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UK house prices fall at fastest rate in seven months – RICS

UK house prices dropped last month by the most since April, as uncertainty about Brexit and the election weighed on the property market, the Royal Institution of Chartered Surveyors (RICS) said on Thursday.

The RICS survey – released on the day Britain votes in a national election intended to break a parliamentary deadlock over Brexit – showed home-buyers and sellers stuck on the sidelines.

The monthly house price balance declined to -12 in November, its lowest since April, from -5 in October.

The number of new buyers and sellers continued to fall – though the drop in sales seemed to be bottoming out and the proportion of surveyors who expected a rebound in activity over the next year rose to its highest since February 2017.

“Whatever happens in the general election today, it is important that the new government provides reassurance both over the stewardship of the economy and the ongoing challenges around Brexit,” RICS chief economist Simon Rubinsohn said.

Britain’s housing market has slowed since June 2016’s Brexit referendum. Prices have fallen in London and surrounding areas, where a rise in property purchase taxes bit hardest and concerns about Brexit were high.

Official data has shown that British house prices rose by 1.3% in the year to September and a Reuters poll of economists has forecast a 1.5% rise for 2020.

Prime Minister Boris Johnson intends to take Britain out of the European Union by Jan. 31, if he wins Thursday’s election. Most opposition parties have said they want a second referendum.

Reporting by David Milliken

Source: UK Reuters

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London house price boost helps overall growth

UK city house price growth has picked up to 2.9% supported by a 1% increase in London house prices, the October Zoopla UK Cities House Price Index has revealed.

Prices have risen by 1% in London over the past year, the highest rate of growth for two years, following a period of year-on-year price falls.

Richard Donnell, research and insight director at Zoopla, said: “After a three-year repricing process accompanied by a sizable decline in housing sales, the London housing market is finally showing signs of life.

“The shift in momentum is clear, resulting from a lack of supply, increased sales and more realistic pricing, which bode well for higher sales activity in 2020, rather than a pick-up in house price growth.

“While the London housing market has been in the doldrums, market conditions in regional cities have been stronger over the last two years with demand supported by employment growth and attractive housing affordability.

“The rate of growth is slowing, and all cities are registering annual growth of less than 5%.

“The announcement of the General Election has brought forward the usual seasonal slowdown, but the last few weeks of the year pre-Christmas tend to be much quieter than after Boxing Day, when consumer interest in housing springs back to life.”

House prices are now registering month-on-month price falls in less than a quarter of London’s housing markets, a huge drop from the 85% of markets registering price falls a year ago.

Over three quarters of London’s homes are in markets registering small month-on-month price increases, which have lifted the overall annual growth rate to 1%.

The shift in London house price momentum is down to a decrease in the number of new properties for sale, which has restricted supply.

This is a trend that has been developing for the last 12 months and has been accelerated by the announcement of the General Election on 12 December.

In addition, there has been a notable increase in the number of sales agreed per agency branch in London.

While this increase is off a low base, it indicates that there is renewed demand for housing in London after a sizable drop in sales volumes over the past three years.

Despite London’s housing market having been through an extended slowdown, accompanied by lower sales, large regional cities are starting to show signs of slower growth.

House price growth since the start of 2017 has exceeded 15% across Edinburgh, Leicester, Manchester and Birmingham, but the pace of growth is slowing.

North of the border, house price growth remains steady in Edinburgh and Glasgow at 4.0% and 2.6% respectively.

By Michael Lloyd

Source: Mortgage Introducer

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Buy To Let Repossessions Up In The UK

The number of buy to let repossessions of investment properties in the UK rose substantially in the third quarter of 2019.

Figures released this week from banking trade body UK Finance revealed a 40 per cent rise in buy to let repossessions on last year.

Around 800 buy to let repossessions were carried out in the third quarter of 2019, compared to 570 in the same quarter of the previous year.

However, there were 4,550 buy to let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the third quarter of 2019, five per cent fewer than in the same quarter of the previous year.

The number of buy to let investors in arrears of between 5 per cent and 7.5 per cent of the outstanding balance also fell by 21 per cent over the year.

In contrast, the number of buy to let investors in arrears of between 7.5 and 10 per cent grew by 9 per cent, while the number in arrears of over 10 per cent dropped just 1 per cent, according to the UK Finance figures.

