Investment News

House prices continue to rise in UK’s big cities

by International Commercial Investment on May 30, 2016

Source: Property Investor Today

Residential property prices in cities such as Bristol, Birmingham, Leeds and Manchester have increased significantly over the past year, a survey has suggested.

Hometrack, which monitors property prices in 20 UK cities, said that the rise was fuelled by interest from buy-to-let investors looking to complete transactions ahead of the April 2016 stamp duty change.

Most cities registered a spike in monthly property prices, led by Cambridge where the average price of a home rose by 15.8% year-on-year.

On an annual basis, only Aberdeen bucked the upward trend posting a fall of -6.1%.

With the EU referendum rapidly approaching, Hometrack, predict that activity in the housing will now fall away, echoing a number of other commentators. However, the prospect of a Brexit has done little to dampen house prices.

Richard Donnell, insight director at Hometrack, said that the economic impacts of a vote to leave will dictate the impact on the housing market.

“Our analysis of how the market has responded to external factors over the last 20 year suggests that a vote to leave on 23 June could result in a 5% to 10% fall in housing turnover with London bearing the brunt,” he said.

After a period of strong house price inflation over the last five years, the London market appears to face greater headwinds irrespective of the referendum vote.

Donnell continued: “Turnover fell 7% last year on the back of affordability constraints and weaker overseas demand. Tax changes for investors will reduce demand and we expect price growth to slow in the near future even if sterling were to weaken and improve the relative value of central London property.”

Unsurprisingly, Donnell believes that a vote to remain in the EU will have “the greatest upside” for house prices and transactions in regional cities where the recovery has been more short-lived and affordability less stretched than in southern cities.

“The boost to confidence from a vote to remain, coupled with low mortgage rates would most likely benefit cities such as Manchester, Leeds and Birmingham as housing demand and price growth seems set to sustain itself,” he added.

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International Commercial InvestmentHouse prices continue to rise in UK’s big cities

UK housing market gains momentum

by International Commercial Investment on May 25, 2016

Source: Property Investor Today

The number of people in the UK who believe that the value of their home increased in value remained high in May despite various market uncertainties, the latest House Price Sentiment Index (HPSI) from Knight Frank and Markit Economics shows.

The research reveals that many households remain confident that the price of their home is increasing. In fact, households in all 12 regions covered by the index reported that prices rose in May, with those living in London perceiving that the value of their home had risen at the strongest rate.

The future HPSI, which measures what households think will happen to the value of their property over the next year, shows that households in every region of the country – for the 14th consecutive month – expect the value of their home to increase over the next 12 months.

With residential property market conditions improving, 5.4% of households said that they planned to purchase a property in the next 12 months, up from 5% in April.

Gráinne Gilmore, head of UK residential research at Knight Frank, said: “The housing market is gaining momentum across many parts of the UK, although it is worth noting that households in the North East did not perceive that the value of their home rose over the last month, but rather reported that prices remained unchanged. This underlines the localised nature of the housing market across the country, which is moving at different speeds.

“The strong price growth seen in other areas including London and the South East is underpinned by a lack of supply, both new delivery of homes into the market as well as a lack of second-hand stock coming onto the market for sale, in the face of rising demand.”

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International Commercial InvestmentUK housing market gains momentum

Property prices are continuing to soar – and it’s not just because of stamp duty

by International Commercial Investment on May 21, 2016

Source: City A.M

There’s yet more evidence that the government’s stamp duty changes forced house prices up in March – but experts are warning that a chronic undersupply of housing will continue to push prices up overall.

UK house prices increased by nine per cent in the year to March 2016, up from 7.6 per cent in the year to February 2016, according to the Office for National Statistics.

House price annual inflation was 10.1 per cent in England – driven largely by London, where prices rose 13 per cent in the year. Prices rose 6.4 per cent in Northern Ireland and 2.1 per cent in Wales. However Scotland is suffering deflation of 6.1 per cent.

Excluding London and the South East, UK house prices increased by 5.9 per cent over the year; on a seasonally adjusted basis, average house prices increased by 2.5 per cent between February and March.

First-time buyers continue to be faced with the biggest jumps in prices – those getting their first foot on the ladder paid 9.7 per cent more this year than those who bought back in March 2015. For existing owners, prices increased by 8.7 per cent for the same period.

