Posts with tag: first time buyers

Average House Price is Eight Times the Typical Wage in the UK

Published On: October 11, 2016 at 9:22 am

Author:

Categories: Property News

Tags: ,,,,

The average house price in the UK is eight times the typical wage, according to online estate agent eMoov.co.uk.

The agent has found the most unaffordable parts of the UK where house price to wage ratio is concerned. It has compiled data for all London boroughs, and each area across England, Scotland and Wales, calculating the most expensive and cheapest areas for buying property when compared to income.

Unsurprisingly, the majority of the most expensive areas are in London, where the average house price climbs to 14 times the typical wage.

Average House Price is Eight Times the Typical Wage in the UK

Average House Price is Eight Times the Typical Wage in the UK

The Royal Borough of Kensington and Chelsea tops the list, with an average house price of £1,212,375, despite suffering the greatest decline in property values in the capital over the past year, of 6%. The cost of buying a home in the borough is now 46 times the average wage, of £26,624, and the nation’s greatest gap in property prices to wages by far.

The City of Westminster is second on the list for the most expensive property price to income, where the typical property costs £1,028,617, up by 11% annually. With an average wage of £33,020, house prices in the borough are 31 times higher than earnings.

Richmond upon Thames, also in London, placed fourth on the list, with the average house price (£659,636) a huge 26 times the typical wage (£25,636).

Looking at England as a whole, the average house price is nine times the typical wage on offer. The most expensive city outside of London and third place overall is St Albans in Hertfordshire, where the average house price (£522,716) is 28 times higher than typical earnings (£18,928).

The second most expensive location outside the capital is South Bucks in Buckinghamshire, where the house price to wage ratio is 25. Workers on an average income of £23,192 are faced with the challenge of buying a property costing £587,645 in the area.

Chiltern, close behind South Bucks, has a wage to house price ratio of 24, with a typical property value of £512,910.

In Wales, the lower average property value means that the gap between prices and wages is just six times. Monmouthshire is home to the highest average house price to wage ratio in Wales (12), but is only ranked 153rd overall in the UK, with a typical property price of £221,345.

With house prices also lower in Scotland, the price to wage ratio is just five. The most expensive Scottish region is East Renfrewshire, despite placing 113th in the whole of the UK. The average wage in the area is 13 times lower than the typical house price.

The City of Edinburgh placed second in a three-way tie (along with East Dunbartonshire and East Lothian) for unaffordability in Scotland, but is ranked just 210th throughout the UK. It would take ten times the average wage in the Scottish capital to buy a home there.

In contrast, Copeland in western Cumbria is the most affordable part of the UK, with a property price to wage ratio of just three. Blaenau Gwent in Wales follows closely behind, at four times, with Burnley in Lancashire also at four.

The Founder and CEO of eMoov, Russell Quirk, comments on the findings: “Property values in England are significantly higher than the rest of the UK, which is reflected in the wages offered. However, the wages are not always consistent with property prices, and have failed to increase at the same pace.

“It highlights the unaffordability of the market in England when you consider the difference in Wales, where the highest annual average wage is under £21,000 in Cardiff, yet the city’s property value is merely third in the country, behind regions with lower averages in annual incomes. Additionally, the average wage in Kensington and Chelsea would take almost a lifetime working to be able to afford a home, which is unrealistic for most, let alone the average buyer.”

He adds: “It is important to consider the wage you can earn when buying property, to understand the longevity of the investment, as a lower property price doesn’t always mean a better quality of living, as the wage will also reflect the local market and economy.”

Government Decides to Scrap the Help to Buy Scheme

Published On: October 3, 2016 at 9:20 am

Author:

Categories: Finance News

Tags: ,,,,

The Government has decided to scrap its Help to Buy mortgage guarantee scheme. The programme will close to new mortgages on 31st December 2016, Chancellor Philip Hammond has confirmed.

The news arrives following research by online estate agent eMoov.co.uk that found that house prices in almost half of England will be too expensive for buyers to purchase a property through the Help to Buy ISA scheme by spring 2017.

Government Decides to Scrap the Help to Buy Scheme

Government Decides to Scrap the Help to Buy Scheme 

The agent analysed the average house prices across all 326 districts in England, finding that prices in almost half of the country will exceed the Help to Buy threshold by March next year.

The Founder and CEO of eMoov, Russell Quirk, comments on the Government’s decision to scrap the Help to Buy mortgage guarantee scheme: “Big development for those looking to get that vital first foot on a rather high UK property ladder.

“On the face of it, it might seem like bad news for would-be homeowners, however, the failure of the Help to Buy scheme has been pretty monumental in addressing the growing housing crisis.”

He continues: “Today’s announcement by Philip Hammond marks a significant change in the ideology of this new Prime Minister and her Government – an ideology that clearly does not share the Cameron/Osborne love affair with aspirational homeownership.

“This complete reversal could be seen as a real retrograde step and now leaves several hundred thousand would-be homebuyers that could benefit from the Help to Buy scheme, particularly those first time buyers, without the assisted first rung of the property ladder to step on.”

