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UK business optimism plummets

Growth expectations among UK businesses has fallen to 49%, from 69% last year

Among private businesses in the UK, optimism is rapidly diminishing, according to new research from PwC. It is falling at more than twice the rate of European counterparts.

PwC polled 2,400 organisations in 31 countries for its European Private Business Survey. Among the 220 UK firms, growth expectations fell to less than half, having been at 69% last year.

Although growth expectations among the other countries also fell, it was by only 8%, from 65% in 2018 to 57% now.

The survey also revealed that across Europe, businesses are facing a widening skills gap. In the UK, PwC estimates, the lack of appropriate skill costs an annual £29bn in lost revenue.

Brexit also remains a concern for businesses. Suzi Woolfson, PwC’s UK private business leader, pointed out that “until there is some certainty around it, businesses will continue to tread carefully.”

Woolfson also highlighted the possibilities that come from uncertainty, “those companies that are agile and flexible can benefit enormously”, she said.

Commenting on the skills shortage that the survey threw light on, she said, “Across Europe we are seeing a skills shortage becoming a significant issue for private businesses and in the UK, while companies say the problem is improving in comparison to last year, overall the impact is still significant”.

UK private businesses are more open than those in Europe to funding from private equity or venture capital for digitalisation, the survey found.

Woolfson said, “Our survey shows that UK private businesses recognise the importance of technology to their long term aspirations, which is why it is important to invest in technology and data to ensure real commercial improvements in systems and processes.

“With their ability to be nimble and decisive, private companies are well-placed to make strategic investments which can lead to substantial benefits”, she added.

By Frances Ball

Source: Economia

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Buy-to-let revealed! The most in-demand cities for renters today

It was once the destination of choice for buy-to-let investors, but London has fallen way out of favour with both would-be and existing landlords over the past year.

The electrifying property price growth of recent decades may have required some truly staggering wads of cash for people to build their property portfolios. However, the rate at which rents were also booming in the capital meant for many this was a price worth paying.

How things have changed since then. London is no longer considered hallowed ground by buy-to-let participants. Added to the problem of stagnating or even falling property prices in some boroughs, changes to stamp duty on second homes have also resulted in eye-watering payouts to the taxman compared with those of previous years.

Bristol’s best
There’s a treasure trove of evidence showing returns in other British cities now exceed those you can expect from investment in the capital. And new research from Bunk gives fresh ammunition for landlords to give London short shrift and buy elsewhere.

According to the lettings platform, which sought to discover the country’s most in-demand city based on which have the highest number of properties already let as a percentage of total listings, Bristol came top of the pile with a score of 50%. Newport and Nottingham followed in second and third place, respectively.

Top 10 Cities By Demand

Location / Rental demand

  • Bristol 50%
  • Newport 39%
  • Nottingham 36%
  • Plymouth 34%
  • Cambridge 34%
  • Portsmouth 32%
  • Bournemouth 30%
  • Oxford 29%
  • Manchester 26%
  • Glasgow 25%

Commenting on the data, Bunk co-founder Tom Woollard said: “We’re starting to see a real change in the rental market with a number of the more alternative cities coming to the forefront in terms of popularity,” with renters seeking out great places to live without the huge rents that come with so-called traditional cities.

London found itself languishing in the bottom 10 of Bunk’s report with a score of just 21%.

Bottom 10 Cities By Demand

Location / Rental demand

  • Aberdeen 8%
  • Newcastle 14%
  • Edinburgh 14%
  • Leeds 16%
  • Swansea 16%
  • Liverpool 18%
  • Cardiff 21%
  • Belfast 21%
  • London 21%
  • Sheffield 22%

Sticking with stocks

I have to confess, though, that this latest set of data isn’t enough to encourage me to get involved in the Bristol buy-to-let scene. No thanks. Given the mix of rising costs and increasing paperwork, not to mention the vast amounts of initial cash needed to buy property in the UK, I’d rather stick with stock investing.