However, the banking trade body has stated that it believes the large increase in buy to let repossessions due partly to a ‘backlog of historic cases’.

Rules were changed two years ago by the city regulator on how lenders have to calculate how much a borrower owes each month if they fall into arrears. This has led to lenders reviewing a large number of cases on an individual basis and applying for buy to let repossessions ‘only when all other options have been exhausted’ according to UK Finance.

However, David Smith of the Residential Landlords Association (RLA) said: ‘Repossessions for mortgage arrears take place for many different reasons.

‘Mortgage interest relief changes, which are now almost fully implemented, the increasing cost of regulation and the ever-increasing time to repossess a property are all major factors.’

‘Since most repossessions of this kind lead to tenants being evicted it is vital that the next government actively supports the majority of landlords doing a good job to provide the homes to rent the country needs.’

Source: Residential Landlord

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UK business pessimistic about economy

The consensus from UK boards is that the combined effects of Brexit, trade wars and consumer slowdown is going to have a negative effect on the UK economy over the next 12 months

More than two-thirds (69%) of respondents from FTSE 350 companies believe that the UK economy will deteriorate in the next year, according to a recent Boardroom Bellweather survey from the Chartered Governance Institute (ICSA) and the Financial Times.

Only 7% expected improvement – a slight uptick in confidence since the end of 2018 when only 2% expected improvements and 81% expected a decline – however still less than pre-referendum, when 24% expected a decline and 13% an improvement.

“The continuing uncertainty about what a post-Brexit Britain might look like, muddled even further at the time of the survey by the Conservative Party leadership contest and differing views with regard to a no-deal Brexit, has undoubtedly contributed to the pessimism that people are feeling,” said Peter Swabey, director of policy and research at ICSA.

Meanwhile, the research found that 40% of respondents thought a no-deal Brexit would be damaging to business, while 40% thought it would not and 20% were unsure.

More generally, 3% of respondents believe leaving is positive, compared to 59% who see it as damaging – down from 73% at the end of 2018 – while the number predicting no change has increased from 28% to 38% since the end of last year.

Swabey suggested that more companies enacting contingency plans might explain why nearly half (49%) of respondents see Brexit as a principal risk and why only 29% have increased inventory in preparation for a no-deal.

However, he noted that the proportion of those considering Brexit as a principal risk has increased since summer 2018 – up from 39%.

“With companies unsure of what trade and non-trade barriers might be in place come the end of the year, it seems evident that they are acting with a certain amount of caution,” Swabey said.

Meanwhile, 51% of respondents expected a decline in global conditions over the next 12 months, while 10% predicted an improvement and 23% thought conditions would stay the same.

“With trade war between the US and China still playing out, over twice as many people now fear a decline [in global economic conditions] than was the case in summer 2018, when just 24% predicted a decline,” Swabey said.

Business optimism in both business and professional services sectors plummeted in the three months to August from -8% to -31%.

The decrease almost matched the decline seen at the start of 2019, according to the Confederation of British Industry (CBI).

Although business volumes stabilised in Q3, businesses expect a decline over the following three months, with respondents pointing to overseas business as a limiting factor.

“UK services firms are operating in a tough environment: activity is sluggish and profits are expected to fall in the coming months. It’s little wonder that business sentiment has plummeted again,” said Rain Newton-Smith, chief economist at CBI.

She described outlook for services companies as “bleak”, pointing to Brexit uncertainty as a dampener on investment and expansion.

“The idea of a no-deal Brexit is clearly weighing down the economy and is affecting businesses both big and small. So the economy can get back on track, the government must re-double its efforts in securing a deal,” she said.

By Danny McCance

Source: Economia

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Glasgow beats Edinburgh for property deals

INVESTMENT from Asia helped the value of commercial property deals in Glasgow exceed Edinburgh for the first time since 2015.

However, the overall value of deals continued to fall in the second quarter, according to the Scottish Property Federation (SPF).

Deals worth a total of £172 million were concluded in Glasgow in the second quarter, up from £104m for the same period last year, compared with £108m in Edinburgh, down £14m.

It was the first time the value of deals in the west exceeded the capital total since the first quarter of 2015, with the market in Glasgow boosted by the £48.4m purchase of 110 St Vincent Street by South Korean investors. The building is occupied by Bank of Scotland.

While deal values rose in Glasgow, the overall value of sales in Scotland slipped to its lowest in five years, at £641m.

