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House price slump sees biggest consumer confidence drop in two years

Falling house prices and fears over job security have dented consumer confidence in the UK, which has seen its biggest drop in two years.

According to the consumer confidence index compiled by Yougov and consultancy group the Centre for Economics and Business Research (CEBR), consumer confidence fell to 108.4, down 1.4 points from April.

While this still means that a majority of UK consumers are confident about the economy, the score is still considerably below where it was before the Brexit referendum in 2016.

The survey, conducted through over 6,000 interviews a month, asks respondents about household finances, property prices, job security and business activity, both over the past 30 days and looking ahead to the next 12 months.

The data shows that while confidence in household finances has increased, consumer confidence in job security, house value and business activity declined.

People’s confidence in their job security over the coming year has decreased by four points from last month, its biggest monthly fall since July 2013.

Both the backward and forward-looking house value and business activity metrics have also cooled in May.

However, household finances over the past 30 days have improved for the fifth month in a row, while anticipated household finances over the coming 12 months are at their highest level since September 2016, the study showed.

Nina Skero, head of macroeconomics at CEBR said: “Consumers have taken note of the UK economy’s recent woes and adjusted their expectations accordingly.

“The measure of future job security has seen the greatest fall in nearly five years and prospects for house values and business activity are also looking bleaker.

“If confidence doesn’t recover soon it could damage second quarter growth prospects, which is especially undesirable given the weak performance at the start of the year.”

Source: City A.M.

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Gross mortgage lending up 13% year-on-year

Gross mortgage lending in April reached £20.4bn, 13.3% higher than a year earlier, while the number of total mortgage approvals has also risen by 11%, UK Finance data showed.

This increase is primarily driven by remortagage approvals which were almost 30% higher than a year earlier.

Eric Leenders, managing director, personal finance at UK Finance said:“April saw steady growth in mortgage lending and approvals, following a slowdown in activity the previous month.

“This was driven by strong remortgaging levels, as borrowers locked into attractive deals amid expectations of a base rate rise.”

Growth in personal deposits has been 1.4% over the year, slightly down on the previous six month average of 2% but still up year-on-year, with consumers opting for instant access accounts over those with notice.

Jeremy Leaf, north London estate agent and former RICS residential chairman, said: “These are stronger than expected figures bearing in mind other recent results, not just in terms of lending which is a reflection of previous decision making but approvals which demonstrates confidence in the future.

“Even more so as we are now well into the spring buying season which tends to set the tone for the rest of the year. We are not expecting to see any fireworks as far as pricing is concerned, and once again it is only the property which is priced realistically which is attracting attention.’

“Construction finance contraction is a reflection of longer-term decisions to take on development projects some time ago when the property market began to soften. Continuing weaker market conditions mean a strong pick-up is unlikely in the near future.

“However, we have noted more activity, particularly at the affordable end of the market over the last few months as buyers and sellers come to terms with new, more realistic pricing.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, added: ‘We are witnessing a highly competitive remortgage market.

“Lenders are seeking to increase market share, often providing additional incentives to borrowers remortgaging, including free survey and legal packages.

“The mortgage market is oversupplied which will continue to drive down lender margins and pricing, which is great for borrowers.”

Source: Mortgage Introducer

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House Prices Continue to Fall in London

Residential property values continued dropping in March with the year inflation rate falling to -0.7% which is the most dramatic drop since 2009 according to figures from the Land Registry.

Despite the tumbling values in the capital the rest of the country is faring rather well with annual  inflation of house prices outside of London sitting at 4.2%. The East of England saw the greatest growth in the country with annual inflation of 5.8%, closely followed by the East Midlands which saw annual inflation of 5.6%. Scotland came out on top in the UK with annual growth  of 6.7%.

Jonathan Hopper of Garrington Property Finders said: “London is paying a painfully high price for its stellar run of price rises and a correction is now under way in several parts of the capital.”

According to the Office for National Statistics (ONS), property price, in London have been decreasing steadily ever since the UK’s decision to leave the European union in 2016.