And what a time to be an investor in equity markets right now. Dividends from the world bourses are hitting record high after record high. While signs of a slowdown in the global economy are predicted to dent many a company’s earnings in 2019, any such slowdown are unlikely to harm payout growth in the immediate future.

Take a look at the FTSE 100, for instance. The average forward dividend yield for the index sits at a chunky 4.3%, though this is not the only reason to grab a slice of some of Britain’s blue-chips. As I type, some of the index’s big hitters are trading on irresistibly-cheap valuations, something which is illustrated by the Footsie’s low forward P/E ratio of around 13 times.

My tip? Take advantage of the recent reversal in FTSE 100 share prices and go grab a big-dividend-paying bargain, or two.

By Royston Wild

Source: Yahoo Finance UK

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Fixed rate mortgages become more popular

Fixed rate mortgage deals are becoming more and more popular as eight in ten mortgage shoppers are considering the option.

This month’s Experian Credit Barometer, out yesterday (June 20), showed May saw 81 per cent of searches directed at fixed rates, compared with 72 per cent in March and 77 per cent in April.

In comparison, interest for variable repayment rates slowed with only 10 per cent searching for a tracker and 9 per cent for a variable mortgage in the month.

Last year, The Bank of England raised interest rates for the first time in 10 years while governor Mark Carney has previously said interest rates were likely to rise twice more over the next three years.

The possibility of rate rises could mean homeowners increasingly value the stability that longer term fixed rate mortgages provide.

The Bank yesterday (June 20) announced it was holding the base rate at 0.75 per cent, which could encourage more savers to lock in the low rates while they can.

Amir Goshtai, managing director of Experian Marketplace & Affinity, said: “People want certainty when it comes to their finances, especially in times of such economic uncertainty.

“Rising popularity in fixed term mortgages and high searches for loans for debt consolidation tell us borrowers are looking for low, fixed monthly payments to effectively manage their outgoings and keep control of their finances.

“Interest rates for mortgages and loans are relatively low so now is a good time for borrowers to shop around and seriously consider locking-in their monthly repayments.”

It emerged in February that the number of fixed rate residential mortgages available has reached a 12-year high, as 5,214 fixed rates were available on the market compared with 4,570 in the previous year.

Daniel White director of White Financial Services said two-year rates have always been a popular choice because they provide “the flexibility of allowing a client to review over a shorter term”.

However, he added it is “the longer term security in a period of uncertainty” that is pushing more mortgage shoppers towards longer term fixed rates.

Jonathan Harris of mortgage broker Anderson Harris, said five-year deals were proving particularly popular at the moment.

He said: “The attraction is they give protection from potential rises for the medium term, without locking the borrower in for too long.”

Providers have also increasingly been introducing 10 year plans in order to meet growing demand for this option.

Research from consumer champion Which out earlier this year showed the number of providers offering such a mortgage had doubled in the year to January, to 14 providers.

For example, Santander was the latest lender to add a long-term fixed rate mortgage to its range with the launch of a ten-year deal in May this year.

By Eveline Vouillemin

Source: FT Adviser

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House prices jump in Telford as ‘Brexit leads to lack of supply’

House prices have jumped in Telford, and an industry expert has said the rises are partly due to the Brexit referendum.

Figures for April show that Telford & Wrekin has seen average house prices rise by 6.4 per cent on the previous year, to £170,358 – well above the UK average increase of 1.4 per cent.

Shropshire prices matched the national increase at 1.4 per cent, rising to £210,194. Powys’ has also seen a significant hike, with a 5.1 per cent rise to an average of £189,043.

Jo Culley, managing director at DB Roberts, which has offices across the region, including at Shrewsbury, Shifnal, and Telford, said: “Certainly in the last 12 months there has been a lack of general supply of property onto the market. If you have more buyers than sellers then it forces prices up.

“That is probably the simple reason for any price increase the market might have seen.”


Mrs Culley said that there had been a reduction in the number of people looking to sell their homes in the wake of the EU referendum.