The average price of a house in the UK during March was £292,000, although average London house prices are now more than double that amount.

Haart estate agents chief executive Paul Smith said: “Today’s data shows UK house prices in March soared as a result of the sky-high level of competition for properties which peaked in advance of the 1 April stamp duty surcharge deadline.

“Our data shows there were 11 buyers chasing every property to come onto the market in March whilst transactions surged 19 per cent on the month.

“Although we expect to see a level of uncertainty in the housing market over the next month or so, prior to the EU referendum, this will simply be a blip on the horizon as the power of the UK property market will outweigh any short term insecurity. London, in particular, will remain a global safe haven for investment whatever the outcome.”

Mark Posniak, managing director at Dragonfly Property Finance, added: “Lending figures for March may resemble a cricket score but the month was clearly skewed by the stamp duty deadline for buy-to-let and second homes.

“We are entering a period of uncertainty for both the property market and the broader economy from which it may take some time to emerge. If there’s one constant in the market at present, it’s the continued lack of supply. This deep structural imbalance should prevent prices from falling materially whether we’re in or out of Europe.”

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International Commercial InvestmentProperty prices are continuing to soar – and it’s not just because of stamp duty

London house prices broke the £600k barrier for the first time in April

by International Commercial Investment on May 14, 2016

Source: City A.M

London house prices broke through the £600,000 barrier for the first time in April, while the value of homes in the capital has almost doubled over the past seven years.

Property prices in London have risen 11 per cent (£59,605) since this time last year, surpassing all other regions of England and Wales, according to the latest House Price Index from Your Move and Reed Rains.

The average London house price in April 2009 was £321,917. Across London, more affordable areas have had some of the sharpest increases in house prices annually, Your Move and Reed Rains said. In Waltham Forest, the average property value has soared by 113 per cent over the past seven years, more than any other London borough.

Adrian Gill, director of Your Move and Reeds Rains estate agents, said: “Homeowners have been basking in the spring sunshine this April, on the back of the fastest year on year growth in property prices since December 2014.

“These kinds of huge hikes in home values in London mean that Sadiq Khan will now face a serious challenge to deliver his promise of increased affordable housing in the city. Across London, it’s been the more affordable areas which have seen some of the steepest increases in house prices annually, as the capital’s residents seek out cheaper properties.”

Property values also hit new records in nine of the ten regions in England and Wales, as growth has rippled out from the capital.

This marks the first time nine regions have broken records in the same month since October 2007 at the height of the housing boom, as the market has now fully recovered from the crash.

The average house price in England and Wales is now worth £24,280 more than a year ago, with prices rising 8.9 per cent since April 2015.

Property values now stand just shy of £300,000, at £298,030.

However, property sales slowed in April, readjusting after the rush of interest from landlords in March ahead of new stamp duty rules.

“With an additional 30,000 home sales made in the previous month and buyers snapping up most of the properties on the market, the current pause in transactions was to be expected,” Gill added.

“While March saw a record 97,500 home sales – the most since November 2007 – this April there will have been an estimated 20,000 fewer sales than usually expected for the month. Many homeowners may now decide to wait until after the EU vote before selling their homes, despite significant demand from buyers, so we could see this shortfall continue until June.”

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International Commercial InvestmentLondon house prices broke the £600k barrier for the first time in April

House prices rise in UK’s big cities, says Hometrack

by International Commercial Investment on April 24, 2016

Source: BBC News

House prices in cities such as Liverpool, Cardiff and Southampton rose sharply in the first three months of the year, a survey has suggested.

Hometrack, which monitors property prices in 20 UK cities, suggested that the increase was driven by interest from buy-to-let investors.

It recorded house price growth of 4.1% in Liverpool and London in the first quarter of the year.

This was the fastest rise among cities across the country, it said.

Over the 20 cities as a whole, house price growth was at its strongest for 12 years in the first three months of the year.

A regular “Spring bounce” in the market was extended by a move by investors to avoid the change in stamp duty on 1 April. A 3% stamp duty surcharge has now been introduced for purchases of homes that are not the buyer’s main residence.

On Thursday, figures from HM Revenue and Customs said that 161,990 properties were sold in the UK in March, the highest monthly number since June 2006, and up from 92,690 sales in February.

