Posts with tag: house price growth

House Prices to Continue Rising in 2017 Despite Brexit, Predicts Cebr

Published On: April 10, 2017 at 8:22 am


Categories: Property News

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Average house prices in the UK are expected to rise to £220,000 in 2017, despite the Brexit process, according to the latest forecasts from the Centre for Economics and Business Research (Cebr).

Cebr predicts that house prices will rise at a rate of 4.4% over the rest of the year, which is much below the 7.4% rate of growth recorded in 2016 and the slowest increase since 2013.

This forecast, part of the consultancy’s Housing Prospects report, claims that growth will fall below 5% for the next two years, until activity in the housing market is expected to pick up again.

House Prices to Continue Rising in 2017 Despite Brexit, Predicts Cebr

House Prices to Continue Rising in 2017 Despite Brexit, Predicts Cebr

After a turbulent 2016, the data for the first quarter (Q1) of 2017 suggests that the property market is moving along at a steady, if unspectacular, pace.

Mortgage approval numbers – a leading indicator for property transactions – have recovered from their mid-2016 low and remain at a stable level of close to, but just under, 70,000 per month.

While this is a low figure compared to the historical average, it is near the post-crisis high of 74,000 seen in early 2014. Though the number of mortgage approvals dipped slightly in February, secured borrowing continues to benefit from low mortgage costs, after the Bank of England cut interest rates in response to the EU referendum result last summer.

Looking at the market fundamentals, the shortage of suitable housing continues to exert pressure on house prices. According to the Government’s Housing White Paper, more than 40% of local planning authorities do not know how to meet local housing demand over the next ten years. Looking at the higher end of the market, those looking to sell can hope to benefit from a pick-up in foreign demand, due to the low value of sterling.

While these factors will provide a bottom floor to price growth, substantial risks on the downside remain. Rising inflation, in combination with stagnating wage growth, has led to a halt in real income growth. This will affect consumers’ disposable incomes and put a dampener on the housing market in 2017 and 2018.

Furthermore, the property market is still reeling from additional taxes, which the previous government implemented not expecting the UK to leave the EU. The increase in Stamp Duty for additional homes, which was introduced in April last year, led to plummeting transaction levels in the subsequent months, which have still only partly recovered.

Additionally, the Government’s changes to mortgage interest tax relief for buy-to-let landlords will further hit the property investment sector. Starting on Thursday 6th April 2017, the Government mandates that only 75% of taxes on mortgage interest payments can be deducted at the full rate of 40%, while the remaining 25% will be deducted at the basic rate of Income Tax – 20%.

Over the next few years, until 6th April 2020, the tax system further reduces the share of pre-tax profits that can be deducted at the higher rate. In 2020, all pre-tax profits can only be deducted at a rate of 20%, essentially shifting the tax base from profits to rental income.

This means that higher rate taxpayers will see their applicable tax deduction shrink by 50%, resulting in substantially lower net profits. Cebr expects this shift to significantly reduce the number of private buy-to-let landlords in the market.

David Brown, the CEO of Marsh and Parsons estate agent, comments on the report: “A lot of the fears many had around Brexit haven’t materialised; both in terms of the wider economy and the housing market, which has proven resilient. The London property market remains an attractive global hub, luring people from around the world to invest and live here. In many ways, the vote has actually brought vigour to some parts of the market, as we are seeing renewed interest from overseas property purchasers as a result of the weaker pound to complement the strong demand from domestic buyers.

“The strength we have seen in the market is reflected in mortgage approval data. At just below 70,000 a month, this is close to the post-crisis high of 74,000 in 2014, and we only expect that to increase in the coming months.”

UK house price growth falls in March

Published On: March 31, 2017 at 9:04 am


Categories: Property News

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The latest report from Nationwide shows that house price growth in the UK fell in March by 0.3%, with annual growth also falling by 3.5%. This took the average price to £207,308.

In addition, the investigation shows that the gap between regional price growth is closing, with this now at its narrowest since 1978.

Rise and Falls

During the first three months of 2017, six regions saw property prices rise, six saw falls and there was no alteration in the East Midlands.