She said: “I think we have been a little reluctant, in a Brexit landscape, to move for the sake of moving.

“Most of the people instructing us to sell since Brexit have been doing so because they have to move, not because they want to.”

Tony Morris-Eyton, head of office for Savills in the West Midlands, said he believed part of the increase was down to natural correction in the market.

He said: “House values in the South rose significantly greater than our part of the world and part of this is a catching up process. The differential between us and particularly the South is beginning to narrow.”

In the West Midlands the rise was ahead of the national average at 2.2 per cent with the average house price in the region reaching £195,498.

The average UK house price was £229,000 in April, according to the figures released jointly by the Office for National Statistics, Land Registry and other bodies.

Nationally property values increased by 0.7 per cent month on month.


The weakest annual growth was in London, where prices fell by 1.2 per cent over the year. In the South East, prices fell by 0.8 per cent.

House prices increased annually by 1.1 per cent in England, 1.6 per cent in Scotland and 3.5 per cent in Northern Ireland.

In England, the East Midlands saw the strongest annual house price growth in April, with a 2.9 per cent increase.

ONS head of inflation Mike Hardie said: “Annual house price growth remained subdued but was strong in Wales, which showed a pronounced increase on the month.

“In London, house prices continued to fall over the year but rental price growth there strengthened.”


Jamie Durham, an economist at PwC, said: “The house price growth story is split between the South East and the rest of the country… While prices are falling in the South East, prices elsewhere are growing.”

Howard Archer, chief economic adviser at the EY Item Club, said: “The ONS data do little to change the overall impression that the housing market is still finding life challenging as buyer caution amid still relatively challenging conditions is being reinforced by Brexit, political and economic uncertainties – although there are significant variations across regions with the overall picture being dragged down by the weakness in London and the South East.”

Jonathan Harris, director of mortgage broker Anderson Harris, said: “There is still a significant premium to pay to buy property in London and the South East, with first-time buyers increasingly having to call upon the ‘Bank of Mum and Dad’ for help with the deposit.”

Gareth Lewis, commercial director of property lender MT Finance, said: “House price growth is picking up outside of London and the South East, which is encouraging as it creates more balance to the country as a whole, although London prices still remain at a premium.

“Hotspots for investors include Middlesbrough, Nottingham, Newcastle and university areas, where the transactional flow has greatly increased as investors chase yield.

“Values are therefore creeping up in response to greater demand for property in those areas.”

By Dominic Robertson

Source: Shropshire Star

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Bank of England holds interest rate at 0.75% as ‘downside risks’ increase

The Bank of England on Thursday held the headline UK interest rate at 0.75%.

The central bank delivered its June interest rate decision at 12pm on Thursday. The 9-person Monetary Policy Committee (MPC) voted unanimously to hold the bank borrowing rate at 0.75%. Analysts and economists had widely forecast this outcome.

The MPC said UK economic growth appears to have “weakened slightly in the first half of the year” and said “downside risks to growth have increased.”

“Globally, trade tensions have intensified,” the MPC said in a statement. “Domestically, the perceived likelihood of a no-deal Brexit has risen. Trade concerns have contributed to volatility in global equity prices and corporate bond spreads, as well as falls in industrial metals prices. Forward interest rates in major economies have fallen materially further.”

Pound falls on decision

The pound fell against the dollar and the euro in the immediate aftermath of the Bank’s decision, although not significantly.

The pound was down about 0.1% against the euro at €1.123 10 minutes after the decision, having traded at €1.125 just before the announcement. Sterling was up 0.4% against the dollar at $1.269 but had been as high as $1.272 earlier in the morning.

The drop-off came as investors judged that Thursday’s update meant a future interest hike from the Bank of England looked less likely.

The Bank of England and governor Mark Carney have consistently said they plan to gradually raise the UK interest rate.

