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Average Property Rises Almost £3,000 in 2018

It’s official: the UK property hotspot of 2018 is the town on Ryde, on the Isle of Wight, where house prices have gone up by over 10%.

According to property website Zoopla, Ryde was the town where average property values rose the most. The average house costs £242,016, and the 10.24% rise added £22,500 to the cost of buying one. Zoopla figures showed that the value of the average UK home increased by a much lower £2,860.

Next to Ryde, the biggest property value rises occurred in Smethwick, near Birmingham, where property prices increased by 9.67% to an average of £163,627, and Diss, in Norfolk, where homes were up 7.89%.

Overall, house price inflation in the UK has subsided in 2018, making it the first year in which the cost of buying a home has not exceeded wages since 2012.

Zoopla indicated that property value rises averaged 1.02%, but there were variations across the UK. Property values in Scotland rose by 6.43% and by 3.98% in Wales. In England, the rise was a marginal 0.58%.

Zoopla said that the property value rises had come during fears over Brexit, which is affecting London and the commuter belt in particular. Buyers in London and the South East are also struggling to afford homes with near-record high prices.

Richard Donnell, Zoopla insight director, said that property values in London have gone up significantly since 2010 but tax changes and affordability issues are causing values to fall back. In contrast, properties remain affordable in areas outside of southern England, and on the back of lower mortgage rates and rising employment, values are outperforming the rest of the UK, a trend that is expected to continue.

Difficult times have been forecast for the property market since 2019, with would-be buyers concerned about the ramifications of Brexit on property prices and the national economy. Another concern is the high cost of buying a home.

Some have suggested that if a Brexit deal is made, a bounce may occur, making this winter a good time to buy for those seeking to negotiate prices.

Halifax, the UK’s largest mortgage lender, forecast property values to rise between 2 and 4% in 2019.

Halifax managing director Russell Galley said that looking ahead, the biggest challenge for the UK housing market in 2019 will be the extent to which mortgage affordability changes.

He pointed out that average income growth is likely to increase but with an additional increase in interest rates, property prices are not likely to be affected significantly. Despite the present political upheaval, annual house prices are expected to grow anywhere between 2% and 4% in 2019.

This rate of growth is slightly stronger than 2018, but still moderate by today’s comparison. However, uncertainty over Brexit means that both sides of the forecast carry a degree of risk.

Source: CRL

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Value of Scotland’s housing stock hits a new high despite Brexit concerns

THE total value of Scotland’s housing stock reached £400.7 billion in 2018 registering one of the highest rises in the UK.

Despite a UK-wide slowdown in the housing market amid Brexit concerns, the total value of Scotland’s housing stock increased by £20.3 billion, real estate adviser Savills found.

That is a 5.1 per cent rise over the year, the fifth biggest gain of the 12 areas of the UK surveyed.

It comes as average house prices in Scotland have hit their highest ever level, despite the struggles facing the property market in England and Wales.

Last month, data from Your Move found that the average house price in Scotland was now £184,569 – up 1% up month-on-month and 5.5 per cent year-on-year.

This was the highest average ever, above the March 2015 peak set by a spike in prices immediately ahead of the introduction of the Land and Buildings Transaction Tax.

The total value of the housing stock across the UK reached a record £7.29 trillion in 2018, increasing by £190.3 billion, according to the analysis.

The gains came from outside London, as the total value of its residential housing stock recorded a £26.2 billion fall – the first decrease since 2009, Savills said.

London’s housing stock is still worth £1.77 trillion – more than four times the combined value of homes in Birmingham, Manchester, Edinburgh, Glasgow, Cardiff, Bristol, Liverpool, and Sheffield.

“Our analysis demonstrates the scale of the housing market and underlines the importance of housing to the economies of London and the UK as a whole, both as an asset class and store of private wealth,” said Lawrence Bowles, residential research analyst at Savills.

He continued: “As affordability becomes more stretched, younger households are having to put off buying their first home until later in life.”