Robert Gardner, Nationwide’s Chief Economist, noted: ‘The spread in the annual rate of change between the weakest and strongest performing regions was at its narrowest since 1978 at 6.8%, the second smallest gap on record.’[1]

‘The South of England continued to see slightly stronger price growth than the North of England, but there was a further narrowing in the differential. Northern Ireland saw a slight pickup in annual house price growth, while conditions remained relatively subdued in Scotland and Wales,’ he continued.[1]

Quarterly Figures

Quarterly, overall year-on-year prices rose by 4.1%. By country, rises were:

  • England 4.7%
  • Northern Ireland 3.8%
  • Scotland 2.9%
  • Wales 1.2%
UK house price growth falls in March

UK house price growth falls in March

By region, prices in the South West, Outer South East, Outer Metropolitan, London and East Anglia all rose by 5% year-on-year.

Despite regional growth rates beginning to converge, there is still disparity in price levels. This becomes more profound when looking at prices relative to their 2007 peak. Prices in London for example are almost 60% above their 2007 levels, while those in the North, Yorkshire and Humberside and the North West are lower than their 2007 peaks.

Experts feel that the March dip in prices is not a trend, with monthly figures tending to be volatile. In addition, the fall is not thought to be connected with the trigger of Article 50 this week.


Jonathan Hopper, managing director of Garrington Property Finders, observed: ‘The market has become a muddled mix of extremes, with double digit reductions going on at one end of the spectrum and gazumping at the other. So it would be overly melodramatic to view the Nationwide’s latest data as a turning point. In reality, average house prices have been meandering for several months against the volatile and uncertain economic backdrop.’[1]

‘Buyer intent remains strong in many parts of the UK, but buyers have become acutely price sensitive. No one wants to buy a home only to realise they could have got it cheaper if they had waited so on the front line, prospective buyers are scrutinising prices harder than ever,’ he added.[1]

Russell Quirk, chief executive officer of eMoov, noted it is unusual to see a dip in the spring market. He went on to say: ‘Although an air of uncertainty on the run up to Wednesday’s formal process may have left a few buyers on the fence, it is unlikely to have had any direct impact itself. Although the market remains healthy which is great news for existing homeowners, those facing the sizable task of climbing the UK ladder are opting to concede and rent. Not just those at the first rung, but seemingly the third and fourth as well.’[1]


First Official House Price Statistics of the Year Released

Published On: March 21, 2017 at 10:57 am


Categories: Property News

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The Office for National Statistics (ONS)/Land Registry have released the first official house price statistics of 2017.

In January, the average house price in the UK was £218,255, after rising by an average of 6.2% over the year – 0.5% higher than in December 2016. However, this still remains below the average annual house price growth recorded in 2016, of 7.4%

On a monthly basis, the typical property value grew by 0.8%.

Alongside the house price statistics, the report shows that moderate demand in the housing market continues to outmatch supply.

The Royal Institution of Chartered Surveyors (RICS) reported little change in property transaction levels and new buyer enquiries between January 2017 and December 2016.

Concerning supply, RICS reported an 11th consecutive month with no improvement in national property listings. London was the only area where near-term price expectations are negative, while in all other UK regions, price expectations are positive.

First Official House Price Statistics of the Year Released

First Official House Price Statistics of the Year Released

The Bank of England’s approvals for lending secured on dwellings data for January shows that the volume of approvals for house purchase dropped by 3.9% over the year. However, the total volume of approvals for lending, which includes remortgaging and other purposes, rose by 3.2% from January 2016 to January 2017.

The Bank of England’s agents’ summary for February 2017 shows that housing market activity has been sluggish overall, and is expected to remain so over the coming year.

ONS construction output in December 2016 reported that total new housing was 6.7% higher than in December 2015. For the 13 months from December 2015 to December 2016, the 12-month growth rate of total new housing has been positive, however, this does not appear to have alleviated housing demand.


The Founder and CEO of online estate agent, Russell Quirk, comments on the house price statistics: “Although mortgage-based indices like Halifax and Nationwide offer an indication on how the market is behaving, this first set of 2017 data from the Government provides a concrete look on how the market has emerged from an up and down 2016.

“Despite the seasonal lull towards the end of the year, prices have continued their upward trend and the market looks strong heading into 2017. This continued growth does hinge on next Wednesday’s triggering of Article 50, however. Although many predict an apocalyptic end to the world, there is also a chance it will further stabilise the market, as the current period of Brexit limbo experienced since last June will finally come to a close.