“This is the lowest annual growth in London since September 2009, when it was negative 3.2%. London has shown a general slowdown in its annual growth rate since mid-2016. The second-lowest annual growth was in the north-east, where prices increased by 2.1% in the year to March 2018” they said.

Figures from the house price index compiled by the ONS show that the average house price in March was £224,000, which is £500 less than in February but £9000 more than in March 2017. One thing to take into consideration is the fact that the ONS has recorded a yearly inflation figure of 4.2% which is considerably higher than numbers published by Nationwide and Halifax who recorded 2.1% and 2.2% respectively.

Howard Archer, the chief economic adviser to the EY Item Club, said: “The latest data and survey evidence largely point to lacklustre housing market activity as it is pressurised by still-limited consumer purchasing power, fragile confidence and concerns of further gradual Bank of England interest rate rises following November’s first hike since 2007.

“We expect house price gains over 2018 will be limited to a modest 2%. At this stage, we expect prices to rise no more than 3% in 2019.”

Source: Money Expert

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Scottish house price growth up 7.7% in March

Scottish annual house price growth has accelerated again, rising by 7.7% in March, compared to just 1.0% in England and Wales as a whole for the same month, Your Move Scotland House Price Index has found.

Wales, bolstered by high value sales as buyers rush to beat the new land transaction tax in April, also still trailed well behind, with annual growth of 4.8%.

Moreover, while prices fell between February and March in England and Wales, they continued to grow in Scotland, up 1.2%. That puts the average price at £184,850, up more than £13,000 in the last 12 months from £171,614 last March.

Christine Campbell, Your Move managing director in Scotland, said: “The Scottish market goes from strength to strength, with Edinburgh driving growth, but excellent performance found across the country. With property in Scotland still very affordable, it is possible this will continue, too.”

Alan Penman, business development manager for Walker Fraser Steele, Scottish chartered surveyors and part of the LSL group of companies, said: “We should welcome the growth we’re seeing in property prices in Scotland because it reflects a strong economy.

“We shouldn’t be blind to the fact that price increases reflect not just strong demand, but also a pronounced lack of supply in housing, however.”

The contrast in fortunes of the Scottish and English housing markets finds its starkest expression in the respective capitals.

While average prices in London were down 2.5% in the 12 months to the end of March, they were up 14.5% in Edinburgh and continue strong.

Edinburgh accounted for 45% of the £2,147 increase in Scotland’s average house price in March, on a weight-adjusted basis. In part, the strong performance in Edinburgh is down to strong sales of high value properties.

The number of transactions for £750,000 or over in the city in the first three months of the year – at 62 – is more than double last year (24).

Overall, 26 out of 32 local authorities in the country recorded growth in the last year with 10 setting new peak average prices in March.

They include several that, like Edinburgh, showed double digit growth for the last year.

Falkirk, which leads the way with annual price growth of 15.4%, was bolstered by rising prices of detached properties and new builds sold off plan. East Renfrewshire, the most expensive area outside Edinburgh and with prices growing almost as fast, was up 13.4% annually.

Midlothian (10.4%) and the Scottish Borders (12.0%), which also have above average prices; but also West Lothian (12.4%) and Fife (11.6%), where prices are below the average for Scotland as a whole, all saw double digit growth too.

Glasgow City (up 10.5%), Dumfries and Galloway (10.6%) and Renfrewshire (10.5%) are also all still recording strong annual growth.

John Tindale, senior housing analyst for Acadata, said: “The March housing market House prices in Scotland rose by 1.2% in March, down from the exceptional 2.2% in February, but still the third-highest rise in any single month of the last twelve.

“On a weight-adjusted basis, which takes into account both the increase in prices and the number of transactions involved, Edinburgh accounted for 45% of the £2,147 increase in Scotland’s March 2018 average house price.

“The second-largest contributor to the increase in Scotland’s average price in the month was East Lothian, where prices rose by 3.8%.

“Edinburgh and East Lothian combined accounted for 52% of the price increase seen in Scotland in the month, suggesting that the main focus of price growth in March was around the capital.”