The Bank of England governor, Mark Carney, said last month that in the event of a “disorderly” departure from the EU – not the central bank’s base-case scenario – house prices could slump by 30% as part of a broader economic shock.

And the Bank said the number of mortgages approved for house purchase fell to 63,728 in November, the lowest figure since April and down from 66,709 in October.

London still accounts for nearly a quarter (24.3%) of UK housing value, compared with a fifth a decade ago, according to Savills.

Some £137.7 billion of the increase in the value of housing stock last year was due to house prices going up – equating to a £4,800 price increase per home.

While 72% of the increase in the value of housing stock last year came from house price increases, the remaining 28% – or £52.6 billion was due to new homes being built.

Savills said this is the the highest proportion contributed by new housing development since 2011 and reflects the Government focus on building more new homes.

Within the £7.29 trillion total, the collective value of the private rented sector topped £1.5 trillion for the first time.

Across the UK, in percentage terms, Wales was the region showing the biggest gains in the value of housing stock in 2018, with a 6.3% increase adding £13.4 billion.

The East Midlands (6.2%) and West Midlands (6.1%) followed closely behind.

In cash terms, the value of stock in the South East saw the biggest increase across the UK last year, with £29.9 billion added on the back of growth of 2.2%.

Here is the total value of homes across the UK’s nations and regions in 2018, according to Savills, with the change in percentage and cash terms compared with 2017:

 London, £1.77 trillion, minus 1.5%, minus £26.2 billion – South East, £1.39 trillion, 2.2%, £29.9 billion – East of England, £810.5 billion, 3.0%, £23.5 billion – South West, £670.4 billion, 4.4%, £28.0 billion – North West, £529.3 billion, 5.1%, £25.5 billion – West Midlands, £468.2 billion, 6.1%, £26.9 billion – Scotland, £400.7 billion, 5.3%, £20.3 billion – East Midlands, £389.3 billion, 6.2%, £22.6 billion – Yorkshire and the Humber, £382.0 billion, 4.6%, £16.8 billion – Wales, £226.1 billion, 6.3%, £13.4 billion – North East, £152.7 billion, 2.7%, £4.0 billion – Northern Ireland, £100.7 billion, 6.0%, £5.7 billion

Source: Herald Scotland

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New homes alone won’t solve the housing crisis

The Shelter housing commission’s report (Cross-party call to build 3m new social homes, 8 January) stands in danger of simply racking up change-of-use inflation in land prices, putting the unearned value uplift of as much as 70% into the pockets of speculators. Unless the basic structure of housing provision in the UK is changed to restore to local authorities powers of compulsory purchase, with taxation on the land-value enhancement, this will be the unintended consequence.

The result of right-to-buy has been the sell-off of 60,000 council homes with a £3.5bn public subsidy, and 40% of that stock finding its way into the hands of private landlords, who rent it back, often to the same local authority at hugely inflated rates. A straight transfer of public wealth into private hands.

Have the report’s authors studied the 2016 research that showed unimplemented planning consents for nearly half a million homes in England and Wales? Or that in the same year, according to government data analysed by the online estate agent HouseSimple, the number of empty homes in England rose for the first time in a decade to 205,293, representing £50bn worth of vacant property stock?

Research shows that there is little evidence of a shortfall in the housing stock. The crisis we suffer from is largely the result of acute maldistribution within an economic structure which encourages maximum consumption of a scarce resource by those with the means to command the market, at the expense of the many with little or no access to capital. Land value taxation is one mechanism which would very swiftly and relatively painlessly provide a counterbalance to this vicious cycle of ever increasing disparity of wealth distribution. The Housing And Planning Act should be rescinded, restoring security of tenure to existing tenants.

