risen for three consecutive months.

Surveyors also said demand improved, as a net balance of 11pc reported rises in enquiries from new buyers, compared with those who reported a fall. This marked the strongest reading since October, after a subdued start to the year. Researchers speculated this could be due to the improving affordability of mortgages.

Peter Bolton King, director at RICS, said: “A buoyant, healthy property market is central to economic recovery and, while these are still very much early signs, it is encouraging that sales are beginning to pick up. The increase in potential buyers getting out there and viewing property is particularly encouraging.”

The Government’s Funding for Lending scheme, launched last August to give banks access to cheap finance, has been cited by lenders as a factor pushing down on bank funding costs and helping to reduce interest rates for customers.

The are concerns in some quarters that the Chancellor risks supporting a “bubble” in prices through his Help to Buy push, which will massively expand the mortgage guarantee and shared equity schemes available to would-be buyers.

Looking ahead, respondents are optimistic that the recent increase in transactions is set to continue. A net balance of 19% more surveyors expect sales to rise further over the coming three months. Moreover, price expectations indicators for both the next three and twelve months have been in positive territory for the last four months.

Source: Royal Institution of Chartered Surveyors (RICS)

Prudential poised to enter UK rented housing market

PrudentialThe Prudential is to become the first UK institutional investor to enter the UK rented housing market in recent times, paving the way for the growth of a corporate-backed letting market at a time of acute housing shortage.

According to a report in The Financial Times, the Prudential Property Investment Management division – part of M&G, the Pru’s asset management arm – is close to a deal to buy more than 500 homes from the Berkeley Group, the UK’s largest housebuilder by market value, which the insurer will use to seed a vast rented property portfolio.

The report goes on to say: The move comes as many of the UK’s largest pension and insurance companies are considering a move into the residential property market.

“It is a massively important moment for the market if they get the deal done,” said Chris Lacey, a director of residential investment at CBRE, the property consultancy. “All of the large institutions are looking at residential and thinking it is the right time to get into the market.”

Richard Gordon of UKPI said: “This is important news for the residential housing market and comes right on the back of the Government’s budget plans to underwrite mortgage deposits. With the Government and now some of the UK’s largest institutions prepared to invest in the housing market, it demonstrates how important the housing market is to Britain’s economic revival and how property is seen as a secure long term investment.”

Read the full Financial Times article here.
 

Buy-to-let offering “blindingly good returns”

Telegraph logoBritain’s biggest property listings website today said investors were piling into buy-to-let for “blindingly good returns” after the government’s efforts to bolster lending had created an “arbitrage of immediate return”.

In a report in today’s Telegraph newspaper, Rightmove said its research showed that rents were now delivering average gross yields of 5.9 per cent but as mortgages were available from as little as 2pc for a two-year fixed-rate and 2.7pc for a five-year deal, there was “the possibility of a straight arbitrage of immediate return on money borrowed against your main residence”.

The Government’s Funding for Lending Scheme (FLS), launched last summer, has offered £80bn of loans to banks at rates as low as 0.25pc. This has helped pushed down mortgage – and savings – best buy deals.

Miles Shipside, a director at Rightmove, said: “There are blindingly good returns on the right buy-to-let investment, with the Funding for Lending Scheme giving the possibility of an immediate and enticing profit gap between borrowing costs and available rental returns.

“With the prospect of capital growth in future years if you buy the right property, you can see why investors are piling in to the rental market – why wouldn’t they when it can offer a much better return than money in the bank?”

Lenders normally require borrowers to have a buy-let-mortgages, which comes with higher rates than residential mortgages.

The number of Britons with buy-to-let mortgages has soared in recent years, to nearly 1.5 million, with savers facing record low interest rates turning to alternative assets for income.

Rightmove also said sellers had lifted asking prices on homes by 1.7pc in the past month, in a further sign of confidence for the property market in 2013.

The rise, to an average £239,710, exceeded the previous record high for March, in 2008.

Homes are also shifting more quickly with the average time on the market now 80 days compared to 90 this time last year.

See full Telegraph article here