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Homebuilder sentiment holds steady despite a decline in mortgage rates

The nation’s homebuilders are feeling positive about their business, but not as much as they did a year ago.

A monthly sentiment measure held steady at 62 from February to March, according to the National Association of Home Builders/Wells Fargo Housing Market Index. The index stood at 70 in March 2018. Anything above 50 is considered positive.

“Builders report the market is stabilizing following the slowdown at the end of 2018, and they anticipate a solid spring home buying season,” said NAHB Chairman Greg Ugalde, a homebuilder and developer from Torrington, Connecticut.

Mortgage rates rose throughout most of last year but have since fallen to below year-ago levels. That should help make all homes more affordable, but new homes come at a higher price than similar existing ones.

Weak affordability has been the biggest problem in the new home market, as builders have largely focused on move-up homes rather than cheaper entry-level products. The median price of a new home sold in January was down nearly 4 percent annually, according to the U.S. Census. That was not necessarily because builders were lowering prices, but because a larger share of entry-level homes sold that month. Sales in January fell to a three-month low.

“More builders are saying that lower price points are selling well, and this was reflected in the government’s new home sales report released last week,” said Robert Dietz, NAHB’s chief economist. “Increased inventory of affordably priced homes — in markets where government policies support such construction — will enable more entry-level buyers to enter the market.”

Builders say they continued to have trouble building lower-priced homes, however, due to shortages of skilled labor and buildable lots.

Of the index’s three components, sales expectations in the next six months rose 3 points over the past month to 71, current sales conditions increased 2 points to 68, and traffic of prospective buyers fell 4 points to 44. Buyer traffic has been in negative territory for several months.

Looking at three-month moving averages, builder sentiment in the Northeast rose 5 points to 48, the South was up 3 points to 66 and the West increased 2 points to 69. Sentiment in the Midwest fell 1 point to 51.

By Diana Olick

Source: Yahoo Finance UK

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Zoopla to ban benefits restrictions in rental adverts

Property advertising platform Zoopla is set to change its terms and conditions to prohibit renting restrictions for tenants in receipt of benefits.

The move follows calls by the government and charities for lenders, insurers, property agents and ad sites to review their approach to ‘no DSS’ discrimination.

A campaign to lift such restrictions began last year when one landlord claimed NatWest threatened to revoke her buy-to-let mortgage when the bank discovered she was renting to a benefits claimant.

Helena McAleer, a landlord from Northern Ireland, contacted the bank to discuss releasing equity from her property – but instead Ms McAleer claimed the lender revoked her mortgage citing its policy prevented rentals to benefits claimants.

At the time NatWest’s buy-to-let eligibility criteria read: “We will not consider multiple tenancies, Homes of Multiple Occupancy, bedsits, DSS tenants or ‘Related Person’ tenancies.”

The campaign gained widespread support, with the Residential Landlords Association calling on the government to use its influence as a shareholder in certain banks to end the “discriminatory” practices.

In 2017 research by the RLA found 66 per cent of lenders representing 90 per cent of the buy-to-let market did not allow properties to be rented to tenants in receipt of housing benefit.

At the beginning of this month NatWest lifted all restrictions on its buy-to-let customers renting to tenants in receipt of housing benefits.

Zoopla has now followed suit, announcing it will launch additional measures over coming weeks in support of “further minimising blanket restrictions” which apply to renters who receive housing benefit.

Due for implementation in April, Zoopla will amend its member terms and conditions to “specifically prohibit” the inclusion of “no DSS” restrictions on its site, remove “no DSS” references from listings uploaded on its site and remove the “no DSS” field in its cloud-based software products.

Charlie Bryant, managing director of Zoopla, said: “We fully support the recommendations of the National Landlords Association and the Residential Landlords Association, which oppose blanket bans against tenants in receipt of housing-related benefits, and are pleased to be taking action which clarifies this position.

“All tenants who are looking to rent a property deserve the chance to be fully assessed for their suitability and matched to a home that suits both their and the landlord’s circumstances.

“We proactively sought the views of our largest lettings-focused agents to ensure the above measures were undertaken on a collaborative basis and received significant support in respect of our proposed additional measures.”

Natwest and Co-op banks, Kensington Mortgages, Nationwide Building Society have been invited to give evidence on their policies in relation to tenants in receipt of benefits – the date was originally set for March 20, but this has now been postponed.

By Rachel Addison

Source: FT Adviser

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Housing market spring season off to subdued start amid Brexit uncertainty

The usual spring bounce in the housing market is being delayed by Brexit uncertainty, reports show.

The average house price is 0.8% lower than it was a year ago, with Rightmove saying the average asking price in March stands at £302,002.

