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Average first-time buyer deposit rises 7% in a year

First-time buyers faced having to raise around £3,000 more for a deposit in 2019 than a year earlier, according to analysis.

The average amount put down by a first-time buyer in 2019 was £46,187 – 7%, or £3,032, higher compared with the average £43,155 deposit the year before, Halifax found.

Across the UK, typical first-time buyer deposit sizes range from an eye-watering £109,885 in London to a substantial £24,091 in the North East of England.

The average price paid by a first-time buyer in the UK last year was £231,455, up by £18,252 (9%) from a year earlier (£213,203).

Burnley, in the North West of England, was identified as the most affordable area for local first-time buyers – calculated by comparing average earnings with average house prices – with a ratio of 3.1.

The least affordable was Hackney in London, with an average house price-to-earnings ratio of 12.1.

The average price paid for a home by a first-time buyer in London has increased by £27,764 or 7% in the past year alone.

The price of an average first-time buyer property in the capital has more than doubled over the past decade, from £222,107 to £453,385.

Despite increasing costs, the overall number of first-time buyers has remained stable, up around 1% from 353,130 in 2018 to 356,767 in 2019, Halifax said.

This means that such buyers account for more than half (51%) of all house purchase loans.

Northern Ireland saw the biggest percentage increase in the number of first-time buyers, up by 6% year on year, from 10,430 to 11,013.

Russell Galley, managing director, Halifax, said: “Whilst price growth in the overall housing market has been modest in recent years, the level of inflation facing first-time buyers is greater, which compounds the challenge in raising bigger deposits.

“However, given their importance to the market as a whole, it’s reassuring that the overall number of new buyers getting on the ladder remains stable.

“This is in part explained by initiatives designed specifically to support this key group, including Help to Buy schemes and family support mortgages, and they also benefit from the continued period of record low interest rates.

“However, it’s clear that more needs to be done to address more fundamental long-term issues, not least the shortage of new, affordable homes being built.”

Halifax used figures from its own database as well as data from UK Finance and the Office for National Statistics (ONS) to make the findings.

Here are figures from Halifax showing average first-time buyer house prices, deposits and deposits as a percentage of the house purchase price in 2019:

– North West, £136,104, £24,091, 18%
– Yorkshire and the Humber, £156,232, £27,598, 18%
– North West, £163,459, £29,472, 18%
– East Midlands, £181,876, £32,917, 18%
– West Midlands, £185,091, £34,178, 18%
– East Anglia, £220,719, £43,188, 20%
– Wales, £153,267, £25,704, 17%
– South West, £221,357, £42,584, 19%
– South East, £295,348, £54,425, 18%
– London, £453,385, £109,885, 24%
– Northern Ireland, £136,850, £25,317, 19%
– Scotland, £152,728, £29,950, 20%

By Vicky Shaw

Source: Yahoo Finance UK

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Boris can lead a Conservative council housing revolution

With Boris Johnson now undisputed world king of the post-Brexit scene, the only relevant policy debates are those going on inside the government itself. These are yielding unusual fruit.

Esther McVey, a deep-dyed Thatcherite and an advocate of blue-collar Conservatism, has been arguing for more council housing. The housing minister wants to help those “left behind” voters who broke Labour’s red northern heart.

However, she has reportedly clashed with her boss, housing and communities secretary Robert Jenrick, who is in the more conventional Tory “property-owning-democracy” mould.

But McVey is right — it is time for another look at council housing, and this Conservative government is ideally placed to do it.

Johnson is enthused by regional regeneration, infrastructure projects, and levelling up the UK. His chief aide Dominic Cummings, meanwhile, is deeply interested in applying scientific research and development to solve big problems and create new industries.

If they combine their enthusiasms, Johnson and Cummings could realise a once-in-a-century opportunity to solve the UK’s housing crisis. To do it, they need to revive the One Nation Conservative party tradition of mass council house building, and use it to make the UK a world-leading location for green modular house building. That way, the housing crisis gets fixed, and the country gets a new high-tech industry.