The MPC said on Thursday that if the economy develops “broadly in line” with forecasts and there is a smooth Brexit, then “an ongoing tightening of monetary policy over the forecast period, at a gradual pace and to a limited extent, would be appropriate.”

However, analyst and economists say the failure to resolve Brexit means the bank is unlikely to make any major changes this year.

“Despite a growing number of hawkish signals coming from the Monetary Policy Committee, in reality the Bank’s room for manoeuvre is limited until Brexit uncertainty clears,” Tej Parikh, chief economist at the Institute of Directors, said in a statement.

The MPC admitted on Thursday: “The economic outlook will continue to depend significantly on the nature and timing of EU withdrawal.”

Brexit cloud hangs over the Bank

Despite the Bank’s signals about raising rates, Investors believe the Bank of England is more likely to cut interest rates than raise them, according to market data ahead of Thursday’s announcement.

The backdrop to Thursday’s decision was a mixed economic picture for the UK. Jobs and wage data has held up well so far in 2019, but GDP growth is sluggish and recent manufacturing data suggests it could remain that way.

The MPC said on Thursday that recent data has been “volatile, in large part due to Brexit-related effects on financial markets and businesses.”

However, the committee repeated the statement that its “response to Brexit, whatever form it takes, will not be automatic and could be in either direction.” Carney has in the past said that the Bank could raise interest rates in response to a no-deal Brexit, although economists and investors largely think he is bluffing.

Central banks load the ‘bazookas’

The Bank of England’s decision to hold rates steady came as other major central banks this week signalled intentions to loosen monetary policy.

European Central Bank chief Mario Draghi said earlier this week that more stimulus may be needed in the eurozone if conditions do not improve. The US Federal Reserve held its benchmark interest rate unchanged at 2.5% on Wednesday but signalled a future interest rate cut looks increasingly likely.

IMF head Christine Lagarde warned in January that “the world economy is growing more slowly than expected and risks are rising.” Conditions have not improved markedly since then, with key issues such as the US-China trade war and Brexit yet to be resolved.

Bank of England governor Mark Carney will give a speech at the annual Mansion House dinner in London on Thursday evening. Carney could give more details on his outlook for the UK economy and future rate movements.

By Oscar Williams-Grut

Source: Yahoo Finance UK

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Rents rise as buy-to-let clampdown begins to hit landlord pockets

Landlords are raising rents after being hit by the buy-to-let clampdown in their tax bills.

ONS data shows rents rose 0.9% in the 12 months to May 2019, the highest annual growth since September 2017.

Across the UK, tenants saw rents rise 1.3% annually in May, up from 1.2% a month before.

Northern Ireland had the highest annual growth rate at 2.1%.

In England, private rental prices grew by 1.3% in the 12 months to May 2019, up from 1.2% in April 2019.

Rents grew by 1.1% annually in Wales, unchanged since February 2019, and Scotland saw a 0.8% increase, up from 0.7% previously.

Commenting on the figures, Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA), said: “After filing their 2017-18 tax returns, landlords are becoming more aware that ongoing changes to mortgage interest tax relief are increasing the financial challenges facing them.

“This is leading more property investors to reconsider their options and the pressure on some to increase rental prices will be mounting. We do not see it as a coincidence that several rental indices show that, following a protracted period of softness, average rents in London are once again increasing.

“Despite the current political and economic uncertainty, we hope a change in leadership will be seen as an opportunity for the Government to demonstrate its support for landlords, which goes hand-in-hand with helping people get on the property ladder.

“Growing pressure on landlords to increase rents in order to make ends meet will ultimately have a detrimental effect on renters’ ability to save for deposits to buy their own homes.

“The Government should be careful to ensure that any future regulation around the private rental market does not further shrink the appetite of private landlords to satisfy the growing demand of tenants.”


Source: Property Industry Eye

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UK property demand may be ‘breaking through’, says report

House prices in England and Wales returned to annual growth with a 0.3% rise in May as foreign buyers returned to the property market and demand may be beginning to break through, according to a report released on Monday.

