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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

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Private Rented Sector investment to hit £75bn by 2025

Investment in the UK’s private rented sector (PRS) is expected to nearly double in size over the next six years, as home-ownership rates wane in the wake of affordability pressures.

The level of capital being invested or committed into the UK’s professionally-managed institutional PRS is forecasted to hit £75bn by 2025, marking a sharp rise from its current levels of just under £40bn.

The total proportion of the UK’s housing market which is expected to be privately rented is also set to grow from 20.6 per cent to 22 per cent, with an additional 560,000 households predicted to be living in the private rented sector by 2023, according to Knight Frank.

“Once again, affordability has emerged as a key reason for people choosing to rent in order to live in an area where they would not be able to buy,” said Tim Hyatt, head of residential lettings at Knight Frank.

Hyatt added: “However, average rents in Great Britain rose one per cent in the 12 months to December as more landlords leave the sector and levels of stock decline.”

Source: City AM

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UK Property Asking Prices Fall By £26,000 as Housing Market Slows Down

New research has revealed that the market price of nearly two out of every five properties for sale in the UK has gone down by over £26,000.

According to property website Zoopla, sellers have lowered the price of 37.9% of properties, up from 32.4% reported in April. It is being seen as proof that the British housing market is slowing down.

This property market outlook suggests that there are differences across regions, with London slowing down whole Manchester and Glasgow perform well.

In London, 39.5% of listed property prices have gone down, compared to 34.6% in April. In Mitcham, asking prices have been reduced by 45%, which is the highest of any borough in the capital. Kensington and Chelsea, where some of the most expensive homes are located, registered an average reduction of £127,394.

The highest proportion of reduced list prices was registered in Brighton at 46% while Glasgow and Manchester had a more positive property market outlook with decreases of 19% and 26% respectively.

The research found that Bradford, London, and Newcastle upon Tyne had the highest percentages taken off the original sale price. Across the country, the average discount is £26,131.

Zoopla representative Lawrence Hall said that the research results should be welcome news for aspiring homeowners trying to get a foot on the property ladder. He said with the property market outlook being so uncertain at the moment, it would be interesting to see whether these reduced prices go up in the coming months.

The research is further confirmation that there is a decline in the UK housing market, especially in London and the more expensive areas of southeast England.

According to the recent figures from Your Move, property price growth in England and Wales reached a six and a half-year low in September, with prices falling throughout the southeast.

The average property price went up 0.9% to £302,626, which is lower from a yearly increase of 4.5% recorded in September 2016.

The total number of transactions fell 16% per month, with approximately 72,500 sales completed in September.

The country is still coping with a housing shortage as construction lags behind the growing population in the UK, but demand has been restrained because many first-time buyers are stretched while 2016 tax changes have made buy-to-let investing less profitable.

Source: CRL

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Buyers eye up Christmas offers as prices slip in November

Homeowners hoping to sell their house are slashing prices and expectations, in a move that signals a boon for buyers in the run-up to the festive season.

Property prices tumbled 1.7 per cent this month, marking the largest November drop since 2012, with London’s stagnant housing market continuing to see a sharper decline than any other UK region.

While prices typically edge down ahead of the Christmas period, today’s data from Rightmove signals a higher-than-usual drop as sellers lower their demands in a bid to lure in cautious buyers amid Brexit uncertainty and wage stagnation.

Inner London’s house prices saw the sharpest monthly fall, with values from October to November dropping 2.5 per cent to an average £754, 726. However, the lowering of prices has signalled a slight uptick in activity, with a modest one per cent rise in the number of November sales compared with the same month last year.

“Some new-to-the-market sellers and their agents have acted early to try to improve the buying mood and avoid the traditional “buyer humbug” dislike of Christmas housing activity,” according to Rightmove director Miles Shipside.

He added: “While many thought that the down-to-the-wire Brexit deal uncertainty would hold people back from buying, more buyers have actually jumped in. Some buyers see this pre-Christmas price lull as a gift to their negotiations. It proves that people need to get on with their lives and will continue to buy homes if the underlying economic fundamentals remain strong.”

Prime Central London’s market has seen one of the most noticeable price drops in the last 12 months, underlined by a slowdown in high end residential areas such as Kensington.

Stamp duty and market volatility have helped deter a swathe of wealthy buyers looking to snap up homes in the capital, with a recent LonRes study showing prices across prime London dipped three per cent in the third quarter of 2018 in the wake of greater buyer uncertainty.

Source: City A.M.

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Estate agents facing pressure as housing market cools and online players expand

Estate agents could be next on the high street casualty list, with more set to experience financial difficulty as the housing market cools and online firms move onto their turf.

Experts at accountancy giant KPMG reckon that pressures on high street agents will come to a head in the second half of the year, piling further pain on town centres reeling from hundreds of retail store closures.

Blair Nimmo, KPMG’s head of restructuring in the UK, said: “High street estate agents are presently facing an unprecedented set of challenges.

“The rise of online-only agencies have combined with falling house prices, a general slowdown in sale activity and a raft of legislative changes, all of which have generated headwinds for your average high street agent.

“I would therefore not be surprised to see operators across this sector struggle over the second half of the year and beyond.”

High street strugglers

  • House of Fraser
  • Maplin
  • Toys R Us
  • New Look
  • Carpetright
  • Mothercare
  • Jamie’s Italian Byron

Profits at the likes of Foxtons have come under intense pressure recently, with the London property market slowing considerably since the Brext vote.

Britain’s biggest listed estate agency Countrywide, which is behind Hamptons and Bairstow Eves, is also in full-blown crisis as it seeks to raise emergency funding.

It comes as the rise of online firms such as Purplebricks, Emoov and Tepilo has eaten into the market share of bricks and mortar firms.

The high street has been pummelled this year by several high profile retail administrations and store closure programmes.

House of Fraser, Maplin and Toys R Us have all gone bust, while New Look, Carpetright and Mothercare have all shut stores.

The casual dining space has also come under pressure, with Jamie’s Italian and Byron among the firms to close restaurants.

“We continue to see companies in the casual dining and retail spaces battle hard in the face of changing consumer attitudes towards spending, coupled with increased costs as a result of the living wage and business rates pressures,” Mr Nimmo said.

“Whilst a number of chains have survived through the implementation of successful CVAs or via pre-pack administrations, inevitably there have been site closures and job losses across many parts of the country.”

But a study by KPMG of notices in the London Gazette shows the total number of companies in England and Wales entering into administration during the second quarter of 2018 fell sharply.

A total of 302 companies went into administration between April and June 2018, compared with 347 in the previous quarter, a fall of 13%.

Year-on-year, the number was up from 297 administrations seen during the same period in 2017.

Mr Nimmo added: “The latest figures reflect a relatively positive picture for most businesses.

“For the most part, adopting a long-term cautious approach appears to be paying off for the majority of firms, although sectoral-specific challenges and broader global economic changes will inevitably force some businesses to reconsider their operations and potentially restructure their organisations to improve efficiencies.”

Source: Shropshire Star