“In many cases, the uncertainty of an outcome can be far more detrimental than the outcome itself, and it is clear that many buyers and sellers have been holding tight on a sale until a decision is made. Despite this, it is actually the markets like the South East and London in particular where the most detrimental impacts of Brexit have been forecast that have continued to see the strongest price growth.”

The Senior Economist at PwC, Richard Snook, also says: “Whilst 6% growth remains healthy, the significant downward revision to both the November and December figures portray a less buoyant market than previously thought. With the triggering of Article 50 now confirmed for March 29th, we may be beginning to see the signs of the Brexit related slowdown that we anticipated last year.

“We expect house price growth for 2017 to be between 2% and 5%, which means a further slowing of prices over the next 12 months.

“The regional data, which can be volatile when viewed as a single month, shows the strongest performance was in London. Average prices jumped from £477,000 in December to £491,000 in January. The South East and East Anglia are also amongst the strongest regions, with annual growth of 8.7% and 9.4% respectively.”

Shaun Church, the Director of Private Finance, adds: “Taking into account the usual winter slowdown in housing activity, the start of the year saw property transactions remain comparatively high, albeit dipping slightly in February. Prior to January, transactions had not been so high since March 2016, when the spectre of Stamp Duty changes prompted an unusually large flurry of activity from second homebuyers and landlords. This lays solid foundations for the rest of 2017, as demand remains – for now – unhampered by external factors such as political uncertainty.

“However, the housing market isn’t necessarily on course for smooth sailing. The shortage of new homes coming onto the market has been dampening home mover activity, while the Stamp Duty surcharge has slowed down movement at the upper end of the market in particular. A healthy housing market needs a consistent flow of transactions at all levels, and any bottlenecks will inevitably cause problems later down the line.

“Affordability also remains a concern. While the annual rate of house price growth fell steadily between June and November 2016, in the past two months it has been creeping up again. Mortgage rates are at record lows, helping more buyers onto the ladder, but saving for a deposit remains a challenge for many. Housebuilding levels are still not at the level they need to be, and if action isn’t taken to address lack of supply soon, rising house prices will undoubtedly block some from accessing the market.”

Rightmove Reports Lowest Annual House Price Increase since 2013

Published On: March 20, 2017 at 9:47 am


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The lowest annual house price increase since April 2013 was recorded in February, according to the latest House Price Index from Rightmove.

House prices rose by an average of 2.3% in February, although overall demand remains strong, reports the property portal.

Rightmove Reports Lowest Annual House Price Increase since 2013

Rightmove Reports Lowest Annual House Price Increase since 2013

The slower house price increase makes it riskier for sellers to over-price their properties, Rightmove highlights, as 40% of vendors are more likely to sell if their properties are priced right when they first come onto the market.

Three-quarters of agents surveyed by Rightmove report that the market is currently price-sensitive, with buyers reluctant to enquire if properties are priced just a few per cent too high.

On a monthly basis, the average house price increase was 2.0% in February (£5,986) – the smallest rise for the month since 2009.

Although Rightmove traffic is high, investor sectors were understandably quieter than this time last year, as buy-to-let landlords rushed to beat the Stamp Duty deadline in 2016.

The Director and Housing Market Analyst at Rightmove, Miles Shipside, comments on the new findings: “While the prices of goods in shops are rising at a faster rate, the pace of price rises in property coming to the market is slowing. They’re still 2.3% higher than a year ago, but perhaps we’re approaching the territory where many buyers are unable or unwilling to pay what sellers are asking, given the negative combination of rises in the cost of living, tighter lending criteria, and a dose of Brexit uncertainty.

“The housing market has had a long sprint since April 2013, when the annual rate was last below this level, so it’s not surprising that upwards price pressure is running on tired legs, with average prices today being 23% or nearly £60,000 higher than they were then. This surge in the cost of homeownership highlights some of the issues referred to in the Government’s recent White Paper on fixing the broken housing market.”

The Founder and CEO of online estate agent, Russell Quirk, says: “Depite Rightmove’s best intentions to deliver transparent market analysis, the nature of their data being based on asking price and not sold price means it should only be viewed as a tentative toe dip into the state of the UK market at present.