Despite this, prices have edged up by 0.4% – or £1,287 – month on month.

Rightmove said this was the lowest month-on-month increase seen at this time of year since 2011 and “considerably lower” than the 0.9% average increase seen over the past seven years.

It said the usual spring bounce in the housing market is, at best, being delayed by Brexit uncertainty.

Rightmove director Miles Shipside said: “While March marks the start of spring, temperatures have yet to rise in the housing market.

“Buying activity remains cooler than usual, with hesitation as some buyers await a more settled political climate.

“There’s greater resilience the further away you get from the London market, and there’s a sound bedrock of demand for the right property at the right price, reinforced by ongoing housing needs combined with cheap mortgage borrowing.”

In Scotland, asking prices have jumped by 3.1% month on month – the biggest increase in March of all Britain’s nations and regions, followed by the North West of England with a 2.2% increase.

In Wales, asking prices are up by 1.4% month on month.

Asking prices in London are down by 1.1% on the previous month, while the only other English region to record a monthly fall is the North East of England, down by 1.3%, with elsewhere in Britain seeing an increase.

London asking prices are 68% higher than they were 10 years ago, while those in the North East of England have increased by 8% over the past decade.

Mr Shipside said: “London and some of its commuter belt are suffering from a post-boom hangover, with prices now having to be far more sober to attract buyer interest.”

Rightmove said the number of sales agreed by estate agents in February was 7% below the same period in 2018, compared with a year-on-year fall of 4% recorded in January.

But search activity on Rightmove remains steady, with the number of visits to the website staying level in the year to date.

It said this indicates that home movers are “keeping a watching brief” which could lead to an eventual bounce if and when the uncertainty subsides.

Mr Shipside said: “The closer you get to the wire without the clarity of an agreed way forward, the greater the propensity for buyers to wait and see rather than acting now.

“This could be a temporary pause, and indeed market slowdowns at election time and around the original referendum result bounced back pretty quickly.

“Markets and people do not like uncertainty, though, while sales agreed numbers are down by 7%, that means they are still running at 93% of last year’s levels.

“Most potential buyers are getting on with their lives or seeing a price lull as an opportunity to get on to the housing ladder or move to the next rung, with average national asking prices being 0.8% cheaper than a year ago.”

By Kirsty Bosley

Source: Kent Live

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Brexit delay will keep stranglehold on UK economy, warns former Bank policymaker

Delaying Brexit will consign Britain’s already weak economy to “sluggish” growth and risks a further manufacturing exodus until a deal is struck, a former Bank of England rate-setter has warned.

Ian McCafferty – who sat on the Bank’s Monetary Policy Committee (MPC) for six years until last August – told the Press Association if the EU approves a delay to Article 50 with no clear plan for a deal at the end, the uncertainty will wreak further havoc on the economy.

He said the sharper than-expected slowdown in business investment, which was largely behind the weak growth of 0.2% in the fourth quarter of 2018, would continue as firms halt large-scale strategic investments.

The longer the uncertainty continues, the more it’s clear that businesses are finding it difficult simply to wait

Ian McCafferty, Oxford Economics

In a sobering take on the prospects for the economy, he said small suppliers face the threat of going out of business if large manufacturers start ditching the UK in droves amid political dithering.

He said: “A longer-term delay would continue the issue of business uncertainty and lack of confidence.

“It would probably continue to see the economy grow very sluggishly.”

He added that large firms will be increasingly forced to put contingency plans into place, which may mean more moves to shift production and operations out of the UK.

“The longer the uncertainty continues, the more it’s clear that businesses are finding it difficult simply to wait,” he said.

Mr McCafferty, who joined Oxford Economics as senior adviser last month, said even if a delay of a year or two was accompanied by the prospect of a better Brexit outcome at the end, there would still not be an immediate bounce back in the economy.

Businesses want to see firm details of trading relationships before committing to investment, he said.

“Until the degree of uncertainty is properly resolved and there is much greater clarity on the future of the trading relationship, I’m not sure we’ll see business confidence and business investment rallying dramatically,” he cautioned.

His comments come ahead of the Bank of England’s MPC meeting on Thursday, when it is set to keep interest rates firmly on hold at 0.75% amid the Brexit maelstrom.

Bank governor Mark Carney has also recently warned that delaying Article 50 is not a better option than a deal or transition period, telling MPs earlier this month that uncertainty will linger for at least a year even after an agreement is struck.

Oxford Economics is currently predicting a 60% chance that Prime Minister Theresa May’s deal will eventually go ahead, albeit with amendments.

