Marketing No Comments

Covid sharpens inequalities in UK housing market

The Covid crisis has widened inequalities in the UK housing market, according to new research published today.

Figures from building society Nationwide show one in four private renters think the pandemic has made it more difficult for them to buy a home.

Sharp rises in house prices over the last year, driven by demand being stoked by the stamp duty holiday and prospective homebuyers rushing to snap up larger properties with gardens, has reduced housing affordability for first-time-buyers.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

Research from property search site Rightmove shows house prices jumped 5.7 per cent annually in July to reach a record high.

Homeownership rates have dropped markedly over the last 15 years, the research shows. 57 per cent of households in the UK now own their home, compared to 64 per cent in 2003.

63 per cent of the country also thinks the UK has a housing crisis, underlining the need to increase home supply to ease inflationary pressures in the market.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Sara Bennison, chief product and marketing officer at Nationwide Building Society, said: “Our research and cross-industry conversations show that the pandemic has served to exacerbate long-standing issues in the housing market.

“Layer onto that the enormous challenge of making the UK’s homes net zero and the challenge ahead becomes even greater.”

By Jack Barnett

Source: City AM

Discover our Mortgage Broker services.

Marketing No Comments

Residential transactions up 219% annually in June

The provisional seasonally adjusted estimate of UK residential transactions in June 2021 was 198,240, 219.1% higher than June 2020, according to HM Revenue & Customs (HMRC).

On a monthly basis, this figure was up 74.1%.

The provisional seasonally adjusted estimate of UK non-residential transactions in June 2021 was 10,850, 58.7% higher than June 2020 and 6.8% higher than May 2021.

Looking to the provisional non-seasonally adjusted estimate of UK residential transactions, this was noted at 213,120, 216.1% higher than June 2020 and 108.5% higher than May 2021.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

The provisional non-seasonally adjusted estimate of UK non-residential transactions in June 2021 is 11,610, 61.1% higher than June 2020 and 30.3% higher than May 2021.

Further to this, the provisional non-seasonally adjusted estimate for UK residential transactions in June 2021 of 213,120 was the highest monthly UK total since the introduction of these statistics in April 2005.

Tomer Aboody said: “Looking at the highest levels of transactions since 2005, when data was first captured, the second quarter has seen properties flying off the shelves as buyers pay premium prices due to the lack of supply.

“But with mortgage interest rates at record lows, and some at sub 1%, borrowers are realising this is the opportune moment to stretch themselves in order to buy their dream home.

“This trend is likely to continue for a while yet, while money remains cheap, resulting in prices rising further due to lack of supply.

“Will the Chancellor look at possibly reformatting stamp duty so that downsizers don’t have to pay it or face a significant reduction?

“This would have the desired result of more properties coming to market, keeping a lid on prices while further boosting the wider economy.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “As always, it is transactions rather than the more volatile prices which are a better measure of housing market health.

“These figures clearly illustrate the frenzied rush to the finishing line for buyers to take advantage before the stamp duty holiday drew to a close.

“However, activity has reduced since, particularly in London where the savings were greatest.

“Early signs are that sales will be down significantly but we have noticed nearly all of our transactions are continuing with very few renegotiations.

Discover our Residential Mortgage Broker services.

“This leads us to believe prices will not be markedly different over the next few months.”

Conor Murphy said: “The end of June brought closure to the first phase of the stamp duty holiday and one of the busiest periods ever witnessed by the property market.

“Today’s fantastic findings are testament to the success of the scheme in sparking further interest in an already busy market and positioning the industry as a key driver in the UK’s economic recovery.

“We have championed the stamp duty holiday as ‘the great equaliser’ since its introduction in July 2020 and will continue to do so long after its conclusion in two months’ time.

“The tax break has reduced the amount of upfront capital needed to get on the property ladder, made homeownership a more viable goal for thousands and provided a much-needed form of economic relief in a period where finances are increasingly strained.

“However, with brokers, conveyancers and lenders all juggling sky-high demand, it’s important that advisors manage client expectations and assess how mortgage tech can be used to streamline transactions before the holiday draws to an end in just 10 weeks’ time.

“Mortgage tech can act as an additional team member if used correctly.

“There’s no better time than today to see how features like one-click DIPs, task automation and digital ID verification can remove the legwork in your business, leaving you with more time to focus on what truly matters: providing clients with expert advice.”