SPF director David Melhuish said: “Glasgow was very impressive this quarter, outperforming Edinburgh for the first time in four years against a wider Scottish market that saw a reduced value of sales activity.

“Glasgow’s sales increase was fuelled by a number of £5m-plus deals, totalling £129m, whereas Edinburgh only secured £33m in the same category.

“A notable feature of Scottish commercial property investment in the Q2 period was the rise of capital sourced from Asia, which topped £250m for the first time on record, according to CoStar data.”

By Scott Wright

Source: Herald Scotland

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UK house prices drop in March amid Brexit uncertainty after shock rise, says Halifax

UK house prices grew 2.6 per cent year on year in March, but fell compared to the month before, according to data released today.

The value of the average UK home hit £233,181 last month, after growing 1.6 per cent between January to March compared to the three months to the end of December.

But house prices dropped 1.6 per cent from February to March, according to Halifax’s latest house price index, to offset a 5.9 per cent surge the bank reported last month that experts viewed very sceptically.

Russell Galley, Managing Director, Halifax, said: “This reduction partly corrects the significant growth seen last month and again demonstrates the risk in focusing too heavily on short-term, volatile measures.

“Industry-wide figures show that the number of mortgages being approved remains around 40 per cent below pre-financial crisis levels, and we know that lower levels of activity can lead to bigger price movements.”

While young people struggle to save up deposits, the combination of fewer homes for sale and fewer buyers has propped up growth, Galley added, underpinning the annual price rise.

However, these factors in addition Brexit impasse currently deadlocking parliament continue to weigh on the housing market, and London house prices in particular.

“These conflicting challenges, when combined with the ongoing uncertainty around Brexit, have had an impact across the country but most notably in London, meaning that we continue to expect subdued price growth for the time being,” Galley said.

Drop corrects ‘bizarre’ Halifax house price rise

Howard Archer, chief economic adviser to the EY Item Club, said last month’s drop corrects the “eye-watering and frankly bizarre” six per cent surge in house prices Halifax suffered criticism over in February.

That contrasted heavily with Nationwide’s own measure of 0.4 per cent growth.

Archer again criticised Halifax’s comparatively volatile measure, pointing to other sharp rises of three per cent in January and 2.5 per cent in December.

“The overall impression is that the housing market is currently soft as it is being hampered by challenging conditions with buyer caution currently being reinforced by heightened Brexit and economic uncertainties,” Archer added.

“The overall picture [is] being dragged down by the weakness in London and the south east.”

Lack of homes hurting buyers’ options

Brian Murphy, head of lending for Mortgage Advice Bureau, said Brexit uncertainty is too easy an answer for the lower level of mortgage approvals.

“The lower levels of homes currently available could be another obvious contributory factor, as this somewhat reduces buyer choice,” he said.

“However, those who are moving home at the moment are likely to find that lender competition has seen rates remain low, providing a silver lining in otherwise cloudy times.”

Lucy Pendleton, founder director of independent estate agents James Pendleton, concurred, saying: “It’s no surprise to see prices fall back this month as low stock levels and general buyer malaise plagues the market.”

London lows continue to drag down UK housing market

Pendleton added that the more reliable annual rise in house prices shows that regions are underpinning the rise, while London lags behind

“There are few signs of improvement in the number of transactions across the capital,” she warned.

“Buyers are understandably showing caution while we remain in this period of limbo, possibly in the belief there will be better opportunities to broker a deal after we leave the EU.”

Sam Mitchell, boss of online estate agent Housesimple, said the market almost looks healthy without London.

“If you take London out of the equation, we are seeing more normal market conditions in other parts of the country, particularly in the north, with healthy levels of transactions during this early spring period, when traditionally there’s more activity in the market,” he said.

Jonathan Hopper, managing director of Garrington Property Finders, said buyers who are committed to London and the southeast are doubling down as they realise momentum is with them.

“Buyers are feeling increasingly emboldened and we’re seeing some very aggressive offers succeed – with sellers who need to move quickly having no choice but to accept big price reductions,” he warned.

Brexit uncertainty continues to weigh down UK housing market

The latest UK house prices show Brexit is still harming the market despite record employment, wage increases and low interest rates, said property lender Octane Capital.

Boss Jonathan Samuels said: “Brexit has torpedoed consumer confidence.