Gross mortgage lending hit £25.7bn in March, the Council of Mortgage Lenders (CML) said. This was 59% higher than in the same month a year earlier.

Richard Donnell, insight director at Hometrack, predicted that activity in the market would now fall away, echoing a number of other commentators.

“We believe house prices will continue to rise but a moderation in investor demand and greater caution in the run up to the EU referendum will limit further acceleration in prices,” he said.

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International Commercial InvestmentHouse prices rise in UK’s big cities, says Hometrack

Buy-to-let landlord surge ignites chain reaction in housing market

by International Commercial Investment on April 20, 2016

Source: The Guardian

The average asking price of homes coming on to the market has risen to a new high, increasing by 1.3% over the past month to an average of £307,033 as landlords raced to buy properties ahead of an increase in stamp duty.

According to the property website Rightmove, the change to stamp duty on 1 April helped “ignite an onward chain reaction”, with landlords snapping up homes at the bottom of the ladder and former owners moving on.

The average asking price for properties typically bought by first-time buyers was down by 1.4% over the month to £182,926, when inner London was excluded, but there were rises in the price tags of larger homes.

The asking price for three- and four-bedroom properties newly listed in April was up by 0.6% on the previous month, at £257,871, while at the top of the ladder homes with at least five bedrooms and four-bed detached properties, were being marketed for 1.9% more than in March, at an average of £546,232.

Rightmove’s figures, which are based on homes listed on the site during the past four weeks, show that sellers in all parts of England and Wales are asking more for their homes than those marketing their properties in April 2015.

The largest annual increase was recorded in the east of England, where the average asking price is up by 10.8% at £331,780, closely followed by the south-east and then London. In the capital, the average new asking price has risen by £51,615 over the past year, to £646,200. The cheapest region is the north-east, where the average asking price is up by 3.5% year-on-year at £151,459.

A clutch of reports have shown that 2016 got off to a busy start in the housing market as investors tried to complete deals ahead of the introduction of the three percentage point surcharge on stamp duty on second homes from 1 April.

This change means buying a £182,926 property will cost an investor almost £5,500 more than a first-time buyer.

Rightmove said the lower rungs of the property ladder, properties with two bedrooms or fewer, had in recent years seen high demand from both first-time buyers and buy-to-let investors, creating upwards price pressure.

Even though demand had dissipated, it said, the momentum it created appears to have enabled owner-occupiers to trade up, creating demand for more expensive homes.

Rightmove director Miles Shipside said: “There’s a whole army of aspiring first-time buyers keen to get on the ladder and they now have a 3% price advantage over the formerly more agile legion of landlords, some of whom have retreated for the time being.

“First-time buyers could fill some of the gap but sellers of properties with two bedrooms or fewer need to realise that with less overall demand they need to price cheaper to match first-time buyers and highly taxed investors.”

First-time buyers struggling to raise a deposit could reduce the amount of time it takes by at least half by moving back in with their parents, property firm Hamptons International has calculated.

A couple saving for a 15% deposit across England and Wales would be able to save enough in 21 months if they lived rent-free with family, compared with three-and-a-half years if they faced rent and housing costs, the firm said.

In London, living rent-free would enable them to accumulate a deposit in 2.75 years, compared with seven-and-a-half years in their own home. A single buyer in London could reduce their saving time by 33 years, it claimed, to seven-and-a-half.

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International Commercial InvestmentBuy-to-let landlord surge ignites chain reaction in housing market

UK economic growth revised higher in fourth quarter

by International Commercial Investment on April 1, 2016

Source: IBTimes

The UK economy expanded in line with expectations in the fourth quarter, figures released by the Office for National Statistics (ONS) on Thursday (31 March) showed.

According to the ONS, in the three months to the end of December, the UK’s gross domestic product (GDP) grew 2.1% year-on-year compared with an initial estimate of 1.9%, which analysts expected would remain unchanged.

On a quarterly basis, meanwhile, Britain’s GDP grew 0.6% from the three previous three months, compared with a first forecast of 0.5% and slightly higher than economists’ expectations for an unchanged reading.

Between 2014 and 2015, GDP in volume terms increased by 2.2%, unrevised from the previous estimate, GDP in current prices remained flat between the third and fourth quarters.