Quirk explains his expectations: “I suspect that the direction of travel for the Prime Minister is to now promote build-to-let, which is an easier win than chasing ever higher house prices. Although it will be seen as an attack on those looking to buy in an ever inflated market, the Government’s record of actually building new property has been less than woeful, and so any attempt to address the shortage of property stock should be commended at the very least.

“If we do see this supply and demand imbalance start to level out, prices will follow suit, resulting in a more realistic ask for those looking to buy.”

With the Help to Buy mortgage guarantee scheme set to be no more in a matter of months, will private tenants be forced to rent for even longer? While this might be good news for landlords, it is always important to remember to stick to the law in order to protect your renters!

Keep up to date with your responsibilities at Landlord News.

Housing Supply Hits Six-Month High, Reports NAEA

Published On: September 26, 2016 at 10:09 am

Author:

Categories: Property News

Tags: ,,,

Housing supply has hit a six-month high, says the National Association of Estate Agents (NAEA) in its August Housing Market report.

Housing Supply Hits Six-Month High, Reports NAEA

Housing Supply Hits Six-Month High, Reports NAEA

Signalling that the property market is moving in the right direction, the NAEA found that the number of homes up for sale rose to an average of 41 per estate agent branch in August – the highest level recorded since March this year, when agents reported an average of 54 properties per branch.

The number of sales to first time buyers also rose in August, from 25% of all sales in July to 28%. Annually, this figure is up by eight percentage points, as just 20% of total sales went to first time buyers in August 2015.

The report also found that two in five (39%) estate agents expect demand to grow following last month’s interest rate cut by the Bank of England, while a quarter (25%) think that first time buyers will benefit from the reduction.

In August, the number of house hunters registered per NAEA member branch dropped slightly, to an average of 287, from 298 in the previous month.

Additionally, three quarters (76%) of properties sold per NAEA member branch were sold for less than the original asking price, down by three percentage points on July, when 79% of properties sold for less than the asking price.

The Managing Director of the NAEA, Mark Hayward, comments on the data: “Following a few months of uncertainty in the market, it’s more than encouraging to see things moving in the right direction. Although we have seen a slight drop in demand, the fact that supply has risen means more choice for those that are looking for a new home, and we can see the impact of that because the rise in sales to first time buyers was higher than we normally see in August.”

He adds: “News from the Treasury this month that Government deposits on the Lifetime ISA can be used towards the initial deposit to secure a property and the impact of interest rate cuts will also raise confidence in first time buyers that now is a good time to be looking to buy.”

The news regarding the Lifetime ISA arrived as an investigation revealed that Government bonuses given through the Help to Buy ISA scheme cannot be used as an initial deposit on a property purchase.

Asking Prices Up, Particularly for First Time Buyers

Published On: September 19, 2016 at 8:28 am

Author:

Categories: Property News

Tags: ,,,

Average asking prices are on the up following the Brexit vote, particularly for first time buyers, according to the latest house price index from Rightmove.

Asking Prices Up, Particularly for First Time Buyers

Asking Prices Up, Particularly for First Time Buyers

The property portal’s September data shows that the average asking price of new properties on the market rose by 0.7% over the month (or £2,277) to reach £306,499, following a 3% decline in the previous two months.

Asking prices are up by 4% annually, down on August’s 4.1% growth.

First time buyer properties, those with two bedrooms or less, showed particularly strong growth, rising by 3.3% on a monthly basis (or £6,240) to hit an average of £194,477. Year-on-year, asking prices increased by 10.5%.

Second stepper properties recorded growth of 0.5% on the month and 5.2% annually, reaching an average of £258,836.

However, properties at the top of the ladder continue to struggle, with asking prices up by just 1.2% on August and 2.7% on last year. The average asking price is now £545,387.

Rightmove also found that properties are staying on the market for an average of 62 days – down on last year’s average of 66 days.

Although eight regions saw falls in asking prices in August, just two recorded declines in September – the North West and Yorkshire and the Humber, where prices dropped by 0.1% and 0.7% respectively.

The Director and Housing Market Analyst at Rightmove, Miles Shipside, comments on the data: “Some of those trying to get onto the property ladder may have wistfully listened to speculation of lower prices in a post-Brexit Britain.

“While the referendum result has created additional downwards price pressure in some upper segments of the market that were already slowing, those who do not own a home and arguably have the greatest housing need are now finding it harder to achieve their goal in the post-Brexit vote aftermath.

“In their favoured target sector with two bedrooms or fewer, average asking prices have jumped by over £6,000 in the last month as we enter the typically active autumn market.”

Over-55s Also Being Hit by the Struggles of the Housing Crisis

Published On: September 15, 2016 at 9:14 am

Author:

Categories: Finance News

Tags: ,,,,

We’re used to hearing about how aspiring first time buyers are finding it difficult to get onto the property ladder, but did you know that over-55s are also being hit by the struggles caused by the housing crisis?