The Acadata house price index said prices grew on an annual basis for the first time since December as a favourable exchange rate and reduced prices have precipitated the return of foreign buyers, particularly in London where those from overseas were undeterred by a 0.2% annual drop in regional prices.

The report added that “there is some evidence that pent-up demand held back by events of the last few months is breaking through” despite the lack of progress in Westminster.

However, overall sales in the capital over the three month period ended May were 3% below the same period last year and 12% below the period in 2017 as prospective buyers and sellers in the Greater London region remain hesitant to take the plunge.

While record levels of employment, recent wage growth and strong competition in the mortgage market have offered some households more buying power, many potential buyers are still struggling to get a mortgage.

“In reality, the positive news on average earnings masks considerable divides – with younger and lower- and middle-income households not enjoying the same level of income inflation as those in higher wage brackets,” said the report.

Overall, average prices stood at £300,866 during the month, which constituted a 0.1% drop compared to the month before, as Wales, the North West of England and the East Midlands led annual growth with respective price increases of 3.1%, 2.5% and 1.5%.

By Duncan Ferris

Source: ShareCast

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Post-Brexit binge in commercial property?

Pent up demand could see a boost to the commercial property market post-Brexit, according to new analysis of the commercial property market from Shawbrook Bank.

The ‘UK Commercial Property Market Report1, produced by Shawbrook Bank and compiled by the Centre for Economics and Business Research (CEBR) assesses the state of the current commercial property market, exploring the various sub-sectors comprising the market, historic and future trends, and the impact of the changing political landscape.

The Shawbrook report shows that uncertainty over Brexit has weighed on the commercial property sector in recent quarters, as owners and tenants take stock. But despite activity slowing, the market remains a profitable place to invest and deliver a solid income over the medium to long term. Over the past 18 years, the commercial property market has returned 308% to investors compared to 209% for the FTSE100, and yields have remained stable; average yields across the commercial property sector have stood nearly unchanged at 5% since 2015.

Rob Lankey, Director of Commercial Property Investment, Shawbrook comments: “Although uncertainty is present, the commercial property market remains fundamentally resilient in terms of both yield and capital growth. Despite investors taking a wait-and-see approach, we believe many are stockpiling cash and simply postponing activity until we have a definitive Brexit outcome.

“With the long-term view and fundamentals of the commercial property market still compelling, I would go as far to say that we will see a ‘post-Brexit binge’ from professional investors looking to utilise the cash they have stockpiled to take advantage of investment opportunities in the post Brexit landscape. However, not every commercial property investment will automatically generate great returns. Doing your homework on potential investments is more important than ever. There are good and bad opportunities within all sectors.”

Factories, warehouses and other industrial properties have shown the most resilience

Underpinning the resilience of the commercial property market are factories, warehouses and other industrial properties, which over the past few years have become the best performing sector over one, three and five years, with yields in line with the commercial sector more broadly2. Stockpiling activity and strong demand for warehouses from online retailers have helped the sector to withstand economic headwinds to date, however, the unwinding of the stockpiling effect poses a risk to this asset class as does a no-deal Brexit, which would severely harm many of the manufacturers that are the current tenants of the industrial assets.

Table 1: capital value growth across industrial, retail and office properties

Capital value growth
Cumulative capital value growth Industrial Retail Office
One year: Jan 2018- Jan 2019 12% -8% 3%
Three years: Jan 2016- Jan 2019 31% -11% 5%
Five years: Jan 2014- Jan 2019 71% 1% 37%

Table 2: (Initial) yields across industrial, retail and office properties

(Initial) Yields
Industrial Retail Office
Jan-19 4.6% 5.7% 4.5%
Jan-16 5.4% 5.3% 4.0%
Jan-14 6.6% 5.7% 5.1%

 Growing popularity of serviced offices

In the office sector, demand has been strong following the recovery from the last recession. The increasing importance of professional and business services for the UK’s economy provides a strong macroeconomic background for assets in this category and growing popularity of serviced offices is becoming particularly important as new business start-ups and smaller businesses struggle to keep up with rising rents in cities such as London and Manchester and as a result are looking for more flexible spaces.