By Jake Carter

Source: Mortgage Introducer

Discover our Mortgage Broker services.

Marketing No Comments

Buyer ‘frenzy’ pushes UK house prices to fresh high

House prices have hit another fresh high, industry data showed on Monday, despite the stamp duty holiday coming to an end, as surging demand outstripped supply.

According the latest Rightmove House Price Index, the average asking price was £338,447 in July, a 0.7% improvement on June and 5.7% hike on July 2020.

Rightmove said the first half of the year had seen a “buyer frenzy” and was the busiest on record, with house prices rising 6.7% in just six months.

The UK housing market has boomed in the last year, fuelled by both pent-up demand and the stamp duty threshold being raised to £500,000. Introduced by the chancellor last year, the tax break was due to end in March 2021 but is now being tapered out, reducing to £250,000 last month June before reverting to £125,000 in September.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

Homeowners have also re-evaluated housing needs during the pandemic, which has led to an imbalance in supply and demand. Rightmove said that 140,000 more sales were agreed upon in the first half, although there were 85,000 fewer new listings than the long-term average.

“This surge in activity has revealed a shortfall of 225,000 homes for sale which, if available, would have corrected this stark imbalance between supply and demand and would have stablished price growth,” Rightmove argued.

Tim Bannister, director of property data at Rightmove, said: “We predict that the number of completed sales will be the highest ever seen in a single month when June’s data is released by HMRC later this week.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

“The pandemic’s side-effect of a new focus on what one’s home needs to provide…is one of the driving forces behind four consecutive months of new record average property prices. Demand has also been boosted by the ongoing creation of new households and property being seen as an asset to hold, with historically low returns from many other forms of investment.”

Bannister added that the June deadline for stamp duty had further helped exhaust the stock of property for sale. “This has left prospective purchasers with the lowest choice of homes for sale that we’ve ever recorded, continuing price rises and stretched affordability.”

By Abigail Townsend

Source: ShareCast

Discover our Mortgage Broker services.

Marketing No Comments

Scotland’s Property Prices Hit Record Levels

Scotland’s property prices are rising at the fastest for a decade, Savills has reported.

The estate agent puts the rises down to a COVID-19-led property boom that has produced double-digit rates of annual increase – with average Edinburgh house price topping £300,000 for the first time.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

‘The sales market, particularly for family homes, has been very active in the first half of the year’, said Savills director John Forsyth. ‘Nearly 80 per cent of the properties we have sold have attracted multiple bidders. Premiums of up to 20 per cent over valuations have been achieved by our Edinburgh city office.

The firm said that in June registered buyer inquiry levels were up 30 per cent on a year ago. As in England, it seems the pandemic has encouraged many families to move to larger properties that are more suitable for working from home.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Savills’ comments were reported in Scottish Housing News which also quoted Rettie & Co head of research Dr John Boyle as saying the last time Scotland had seen similar house market growth was in the bubble of the early to mid-noughties leading up to the global financial crisis. ‘Increased demand has not been met by a rise in supply, which is broadly stagnant or below comparable 2019 levels, therefore prices will rise’, he said.

Registers of Scotland, which records all Scotland’s house transactions, said that the cost of the average house in the country had increased from just under £153,000 in May 2020 to £171,448 this year.

Source: Landlord Knowledge

Discover our Mortgage Broker services.

Marketing No Comments

Stamp duty holiday generates 140,000 ‘extra’ transactions

The stamp duty holiday has generated 140,000 “extra” transactions in the UK mortgage market but contributed a meagre 0.1 per cent of GDP, according to a report.

In its report, ‘Lessons From The Stamp Duty Holiday’, the London School of Economics said thousands of homebuyers had been helped by the tax break but when it came to consumption the effect was not as great.

LSE distinguished policy fellow Kath Scanlon told FTAdviser in an online briefing: “I dare say there were other tax changes one could have made which would have stimulated more consumption.”

The holiday enabled first-time buyers to avoid stamp duty land tax on up to £500,000 of a house purchase between July 2020 and June 2021. On average, it saved individual buyers £15,000, according to the report.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

The government introduced the tax holiday to stimulate the housing market and to increase expenditure on goods and services relating to housing transactions.

But LSE found the “extra” 140,000 transactions, which it defined as “transactions which would not have taken place without the holiday”, sparked expenses of an average of £16,000 per transaction.