Tindale added: “Over the last 12 months, the average house price in Scotland has increased by £13,236, or 7.7%, and now stands at £184,850. This is the highest annual rate since March 2008, if one ignores the period around the introduction of land and buildings transaction tax.

“Not only is Scotland currently seeing the highest growth rate in its house prices for ten years, but it also tops the league in terms of house price growth in the United Kingdom.

“Average house prices are currently climbing at an annual rate of 0.9% in England, 4.8% in Wales and 4.3% in Northern Ireland.”

Source: Mortgage Introducer

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Amid mounting Brexit concerns, UK economy is barely growing

A day after the Bank of England’s governor warned about the damaging consequences of a “disorderly” Brexit, official figures Friday confirmed that the British economy barely grew in the first three months of the year.

The Office for National Statistics said the economy expanded by a quarterly rate of just 0.1 percent amid weak household spending and business investment. Both have been held by factors directly related to the country’s vote to leave the European Union.

Household spending, which rose just 0.2 percent in the first quarter, has been held back by the inflation stoked by the pound’s sharp fall in the aftermath of the Brexit vote, which led to a rise in the cost of imports.

Meanwhile, business investment fell by 0.2 percent, with executives seemingly cautious amid uncertainty over Britain’s future relationship with the EU, its biggest trading partner. With firms’ balance sheets healthier than they have been for years and with the global economy — in particular Europe — doing better than expected, business investment should be rising.

For those wishing to blame the low growth on late winter weather, the statistics agency noted that the impact was fairly minimal. It said bad weather had some impact on the economy, particularly in construction and retail, but that its overall effect was limited.

The low growth was one of two main reasons why the Bank of England did not raise its main interest rate by a quarter-point this month to 0.75 percent, as it had earlier signaled it would. The other was that inflation had come down more sharply than anticipated.

The latest growth figures come a day after Bank of England Governor Mark Carney warned that a “disorderly” Brexit could push the bank into the same sort of exceptional stimulus it unleashed after the country voted to leave the EU two years ago. Then, the bank’s Monetary Policy Committee cut its main rate to a record low of 0.25 percent and enacted some further stimulus measures to shore up confidence.

Amid signs that the British government’s Brexit negotiations with the EU are making little headway and could in fact be deteriorating, Carney told an audience of economists late Thursday that a “sharper” Brexit may lead policymakers to pursue a similar response.

“For example, if the transition were disorderly, or the end state agreement materially worse than the average potential outcome, then the MPC could once again be confronted by a trade-off between the speed with which it returns inflation to target and the support policy provides to jobs and activity,” he said.

“On this path, the MPC can be expected to set policy to manage any trade-off using the framework it applied following the referendum.”

Though acknowledging that the Brexit vote has already hurt the economy by raising inflation and hindering investment, the bank has operated on the assumption that the transition to a new trading relationship with the EU would be smooth.

That gave it room to raise its main rate in November to 0.5 percent, its first hike in a decade, even though economic growth has slowed noticeably.

With the British government split over several issues related to Brexit and Prime Minister Theresa May losing a series of votes in Parliament, there’s growing concern that there won’t be a deal by the fall. That means the country could end up crashing out of the EU next year without a deal that would, among other things, see tariffs slapped on British exports.

The aim of the Brexit discussions was to get a political deal by about October to give individual EU parliaments’ the time to approve the agreement before the official Brexit date of March 29, 2019. After that, Britain would remain in the tariff-free and frictionless European single market and customs union until the end of 2020 to smooth the process — but that transition period depends on a broad agreement being reached.

On Thursday, the cross-party Commons Exiting the European Union Committee said it was “highly unsatisfactory” the government had yet to agree on the post-Brexit trading and customs arrangements and that the country may have to stay in the customs union for years after Brexit.

Source: Business Insider

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Just 9% of buyers start searching for a home by visiting an estate agency branch

Only a fifth of buyers have used an estate agent as their first port of call when searching for a property in the past year, with almost six in ten relying first and foremost on portals.

Zoopla has released a report – Insights into New Homes Buyers 2018 – looking at what motivates people to buy a new-build in the UK, but which also unveils interesting data on the use of agents and ZPG’s competitors.