Retail needs to adapt to remain relevant

For retail properties, a number of factors have come together to create a ‘perfect storm’. On the back of a decade of very low real wage growth, consumers have turned away from the high street and increasingly do their shopping online. Recent research on high streets in Great Britain by the ONS shows that over half (56%) of addresses on high streets are now residential.3

Rob Lankey adds: “The challenges faced by retail won’t be solved by a shift to residential, but the trend will be a significant boost to opportunities for property owners. Irrespective of broad capital value trends, retail property can continue to provide strong rental returns for landlords where the combination of tenant and property location are meeting modern consumer demand. For investors of mixed-use space to realise the full benefits that can be had, there will have to be a level of collaboration in the property sector moving forward. Another beneficiary of the declining high street will be for shared office spaces, such as WeWork which would likely use former retail premises in UK town and city centres”.

Shawbrook Head of Products & Markets, Daryl Norkett adds: “Broadly, if we look at the sub-sectors that are performing today and consider the analysis brought to life in this research, there is opportunity for experienced investors to grow and diversify their portfolios. However, it is important to highlight that the current market requires a certain level of expertise, knowledge, understanding and commitment of time in order to make the right property investment decisions but if you do your homework, it can be a great investment.”

Source: Property 118

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What to expect from Bank of England’s interest rate decision

The Bank of England (BoE) is set to leave interest rates unchanged this week but will likely try to convince investors rate hikes are around the corner.

The BoE will on Thursday publish the minutes of the latest Monetary Policy Committee (MPC) meeting and the committee’s decision on interest rates. Analysts think the MPC will vote unanimously to kept the benchmark bank borrowing rate unchanged at 0.75%.

“We expect unchanged policy and for the minutes to maintain the current rhetoric of a gradual path of rate hikes,” Barclays’ senior UK economist Sree Kochugovindan said in a note sent to clients last Friday.

The Bank of England has repeatedly signalled that it wants to gradually raise the benchmark interest rate, which remains at a historic low. But economists, analysts, and investors think hikes are unlikely as long as Brexit remains unresolved and the UK’s economy remains lukewarm at best. Market prices indicate investors believe a rate cut is more likely than a hike.

As a result, Bank of England governor Mark Carney and his colleagues will have to signal in the MPC minutes and Thursday’s press conference that they do actually plan to hike rates if they don’t want markets to get a shock.

“We do not expect the BoE to move interest rates higher unless or until there is some positive resolution to the Brexit saga,” Nomura’s George Buckley wrote in a note to clients last week.

As well as Brexit uncertainty, Credit Suisse said economic “risks have turned to the downside” since the MPC’s last meeting. The investment bank cited recent worsening UK manufacturing data, as well as ongoing trade tensions between the US and China, both of which could hit economic growth. Barclays last week cut its forecast for UK GDP growth in 2019 from 1.2% to 1.1% on similar concerns.

Against this backdrop, the central bank looks more likely to cut rates than to raise them. Lower interest rates should help boost growth by encouraging borrowing and spending.

However, the Bank of England has consistently said it wants to gradually raise interest rates — not cut them further. Carney has even suggested he could raise rates if there is a no-deal Brexit, counter to conventional logic.

In order to keep this path open, the BoE will have to prepare the market for future hikes. It will likely do so by sounding a “hawkish” tone in the public comments of the committee. (In central banking, “doves” favour low interest rate policy, while “hawks” favour higher interest rates.)

“The MPC will have to issue fresh, dovish guidance in order to satisfy markets on Thursday, which now think the Committee is more likely to cut than raise Bank Rate within the next six months,” Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said in a note to clients.

“But with clearer signs emerging that domestic price pressures are building, we expect the Committee to reiterate its commitment to ‘ongoing’ tightening and to repeat its May warning that markets’ expectations are out of line with reality.“

Even if Carney and his colleagues do strike a more “hawkish” tone, investors may remain out of step with the bank.