This totalled around £2.2bn, though LSE clarified in its report that this figure could sit anywhere between £1.8 to £2.7bn, “given the very large uncertainties around these figures”.

With the UK gross domestic product totalling £1.96trn in 2020, this means the stamp duty holiday expenditure contributed just a fraction, 0.1 per cent, to countrywide spending.

The biggest values in the stamp duty holiday expenditure total came from bathroom and kitchen renovations. Followed by gas rewiring, and then furniture.

LSE’s report added these values to the pre-sale improvements sellers made prior to putting their property on the market to attract buyers to calculate final expenditure.

For the economy as a whole, Scanlon said the stamp duty tax holiday probably wasn’t “so much” worthwhile due to the spike in house prices, compared to how worthwhile it was for the industry and its employers.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

“But this [the stamp duty tax holiday] was chartered at the housing market specifically and it seems to have been successful.”

When the holiday came into force, house prices began to climb, enjoying eight months of uninterrupted growth.

According to the Office of National Statistics’ (ONS) latest house price index, UK average house prices have increased by 10 per cent over the year to May 2021.

Scanlon said it would be interesting to compare the stamp duty holiday with the government’s Eat Out to Help Out scheme.

Whilst the LSE report did not explore this, Barclaycard figures showed the latter scheme prompted a 34 per cent jump in spending on dining out. The Treasury estimated the average claim was about £5 during the scheme’s tenure, totalling to an estimated 80m claims which cost it £400m.

Other contributing factors LSE cited in its report for the rise in house prices, alongside stamp duty tax, included the pandemic induced shift to rural areas with more space.

“The tax holiday was not wholly responsible for house price rise,” said Scanlon. “Consumer behaviours [due to the pandemic] really reshaped the housing market. Though we still don’t know if this is temporary, or here to stay.”

By Ruby Hinchliffe

Source: FT Adviser

Discover our Mortgage Broker services.

Marketing No Comments

UK House Prices to Stabilise in H2 2021?

The average price of a home in the UK rose 10 per cent between May 2020 and May 2021, according to the latest data from the Office for National Statistics (ONS).

The figures, released yesterday, showed a slightly increase from the period between April 2020 and April 2021, when house prices went up 9.6 per cent. According to the ONS, the average home in the UK increased 0.9 per cent in May 2021 to reach £255,000. This is £1,000 below the high of March 2021.

Strangely enough, the region with the lowest annual growth was London, where house prices rose just 5.2 per cent between May 2020 and May 2021.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

There was no shortage of industry comment, much of it agreeing that the escalation in prices is due to slow over the second half of 2021.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “In May, double-digit house price rises hit the dizzying heights we last saw just before the onset of the financial crisis, but this could be as good as it gets for a while. We’re not expecting precipitous falls, but rises are unlikely to be as steep in the coming months. While homeowners may miss the boost to their wealth, it could be a blessed relief for buyers.”

Coles said that the figures for May reflected the ending of the Stamp Duty holiday. “Sentiment takes a while to feed into these figures,” she said, “because the gap between the initial enthusiasm of a house buyer and final exchange is a soul-destroying period of around three months. It means many of the property sales completing by the end of May are likely to have been agreed at the start of March – when Rishi Sunak confirmed the stamp duty extension in the Budget.”

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Others were more critical. Karen Noye, mortgage expert at Quilter, said that house prices were ‘completely detached’ from current circumstances.

She added that the economy is coming to a crossroads. “Many businesses will be buoyed,” she said, “by the prospect of the biggest opening since March 2020 on the horizon but simultaneously worried about having to cope with the furlough scheme being rescinded. With the stamp duty taper about to fully go in a matter of weeks the run of house price increases may be soon about to falter.”

BY PETE CARVILL

Source: Property Wire

Discover our Mortgage Broker services.

Marketing No Comments

House prices up 10% annually, according to ONS

Average house prices increased by 10.0% over the year to May, up from 9.6% in April, according to the latest figures from the ONS.

On a monthly basis prices were up 0.9% in the month to May to an average £255,000, nearly returning to the record average house price seen in March of £256,000.

Average house prices increased over the year in England to £271,000 (9.7%), in Wales to £184,000 (13.3%), in Scotland to £171,000 (12.1%) and in Northern Ireland to £149,000 (6.0%).

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

London continues to be the region with the lowest annual growth (5.2%) for the sixth consecutive month.

Tomer Aboody, director of property lender MT Finance, said: “Despite a dip in price growth in April, the housing market got back on track in May, continuing on its upwards trajectory.