“Strong economic fundamentals count for nothing when the UK body politic is in such fundamental disarray.

“A drought of buyers and lack of homes for sale has been the defining narrative of the property market for the past two years.

“Prospective sellers and buyers alike are holding back as an unprecedented political drama plays out. For most people, the inclination is to play it safe rather than make a move.”

Jeremy Leaf, north London estate agent and a former Rics residential chairman, said the UK housing market is holding up better than expected under the pressure of Brexit, but that the prolonged political problems are hurting activity.

“On the ground, we are seeing more buying activity in the buildup to the traditionally busier spring market but it is patchy, encouraging in some areas, disappointing in others, even sometimes very close to one another,” he said.

“On the other hand, many sellers are still cautious, awaiting a small sign at least that their Brexit nightmare will soon be over and they will have more confidence about taking on additional debt.”

By Joe Curtis

Source: City AM

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Housing minister warns of Brexit’s threat to Scotland’s housing ambition

A “no deal” exit from the EU has potential to cause serious problems for Scotland’s housing sector, housing minister Kevin Stewart has warned.

In a letter to housing organisations and stakeholders due to issue this week, Mr Stewart will highlight the potential adverse consequences of Brexit including:

  • Hurting investor confidence in residential assets and build to rent market
  • Inflation and interest rate fluctuation affecting rents, the financial health of Registered Social Landlords (RSLs) and the availability and cost of finance for new build homes
  • Reduced availability and increased costs of house-building materials such as timber, prefabricated concrete and boilers from non-tariff and tariff barriers
  • Impact on the availability of EU nationals working in the construction and housebuilding sector, as well as housing support services

Speaking ahead of Scotland’s Housing Festival 2019 tomorrow, Mr Stewart said: “The UK’s exit from the EU has the potential to impact the housing sector in Scotland and therefore our housing ambitions. As we strive to provide stability and certainty, our efforts are being compromised by the UK Government’s failure to acknowledge our concerns or discuss compromise alternatives.

“Some 60% of the UK’s building material imports come from the EU and we have a particular reliance in Scotland on imported timber for housebuilding. Many of those employed across the housing sector are EU nationals. The extent to which we depend on EU relations cannot and should not be underestimated.

“We are committed to delivering more affordable homes and are on track to deliver our ambitious 50,000 affordable homes target by 2021, backed by our investment of over £3 billion. We are also investing in energy efficiency improvements to existing homes, making them warmer and cheaper to heat.

“We must not allow the UK Government’s approach to Brexit jeopardise these commitments which also supports our aims to end homelessness, and reduce fuel poverty.

“We will continue to work with the housing sector on Brexit-related risks – with construction, housebuilding and mortgage lending industries in Scotland, as well as through the Joint Housing Policy and Delivery Group.”

Scotland’s Housing Festival 2019 takes place in Glasgow on 12-13 March.

In 2018, the Scottish Government commissioned an analysis of the construction and housebuilding industry in Scotland to understand specific Scottish risks on housing demand, materials and workforce.

Source: Scottish Housing News

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One in five home loans were remortgage or product transfer

More than 1.6 million borrowers switched product or remortgaged in 2018, making up almost one in five of all homeowner mortgages, according to UK Finance.

Of these, over one million (1,189,100) borrowers opted for a new deal with their existing provider through a product transfer, representing £158.7 billion of mortgage debt refinanced internally.

The total number of product transfers that were conducted on an advised basis was 624,900, worth £85.7 billion, while 564,300 transfers, worth £73 billion, were execution-only.

In the fourth quarter of 2018, there were 331,500 homeowners product transfers representing £46.1 billion of mortgage debt refinanced internally.

Of the total number of product transfers in the fourth quarter of 2018, 176,700 transfers, worth £25.2 billion, were conducted on an advised basis and 154,900 transfers, worth £20.9 billion, were execution-only.

These figures do not feature in any market data on remortgaging, or other published gross mortgage lending data.

Jackie Bennett, director of mortgages at UK Finance, said: “This shows a high level of customer engagement, as borrowers continue to take advantage of a competitive marketplace to switch to a product that best suits their needs.

“For those who need help in finding the right product, support is widely available through both direct channels and intermediaries, with more than half of borrowers taking advice for their new deal.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, commented: “It is good to see these stats are now being produced and that the product transfer market was a little larger than most people would have thought.

