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Good Move: Housing market could return to ‘normal’ by the end of the year

Despite the significant impact of COVID-19 on the UK property market, positive signs of growth suggest a return to normal could be on the cards by the end of the year, according to Good Move.

Ross Counsell, chartered surveyor and director at Good Move, said: “COVID-19 has had a detrimental effect on the British economy, and this too included the property market.

“However, we are now seeing positive signs that signal growth in the property market as we re-emerge from lockdown.

“We’ve seen asking prices increase in July, up 2.4% compared to March, which signals a ‘boom’ in the property market and is a fantastic sign for sellers and estate agents as they can expect higher offers for homes.

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“Rishi Sunak’s stamp duty holiday also saw properties in London soar in sales by 27% in the weeks following the announcement in July, although this only increased by 6% in the rest of England.”

Counsell added that the impact of COVID-19 might change the shape of the market moving forwards.

He said: “Following the impact of coronavirus, we predict buyers will be looking for homes with a garden and a home office space, in the suburbs and countryside for added outdoor space rather than in cities.

“Sellers on the other hand need to adapt to the change in buyer preference.

“As we know, space is now at the forefront of buyer’s minds and they’re going to consider every single detail of a house before putting an offer in.

“Therefore, we advise sellers to instruct a chartered surveyor to perform a property survey, so they can take steps to rectify any major issues that will put buyers off or reduce the value of their home.

“For estate agents, we expect house prices to continue to increase across the UK, as well as more and more people looking to sell their home now the housing market has re-opened.

“We’ll see many estate agents working around the clock to support their clients and find the best possible deal for them to help protect their finances long-term.

“With everything considered, we fully predict the market to be back to ‘normal’ by the close of the year.”

By Jessica Bird

Source: Mortgage Introducer

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Stamp duty cut sees London house sales rocket 27 per cent

The stamp duty holiday has significantly boosted London’s housing market, with new sales agreed up by over a quarter in just two weeks, new data has shown.

UK house prices rose 0.2 per cent in June as a jump in demand for houses outstripped a fall in the number of sellers, the figures also showed.

But the market has still taken a big hit this year, said property website Zoopla, which compiled the data. Housing sales in 2020 so far are around 20 per cent below the same period in 2019, amounting to around £27bn in lost deals.

Chancellor Rishi Sunak earlier this month unveiled a “holiday” for the payment of the stamp duty property tax in a bid to boost the market and the economy. This raised the threshold at which stamp duty is paid from £125,000 to £500,000 until March 2021.

The move has spurred activity in London, according to Zoopla’s data, with new sales agreed up 27 per cent over the last two weeks. That compares to a six per cent rise across the rest of the country.

Zoopla said this was because London’s higher house prices meant it stood to benefit relatively more from an increase in the tax threshold.

London and UK house prices continue to rise

Overall, London house prices rose 1.7 per cent in June – before the stamp duty cut came in – compared to a year earlier.

Month on month prices flatlined. This meant the average London house price stood at £479,300.

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UK house prices as a whole were up 2.7 per cent year on year, although the monthly growth rate halved to 0.2 per cent. The average UK house price is £219,500.

The rise in prices “certainly seems at odds” with a cratering economy and rising unemployment, said Richard Donnell, Zoopla’s research director.

Yet he said the release of pent-up demand for new houses after the market was put on ice during lockdown would likely support prices for the rest of the year.

In London, buyer demand is up 28 per cent in 2020 so far compared to the same period a year earlier. This was partly because Brexit subdued activity last year.

Supply has fallen 11.2 per cent, however, meaning relatively higher demand is pushing up prices.

House prices expected to fall by 2021

But Zoopla said prices were likely to eventually fall as job losses and uncertainty take a toll.

“We expect rising unemployment to weigh on market activity over the final quarter of 2020 and into the first half of 2021,” Donnell said.

“The impact on pricing looks set to be pushed into 2021 as a result of sizable government support for the economy.”