“The modest upward revision to overall GDP growth in 2015 and in the fourth quarter does not fundamentally change the outlook for interest rates,” said Howard Archer, chief UK and European economist at IHS Global Insight.

“An interest rate cut in 2016 currently looks improbable given current lacklustre looking UK growth, muted earnings growth and consumer price inflation likely to only reach 1.0% around the end of the year.”

However, the slight upward revision to GDP growth in 2015 indicated the economy is not weak enough to warrant an interest rate cut, especially given record high employment and the help to growth that should come from a weaker pound, Archer added.

On 16 March, during his Budget Speech, Chancellor George Osborne revealed Britain’s economy was forecast to expand at a slower rate than originally expected. The UK economy is now expected to grow 2% this year, compared with a previous 2.4% forecast in November 2015.

The Office for Budget Responsibility (OBR), the government’s fiscal watchdog, has also cut its growth forecast for 2017 to 2.2% from November’s 2.5% expectations. The UK economy, Osborne added, is expected to grow 2.1% in each year between 2017 and 2019.

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International Commercial InvestmentUK economic growth revised higher in fourth quarter

London property prices soar

by International Commercial Investment on March 31, 2016

Source: Money Observer

House prices rose by 13.5 per cent in the capital over the year to February, bringing the average price to £530,368, according to the latest official data.

Meanwhile, property prices in England and Wales rose by 6.1 per cent annually taking the average price to £190,275.

On a monthly basis, house prices in England and Wales were down by 0.2 per cent, according to the Land Registry’s February 2016 House Price Index.

The only other region to show double-digit rises was the South East, which saw house prices go up by 10.9 per cent annually, with an average property price of £267,235. The East of England was not far behind, with price rises of 9.8 per cent over the year and an average property price of £220,188.

INCREASE IN PROPERTY MILLIONAIRES

The North East was the only area to see a drop in house prices over the year to February 2015, with prices down by 3.2 per cent. This area also saw the largest monthly price drop, with prices down by 1.2 per cent. In contrast, the North West witnessed the greatest monthly growth, with a rise of 1.8 per cent.

Prime London areas such as Kensington & Chelsea and Hammersmith & Fulham showed a slowing down, with annual rises of just 5.6 per cent and 7.3 per cent.

This contrasts with outer London areas, where Hillingdon had the biggest annual rise of 17.1 per cent, followed by Havering (16.9 per cent) and Lewisham (16.3 per cent).

There are now more property millionaires, with a 2 per cent rise in homes in England and Wales selling for more than £1 million. The number is up from 1,052 in February 2015 to 1,077 a year later.

The Land Registry’s data – which is based on completed transactions – also reveals that the number of repossessions fell by 50 per cent, from 706 to 356, in the year to December 2015. In London, there was a drop of 67 per cent in the number of repossession sales.
INVESTORS LOOKING OUTSIDE LONDON

Commenting on the data, Mark Posniak, managing director at Dragonfly Property Finance, says: ‘With its double-digit price growth over the past year, the unique property microclimate of London and the South East is once again in evidence.

‘With the exception of the East of England, the difference between the south-east corner of England and all the other regions is as pronounced as ever.

‘With the London market where it is, the South East is well positioned for further outperformance in the short to medium term as buyers shift their focus beyond the capital. Property investors, both overseas and domestic, are increasingly looking for capital growth and yield potential outside London.

‘There will naturally be a degree of uncertainty around Brexit, but the sense we are getting is that, however things turn out, it won’t be a Black Swan for the UK’s property market. With demand still strong and supply as weak as it is, the overall trajectory of the market is likely to be up.’
FORMIDABLE PROPERTY PRICE GROWTH

Richard Sexton, director of chartered surveyor e.surv, adds: ‘London may be leading the way, but the South East is catching up, alongside the East of the country – creating a corner of formidable property price growth.

‘While encouraging anyone selling a home in these areas, this is also a potential obstacle for some buyers. Savings are struggling and government initiatives like the Lifetime Isa are still a drop in the ocean when it comes to building a deposit.

‘It’s in the North East that first-time buyers are most likely to get value for money – and most likely to get a foot on the property ladder. It is a fact that imbalances in the UK’s property market are becoming ever starker.’

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International Commercial InvestmentLondon property prices soar