The report used a sample of 600 respondents who have either purchased a home in the past year or intend to do so,  and found the preference for resale homes versus new-build properties was split almost equally at 36% and 37% respectively, with 27% claiming no preference.

The majority, 57% of respondents, said they would use a property portal as their first port of call when searching for a home, compared with 19% for agents. This was made up of 9% who visited a high street agency branch, 7% who went through an agent’s website and 3% who used agent leaflets that had come through the door.

Broken down by type of property, 75% of buyers said they used a portal when researching for a new-build, while 82% did so for resale homes.

Almost half, 46% of buyers, consulted an agent’s website when looking for a resale property, but the figure dropped to 37% when it comes to new-builds.

The research also had a dig at ZPG’s competitors, finding that 64% browsed new homes and 47% bought after visiting Zoopla. In comparison, 53% did their research and 36% purchased after visiting Rightmove, with the figure dropping to 24% and 17% respectively for OnTheMarket.

Looking at appetite for new-builds, the report found families were the biggest audience for developers.

Almost half (47%) of respondents with families had the strongest preference for this property type compared with just 14% among empty-nesters. Couples with no children didn’t have any preference.

Respondents did however raise some concerns about new-builds, with 37% saying they could be too small and 21% worried about the location. Looking at the positives, 37% claimed the sales process for a new-build was easier and 32% said they cost less to run.

Chris Browne, sales director at ZPG’s new homes division, said: “When it comes to building and selling new homes, a one-size-fits-all approach will not work for developers.

“Our research reveals that buyers at different stages of life have clear, and differing, preferences for new homes and therefore developers need to keep their target market at the forefront of their mind – both when building and marketing these properties.”

Source: Property Industry Eye

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Edinburgh fuels rise in house prices as effect of new tax fades

HOUSE prices in Scotland are outstripping the rest of the UK with the surge being driven by a boom in the value of property in Edinburgh.

New analysis of the housing market has found that the average cost of a home jumped by almost 8 per cent north of the border compared to just 1 per cent down south.

The burgeoning property market means that the average house price is now £184,850, an increase of more than £13,000 in the last 12 months from £171,614 last March.

House price growth is now at its highest level since March 2008 and the start of the economic downturn.

The data has been revealed by the latest Your Move/Acadata House Price Index, and shows that the housing market has now recovered to a level last seen before the introduction of the Scottish Government’s Land and Buildings Transaction Tax (LBTT), which replaced stamp duty.

Christine Campbell, Your Move managing director in Scotland, said: “The Scottish market goes from strength to strength, with Edinburgh driving growth, but excellent performance found across the country.

“With property in Scotland still very affordable, it is possible this will continue, too.”

House prices in Edinburgh saw a double-digit surge during the past 12 months, rising 14.5 per cent to an average of £288,039 at the end of March.

This is in contrast to London, where prices fell slightly by 2.5 per cent during the same time.

At the top of the market, 62 properties priced at £750,000 or over changed hand in Edinburgh during the first three months of the year, more than double the number last year (24).

John Tindale, senior housing analyst for Acadata said that wealthy house-buyers were returning to the capital after being scared off by the impact of LBTT, which increased the amount due on properties at the higher end of the price scale.

He said: “A recent Royal Mail survey concluded that “Edinburgh is the UK’s most attractive city to live and work in”. The high level of LBTT payable on properties priced in excess of £750k no longer appears to be a strong deterrent to potential purchasers in the Edinburgh area, with the sale of such properties very much on the increase.

“It will be interesting to see if this positivity in the upper echelons of the Edinburgh market is going to have a ripple effect outward to the remainder of Scotland’s housing sector over the next few months.”

Overall, 26 out of 32 local authorities in the country recorded growth in the last year with 10 setting new peak average prices in March.

They include several which saw double digit growth similar to that found in Edinburgh, including Falkirk, which leads the way with annual price growth of 15.4 per cent, and East Renfrewshire, the most expensive area outside Edinburgh where prices grew almost as fast at 13.4 per cent.