However, Zoopla’s data laid bare the damage that has already been done to the housing market, despite London and UK activity being boosted by the stamp duty cut.

The closure of estate agents over the lockdown reduced new supply and agreed sales by 90 per cent.

So far this year, sales are 20 per cent below 2019 levels. Roughly 124,000 sales that were expected to take place and could have been worth £27bn since March did not happen.

Zoopla said it expects sales to be around 15 per cent lower in 2020 than they were last year.

By Harry Robertson

Source: City AM

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Zoopla: New sales agreed in June ran 28% above pre-lockdown levels

New sales agreed ran 28% above pre-lockdown levels in June, as the surge in demand converted into actual sales, according to the monthly House Price Index by Zoopla.

The market suspension during lockdown reduced the flow of new supply and sales agreed by 90%.

While these measures are now rising ahead of their pre-COVID levels, the increase in sales and supply since the start of the year is lagging 20% behind compared to 2019.

In contrast, in June 2020 demand from buyers was double that of the same period in 2019.

On a cumulative basis, since January 2020, demand ran 25% higher than the same period in 2019 despite the lockdown and market closure.

Zoopla’s analysis suggested that this was primarily ‘catch-up’ demand for what was lost over lockdown, and estimated that returning buyers accounted for 80% of levels that would have been expected over this period in 2020 had COVID not struck.

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Regional cities across the north of England recorded stronger growth in demand in the first half of 2020 compared to 2019, while new supply was hit countrywide as a result of the market closure.

Top of the list for demand are Sheffield, Liverpool, Manchester and Nottingham, which are all in the top fastest growing cities in terms of house price growth.

Short-term demand for city living is holding firm, despite predictions that it would fall. Research has suggested that COVID-19 has boosted demand for homes outside major cities; however, Zoopla said it expects this to be a one-off factor rather than a long-term shift in consumer attitudes.

London ranks fifth for growth in demand since the start of 2020; this demand has seen a modest shift away from the centre, towards the suburbs and commuter belt.

Despite an overall decline in annual transactions, London enjoyed an immediate boost to sales agreed following the temporary stamp duty holiday implemented by the government.

New sales agreed increased by over a quarter (27%) in just two weeks in London, which was geared to benefit most from the changes.

This boost to transaction volumes was not replicated in other regions, where average property prices are lower and less responsive to stamp duty amends.

While stamp duty relief will support demand in higher value markets across southern England, Zoopla said this was unlikely to sustain demand indefinitely into 2021.

UK house price inflation in the 12 months to June 2020 rose to +2.7%, registering the highest level of annual growth for almost two years.

By contrast, the monthly rate of growth has halved to 0.2% and the city level price indices registered slower growth still as a result of lockdown and reduced pricing evidence.

While there was a wide variation in annual growth rates across the country, there was no evidence of material, localised annual price falls at a regional or city level.

Based on current trends, Zoopla predicted that the headline annual rate of growth is set to remain positive, as the growing imbalance of supply and demand is set to support prices for the remainder of the year.

Richard Donnell, research and insight director at Zoopla, said: “COVID and the lockdown have shifted the dynamics of supply and demand across the housing market.

“The staggered reopening of housing markets across countries and the added impetus from the stamp duty holiday mean we expect buyer demand and new sales volumes to hold at current levels over the next two months.

“The net result will be continued support for house price growth at current levels over the second half of the year.

“Regional cities in northern England and the Midlands have the strongest underlying trends.

“For those operating in the market, and others looking in, the latest forecasts for increased unemployment and a sharp economic contraction over the next 12 to 18 months certainly seem at odds with current levels of sales market activity.

“We expect rising unemployment to weigh on market activity over the final quarter of 2020 and into the first half of 2021.

“The impact on pricing looks set to be pushed into 2021 as a result of sizeable government support for the economy.

“Further support cannot be ruled out while forbearance by lenders, and the availability of the mortgage payment deferrals, which can start up until the end of October for three to six months, is likely to limit the scale of downside for house prices.