No UK housing shortage has ever been cured without a mass council house building programme. From 1945 to 1979, all British governments knew this and invested heavily in (mostly) good and plentiful council homes.

Unlike private house builders, who are bound by their duty to shareholders, the state can invest to solve housing shortages, not solely to make a profit from them.

Government borrowing costs are currently at an all time low, and the north of the country is lacking both infrastructure and housing. The Prime Minister therefore has a historic chance to borrow both to build council housing and to construct transport links within and between towns and cities across the Midlands and the north.

The new houses could be called “Boris Homes”, to remind tenants of their benefactor. A project like this, which breaks decisively with the “austerity” of the last two Tory Prime Ministers, could help cement Johnson as the long-term electoral friend of Workington man. The “Boris” branding would deal with George Osborne’s old fear that council housing only creates Labour voters.

Of course, governments used to rely on local authorities to build council homes, but that was before the centralising force of Thatcherism forced them to slash their construction capabilities. Most UK local authorities, even if asked, no longer have the resources, experience and manpower to launch a transformative council house building programme.

So the government should set up a platform of all the major UK institutions, working closely with regional mayors and local authorities, to create Council Housing 2.0: a giant joint venture corporation to build 150,000 new council homes a year.

The government could incentivise and match institutional investment to build the homes, and then share (along with the regional authorities) in their long-term rents.

Now that we are definitely leaving the EU — in just one week — the government should also cut the utterly tedious procurement rules that bed-block big projects.

These council houses need to be built quickly, cost-effectively, and sustainably. Cummings has plans to create R&D centres of excellence in the north. To combine that need and his ambition, the government should invest heavily in a campus for the research, development and manufacture of modular housing.

A modern modular factory can build a semi-detached, highly-energy efficient house — that will last 100 years — in 14 days for less than £70,000.

If the government gets this modular R&D cluster right and attracts global investment and talent, it will solve the UK’s housing crisis and incubate a new British modular export industry that can help other countries solve theirs.

For too long, UK housing policy has been held back by prejudice and party politics. Council housing was a dirty word for generations of Conservative politicians. But it is one of our country’s great civilising projects, providing shelter for the poor and vulnerable.

If Johnson is brave, council housing can become an engine for levelling up whole regions and making the UK the global leader in a cutting-edge technological field.

You have ridden a Boris Bike — get ready to live in a Boris Home.

By Bruce Dear

Source: City AM

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The proportion of income spent on rent drops

The proportion of income that tenants spent on rent fell between 2016 and 2019 despite increases in rental levels, according to The Deposit Protection Service (DPS).

Its rent index showed the average proportion of wages spent on rent decreased from 32.64% in 2016 to 30.64% in 2019.

The DPS said that various factors had helped improve the affordability of renting during the period.

These included: a 2.69% increase in average salary (from £29,559 to £30,353) and a £77 decrease in average tenancy deposits (from £905 to £828) since the introduction of the deposit cap in June last year.

Matt Trevett, managing director of the DPS, said: “Although rents have risen over the past decade, other changes since 2016 have helped ensure renting has become on average more affordable.

“Predictions that rents would rise in response to the introduction of the tenant fees ban and deposit cap do not seem to have materialised, with many landlords seemingly declining to increase rents since last summer.”

Average rents reached a peak of £777 during Q3 2019 before decreasing marginally by £4 to £773 during the following quarter.

Paul Fryers, managing director at specialist buy-to-let mortgage provider Zephyr Homeloans, added: “Although the longer-term recovery in rental levels is likely owing to broader economic factors, changes to rental figures are also more likely at moments where property changes hands.

“Over the past couple of years, professional landlords have become a larger proportion of the buy-to-let market as more and more smaller or ‘accidental’ landlords sell up, partly as a result of increasing costs.”