Given that the MP votes are not yet legally binding, it believes there is still a 35% chance of the UK crashing out without a deal – and a 5% probability of Article 50 being revoked completely.

While a delayed Brexit deal will inflict yet more uncertainty on Britain’s beleaguered businesses, a no-deal outcome would still be a far worse outcome in the short term, said Mr McCafferty.

Oxford Economics is forecasting a no-deal Brexit would wipe at least 2% off gross domestic product (GDP) in the next two years – tipping the UK into recession.

Mr McCafferty said the UK’s already “weak economy” is likely to have eked out growth of just 0.1% to 0.2% in the first quarter of 2019 – a far cry from the 0.6% growth seen last summer amid the heatwave and World Cup boost.

He said the MPC has “limited room for manoeuvre” to boost the economy, with rates already not far off zero and increasing political resistance to further quantitative easing (QE).

Given the “shifting attitudes” to QE, he questions if the Bank could use it again, with politicians blaming it for increasing inequality in the UK since the financial crisis.

But he said the better position in the public finances should allow the Chancellor to use his fiscal firepower to bolster the economy in tandem with monetary policy.

Mr McCafferty – whose new role sees him provide boardroom-level consultancy for large companies on issues such as the economy and Brexit – left the MPC just before the worst of the Brexit turmoil.

But he dismissed suggestions he left at the right time.

He said: “I envy my colleagues who are still on the committee – it’s a fascinating time to be on the MPC.”

Source: iTV

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First-time buyer activity up while buy-to-let drops again

There were more first-time mortgages in January than that of the previous year, while remortgages and buy-to-let home purchases saw a decline, UK Finance’s Mortgage Trends Update for January has found.

There were 25,100 new first-time buyer mortgages completed in January, 4.6% more year-on-year and 25,300 homemover mortgages completed in the month, 2.8% more year-on-year.

There were 5,500 new buy-to-let home purchase mortgages completed in January 2019, 1.8% fewer than in the same month a year earlier. However, the rate of decline is less than in January 2018, when there was a 5.1% year-on-year decrease in the number of buy-to-let home purchases.

Matt Andrews, managing director of Mortgages at Masthaven, said: “Despite the current political uncertainty, the first-time buyer market appears largely unaffected.

“Whether this be attributed to government initiatives such as the extension of the Help to Buy scheme, the ‘gifting’ of wealth from parents to children, or an increase in flexible products offered by lenders, this segment of the market is in good stead for whatever political and economic decisions are made in the coming weeks.

“More could still be done for the buy-to-let market to encourage greater purchase activity. The slight softening in remortgaging figures for this sector suggests landlords remain committed to the market, greater product innovations, alongside a range of housing tenure that meets consumer needs, would certainly be welcomed so the sector can reach its full potential.”

Gareth Lewis, commercial director at specialist lender MT Finance, added: “There was always a worry that the lending market would be depressed at the beginning of the year as we edged ever close to the March deadline for Brexit, with this preventing people from buying and selling.

“But these figures are actually very positive and show that people have come out and continued to buy, so sentiment is pretty good.

“There is still pressure on the buy-to-let space and this will continue unless something is done to ease all the restrictions that have been placed on landlords in terms of taxation and higher stamp duty.

“A review of stamp duty at least could stimulate movement in this area but perhaps this is wishful thinking, with the government loathe to make any changes.

“First-time buyer numbers remain strong and encouragingly, loan-to-values have been consistent so it is not as if they are over-stretching themselves. With the average LTV around 85%, sensible lending is being done rather than chasing volume.”

There were 47,400 new homeowner remortgages completed in January 2019, 2.7% fewer than in the same month a year earlier.

Remortgaging in the buy-to-let sector saw a similar drop-off in activity, with 15,800 new remortgages, a 4.2% drop from the year before.

While this amounted to a year-on-year fall, it is worth noting that January 2018 was a particularly strong month, with the highest number of residential remortgages in nine years and the highest number of buy-to-let remortgages on record.

Overall, UK Finance expected the remortgaging sector to see continued strength in 2019, as more tranches of fixed-rate deals come to an end.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The year has got off to a remarkably good start on the lending front despite ongoing political uncertainty. Clearly, people have had enough with situations they can’t control and are getting on with their lives.

“Lenders are keen to lend and rates are extremely competitive. Several lenders have trimmed rates this year in an effort to encourage more business, while innovative tweaks here and there are increasing as an alternative to offering the cheapest rate in the market.

“Swaps have dipped further over the past few days on the back of heightened uncertainty around Brexit which is likely to continue to result in lenders offering perks such as cash back and free valuations, and going down the innovation route, which is good news for borrowers.