“Much depends on how businesses respond to the outlook and their decisions on staffing levels and the knock-on impact for unemployment.”

By Jessica Bird

Source: Mortgage Introducer

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Property increasingly seen as a retirement tool

Property wealth is growing in importance for funding care in later life – as people lose faith in savings and pension income, Key’s Tackling the Care Question report has found.

Three in 10 (29%) over-55s plan to use their homes now compared with just 19% a year ago.

Meanwhile 34% of over-55s (44% – 2019) believe their savings and investments will help fund care while 30% (40% – 2019) say they will use pension income.

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Will Hale, chief executive at Key, said: “When you speak to people, you find that the vast majority are keen to receive care and support in the comfort of their own home but struggle to know how, or how best, they might meet these costs.

“With the recent economic turmoil, confidence in savings and pension income has fallen while more people are looking to the value tied up in bricks and mortar to finance care. Getting good advice and understanding what resources you have to draw on is important – and making sure you factor these potential costs into your retirement planning is vital.

“At the same time as councils are under pressure, over-55s are waking up to the reality that they may well need to pay for all or some of their care in later life. This has created the perfect storm and it is vital that the government focuses on setting out clear plans for reaching a cross-party consensus on social care, and consider long-term reform and funding of the care system.”

Over-55s overwhelmingly want to receive care in their own property – with three-quarters (75%) planning to either stay in their current home or move to a more manageable property. Just 4% would prefer to move to a care home.

BY RYAN BEMBRIDGE

Source: Property Wire

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Lockdown results in positive financial impact for a third of first-time buyers

A third of first-time buyers across the country have revealed that the lockdown has resulted in a positive impact on their finances, with this group of property hunters making up a third of those hoping to purchase a property in the next 12 months according to analysis from money.co.uk.

In regards to location, the data shows that over a quarter (28%) of first-time buyers are looking to purchase a home in London in the next year, with Barnet being the most sought after area for Help to Buy purchases. The top five London hotspots for first-time buyers also include Tower Hamlets, Lewisham and Greenwich.

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Additional insights reveal that the process of taking out a mortgage has become more difficult during the pandemic. Of those who have applied for a mortgage, 44% have claimed that there has been a reduced number of mortgage products available to them.

Salman Haqqi, personal finance expert at money.co.uk, said: “Since the UK went into lockdown in March, we have seen a huge impact on the property sector as a whole. However, following the recent reopening of the market, there has been an increase in the number of people purchasing the properties they had to put on hold due to COVID-19 restrictions.

“For those looking to buy, there are currently fewer mortgage products available than pre-COVID-19 but there are still some good deals to be found. With the base rate at a historical low at the moment, prospective buyers should really do their homework and research their options.

“If they have any doubts, they should speak to a mortgage advisor to ensure they are getting the right deal for their personal affordability, and circumstance.”

Source: Property Wire

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Residential property transactions jump 32% in June – HMRC

Residential property transactions in June increased 32% month-on-month to 63,250 transactions, HMRC figures show.

However, this is still far below the transaction levels seen in the same month last year. Year on year, transactions were 36% lower than June 2019.

Non-residential transactions rose 31% to 7,340 in June but annually, this was represented a 27% decline on the same month last year.

Market position to be seen in months

Andrew Southern, chairman of Southern Grove, said: “The annual decline isn’t particularly flattering but it’s the trajectory that’s most important. The next few months are going to make June look like an amuse-bouche rather than an entrée.

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“A healthy improvement in volumes month-on-month points to a large proportion of agreed sales that were knocked back, due to the pandemic, finally reaching completion.”

Paul Stockwell, chief commercial officer at Gatehouse Bank, added: “Whilst the transactions figures have not improved significantly since May, the nature of the property market means people have not had enough time to get through the moving process.

“It will take a bit longer for us to see how much new activity there has been in the market since it reopened in May.”