Northern Ireland saw the biggest increase in average monthly rents (3.01%) from £532 to £548 during Q4 2019, while average monthly rent in Yorkshire and The Humber dropped the most, from £551 to £524 (4.90%).

London continues to be the most expensive rental region, with average monthly rents standing at £1,345 in Q4.

This is over two and a half times the amount (£518) paid in the UK’s cheapest region, the North East, during the same period.

Excluding London, average monthly rent during the last quarter of 2019 stood at £672.

Detached properties saw the largest increase (0.81%) in average monthly rents, from £990 to £998, in Q4.

Monthly rents for terraced houses declined the most during the quarter, falling 0.55%, from £732 to £728.

By Michael Lloyd

Source: Mortgage Introducer

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London rental growth at three-year high

Annual rental growth in London reached 2.8% in Q4 2019, the highest growth rate for three years, Zoopla’s Rental Market report shows.

In York, Bristol and Nottingham the average cost of renting has increased by more than 5%, more than double the UK average of 2.6%.

Aberdeen, Middlesbrough and Coventry were the only three cities where the cost of renting has fallen compared to last year.

Mary-Anne Bowring, managing director at Ringley, said: “Rental prices in London have increased by 2.8% – the highest rate in the capital for almost four years – and providing the Brexit deal doesn’t prove too damaging, this will likely continue.

“Zoopla’s prediction that anticipates a 3.5% growth in rental prices over 2020 is welcome news for landlords and the institutional investors eyeing the UK rental market, with recent Savills research showing there are now over 150,000 build-to-rent homes in the pipeline.”

The Office for National Statistics estimated that average rents grew by 3.8% in 2019, compared to the 2.6% cost of renting.

Bowring added: “Rental growth has largely been driven by higher wages but there are al-ready signs wage growth may be slowing. Lack of supply is also another factor, with many private landlords looking to exit the market following tax and regulatory changes.

“A drop off in available rental homes combined with reduced wage growth could leave renters out of pocket. To that end, the government should rethink its approach to buy-to-let landlords.”

BY RYAN BEMBRIDGE

Source: Property Wire

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House Prices Rise at Fastest December Rate on Record

Average UK house prices jumped by 2.3% in December, a record for that month, according to Rightmove.

The online property website said that last month’s rise in average house prices was the biggest December jump since it started its house priced index back in 2002. Rightmove revealed that almost 65,000 properties were put onto the market in December at an average asking price of £306,810.

Miles Shipside, a director and housing market analyst at Rightmove, said the recent surge in house prices was down to the increased political stability in the UK following December’s General Election and the following easing of Brexit uncertainty.

“These statistics seem to indicate that many buyers and sellers feel that the election result gives a window of stability,” said Mr Shipside. “The housing market dislikes uncertainty and the unsettled political outlook over the last three and a half years since the EU referendum caused some potential home movers to hesitate.

“There now seems to be a release of this pent-up demand, which suggests we are in store for an active spring market, with more properties being listed by new sellers than we have seen in recent years.

“One factor behind the upwards price pressure has been the shortage of property coming to market, with 2019 numbers down by 19% on 2018 and some would-be sellers postponing their moves until they judge the outlook to be more certain. This month sees new seller numbers still down on the prior year, but by a less dramatic 10%.

“While there may well be more twists and turns to come in the Brexit saga, with London prices now rising again and not enough properties to satisfy this buyer demand, there is an opportunity for sellers to get their property on the market for spring move unaffected by Brexit deadlines.”

Tom Bill, head of London residential research at estate agent Knight Frank, said: “The reason for this uptick includes the relatively benign global economic backdrop, ultra-low mortgage rates, the currency discount and the fact prime residential markets have re-prices in response to political uncertainty and tax changes.

“In the final quarter of last year, there were 10 new buyers for every new property listed in prime central and outer London, the highest ratio in more than 15 years.”