“Today’s numbers may help to compound the current issue of a shortage of housing, but this isn’t an anomaly that has only just surfaced. It has been rife for quite some time now, and so this latest data would suggest the addition of a seasonal pickup as we head into the busiest time of the year. This heightened market activity, coupled with the ongoing stock shortage, is leading to a strong hike in prices.”

He continues: “We’ve seen a lot of hesitation in the market of late, particularly amongst those in the likes of the South East, who are worried about maximising their investment return.

“The reality is that in areas like the Midlands, where prices aren’t as inflated, a more no nonsense approach is benefitting homeowners as they proceed with their sale and see stronger, more natural price growth across the board as a result.”

How will House Prices be Affected by Article 50?

Published On: March 17, 2017 at 9:42 am


Categories: Property News

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Average house prices are expected to rise by 1.2% this year, although they could decline by as much as 4% as a result of Article 50, warns a new report.

How will House Prices be Affected by Article 50?

How will House Prices be Affected by Article 50?

Online estate agent YOPA has launched a Brexit House Price Tracker, which collates industry predictions and compares them to the house price indices from Halifax, Nationwide, Rightmove and the Land Registry, ahead of Article 50 being triggered.

Forecasts have been taken from commentators in the industry, including buying agent Henry Pryor, who expects to see a 2% increase in house prices this year, as do experts from Rightmove and Nationwide.

The tracker, which will be regularly updated as we await Article 50, also includes predictions from Ray Boulger, of John Charcol mortgage brokers, who thinks there will be a 1% rise, while Halifax’s Martin Ellis has predicted growth of between 1-4%.

YOPA has taken an average of the predictions, to forecast 1.2% average growth in house prices as a result of Article 50.

However, the agent has highlighted that the Halifax House Price Index for January showed a 1.1% monthly drop, followed by a 1.1% increase in February, while Nationwide recorded growth of just 0.2% and 0.6% over the same period.

A spokesperson for YOPA comments: “With Article 50 set to be invoked before the end of this month, many homeowners and residents looking to get a foot on the property ladder are keenly watching how Brexit will affect the nation’s house prices.

“Looking at house price data over the past two years, we can see that all the major house price indices are showing a marked slowdown in growth since July 2016 – the month of the Brexit vote.”

He continues: “It’s also been a rough start for 2017, with Nationwide, Halifax and Rightmove all showing a decline in house prices during January.

“In January, experts were predicting that 2017 would see a 1.2% increase in house prices, but, using YOPA’s tracker, we can see that, so far this year, house prices have actually declined.”

He adds: “In fact, if 2017’s house prices continue at their same downward trajectory, then we would be looking at a 3-4% decline for the year.”

London Homes have Risen in Value by £105 a Day in the Past Five Years

Published On: March 3, 2017 at 10:43 am


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London homes have risen in value by a huge £105 a day over the past five years, while salaries in the capital have grown by just 54p per day, shows new research.

London Homes have Risen in Value by £105 a Day in the Past Five Years

London Homes have Risen in Value by £105 a Day in the Past Five Years

The study found that, despite recession blues and political and economic uncertainty, London homes have comfortably outpaced growth in salaries, pushing the gap between average incomes and average house prices to its widest point ever.

In December 2011, average London homes cost £292,284. Today, this has soared to a huge £483,803, according to Savills.

Meanwhile, average London salaries have inched up slightly from £34,336 to £34,531.

This means that the majority of property owners in the capital have almost certainly earned less than their homes since 2011.

Frances Clacy, the Research Analyst at Savills, says: “The £105 per day increase in house prices over the past five years means the average home has earned £38,325 a year, against the average pre-tax salary of £34,531.”

And, she points out, once tax has been taken into account, the gap between average incomes and property prices only widens further.

The study found that the two boroughs where London homes have grown fastest, in cash terms, are Westminster and Kensington and Chelsea – by more than £200 per day since 2011. Prices in more than half of the capital’s boroughs have risen by more than £100 a day over the last five years.

Even in Barking and Dagenham – the worst performing borough – property values have risen by an average of £69 per day.

The research includes a graphic illustration that proves just how difficult it is for Londoners to get onto the property ladder, particularly since, in the same period, rent prices have soared by 23%, making it increasingly harder for generation rent to save for a deposit for their own homes.

The Mortgage Products Director at Lloyds Bank, Andy Mason, comments: “Affordability levels have worsened for four consecutive years, as average City house prices continue to rise more steeply than average wage growth.”