Midlothian (10.4 per cent) and the Scottish Borders (12.0 per cent), also saw above average prices as did West Lothian (12.4 per cent) and Fife (11.6 per cent).

House prices increased in Glasgow by 10.5 per cent, while strong growth was also observed in Dumfries and Galloway (10.6 per cent) and Renfrewshire (10.5 per cent).

Acadata said that the strength in the market is a combination of factors that include low interest rates and strong competition among mortgage providers; high employment rates and average weekly earnings that are the third highest of the 12 regions in the UK;

Despite the record increase, house prices in Scotland are still the second-lowest in the UK, meaning that property is more readily affordable north of the border than elsewhere.

Alan Penman, business development manager for Walker Fraser Steele, one of Scotland’s oldest firms of chartered surveyors and part of the LSL group of companies, said: “We should welcome the growth we’re seeing in property prices in Scotland because it reflects a strong economy.

“We shouldn’t be blind to the fact that price increases reflect not just strong demand, but also a pronounced lack of supply in housing, however.”

Source: Herald Scotland

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Brexit could see Bank cut interest rates, says Carney

A “disorderly” exit by the UK from the European Union (EU) could see interest rates fall rather than rise, according to Bank of England governor Mark Carney.

In a speech to the Society of Professional Economists in London on 24 May, Mr Carney said it remains the central bank’s base case that a deal on the terms of the UK leaving the EU will happen and interest rates will rise, if that is not the outcome then the Bank of England will have to change the course of its interest rate policy.

He said that while financial markets have repriced assets at least partly in expectation of a “disorderly”  Brexit, consumers and households have not done this.

Mr Carney said the return of real wage growth, that is wages rising faster than inflation, would imply that consumer spending will rise.

But he said if consumers become as concerned about the outcome of the Brexit negotiations as households are, and decide to save the extra cash, or use it to reduce debt, then that would remove enough demand from the economy to drive inflation sharply downwards, below the Bank of England’s 2 per cent target.

He said this would justify the Bank of England to “respond” to the changing circumstances by either cutting rates or leaving them unchanged.

If economic conditions are such that the Bank of England is contemplating cutting rates, then it is likely sterling will have dropped in value against other currencies, and a rate cut would entrench this fall.

For equity markets a fall in sterling would enhance the value of the overseas earnings achieved by some companies, while denting the investment case for banks, and other businesses that earn the bulk of their income from within the UK.

If rates are being cut, then the likelihood is inflation is falling, and that helps the bond market, as the value of the fixed income from bonds is worth more.

He said if progress happened in the Brexit negotiations, then it might mean the business response to Brexit moves into line with that of the consumer, and the economy grows at a faster rate than expected, and rates rise more quickly than expected.

Mr Carney repeated his claim that UK households are on average £900 worse off than they would have been if Brexit had not happened.

This £900 is based on forecasts for future levels of growth made by central bank in May 2016, prior to the vote happening, those forecasts could have been inaccurate in either direction, whether the vote had happened or not.

He said Brexit has reduced the long-term equilibrium rate of growth in the UK economy by 40 per cent annually, to 1.5 per cent. This means he normal level of growth in the economy would be 1.5 per cent, with any deviation above or below that being the result of government or central  bank policy that is nescessarily short-term in nature.

Jeremy Lawson, chief economist at Aberdeen Standard Investments, said a “no-deal” Brexit would likely mean that rates fall, and that any Brexit outcome which increases barriers to trade would reduce GDP growth for for both countries where the trade barrier applies.

Source: FT Adviser

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London only region to see house price falls

The latest house price index from the Office for National Statistics has revealed that house prices in the capital dropped by 0.7% in the 12 months to March.

It was the only region to see house prices fall over that period, according to the data.

Overall, average house prices in the UK increased by 4.2% in the year, a figure unchanged from February, with the typical property worth £224,000. This is up £9,000 from the same time last year.

While London struggled, other regions saw house prices rise substantially. In the East of England, for example, prices grew by 5.8%, while the East Midlands saw a jump of 5.6%. The North East saw the smallest growth at 2.1%.