Source: Money Expert

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Wales Continues to Experience House Price Growth

House prices in Wales have reached an all-time peak, with the average house price across the country now £193,254, despite a drop in overall sales in 2019.

The figures have been released from Principality Building Society’s Wales House Price Index for Q4 2019, which demonstrates the rise and fall in house prices in each of the 22 local authorities in Wales.

In 2019, the average house price in Wales grew by 3.3%, a £6,237 rise since December 2018 driven by first time buyers and holiday homes. Over the quarter in Wales (October – December 2019), house prices rose by 1.7%.

Despite house price growth in 2019, house sales were down by 6% in 2019 compared to the previous year. The reduction is likely to be due to the uncertainties associated with Brexit and then latterly the December General Election.

“It’s been a decent year for average house price growth in Wales, mainly supported by historically low interest rates, a shortage of housing supply and relatively high employment. First time buyers were the driving force behind housing sales, with holiday homes also performing well.

“Although Brexit uncertainty and the General Election had a greater impact on the housing market in the south of England, sales were still down by 6% in Wales in 2019 compared with 2018. Now that there is a bit more clarity politically, we will wait to see if house sales pick up in 2020, although we anticipate continued modest growth in terms of house prices as a whole.”

 Denman, Chief Financial Officer at Principality Building Society

At the end of 2019, eight local authority areas established new peak prices – Bridgend (£180,988), Denbighshire (£192,665), Gwynedd (£190,868), Merthyr Tydfil (£141,657), Monmouthshire (£298,618), Rhondda Cynon Taf (£142,733) and Swansea (£188,417).

Principality’s House Price Index figures show that the largest decrease in sales in Q4 2019 compared to Q4 2018 have been flats, down by 32.6%, followed by detached properties which were down by 12.5%. Semi-detached sales reduced by 9.6%, with terraces down by 6.5%, which supports indications that first-time buyers are now more attracted to terraced and semi-detached properties, rather than to small city centre flats.

In the past decade (December 2009-December 2019), house prices in Wales have risen by 24.5%. Over this same 10-year time span, the CPIH index for consumer price inflation has increased by some 22.6%. This means that the average house price in Wales has grown in ‘real’ terms by just 1.9% in the past decade.

Cardiff tops the list with house price growth of 41.2% for the decade, followed by Torfaen at 37.7% and Newport at 33.4%. The top nine authorities in terms of growth are all located in the south-east corner of Wales – which may indicate the extent to which Cardiff, and the Severn Bridge tolls, have had an impact on housing demand, and therefore house prices, in this area over the last 10 years.

The ‘top’ location for house price growth in the north of Wales is Denbighshire, at 23.5%.

By MARK POWNEY

Source: Business News Wales

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UK house prices: Post-election surge breaks records

The decisive result of the General Election sparked a record-breaking surge in UK house prices in December and January, in the latest sign that the UK housing market has been revitalised by a “Boris bounce”

There was a 2.3 per cent monthly surge in the average price of property coming to the market between 8 December and 11 January, the largest jump ever for that time of year since Rightmove records began in 2002.

Nearly 65,000 properties were put on the market during the period, meaning most were advertised for sale following the General Election on 12 December, according to the property platform’s House Price Index.

There has also been a jump in buyer demand since the Conservative election victory.

Enquiries to estate agents between 13 December and 15 January were up 15 per cent compared to the previous year, with an extra 1.3m buyer enquiries following the election.

The number of sales agreed spiked by 7.4 per cent during the same period as buyers made the most of the renewed political uncertainty offered by the election result.

Rightmove director and housing market analyst Miles Shipside: “These statistics seem to indicate that many buyers and sellers feel that the election result gives a window of stability.

“The housing market dislikes uncertainty and the unsettled political outlook over the last three and a half years since the EU referendum caused some potential home movers to hesitate.

“There now seems to be a release of this pent-up demand, which suggests we are in store for an active spring market.”

