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Em Morley

11 Buyers Chasing Every Property on the Market

Published On: February 27, 2017 at 9:53 am

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NAEA Propertymark (the National Association of Estate Agents) has today released its January Housing Report, which shows that an average of 11 buyers are now chasing every property on the market.

11 Buyers Chasing Every Property on the Market

11 Buyers Chasing Every Property on the Market

An imbalance between supply and demand means that every homebuyer is facing competition from ten more prospective buyers.

Housing demand

The average number of prospective buyers registered per estate agency branch in January was 425 – up by 10% on December 2016, when NAEA members registered 386 on average.

Property supply

The amount of properties available to buy on estate agents’ books in January stood at an average of 38. This is down from 41 in December, and the lowest recorded since July 2016.

The rise in homebuyers and decrease in properties on the market means there is an average of 11 buyers chasing every home.

Home sales 

In January, three in ten (30%) property sales were made to first time buyers – a slight decline from December, when 32% of sales were made to this group.

The number of sales agreed per branch rose from an average of six in December to eight last month – returning to the same level seen in November.

Sale prices

More than one in every 20 properties (7%) sold for more than the original asking price in January – the highest amount since April 2016, when 9% sold for more than the asking price.

The Chief Executive of NAEA Propertymark, Mark Hayward, says: “January saw a surge in buyers looking to kick off the New Year with a new home, but competition is rife, with an average of 11 buyers chasing each property.

“The increase in the number of properties selling for more than the asking price in January could be a result of heightened interest and the fact there is simply not enough housing to meet demand.”

He adds: “When the Government issued their Housing White Paper at the start of February, we stated how important it was for the industry to put forward robust solutions to really make a difference, and it’s vital that building more affordable housing is at the very top of their agenda.”

Where are the most and least affordable locations in the UK?

Published On: February 27, 2017 at 9:52 am

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A new report from Lloyds Bank has indicated that the ratio between average city house prices and typical earnings is at its poorest level since 2008.

The data shows that during the past five years, the average UK city house price has increased by 32%, from £169,966 in 2012 to the greatest ever value of £224,926 this year.

In comparison, average yearly city earnings have increased by just 7% to £32,796 over the same period. As a result, average affordability in the cities of the UK has worsened.

Ratios

House prices have risen as a multiple of average annual earnings from 5.5 in 2012, to 6.9 in 2017. This is the worse level since 2008, where the ratio of house prices to earnings stood at 7.2.

The UK’s least affordable city was Oxford, where the average house price is £358,372, nearly 11 times the level of annual average earnings in the city.

In all, there are five cities with typical house prices over ten times the average annual earnings. Alongside Oxford, these are Greater London (10.5), Winchester, (10.5), Cambridge )10.3) and Chichester (10.0). However, the average figure for London disguises variations in the capital, with boroughs much less affordable in the centre as opposed to the Greater London average.

What’s more, there is a prominent North/South divide. Only Lichfield (8.3), York (7.6) and Leicester (7.6) were cities outside of the South to make the top 20 least affordable locations.

Where are the most and least affordable locations in the UK?

Where are the most and least affordable locations in the UK?

Most Affordable

On the other hand, Stirling in Scotland was found to be the most affordable studio. Here, the average property price is 3.7 times average gross annual earnings. Londonderry in Northern Ireland came in second.

Two other Northern Irish cities, Belfast (4.6) and Lisburn (4.8) are placed in fourth and sixth respectively.

Andy Mason, Lloyds Bank Mortgage Products Director, said: ‘City living is becoming increasingly expensive with average house price at least ten times average annual earnings in five of the UK’s cities. Affordability levels have worsened for four consecutive years as average city house prices continue to rise more steeply than average wage growth.’[1]

‘House prices in the south have generally seen stronger growth than in the north. St Albans has recorded the biggest gains over the past decade, whilst London has been the top performer during the recovery,’ he added.[1]

[1] http://www.propertyreporter.co.uk/property/uks-least-affordable-city-revealed-in-new-report.html

 

Landlords Taking Out Commercial Loans to Avoid Tax Changes

Published On: February 27, 2017 at 9:24 am

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The proportion of landlords intending to take out commercial loans to fund their property purchases has doubled over the past 18 months, as investors look for ways to avoid the forthcoming changes to landlord taxes.

Landlords Taking Out Commercial Loans to Avoid Tax Changes

Landlords Taking Out Commercial Loans to Avoid Tax Changes

The study, by the National Landlords Association (NLA), found that the number of landlords who said they planned to use commercial loans has risen from 10% in 2015 – when the tax changes were first announced – to 19% at the end of last year.

The tax changes will be introduced from April this year and will, once fully implemented in 2021, prevent landlords with buy-to-let mortgages from deducting their interest payments and other finance costs from their turnover before declaring their taxable income.

The rise in the proportion of landlords looking to take out commercial loans coincides with a 500% increase in the number of landlords who have formed a limited company over the past year. This has grown from 1% in January 2016 – around 20,000 landlords – to 6% by the end of last year – approximately 120,000 investors.

Landlords who own their properties in a limited company structure will avoid the tax changes and instead pay Corporation Tax, which is currently at 20%, on their profits alone.

The CEO of the NLA, Richard Lambert, comments: “Over the last year, more than one hundred thousand landlords have formed a limited company in order to beat the tax changes, and this overlaps with an increasing intention to look to commercial loans to fund future purchases.

“While commercial loans are available to non-incorporated landlords, they tend to be a source of funding more commonly used by limited companies looking to expand their property portfolios, so we’d expect to see this trend develop as the year plays out.”

He continues: “However, we know that the Treasury is concerned by the drop in tax revenues as a result of businesses across the economy incorporating to reduce their tax bills, and the Chancellor hinted at a review into the matter during his Autumn Statement last year.