The equalisation of VAT on refurbishment with the current zero rate for new housebuilding would remove a 20% incentive to demolish and redevelop. With a level playing field, an objective cost comparison could be made between proper maintenance and redevelopment, with all the social cost the latter involves.
Kate Macintosh
Winchester, Hampshire

• Before we start spending a projected £225bn on concreting over huge tracts of increasingly precious green space, how about doing more with the existing housing stock? Rent control, much longer tenancies with, obviously, an end to no-fault evictions, penal taxation of property left empty, and the compulsory purchase and improvement – or redevelopment – of substandard rental accommodation, and thus its conversion to social housing, would collectively be quicker and cheaper. Sure, all of that would soften prices, but the issue is homes, not investments, and spending power released by lower housing costs – both personal discretionary and for government in housing benefit savings – would flow into the wider economy.
John Worrall
Cromer, Norfolk

• This report is good news. But there is also an urgent need to overhaul the standard approach to the design and governance of low-cost housing so it accommodates home-based work. This is often restricted or even prohibited in social housing, which is generally currently designed to models developed in the early 20th century specifically to prevent this working practice. This is short-sighted and discriminatory – social tenants have as much right to work from home as anyone else.
Frances Holliss
Emeritus reader in architecture, London Metropolitan University

• The current social housing crisis is an artificially created problem begun by the political dogma in the 1980 Housing Act and developed into a crisis by the political ineptitude and inertia of governments of every colour over the four decades since.

For almost the whole of that period house prices have gone up faster than wages. It takes a bear of very little brain to realise that sooner or later both house purchase and rental become unaffordable, which is, of course, exactly what has happened.

The good news is that because it is an artificially created problem, we have the ability to solve it. However, the cost has been estimated to be as much as four HS2s, while the net cost might be less than one. This sounds like a rather good deal to me, since failure to get to grips with it is going to tear at the heart of our society over the next decades.
Robin Howell
Bridgwater, Somerset

Source: Yahoo Finance UK

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Average monthly rent in Northern Ireland jumps to £632

AVERAGE rental values in Northern Ireland rose again last month, according to the latest data from HomeLet.

Its December index show that the average rent in Northern Ireland is now £632, up by 1.9 per cent on the same month last year.

But that is still at the lower end of the UK rate, where the average is now £921 (or £763 when London is excluded.

HomeLet chief executive Martin Totty said: “Positively for both tenants and landlords, this year we’ve seen stability in UK rental price growth, with increases remaining broadly in line with the rate of consumer inflation.

“For landlords there remains a sustained demand for property, with the private rental sector continuing to provide the market with both flexible and long term housing options.

“The slowdown in the rate of house price growth, as reported by the Nationwide House Price Index is being driven by the depressed London market, which saw house prices decline by 0.8 per cent during the last four months of 2018.

In contrast, we have seen average rental values in the capital rise by over 4 per cent in the latter stages of the year. Ultimately, we would expect this theme to continue in London, if the demand for property outweighs supply.”

On the outlook for 2019, Mr Totty added: “Private residential landlords will continue to play a key role in the wider UK housing market. Whilst the outlook for property investors remains positive, one of the key concerns for the market in 2019 would be a potential lack of supply in certain regions.

“The government’s squeeze on private landlords via taxation changes and more regulation could discourage their continued participation in this important sector. Unlike the trends we saw in 2018, any reduction in supply could lead to rental increases that are above the rate of consumer inflation.”

Source: Irish News

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Maximum borrowing tops broker searches

Brokers most frequently searched for lenders using a maximum borrowing limit in December, a mortgage search platform has revealed.

Knowledge Bank released the monthly data from its criteria searching system today (January 10), which contained more than 80,000 criteria covering 150 lenders.

According to Knowledge Bank, broker activity remained high in the final month of last year with brokers most frequently searching for maximum borrowing criteria in the residential, second charge and self-build categories.

Searches for Help-to-Buy remained in the top five residential searches, a month after making its first appearance on the list last year following an extension of the government scheme in the Autumn Budget.

In the buy-to-let sector, searches for lenders happy to lend to limited companies featured most frequently in December – a pattern matched by lender reports of landlords increasingly transferring properties to limited companies to navigate tax changes in the market.