Stamp duty concerns

Mike Scott, chief property analyst at Yopa, said the recent stamp duty holiday in England and Northern Ireland, as well as similar initiatives in Scotland and Wales would help bring some transactions forward to this year but suggested this would not have a lasting impact.

“After a spike in the number of completions in March 2021 there will probably be another fall in the second quarter of next year as the normal rate of stamp duty is reimposed,” he said.

Tomer Aboody, director of MT Finance, also agreed the tax break had a positive effect on the market but said changes to capital gains tax could set that back.

Aboody said: “If the government increases capital gains tax on principal home sales, it will push us back again so any progress made by the stamp duty reduction will be swiftly lost.

“We need more stimulus via reduced stamp duty to the upper end of the market and hope for this in the Autumn Budget.”

Written by: Shekina Tuahene

Source: Your Money

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UK housing market enjoys ‘mini-boom’ as asking prices soar in July, says Rightmove

Residential property asking prices soared in July as coronavirus lockdown restrictions were lifted, sparking a “mini-boom” in the UK housing market.

The average asking price of property coming to market in July was up 2.4 per cent compared to March, before the coronavirus lockdown was announced.

The 3.7 per cent annual rate of increase recorded in July is the highest since 2016, according to the latest analysis by property platform Rightmove.

Year-on-year buyer enquiries were up 75 per cent in Britain since the beginning of the month, and 44 per cent of new listings that came up for sale in the first month after restrictions were eased in May have been marked as sale agreed.

Estate agents hailed the figures, saying that such levels of activity were “unheard of” within the UK market, saying that they expected prices to rise further.

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The property market was brought to a standstill during the UK coronavirus lockdown, as estate agents closed, construction work was paused and prospective buyers were unable to view houses.

The government opened the English property market on 13 May, and has since announced a stamp duty holiday to reignite the market.

The number of monthly sales agreed jumped 15 per cent in England compared to last year and soared 35 per cent in the five days after the government increased the stamp duty threshold from £125,000 to £500,000.

Rightmove housing market analyst Miles Shipside said: “The unexpected mini-boom continues to gather momentum as more nations reopen.

“The busy until interrupted spring market has now picked up where it left off and has been accelerated by both time-limited stamp duty holidays and by homeowners reappraising their homes and lifestyles because of the lockdown.”

James Forester, managing director of Barrows and Forester, said: “Such significant levels of buyer activity are unheard of within the UK market and should ensure a nitrous-oxide fuelled return to form for the UK property market.

“While the market will return to a more familiar form of ‘normality’ as this demand levels out, it has truly defibrillated any fears of a downturn in home values”.

However, former RICS chairman Jeremy Leaf said that the signs were that many expected this surge to be a brief one.

“We get the impression too that many recognise this may be a relatively short-term surge as government support schemes start to fall away and news about the economy is not very encouraging”, he said.

“Looking forward, we don’t expect prices to increase particularly strongly as the number of new listings is also rising, providing more balance between supply and demand. The market remains price-sensitive.”

By Jessica Clark

Source: City AM

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BTL landlords should prepare to take advantage of Green Homes grants

Buy to Let landlords in England should be assessing the energy efficiency works that their properties require in advance of the opening of online applications for the Green Homes Grant in September, say tax and advisory firm, Blick Rothenberg.

Heather Powell, Property partner at the firm said:

“The applications for the grant will open in just over a months’ time so Buy to Let landlords need to assess their properties now and get their applications in as fast as possible because thousands of people will apply.

“It is also likely that the Government will tighten energy efficiency regulations still further in 2021, making these works essential for many rental properties.”

“The grant scheme will fund £2 of every £3 spent by a landlord, up to a maximum of £5,000, to improve the energy efficiency of their properties.

“Works can include wall and loft insulation, draught proofing and double glazing, all works that should improve the Energy Performance Rating (“EPC”) of a property.

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“Landlords cannot let properties with an energy performance rating of F or G (unless they qualify for an exemption) so they should be planning to undertake works that can be done with the grant funding that is being made available. Their tenants will also benefit as they will get a reduction in their annual fuel bills.”