“With this Government’s recent track record in mind, we’d advise any landlords who have yet to incorporate to wait to see whether a consultation is launched in the Budget before making a decision.”

Are you thinking of taking out a commercial loan for future purchases?

House price growth in the UK slows again

Published On: February 24, 2017 at 12:22 pm

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Residential house price growth in the UK continues to slow across many regions, lead by the capital, according to the latest Hometrack UK Cities House Price Index.

The report shows that annual home price inflation has slipped to 6.4%-the lowest level for 42 months. This is perhaps unsurprising given the fact that property values in the capital have risen by 85% since 2009.

Slowdown

Slower market conditions in London have led to a slowdown in the headline rate of growth for the Index. This is now running at 6.9%, down from 7.2% last month and from 7.9% one year ago.

This 20 city average now stands at £245,900, a fall from £244,300 recorded last month. Bristol remains the fastest growing city in the Index, with annual growth here staying at 9.5%.

Away from the South, Manchester saw the largest increase in prices, up 8.3% year-on-year. Birmingham and Liverpool have also seen significant increases, with affordability remaining attractive.

Richard Donnell, Insight Director at Hometrack, noted: ‘Growth in London has been superseded by large regional cities such as Manchester, Liverpool and Birmingham. When you consider that house prices in London are 85% higher than they were in 2009 it is not surprising that the pace of increases is slowing toward a standstill as very high house price increases mean affordability is stretched.’[1]

House price growth in the UK slows again

House price growth in the UK slows again

Contrast

Continuing, Donnell said: ‘The contrast with large regional cities outside of London and the South East couldn’t be starker. They continue to register robust levels of house price inflation in excess of 7%. The question is how much further house prices in regional cities could have to run were house prices to fully price in low mortgage rates supported by rising incomes and employment.’[1]

‘In our view there is material upside for house prices in the coming years in many cities where the recovery since 2009 has been limited. Typically those where there is investment in employment, infrastructure and regeneration will help stimulate the local economy. The timing and scale of future house price growth will, of course, depend upon the outlook for jobs, incomes and mortgage rates,’ he concluded.[1]

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2017/2/uk-house-price-growth-continues-to-slow

 

Mortgage Lending Hits 9-Year High Despite Weak Homeowner Demand

Published On: February 24, 2017 at 10:53 am

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Monthly gross mortgage lending hit a nine-year high in January, despite weak homemover demand, according to lenders.

Mortgage Lending Hits 9-Year High Despite Weak Homeowner Demand

Mortgage Lending Hits 9-Year High Despite Weak Homeowner Demand

Figures from the Council of Mortgage Lenders (CML) show that banks lent £18.9 billion in the first month of 2017, down from £20 billion in December but up by 2% year-on-year.

This is the highest lending total for the month of January since the £25.2 billion recorded in 2008.

The Economist for the CML, Mohammad Jamei, says: “Overall mortgage lending continues to hold up pretty well, but we seem to have a twin-track market. Weakness in buy-to-let and homemovers has been offset by an increase in first time buyers and remortgage lending.

“A continuing acute shortage of homes being offered for sale is one aspect of a broken housing market that looks unlikely to resolve in the near term.”

However, Andrew McPhillips, the Chief Economist at Yorkshire Building Society, was less impressed with the data.

He explains: “This annual growth in mortgage lending was most likely driven by an increase in the number of people remortgaging to better rates, offsetting the impact of a fall in property transactions.

“Affordability constraints caused by increasing house prices, the cost of Stamp Duty and rising inflation, are still hindering the market by limiting the number of people who can afford a property. These increasing costs are making homeownership a more distant dream for many.”

He continues: “In order to make homes more affordable, the Government should implement measures to ease pressures for potential buyers and build enough affordable housing and infrastructure to tackle the supply crisis.

“The Government should also consider introducing measures to ease affordability pressures in the short-term, such as by changing Stamp Duty to a seller’s tax rather than a buyer’s tax.”

Do you agree with McPhillips’ calls on the Government following his belief that remortgaging caused such a surge in mortgage lending?

Rightmove saw an extremely profitable 2016

Published On: February 24, 2017 at 10:29 am

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Yearly figures released by Rightmove for 2016 show that the portal achieved a record number of advertisers and traffic.

Data shows that agency and new homes customers rose by 2% in the course of the year to 20,121. In addition, Rightmove said that one million UK residential properties were advertised during the year, which it claims is one-third more than any other portal.

Growth

In its trading statement, the portal said that it saw strong traffic growth in 2016, with a 10% rise in visits. There are an average of 120 million visits per month, in terms of ‘time on site.’

Revenue was 15% up year-on-year, while operating profit rose by 18% and basic earnings share increased by 21%.

Rightmove saw an extremely profitable 2016

Rightmove saw an extremely profitable 2016

What’s more, Rightmove was ranked by Forbes as the worlds most innovative growth company, following the launch of a new marketing tool.

Commenting on the figures, Nick McKittrick, Chief Executive Officer of Rightmove, said: ‘Rightmove continues to be the place that home movers turn to first, with nearly 1.5billion visits in 2016, up 10% on last year. Our continued innovation and audience growth is delivering even greater exposure for our customer’s brands and properties.’[1]

‘We are adding further value through our data, advertising products and productivity tools and by building closer relationships with customers to support their ambitions. With consumers and customers becoming increasingly digital our clear market leadership coupled with the value of our products and data positions us well for the future,’ he added.[1]

[1] https://www.estateagenttoday.co.uk/breaking-news/2017/2/rightmove-reveals-more-agents-more-visits-and-more-profits-in-past-year