London’s property market has also benefited following the General Election, as the capital saw a sharp increase in buyer interest and sales prospects. In December, 31 per cent of chartered surveyors saw a rise rather than a fall in enquiries from new buyers, up from minus 12 in November, according to the latest Rics data.

“We have absolutely seen a post-election bounce, quite substantially actually,” Marc von Grundherr, a director at Benham & Reeves in London, said.

“Things usually quieten down before Christmas, but we had three times the number of offers in the last two weeks of December than the first two weeks.

“People have been waiting for stability, and the moment it arrived, confidence in the market has increased significantly.

“There has been a dramatic Boris bounce, so to speak, with real optimism among buyers still getting good value. But it’s also not a bad time for sellers as stock levels are still relatively low.”

By Jessica Clark

Source: City AM

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UK property asking prices jump by record 2.3% month-on-month at turn of year – Rightmove

Asking prices for British houses put on sale in the five weeks to Jan. 11 rose by a record amount for the time of year, property website Rightmove said on Monday, adding to signs of a post-election bounce in consumer and business confidence.

Britain’s Royal Institution of Chartered Surveyors and major mortgage lender Halifax have both reported stronger-than-expected housing market activity since Prime Minister Boris Johnson’s election victory on Dec. 12.

Business surveys from Deloitte and IHS Markit have also perked up, as the election result ensures there will be a smooth departure from the European Union on Jan. 31 and no industry renationalisation by the opposition Labour Party.

Rightmove said average asking prices of property marketed between Dec. 8 and Jan. 11 jumped 2.3% in monthly terms, the biggest increase for that period since the survey started in 2002.

Prices were up 2.7% compared with the same period a year earlier, marking the strongest growth since July 2017.

“There now seems to be a release of this pent-up demand,” Rightmove director Miles Shipside said. “The housing market dislikes uncertainty, and the unsettled political outlook over the last three and a half years since the EU referendum caused some potential home-movers to hesitate.”

Asking prices, which are not seasonally adjusted, rose by 0.8% year-on-year in December’s release.

Britain’s housing market has slowed since June 2016’s Brexit referendum, especially in London and neighbouring areas, where higher property taxes as well as concern about the impact of Brexit on the region’s economy hurt demand.

There had been some signs of a pick-up in the housing market before the election.

Official data for November showed a 2.2% rise in house prices across Britain, the largest increase in a year, and Halifax said prices rose 4.0% in the 12 months to December, bolstered by the biggest monthly rise in almost 13 years.

But the broader economic picture in the run-up to election was downbeat, with GDP growth in the 12 months to November the slowest since 2012 at just 0.6%, and more Bank of England officials are considering cutting interest rates.

Reporting by David Milliken

Source: UK Reuters

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Savills: UK sees influx of Build to Rent homes

The UK is seeing an influx of American-style purpose-built professionally managed rental homes, with the number of homes designed and built specifically for rent having grown massively in the last year.

Analysis by Savills for industry trade body the British Property Federation (BPF) has found the number of Build to Rent (BTR) homes has increased, with 150,000 BTR homes in planning, under construction or completed.

There has been a 51% surge in the number of completed US-style rental homes in key regional cities, with Manchester, Birmingham Liverpool, Leeds, Glasgow and Sheffield leading the way.

Richard Jackson, co-founder and managing director of Apache Capital Partners, which has a £2bn BTR development pipeline with Moda Living, said: “Given the wider investment landscape and the state of the traditional private rented sector in the UK, it’s no surprise that Build to Rent continues to attract interest from both investors and consumers.

“The under-performance of traditional investments such as sovereign bonds has encouraged institutional investors such as pension funds and insurers to look at emerging asset classes like BTR for long-term steady income streams to match their liabilities, while the poor quality of accommodation and service that many renters receive from private landlords mean a purpose-built, professionally managed offer like what we’re providing through our partnership with Moda Living is highly appealing.

“We’ve seen healthy demand at our first building to open Angel Gardens, and we see regional BTR going from strength to strength, buoyed by strong fundamentals and a renewed political focus on powering up the UK regions.”