“The all-important first-time buyer numbers continue to grow in numbers as lenders offer more products at high loan-to-values and the Help to Buy scheme remains popular, despite its critics. This is good news for the market as a whole.”

By Michael Lloyd

Source: Mortgage Introducer

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Hammonds’ solution to a broken housing market: a sticking plaster on a gaping wound

Despite reiterating that the economy remained “robust”, during the delivery of the Spring Statement on 13 March 2019, Chancellor of the Exchequer Philip Hammond MP emphasised that the UK is currently shrouded in a “cloud of uncertainty”.

The National Federation of Builders (NFB) remains unconvinced by the chancellor’s latest announcements on housing and planning which include an Affordable Homes Guarantee Scheme and the use of the forthcoming Environment Bill to mandate biodiversity net gain for developments in England.

As we approach the 2020 deadline by which the Government had pledged to deliver one million homes, including 200,000 starter homes, it is becoming increasingly clear that both targets will be missed.

Now, it appears the Government’s solution is to throw money at the challenge – up to £3 billion for the delivery of 30,000 affordable homes through housing associations, to be precise.

Firstly, those figures make no economic sense. If the Government, its agencies, such as Homes England, and planners had been developing sustainable relationships with lower volume house builders to deliver the numbers of homes we need, it would not be in a last-minute panic.

Further, a stumbling block to increasing demand for, or the provision of, affordable housing is the cost. As long as the cost of affordable housing is set in legislation at £450,000, it will continue to remain unaffordable.

The House Builders Association (HBA), the house building division of the NFB, expresses concerns about the chancellor’s announcement that biodiversity net gain will become compulsory for developments across England.

Rico Wojtulewicz, head of housing and planning policy for the HBA, said: “With biodiversity net gain in its infancy and the consultation barely completed, there is a real danger that mandating it, without thinking about its real world consequences, makes it a tax and not a positive outcome for the environment. For that reason, it is a serious concern that a timeline for implementation has already been set.”

Written by: National Federation of Builders

Source: Politics Home

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BOE Set to Hold Rates as Officials Face Longer Brexit Paralysis

BOE Set to Hold Rates as Officials Face Longer Brexit Paralysis More (Bloomberg) — Any hope Bank of England officials may have had of escaping from Brexit limbo this month has been dashed.

The Monetary Policy Committee’s next interest-rate decision will be announced on Thursday, just a week before the U.K.’s planned March 29 exit date from the European Union.

While any kind of delay — which would still need to be approved by the European Union — would help avoid the worst-case scenario of a no-deal exit, it’s unlikely to lift the “fog of Brexit” that Governor Mark Carney spoke of last month.

Against that backdrop, all 20 economists surveyed by Bloomberg say the nine-member MPC will vote unanimously to keep interest rates unchanged at 0.75 percent on March 21.

That chimes with the views of markets, who don’t see another move until beyond May 2020. The MPC’s central view remains that a gradual series of interest-rate hikes will be needed in coming years.

However, a number of officials, including the hawkish Michael Saunders, have indicated they’re prepared to wait and see how Brexit turns out before making another move. That may now take longer than previously anticipated.

Parliament voted this week to seek a delay to the U.K.’s exit date, buying Prime Minister Theresa May time to try to get her deal through on the third try.

If she manages to win that vote — which could come before the BOE decision — then it’s likely that a short delay will be requested. Lose it, and there could be a far more a lengthy postponement.

By David Goodman

Source: Gooruf

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Brexit doubts hit house sales – but Scottish prices soar

The average price of a Scottish home is bucking the UK-wide trend, with asking prices climbing as the spring selling season begins.

Asking prices north of the Border have jumped by 3.1 per cent month on month – the biggest increase in March of all Britain’s nations and regions. The surge has been in contrast to the rest of the UK where an average home price is 0.8 per cent lower than it was a year ago, property website Rightmove has found.

Across Britain, the average asking price for a home in March is £302,002. While this is lower than a year ago, prices have edged up by 0.4 per cent or £1,287 month on month.

Rightmove said this was the lowest month-on-month increase at this time of year since 2011 and “considerably lower” than the 0.9 per cent average increase seen over the past seven years.

The agency said the usual spring bounce in the housing market was, at best, being delayed by Brexit uncertainty as the 29 March withdrawal deadline approaches.

Rightmove director Miles Shipside said: “While March marks the start of spring, temperatures have yet to rise in the housing market. “Buying activity remains cooler than usual, with hesitation as some buyers await a more settled political climate.

“There’s greater resilience the further away you get from the London market and there’s a sound bedrock of demand for the right property at the right price, reinforced by ongoing housing needs combined with cheap mortgage borrowing.”