“Buyer confidence certainly remains high, not only in terms of the desire to move but also in respect of getting the necessary finance approved, and this is helping push up prices.

“With so many mortgage products out there, buyers have the opportunity to get onto the property ladder, or move up it, at record low rates. If you have to stretch yourself to get a bigger mortgage to purchase the property you have set your heart on, low mortgage rates make this a much more palatable proposition.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

“Stamp duty holiday or not, prime properties with good outdoor space, including room to work from home and not too far from the station or the office to make commuting possible where necessary, will always be in demand with multiple buyers willing, and able, to pay.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “Continued strong demand for property, combined with a lack of stock, is pushing up prices further still. Low mortgage rates, combined with bigger deposits built up during lockdown, are giving buyers plenty of purchase power.

“Despite the tapering of the stamp duty holiday, there isn’t much sign of a significant slowdown in the market. Lenders remain keen to lend and interest rates look unlikely to rise anytime soon, resulting in some cheap mortgage deals, particularly for those with large deposits.”

Source: Mortgage Introducer

Discover our Mortgage Broker services.

Marketing No Comments

Annual house price growth accelerated in June

Annual house price growth accelerated in June, and now stands at over 13 per cent, the Nationwide’s latest House Price Index suggests.

The 13.4 per cent annual rate of increase is the highest level recorded since November 2004. The month on month rate of increase was 0.7 per cent, meaning an average priced house went up by over £2k between May and June.

Strongest price growth was in Northern Ireland, weakest was in Scotland.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

While strong house price growth is partly due to ‘base effects’, with June last year unusually weak due to the first lockdown, the market continues to show significant momentum, said Nationwide chief economist Robert Gardner.

‘Indeed, June saw the third consecutive month-on-month rise, after taking account of seasonal effects. Prices in June were almost 5 per cent higher than in March.

‘Regional data for the three months to June indicates that all parts of the UK saw an acceleration in annual house price growth. Northern Ireland and Wales saw the largest gains, at 14 per cent and 13.4 per cent respectively. By contrast Scotland saw the weakest rate of annual growth, at 7.1 per cent closely followed by London at 7.3 per cent’.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Meanwhile mortgage payments are still affordable, said Gardner, but deposits remain a major hurdle for most first time buyers

‘Despite the increase in house prices to new all-time highs, the typical mortgage payment is not high by historic standards compared to take home pay, largely because mortgage rates remain close to all-time lows. In fact, on this measure affordability remains broadly in line with its long run average,.

‘However, house prices are close to a record high relative to average incomes. This is important because it makes it even harder for prospective first time buyers to raise a deposit. For example, a 10 per cent deposit is over 50 per cent of typical first time buyer’s income’.

Underlying demand is likely to remain solid in the near term as the economy unlocks, said Gardner. ‘Consumer confidence has rebounded while borrowing costs remain low. This, combined with a lack of supply on the market, suggests further upward pressure on prices. But as we look toward the end of the year, the outlook is harder to foresee’.

Source: Landlord Knowledge

Discover our Mortgage Broker services.

Marketing No Comments

Will London Rents Recover After Covid?

Inner London bore the brunt of the pandemic’s impact on the rental market which saw a decade of rental growth wiped out. In previous downturns, Inner London has typically been the region to lead the rest of the country. But this time around it was the only area where rents fell for 13 consecutive months, while rents in other regions reached record highs. However, it appears that late spring marked the bottom of the Inner London market.

For the first time since April 2020, the average rent in Inner London rose on a monthly basis, averaging £2,103 pcm in June 2021 (chart 1). While the average rental home in Inner London costs 16.5 per cent or £415 pcm less than it did this time last year, rents jumped 4.3 per cent month-on-month between May and June, the largest monthly increase on record. June was also the third straight month that the annual decline in rents slowed.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

The reversal in the direction of rental growth has been driven by more tenants returning to the capital. Last month, the number of tenants registering to rent in Inner London was up 16 per cent on June 2020 levels and up 45 per cent on June 2019. Zone 2 recorded the strongest growth in demand, but this has been almost completely driven by domestic, rather than international tenants. Here, the share of tenants coming from outside the capital doubled as more people planned their return to London.