The latest research by online estate agent eMoov.co.uk has found that those in the later stages of life are also struggling to get buy in current conditions, forcing many to draw equity from their property in order to survive.

Over-55s Also Being Hit by the Struggles of the Housing Crisis

Over-55s Also Being Hit by the Struggles of the Housing Crisis

The agent found that there has been a sharp rise in the number of people aged 55 and over drawing on the equity from their property in order to get by. Around £17 billion of funding has been provided to 350,000 homeowners since 1991 – a third of which was released in the last five years alone.

Equity release plans are long-term agreements based on indefinite terms that usually last until the customer either moves into care or passes away. There is no payment required or interest due on the amount paid out until this point, and an equity release provides better long-term security than a residential mortgage.

During the second half of 2015, the Equity Release Council found that UK homeowners aged 55+ released housing wealth worth a total of 898m – the greatest amount of any half-year on record.

The data also shows a significant increase in those aged 85 and over taking out equity release, accounting for 5.9% of all customers – almost double that in 2014.

The research suggests that for many, the cost of living, alongside the repayment of their mortgage, means that private and state pensions are often inadequate.

Additionally, equity release provides a source of income to fund this, as well as home care and other costs incurred during retirement.

Depending on whether they opt for a drawdown release or a lump sum, equity release customers across the UK are able to boost their finances by between 109-179 weeks’ full-time take home pay, taking an average of £49,607 in equity through a first drawdown withdrawal, or as much as an average of £81,324 in one lump sum.

Unsurprisingly, the figure is highest in London, where the average lump sum increases to £209,739, down to £102,184 in the South East and £78,531 in the South West. The lowest amount on offer across the UK is in Scotland, where the average lump sum is just £39,384.

The founder and CEO of eMoov, Russell Quirk, comments on the findings: “There has been a dramatic increase in the number of over-55s, particularly those 85 and above, having to draw equity from their property in order to survive, due to the ever inflating cost of living in the UK.

“Although record low interest rates are good news for those struggling to get on one end of the ladder, it’s not the case for those at the other end who have seen the interest accrued on their life savings dwindle with the cut in rates.

“With savings rates ever lower, it’s evident that income from pensioners’ savings is under pressure, and therefore, necessitating that grey equity within such housing is being increasingly turned to in order to make ends meet.”

Housing Minister Backs the Private Rental Sector in First Major Speech

Published On: September 14, 2016 at 10:54 am

Author:

Categories: Property News

Tags: ,,,,

The new Housing Minister, Gavin Barwell, has backed the private rental sector in his first major speech.

Barwell, who was appointed as Housing Minister in July, used his speech at the RESI Conference to shift Government policy away from a focus on homeownership.

He insisted: “We need to build more homes of every single type and not focus on one single tenure.”

He also suggested that the Government is considering abandoning its pledge to build 200,000 Starter Homes by 2020, due to a shift towards supporting the private rental sector.

The Government’s Starter Homes policy involved building homes for first time buyers, sold at a discounted rate of 20%. However, Barwell explained that such policies, which encourage homeownership and increase the level of demand, could affect the amount of homes built to rent.

Housing Minister Backs the Private Rental Sector in First Major Speech

Housing Minister Backs the Private Rental Sector in First Major Speech

He said: “There’s a little bit of a tension between the overall supply objective and measures specifically to help people onto the housing ladder.”

Barwell indicated that affordable rental homes could now be included in the Starter Homes target.

He added: “The way you make housing in this country more affordable to rent and buy is you build more homes. There is still a role for the Government doing specific things to help people onto the first rung, but this can’t be at the exclusion of all else.”

In the past, Government policy has largely focused on homeownership, at the expense of private rental sector development.

Additionally, buy-to-let landlords are now facing an additional 3% Stamp Duty charge when they purchase a rental property.

Barwell commented: “A growing number of families and young professionals are choosing the [private rental sector], and while homeownership is still the goal for the majority, many will rent for some years before they buy.

“I’m very clear that our ambitions will never be achieved without a significant boost in institutional investment to the [private rental sector], to ensure more choice and quality for people living in rented accommodation.”

Adam Challis, the Head of Residential Research at JLL, describes the Starter Homes policy as “a big distraction”, adding: “This is welcome news, as it signals this Government’s desire to support housing across all tenures.

“The private rented sector is the fastest growing tenure, but had been overlooked under old policy. This is the first step in putting that right.”

Barwell also gave his backing for build-to-rent schemes, highlighting one by Essential Living in north London and another by Pocket Living in south London, which uses modular techniques.

He said: “Recent growth in the bespoke rental market has been impressive, but this progress must be expanded.”

London’s Deputy Mayor for Housing, James Murray, also expressed his backing for the private rental sector, while defending his 50% affordable housing target.

He said: “If we’re going to increase supply and have affordable [housing] within that, you need to use every route of delivery, and if build-to-rent can deliver at scale and speed, then we should support that.”

Is the Government’s change of focus good news for landlords?