The north-west of England has also defied the wider British trend, with a 2.2 per cent increase in asking prices. The average house price in London is down 1.1 per cent on the previous month.

Rightmove said the number of sales agreed by estate agents last month was 7 per cent below the same period in 2018, compared with a year-on-year fall of 4 per cent recorded in January.

But search activity on Rightmove remains steady, with the number of visits to the website staying level.

Mr Shipside said: “The closer you get to the wire without the clarity of an agreed way forward, the greater the propensity for buyers to wait and see, rather than acting now. “This could be a temporary pause and indeed market slowdowns at election time and around the original referendum result bounced back pretty quickly.”

Source: Scotsman

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UK house prices: Ongoing Brexit uncertainty will hurt housing market, says RICS

UK house prices will continue to plunge this year as prolonged Brexit uncertainty weighs on the market, according to the latest forecasts.

Buyer enquiries, agreed sales and instructions to sell have fallen for the sixth month running, according to the Royal Institute of Chartered Surveyors’ (RICS) latest housing market survey.

Buyers and sellers are both waiting for a resolution to Brexit before committing to a sale, according to the survey conducted in February and released today, with 77 per cent of respondents blaming the political uncertainty.

Buyer demand fell for the seventh month in a row in February as 41 per cent of respondents said buyer enquiries are falling, while agreed sales have been flat or negative since March 2016.

Simon Rubinsohn, RICS chief economist, said: “The latest RICS survey makes it pretty clear that the ongoing uncertainty around how Brexit will play out is the critical factor influencing both buyers and sellers.

“And with little sign that the issue will be resolved anytime soon, it could prove to be a challenging spring for the housing market and the wider economy.”

He added that while it is a buyers’ market now, sellers reluctant to give up higher prices must face reality if they want to agree a sale.

“This environment requires a greater degree of realism from those looking to move,” Rubinsohn said. “A reluctance from some vendors to acknowledge the shift in the balance of power in the market will compound the difficulty in executing transactions.”

Meanwhile the Office for Budget Responsibility (OBR) curt its five-year house price forecast from 20 per cent to 17 per cent yesterday, saying prices will fall in 2019.

By Joe Curtis

Source: City AM

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House Prices Predicted to Fall

House prices in the UK are expected to fall by the end of the year, according to the Office for Budget Responsibility.

The OBR downgraded their official forecasts, predicting that in the final quarter of 2019 average house prices will fall by 0.3%. The independent analysts previously predicted back in October last year that the average price of a home in the UK would grow by 3.2% over that period.

According to official figures, the growth of house prices over 2018 was just 2.5%, the lowest rate in the last 5 years. Many analysts have pointed towards uncertainty surrounding Brexit as a reason for the slowdown in the UK housing market, as well as a shortage of supply. The Royal Institution of Chartered Surveyors said that new buyer enquiries and agreed sales have both been falling for six months in a row.

However, the OBR were more positive about the outlook beyond 2019. They predicted that by the second quarter of next year, average house price growth will hit 0.9%. This is still lower than their previous prediction of 3.1%. But they believe that by the end of 2021, growth will be up to 4% – higher than the 3.3% predicted in October.

“Leading indicators of housing activity and prices have weakened noticeably since our October forecast,” said the OBR. “Beyond the near term, we expect price inflation to pick up as a result of stronger real household income growth and continued pressure of demand on supply. Overall, we expect house prices to rise by almost 17% between the fourth quarter of 2018 and the first quarter of 2024 – close to household income growth over the same period. That compares with forecast growth of nearly 20% in our October forecast.”

However, some people in the housing industry weren’t as confident. Aneisha Beveridge, head of research at estate agents Hamptons International, believes the future of the housing market will be less prosperous if the UK were to crash out of the EU without a deal by the end of the month.

“Their forecasts are based on the assumption that the UK will leave the EU on March 29 with a deal in place and a smooth transition period,” said Ms Beveridge. “But given that this assumption is now looking less likely than ever, there is every possibility that their forecast for house price growth will be revised down again.”

Simon Rubinsohn, the chief economist at Rics, believes that people selling their home need to be more realistic and have more awareness of the current market conditions.

“This environment requires a greater degree of realism from those looking to move,” said Rubinsohn. “A reluctance from some vendors to acknowledge the shift in the balance of power in the market will compound the difficulty in executing transactions.”

In a bid to tackle the issue of limited supply, the government have announced plans to inject more affordable housing on the market. In his Spring Statement, the chancellor Philipp Hammond guaranteed £3bn of lending to housing associations to help deliver 30,000 affordable homes.

By Fergus Cole

Source: Money Expert