But searches for lenders willing to lend to first time landlords featured as the second most commonly searched criteria in the buy-to-let sector, closely followed by requirements for first-time buyers.

Nicola Firth, chief executive of Knowledge Bank, said: “The year ended largely as it had started with a huge number of searches across the different product areas.

“During 2018 new lenders entered the market but it was product innovation that really was the stand out change.

“With interest rates remaining low, lenders continue to compete on criteria in addition to rate which makes it increasingly difficult for a broker to know who will or won’t accept their client.”

She added: “On average brokers searched on five individual pieces of criteria for each borrower which shows how essential it is for a system to ensure that cases are not sent to lenders who will inevitably turn them down.”

Source: FT Adviser

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There’s only one way to fix the housing crisis: build more

From free marketeers on the right to proponents of central planning on the left, cries to fix Britain’s broken housing market have become deafening.

The solutions, of course, differ greatly depending on where along the political spectrum you stand.

Yesterday, for example, Shelter issued its latest call to action, proposing three million new social homes to be built over the next 20 years. The housing charity points to the high costs and levels of insecurity among renters, and makes a link between “insecure unaffordable private rentals” and the rise of homelessness across Britain.

Shelter has correctly identified two key problems: that home ownership is becoming increasingly unaffordable, and that the rental market is not set up for long-term, stable tenancies, as seen in other countries.

It is also correct that other government policies to fix the problem, such as the Help-to-Buy scheme, are not an effective use of taxpayer money and actually distort the market by tinkering on the demand-side.

Building more social houses, however, is only one small part of a solution that must go far further. After all, the UK is already in the top three European countries in terms of social housing stock.

It’s not the lack of building social houses that is the key problem, but the lack of building full stop. This is set to be the worst decade for UK house-building since the Second World War, continuing a downward trend that has lasted half a century.

The result is that, even with the recent slowdown in house price growth, one in three millennials will never own their own home.

Unfortunately, this is where politics comes in, with endless arguments over who should build what kind of homes where and with what funding. For too long, stringent planning restrictions have prevented building in places where people actually want to live.

This needs to change – and in some cases it finally is, with a cross-party plan to redesignate areas of the so-called green belt within 10 minutes’ walk of a station to build a million extra homes around London.

There are other things we could do, from exploring high-tech construction methods like modular homes to repurposing disused retail and warehouse space to building new commuter towns with cutting-edge transport links, as well as looking into reforming the rental sector.

However, without more building – and lots of it – the housing crisis is only going to get worse, and is set to throw a spanner in the works of any government, from any party, that hopes to improve business competitiveness, social mobility, and standards of living in the UK.

Source: City A.M.

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UK house prices rise, broad picture still weak

UK house prices rose more than expected in December but the property market remains subdued ahead of Brexit, mortgage lender Halifax said on Tuesday.

House prices rose 2.2 percent, more than reversing a 1.2 percent fall in November and outstripping all forecasts in a Reuters poll of economists that had pointed to a 0.2 percent increase.

On an annual basis, prices rose 1.3 percent in the three months to December, again topping all forecasts that pointed to a 0.4 percent rise.

Still, with other surveys and official data mostly showing a slowing housing market, Halifax cautioned against reading too much into the strength of a single month’s figures.

“In 2019, we’re expecting continued stability in house prices with between 2 percent and 4 percent price inflation. This is slightly stronger than 2018, but still fairly subdued by modern comparison,” Russell Galley, managing director of Halifax, said.

“However, this expectation will clearly be dependent on the Brexit outcome, with risks to both sides of our forecast.”

Britain’s departure from the European Union, scheduled for March 29, remains unclear as lawmakers are expected next week to vote down the divorce deal that May struck with the EU in November.

Business chiefs and investors fear leaving the EU without a deal would slow trade, spook financial markets and dislocate supply chains for the world’s fifth-largest economy.