“The 27 million homes in the UK, which generate up to 25% of the greenhouse gas emissions and energy demand in the UK, are some of the least heat efficient homes in Europe.

“The Government hopes the grants will improve these statistics and help the UK to meet the commitment to have net zero greenhouse gas emissions by 2050.

“Online applications by landlords will be passed to “registered local tradesmen” to do the necessary works – which the Chancellor expects to help generate a further 100,000 jobs in the “Green Sector.”

“There are c2.2m landlords in England, with an average of 1.8 properties each – a total of 3.96m buy to let properties.

“If landlords applied for grants to improve the energy efficiency of just 25% of their properties, and got an average grant of £3,300 for insulation, the Green Homes Grant funding would be £3.27bn, and 990,000 homes would have been improved.

“The Chancellor announced £2bn to fund grants in 2020/21, and stated he hopes 600,000 homes to be improved, but he made it clear that his funding was based on estimates of take up of the funding, and indicated it is not capped, which is good news for BTL landlords.”

“The full details of the Green Homes Grants has not been published, but given the Grant funding announced was only for one year it is important that Landlords start reviewing their housing, assessing what work should be done that is eligible for the grant, so that that they can apply for the funding.

“This is one of the few measures announced by the Government in the last three months that assists landlords, and they should make sure that they take advantage of the funding, and at the same time help the UK achieve net zero greenhouse gas emissions by 2050.”

Source: Property Industry Eye

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Rightmove: July house prices beat pre-lockdown levels by 2.4%

The average asking price of property coming to market in July was £320,265, 2.4% (£7,640) higher than in March pre-lockdown, and the annual rate of increase (3.7%) was the highest since December 2016, according to Rightmove’s July House Price Index.

Year-on-year buyer enquiries increased by 75% in Britain since the start of July, while 44% of new listings that came up for sale in the first month after the English market opened on 13 May have already been marked as sale agreed, compared to 34% for the equivalent dates last year.

The number of monthly sales rose 15% in England on last year, and in the five days after the stamp duty announcement it rose 35% above levels from the same days one year previous.

The number of properties coming to market in July was up by 11.1% compared to a year ago, despite Scotland and Wales not contributing for the full period, and total available stock recovering to being 13% down.

40,741 (44%) of the 92,085 newly listed properties in the first month after the English market reopened have already found a buyer, compared to 34% for the equivalent dates last year.

Miles Shipside, director and housing market analyst at Rightmove, said: “The unexpected mini-boom continues to gather momentum as more nations reopen.

“Overall buyer enquiries are up by an incredible 75% year-on-year in Britain and we expect activity will increase even further as Scotland has not yet been open for a full month, and Wales still has some housing market restrictions in place.

“The busy until interrupted spring market has now picked up where it left off and has been accelerated by both time-limited stamp duty holidays and by homeowners reappraising their homes and lifestyles because of the lockdown.

“The strength of buyer demand has contributed to record prices, with the 3.7% annual rate of increase being the highest for over three and a half years.

“These figures are the earliest indicator of house price trends. They show on average prices gently rising not falling, and this will be reflected in the coming months in other house price reports.”

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Shipside added:”There is a window of opportunity for sellers to come to market and to find a buyer who is tempted by the stamp duty savings.

“Although March next year may sound like a long time away, in reality sellers need to find a buyer before Christmas, to allow a further three months for completion of the legal process to beat the deadline.

“While property is selling much faster than a year ago, it’s important not to over-price and miss this window.

“It’s still a price sensitive market with buyers having limits on what they are able to borrow, and the uncertain economic outlook making them more cautious.”

He continued: “While most first-time buyers will not benefit from the stamp duty holiday, as they were already exempt from stamp duty on purchases of up to £300,000, many will benefit from lenders now starting to bring back first-time buyer mortgages for up to 90% of the purchase price.