Ishaan Malhi, chief executive officer of online mortgage broker, Trussle, noted that with house prices still rising faster than wages it is making the prospect of homeownership “increasingly tricky” for first-time buyers.

He continued: “On average, a year’s take home pay is little over 50% of the average first-time buyer deposit. For younger people, the situation is especially tough.”

Lucy Pendleton, director of London estate agents, James Pendleton, said that the situation is not as negative as it may appear for the capital, arguing the city is “ahead of the game in making much needed adjustments to maintain demand”.

She added: “Outside London, only the North East is being buffeted by inflation. Prices being achieved across the rest of the country still betray a housing market in relatively rude health. Looking at the numbers it’s less a case of a two-speed housing market, and more a case of pick any speed you like.”

However, Jonathan Samuels, chief executive officer of Octane Capital, said that the capital was a “victim of its own extraordinary success”, with a fundamental rebalancing of the housing market now taking place.

He said: “Low stock levels and continued cheap borrowing rates are preventing prices from falling while economic weakness and political uncertainty ahead of Brexit are seeing many households err on the side of caution.

“For the rest of 2018 and perhaps well into next year, the property market will likely mirror the economy, lacking any real momentum and simply idling along.”

Source: Your Money

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House prices up 4% year-on-year but down slightly in March

Average house prices have increased by 4.2% in the year to March 2018 while decreasing by 0.2% on the month, the ONS House Price Index has found.

The annual growth rate has slowed since mid-2016 but has remained under 5%, with the exception of October 2017, throughout 2017 and into 2018.

The average UK house price was £224,000 in March 2018. This is £9,000 higher than in March 2017 and £500 lower than last month.

Jonathan Samuels, Octane Capital, said: “For annual growth in London to be the lowest since 2009 underlines the extent of the capital’s fall from grace.

“The once untouchable market has become a victim of its own extraordinary success. While prices will never collapse in the capital, because of demand and the sheer lack of supply, it’s now the turn of the regions to play catch-up.

“We’re starting to see a fundamental rebalancing of the housing market, as property investors and homebuyers look for value further afield. With remote and flexible working become more widespread by the day, the dynamic of the UK property market is shifting irreversibly.”

The main contribution to the increase in UK house prices came from England, where house prices increased by 4.0% over the year to March 2018, with the average price in England now £241,000.

Wales saw house prices increase by 3.5% over the last 12 months to stand at £153,000. In Scotland, the average price increased by 6.7% over the year to stand at £146,000.

The average price in Northern Ireland currently stands at £130,000, an increase of 4.2% over the year to Q1 2018.

On a regional basis, London continued to be the region with the highest average house price at £472,000, followed by the South East and the East of England, which stood at £321,000 and £291,000 respectively. The lowest average price continued to be in the North East at £124,000.

The East of England showed the highest annual growth, with prices increasing by 5.8% in the year to March 2018. This was followed by the East Midlands (5.6%).

Samuels added: “The broader property market narrative continues to be one of low single digit growth.

“Low stock levels and continued cheap borrowing rates are preventing prices from falling while economic weakness and political uncertainty ahead of Brexit are seeing many households err on the side of caution.

“For the rest of 2018 and perhaps well into next year, the property market will likely mirror the economy, lacking any real momentum and simply idling along.”

The lowest annual growth was in London, where prices decreased by 0.7% over the year. This is the lowest annual growth in London since September 2009, when it was negative 3.2%.

London has shown a general slowdown in its annual growth rate since mid-2016. The second-lowest annual growth was in the North East, where prices increased by 2.1% in the year to March 2018.

John Eastgate, sales and marketing director at OneSavings Bank, said: “House prices are a reflection of general levels of consumer confidence and these numbers show that whilst we’re not as confident as we were a couple of years ago, equally no one is forecasting anything disastrous for the UK economy.

“HPI levels in excess of 5% are arguably not sustainable, so we should welcome this more moderate figure, noting that even at this level, HPI is still comfortably in excess of wage inflation.

“Set against the backdrop of insufficient levels of new housebuilding, we still therefore face a housing market characterised by increasing affordability challenges and scarcity of supply.”

Source: Mortgage Introducer