“Markets are pricing out any prospect of a rate hike from the BoE this year (amid a Fed-led collapse in global rate expectations),” Michael Ingram, the chief market analyst at WH Ireland, told Yahoo Finance UK. “So they can try and sound hawkish, but the market ain’t buying it.”

The Bank of England’s decision will come a day after the US Federal Reserve makes its latest call on interest rates. Investors believe the Fed will signal rate cuts later this year. This loosening of policy may undermine the BoE’s attempts to threaten future rate rises.

Aside from the tone of comments from MPC members, investors will be watching the balance of voting on the nine-member committee closely. If even one member dissents, it could send shockwaves through the market as investors shift bets towards a rate hike later this year.

“A couple of hawkish comments from Haldane and Saunders have made that meeting a little more interesting than it might have been,” Allan Monks, JPMorgan’s UK economist, said in a note to clients.

“But we expect there will be no dissents at next week’s meeting, with the BoE instead using its communications to push back against current market expectations for cuts.”

By Oscar Williams-Grut

Source: Yahoo Finance UK

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Southern England housing market ‘feels ripple effects of London price falls’

More than a third of homes in southern England outside London are in housing markets where prices are tumbling year-on-year, as the cool down in the capital ripples outwards, a report has found.

Some 36% of homes across the South East, East Anglia and the south-west regions of England are in markets where prices are falling annually, Zoopla said.

House price falls in London accelerated from 2016.

But a previous period of rapid house price growth in the capital from 2010 means the average price of a London property is still 20% higher than it was in 2014.

The proportion of areas in London registering annual price falls peaked at 80% in October 2018 – with the number of areas with price falls later reducing as buyers’ and sellers’ price expectations now match up more closely.

Zoopla said that while housing markets in southern England are following trends in London, the general level of price falls in these areas is expected to remain “modest” – and will be more concentrated in commuter belt towns and areas where house prices are particularly high.

For example, in the South East, commuter areas such as Woking (minus 2.3%), Epsom ( minus 2.3%), Basingstoke (minus 1.9%) and Maidenhead (minus 1.6%) have seen annual house price falls, Zoopla said.

By contrast, areas that have performed relatively well for annual house price growth include Dover (3.4%), Hastings (2.9%) and Shepway (2.3%).

In the South West, higher value areas have seen lower house price growth.

Examples include Bath, where the average price is £345,575 and prices are up 0.3% annually, the Cotswolds, where the average house price is £365,630 – a 0.7% annual increase, and Poole where the average house price is £307,667 – up 0.3% annually.

In Gloucester and Taunton, where house prices tend to be more affordable, house prices have grown more strongly, by 3.2% and 4.6% respectively.

Looking ahead, Zoopla expects price falls in southern England to be more short-lived than in London, most likely extending into early 2020.

Its report said: “We are not predicting a subsequent bounce-back in average prices, but we would expect sales volumes, which have fallen by 10% in southern England since 2015, to plateau and then start to increase over time.

“In London, which is further down the road to a pricing realignment between buyers and sellers, we currently expect sales volumes to plateau and slowly start to increase over the latter parts of 2019 and into 2020.”

The report also said there is “little evidence” that the trends in London and southern England are spreading further afield.

In the Midlands, there has been only a very small increase in markets registering annual price falls, again concentrated in higher-value areas, Zoopla said.

Richard Donnell research and insight director at Zoopla, said: “The trends in London and southern England are all part and parcel of the unfolding housing cycle.

“There remains plenty of demand for housing in southern England but there are fewer buyers who are more cautious, seeking out value for money.

“For homeowners entering the market the key to securing a sale is to be realistic on pricing based on the profile of demand for homes in the local market.

“Our analysis shows how trends vary within regions and all local markets have their differences.”

By Vicky Shaw

Source: Yahoo Finance UK