For graphic on UK house prices perk up in December, click tmsnrt.rs/2GYAhXm

Source: UK Reuters

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Millions more homes needed to tackle social housing crisis

A housing charity has called for the Government to spend £214 billion on creating three million new homes to solve the social housing crisis.

In the wake of the Grenfell disaster, Shelter brought together 16 independent commissioners from across the political spectrum to write a report on the issue.

Entitled Building For Our Future: A Vision For Social Housing, it urges ministers to invest in a major 20-year housebuilding programme and massively extend the criteria for who is applicable for social housing.

The report recommends building 1.27 million homes for “those in greatest housing need”, including homeless households, the disabled and long-term ill, or those living in very poor conditions.

It also wants the Government to create 1.17 million homes for what it calls “trapped renters”, younger families unable to get on the housing ladder, as well as 690,000 homes for older private renters who face housing insecurity beyond retirement.

The authors of the report, who include former Labour leader Ed Miliband, ex-Tory chairman Baroness Warsi, Baroness Lawrence, mother of murdered teenager Stephen Lawrence, TV architect George Clarke and Grenfell survivor Ed Daffarn, spent a year speaking to hundreds of social tenants, more than 30,000 members of the public as well as housing experts.

Their findings suggest it would require an average yearly investment of £10.7 billion to pay for the new homes, but analysis by economic experts suggests up to two-thirds of this could be recouped through “housing benefit savings and increased tax revenue each year”.

The charity said that, on this basis, the true net additional cost to the Government would be about £3.8 billion on average per year over the 20-year period.

Baroness Warsi said: “Social mobility has been decimated by decades of political failure to address our worsening housing crisis.

“Our vision for social housing presents a vital political opportunity to reverse this decay. It offers the chance of a stable home to millions of people, providing much needed security and a step up for young families trying to get on in life and save for their future.”

Mr Miliband said: “The time for the Government to act is now. We have never felt so divided as a nation, but building social homes is priority for people right across our country.

“This is a moment for political boldness on social housing investment that we have not seen for a generation.

“It is the way to restore hope, build strong communities, and fix the broken housing market so that we meet both the needs and the aspirations of millions of people.”

Other suggestions in the report, which will be presented to Prime Minister Theresa May and Labour leader Jeremy Corbyn on Tuesday, include creating an Ofsted-style consumer regulator to protect residents in social housing and private renting, a new national tenants’ voice organisation and improved national standards in maintaining publicly-owned homes.

Communities Secretary James Brokenshire said: “Providing quality and fair social housing is a priority for this Government and our Social Housing Green Paper seeks to ensure it can both support social mobility and be a stable base that supports people when they need it.”

He added: “Our ambitious £9 billion affordable homes programme will deliver 250,000 homes by 2022, including homes for social rent. A further £2 billion of long-term funding has already been committed beyond that as part of a 10-year home-building programme through to 2028.

“We’re also giving councils extra freedom to build the social homes their communities need and expect.”

Source: Shropshire Star

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Here’s how home buyers could save some money amid rising interest rates

With mortgage rates poised to rise, it might be time to dust off a strategy that could help prospective homeowners afford their new abode.

TransUnion, one of three major credit bureaus, predicted that the average interest rate on a 30-year mortgage would approach 5 percent by the end of 2019.

This rate is a far cry from the heyday of double-digit interest rates in the 1980s, but it’s a noticeable change from where rates were in the last year.

“For a lot of people who have only been around to know the mortgage environment where everything was 4 percent, 5 percent seems pretty dire,” said Monica Sonnier, CPA and member of the American Institute of CPA’s National CPA Financial Literacy Commission.

See below for average historical rates on 30-year mortgages.

Add to that the fact that sales prices on homes have continued to rise — the median listing price for a home is $276,000, as of Nov. 30, according to Zillow.

More individuals believe now isn’t a good time to buy a home, primarily because home prices are so high, according to December data from Fannie Mae.