“Product transfers are good for lenders with big back books but for new lenders they are going to have to offer competitive products to compete and attract business away. From a borrower’s perspective, this makes it a great market.”

By Joanne Atkin

Source: Mortgage Finance Gazette

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Housing market off to ‘subdued’ start in 2019

The Royal Institution of Chartered Surveyors (RICS) has described the housing market as ‘subdued’, noting that new buyer enquiries fell in January for the sixth successive month.

In its latest residential market survey, the trade body confirmed that demand declined to some degree across almost every region in the UK, with Scotland the only exception. Even north of the border however the trend was flat.

A drop in demand has been accompanied by a fall in new listings also, to the weakest level seen since July 2016, while agreed sales fell further as well.

What’s ahead?

The RICS survey found that sales expectations are negative for the next three months both nationally and across most parts of the UK, though surveyors are positive in expecting sales to rise over the next year.

Prices are expected to continue to slip, with London and the south east subject to the most negativity from surveyors. RICS noted that these regions have seen strong house price growth in recent years, making them less affordable.

A mixed picture for landlords

The survey revealed a mixed picture for the lettings market. While demand picked up modestly, for the third straight quarter, new landlord instructions fell for the eleventh successive quarter.

Surveyors expect rents to increase by around 2% over the next year.

Simon Rubinsohn, chief economist at RICS, noted that while some respondents had enjoyed a stronger start to the year than anticipated, the majority were continuing to find the market a tough one in which to do business.

“Resolution of the Brexit negotiations is widely seen as critical to encouraging potential buyers back into the market, although whether that will be sufficient in London and parts of the south east where affordability remains stretched and the tax changes are most penal remains to be seen,” he added.

Source: Your Money

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First time buyers cease to chase market

First time buyers have ceased to chase the housing market and pay proportionally more than home movers, as Brexit uncertainty and affordability concerns take hold.

Analysis by home finance provider Gatehouse Bank, has found the number of areas where first time buyers were willing to pay more to secure a foot on the property ladder has plummeted 98.8 per cent year on year, signalling a strengthening buyers market.

Doncaster in South Yorkshire was the only area where first time entrants to the property market were prepared to pay slightly more than home movers.

In 2017 the same study found 81 areas where first time buyers were chasing the market.

While affordability and Brexit uncertainty have played a significant part in the decline, according to the report, so too has the continued slowdown in house price growth across the country.

The latest Halifax House Price Index revealed that prices in the three months to January were a mere 0.8 per cent higher than in the same three months a year earlier, with the average house price being £223,691.

Charles Haresnape, CEO of Garehouse Bank, said: “First time buyers are an interesting group because they are a bellwether for affordability and the wider housing market.

“In the round, they are acutely sensitive to whether they are getting good value because it can have a significant impact on how quickly they are able to lower their finance costs and move up the ladder in the future.

“If first-time buyers are chasing the market to a larger degree than home owners, it is a bullish sign for prices.

“When they do a volte-face like this, people should take notice because first-time buyers are the new blood that keeps a market on its feet higher up the ladder.

“This trend could right itself over the next year, but only if wage growth continues to beat inflation and there is confidence in the economic outlook.”

Greg Cunnington, director of lender relationships and new homes at Alexander Hall, said: “It is not surprising to see that first time buyers are looking to not pay over the odds.

“It is a strong buyer’s market currently with the Brexit uncertainty, putting the purchaser immediately in a strong position.

“We also have a climate where there is more stock availability for first time buyers thanks to the Help to Buy scheme, which is proving incredibly successful, and means first time buyers are more likely to be willing to walk away from a property knowing that other options will be available.”

Data from UK Finance published in January showed 35,000 first time buyer mortgages were completed in November 2018, a rise of 5.8 per cent on November 2017.

Meanwhile, a number of lenders have announced reduced rates on high loan-to-value mortgages to assist first time buyers in getting on the property ladder.

Analysis from Moneyfacts last week (February 8) showed the average two-year fixed rate at the maximum 95 per cent loan-to-value (LTV) tier has fallen by 0.54 percentage points.

Commenting on the data, Darren Cook, finance expert at Moneyfacts, said: “There clearly seems to be a concerted drive by mortgage providers to try and secure the business of potential FTBs, who are the lifeblood of the mortgage and property markets and it is encouraging to see rates decrease as a result of some healthy competition.”

Source: FT Adviser