“Lower-deposit lending helps to boost buyer activity on the all-important first rung of the ladder, which in turn helps to boost the numbers of second-steppers who are able to trade up, and so also enables others higher up the chain to move.”

Marc von Grundherr, director of Benham and Reeves, said: “Oh, ye of little faith. Previous reports from a number of ‘doomster’ commentators as to the demise of the UK property market seem to have been greatly exaggerated as if often the case.

“Prices are up, enquiries are through the roof and sales are being agreed like billy-o, and that’s even before the effects of the temporary stamp duty reprieve have had time to kick in.

“Hold on tight folks, we’re in for a fast ride over the next few months and prices will rise further as a consequence of this unprecedented demand.

“Albeit somewhat fabricated by a chancellor determined to bolster the flagging economy via the property market.”

James Forester, managing director of Barrows and Forrester, said: “Light the blue touch-paper indeed. Such significant levels of buyer activity are unheard of within the UK market and should ensure a nitrous-oxide fuelled return to form for the UK property market.

“This is, of course, a result of a double whammy of pent up demand that had been throttled during lockdown and the latest government incentives via a huge stamp duty saving.

“While the market will return to a more familiar form of ‘normality’ as this demand levels out, it has truly defibrillated any fears of a downturn in home values.

“In addition to this, the government’s continued failure to address the UK’s housing shortage will ensure that even when buyer demand returns to normal levels, prices will remain buoyant due to the supply and demand imbalance.”

Islay Robinson, CEO of Enness Global, added: “We are now seeing a welcome boost in mortgage lending at all levels of the market, especially for first-time buyers, which will help fuel the market from the bottom right through to those transacting at the very highest price brackets.

“The latest Rightmove numbers also show that at last, London is back in positive territory.

“As the cornerstone of the UK property market, good health across the capital will help drive the market forward on a national scale with the figures also showing that it is the more expensive homes that are rising in value the most, 4% up in asking price terms since March.

“So it would seem that this return to prominence is being driven by the well-heeled buyer as well as a heightened level of foreign investment, buoyed by favourable mortgage terms and current exchange rate advantages.

“With buyers returning in their droves, we can rest assured that these positive trends will continue for the remainder of the year.”

By Jessica Bird

Source: Mortgage Introducer

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Property asking prices jump to a record high

The average price of property coming to market in Britain is at a record high of £320,265, data from Rightmove has revealed. In addition to the rise in property asking prices, the number of people contacting estate agents about house viewings is up by 75% so far in July compared to the same period last year.

The average asking prices are 2.4% higher than in March pre-lockdown. The number of sales agreed this month is also now exceeding last year’s figures in England, Scotland and Wales. Almost half (44%) of new listings that came up for sale in the first month after the market re-opened on the 13 May have already been marked as sale agreed, compared to 34% at the equivalent time last year.

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The number of monthly sales agreed is up 15% in England on last year, and in the five days after the stamp duty announcement it jumped to 35% up on the same days a year ago. Total available stock has also reportedly recovered to being 13% down in Britain following a steep decline, with Rightmove claiming that the stamp duty holiday may encourage more sellers to the market to ensure they have ample time before the 31 March deadline.

Miles Shipside, resident property expert at Rightmove, said: “The busy until interrupted spring market has now picked up where it left off and has been accelerated by both time-limited stamp duty holidays and by homeowners reappraising their homes and lifestyles because of the lockdown.

“The strength of buyer demand has contributed to record prices, with the 3.7% annual rate of increase being the highest for over three and a half years.

“There is a window of opportunity for sellers to come to market and to find a buyer who is tempted by the stamp duty savings. Although March next year may sound like a long time away, in reality sellers need to find a buyer before Christmas, to allow a further three months for completion of the legal process to beat the deadline.

“While property is selling much faster than a year ago, it’s important not to over-price and miss this window. It’s still a price sensitive market with buyers having limits on what they are able to borrow, and the uncertain economic outlook making them more cautious.”

Source: Property Wire