Enter a strategy that could help potential buyers afford a new home, even as mortgages become more expensive: Paying your lender a fee upfront in order to reduce the interest rate on the mortgage.

This is known as paying “mortgage points” or “discount points.”

“Largely the option for points is often there, but it becomes more a question of whether consumers want to be proactive and ask about them or not,” Joe Mellman, senior vice president and mortgage business leader at TransUnion.

Here’s what you should know about points and whether this move might be right for you.

What’s the point?
Each point that you pay is equal to 1 percent of the amount that you’re borrowing. In that manner, one point on a $100,000 mortgage is equal to $1,000 — the amount of money you’ll need to give to your lender when you close on your loan.

Points don’t have to be round numbers; they can be fractional.

The example below from the Consumer Finance Protection Bureau compares a $180,000 mortgage with a 5 percent interest rate and no points to a loan for the same amount with 0.375 of a point and 4.875 percent interest.

In the end, an additional $675 in closing costs will lead to an overall monthly savings of $14, according to the CFPB.

To determine how long it will take to recoup the additional upfront cost of the points — your break-even point — you’ll need to divide the additional amount you paid by the amount of monthly savings.

In that sense, if you spend $2,000 on a point and save $30 a month due to lower interest, it will take you about 66 months or 5½ years to break even.

Deductibility
While points may be deductible on your income tax return, you will need to itemize in order to take the break.

Don’t let the tax deductibility of points drive your decision.

Now that the standard deduction has been raised to $12,200 for single filers and $24,400 for married couples who file jointly (for the 2019 tax year), fewer people are expected to itemize deductions on their returns.

Cash up front
Generally, home buyers need to make a down payment of at least 20 percent of the purchase price in order to avoid the additional monthly cost of private mortgage insurance.

But what if you have enough cash that you’ll need to choose between making a 20 percent down payment or using some of the money to buy points?

“If I put the money into the down payment, I reduce the balance I’m borrowing,” Sonnier said. “If I pay for points, I’ll have a higher balance, but at a lower rate of interest.”

Get out that calculator and compare your monthly savings over the life of the loan. That’s because the additional cost of the private mortgage insurance could cancel out the monthly savings from the points.

Ultimately, whether paying down points makes sense for you will depend on how long you’re staying in the house.

“The rule of thumb is that it takes about five to seven years to break even,” Sonnier said. “If you’re sure you won’t be in that house for five years, then it doesn’t make sense to pay down the points.”

Source: Yahoo Finance UK

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House-price growth slows to six-year low amid weak confidence

House price growth slowed sharply as 2018 drew to a close, with the UK recording its weakest annual growth in nearly six years.

Annual house price growth slowed from 1.9 per cent in November to 0.5 per cent in December, Nationwide Building Society has said.

But Scotland fared slightly better, with house prices in 2018’s fourth quarter 0.9 per cent higher annually, at £147,856 on average.

The 0.5 per cent increase in December was the weakest since February 2013. House prices were down by 0.7 per cent month-on-month in December.

Across the UK, the average house price in December was £212,281. London and some commuter belt areas surrounding the capital have seen house prices dip year-on-year.

In London, the average house price in the fourth quarter of 2018 was £466,988 – 0.8 per cent lower than the same period in 2017.

Northern Ireland was the strongest performer, with house prices in the fourth quarter of 2018 up by 5.8 per cent annually to reach £139,599 on average, followed by the East Midlands and Wales, where house prices lifted by 4 per cent annually.

Nationwide’s chief economist Robert Gardner said: “UK house price growth slowed noticeably as 2018 drew to a close, with prices just 0.5 per cent higher than December 2017.

“This marks a noticeable slowdown from previous months.” He said there have been indications a softening in the housing market was likely, including weakened consumer confidence.

Mr Gardner said: “The economic outlook is unusually uncertain. However, if the economy continues to grow at a modest pace, with the unemployment rate and borrowing costs remaining close to current levels, we would expect UK house prices to rise at a low single-digit pace in 2019.”

Source: Scotsman