There are now 152,071 BTR homes at various stages of completion in the UK.

Of these 40,181 are complete, with a further 35,415 under construction and 75,475 in planning.

This represents an increase of 15% over last year.

Manchester and Salford lead the way with almost 23,000 BTR properties either completed or in the development pipeline.

Birmingham meanwhile nearly doubled its pipeline from 4,800 BTR homes, to over 8,000, with Leeds, Liverpool, Glasgow and Sheffield all seeing an uptick in BTR activity too.

Pete Ladhams, managing director of BTR specialists Assael Architecture, which has designed BTR projects for L&G, Grainger plc and Essential Living, added: “The meteoric rise of Build to Rent in the UK last year shows the appetite for genuine alternatives within the rental market.

“As residential housing shifts towards being more service-led, rental properties are offering residents far more than just a home.

“With a range of amenities, building-wide social initiatives and boasting great locations, BTR is showcasing what a more professional, secure and high-quality rental product looks like.”

Franz Doerr, founder and chief executive of deposit alternative provider flatfair, said: “These figures show the demand for professionally managed rental housing that makes the entire experience seamless.

“As people rent for longer periods there will be an increased focus on service, and Build to Rent housing is leading the way.

“As more units come online, service will be the differentiating factor between developments, and those that embrace the technological solutions that make things easier for tenants will thrive.”

By Michael Lloyd

Source: Mortgage Introducer

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UK Housing Market on the Up, Says RICS

The UK housing market seems to be gathering pace following last month’s General Election, according to the Royal Institution of Chartered Surveyors (RICS).

The latest RICS survey revealed an increase in both the number of sales and buyer enquiries in December for the first time in seven months. According to RICS, house prices across the country are set to rise in 2020 due to a less volatile political and economic climate following the Conservatives landslide election win last month.

The figures were boosted by a sharp increase in sales in London and the South East of England, although in Scotland and Northern Ireland property sales fell. Heightened interest from new buyers in Wales and the North East of England also helped to drive up expectations for the year ahead.

According to the survey, 66% of RICS members expect positive house sales growth over the next year, a massive jump from the 35% that expected it just a month ago.

“The signals from the latest RICS survey provides further evidence that the housing market is seeing some benefit from the greater clarity provided by the decisive election outcome,” said Simon Rubinsohn, chief economist at RICS.

“Whether the improvement in sentiment can be sustained remains to be seen given that there is so much work to be done over the course of this year in determining the nature of the eventual Brexit deal.

“However, the sales expectations indicators clearly point to the prospect of more upbeat trend in transactions emerging with potential purchasers being more comfortable in following through on initial enquiries.

“The ongoing lack of stock on the market remains a potential drag on a meaningful uplift in activity although the very modest increase in new instructions in December is an early hopeful sign.

“Given that affordability remains a key issue in many parts of the country, the shift in the mood-music on prices is a concern with even London expectations pointing to a reversal of course both over the coming months and looking further out.

“This highlights the critical importance of the government addressing the challenge around housing supply particularly with the gradual phasing out of the Help to Buy incentive.”

Independent property expert Henry Pryor said: “Transaction volumes have held up well last year but while it feels like there may be a little more life in the market and some signs of confidence returning to the middle and upper ends there is no actual evidence of a Boris Bounce just yet.

“The data won’t be available until May as it takes time for sales that are agreed to exchange and complete and then another month to appear in the official records. However, it does seem like more people are thinking of moving, more homes are coming to market, and some buyers are bored of putting their lives on hold and want to get on with their lives.

“Will it last? Well, there are still some big icebergs ahead of us – the Budget next month, ongoing negotiations with Europe, a possible return of the Beast from the East. Any one of these could knock confidence and snuff out the fragile optimism, but if you want to buy or sell it looks like 2020 may be your year after all.”

Source: Money Expert