Rising rents have also been supported by lower stock levels, a reversal of the months following the height of the pandemic when landlords struggled to find long-term tenants for their short-term lets. While back in September 2020 there were 14 per cent more homes available to rent in Inner London than in September 2019, by June there were 8 per cent fewer homes to rent than two years ago. Family houses are most scarce, while entry level flats make up most of the homes taking more than a week to let.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

In contrast to Inner London, Outer London rents recorded only six months of falls on an annual basis following the onset of the pandemic. Outer London rents have grown for the last 10 months, with June’s annual rental growth (9.4 per cent) the strongest on record. The average rental home in Outer London now stands at £1,685 pcm,10 per cent more than it did when the pandemic started in March 2020.

Across Great Britain the pace of rental growth continued to climb in June, with rents rising 8.5 per cent year-on-year. In fact, four of the 10 fastest months for rental growth over the last decade have been since the onset of the pandemic. Stock scarcity has become a pressing issue, with 46 per cent fewer homes on the market than at the same time two years ago. In rural and suburban areas, the drop in rental homes on the market has been even greater.

Outside London, rents rose 10.9 per cent annually – the fastest rate of growth recorded during any time since 2014. Six regions saw rental growth hit double digits in June, up from five in May. Last month eight of the 11 GB regions recorded the biggest annual increases since the lettings index began in 2014. Wales, the West Midlands and London were the only regions not to register record rental growth.

Aneisha Beveridge, head of research at Hamptons, said: “Over the course of the pandemic, Inner London landlords have suffered more than investors anywhere else in the country. But in recent months rental growth here has changed course and is now on an upward trajectory. We are forecasting that rents in Inner London will return to pre-pandemic levels within 12 months.

She added: “That said, and despite a recovery, rents in Inner London are likely to remain lower than they would have been had the pandemic not happened. A relatively buoyant recovery has ensued as restrictions have been lifted, but some scarring is likely to remain as tenants become less closely bound to their office desk and international travellers remain in short supply. Nationally, the last 12 months have seen five years of pre-pandemic growth squeezed into a year. Rents are rising at such a pace that monthly rental growth figures could, in more normal times, be mistaken for annual ones. While this growth is underpinned by a lack of stock, it will ultimately be tapered by affordability.”

BY PETE CARVILL

Source: Property Wire

Discover our Mortgage Broker services.

Marketing No Comments

House Price Begin to Dip, but Remain High Year-on-Year

The average price of a UK home dipped 0.5 per cent in June, according to the latest House Price Index from Halifax.

The statistics, released yesterday, showed that the average house price was now £260,358 across the UK, having risen 2.9 per cent in the last quarter. Annually, however, house prices have increased by 8.8 per cent.

Russell Galley, managing director of Halifax, said: “With the stamp duty holiday now being phased out, it’s was predicted the market might start to lose some steam entering the latter half of the year, and it’s unlikely that those with mortgages approved in the early months of summer expected to benefit from the maximum tax break, given the time needed to complete transactions.”

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

He added: “That said, with the tapered approach, those purchasing at the current average price of £260,358 would still only pay about £500 in stamp duty at today’s rates, increasing to around £3,000 when things return to normal from the start of October. Government support measures over the last year have helped to boost demand, particularly amongst buyers searching for larger family homes at the upper end of the market. Indeed, the average price of a detached home has risen faster than any other property type over the past 12 months, up by more than 10 per cent or almost £47,000 in cash terms. At a cost of over half a million pounds, they are now £200,000 more expensive than the typical semi-detached house.”

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Reacing to the news, Martin Magnone, CEO and co-founder at Tymit, said: “Whilst house prices have dipped by 0.5 per cent this month, the frenzied housing market shows no signs of slowing down just yet. As a result, it’s not just property prices that have been surging – furnishing budgets are too, and it’s not out of choice. Our research revealed that a third of people rushed their property purchase to take advantage of the Stamp Duty holiday, and two-thirds faced unexpected expenses as a result, with the average furnishing budget blown by almost £15,000.”

He added: “As demand outstrips supply, the market is moving at a faster rate than ever before and caution, planning and budgeting are being thrown to the wind in order to secure a dream home. Whilst home buyers need to act fast, purchasing a property is a huge decision – 60 per cent of those we surveyed wished they’d taken more time. With this in mind, I’d urge people to plan, plan and plan again to ensure their new home doesn’t welcome them with loans and costly credit cards they hadn’t budgeted for.”

BY PETE CARVILL

Source: Property Wire

Discover our Mortgage Broker services.