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Property market expected to start 2021 with a bang

With pent-up demand after lockdown and news of a Covid-19 vaccine, the UK property market should expect a promising start in 2021, property developer GRE Assets has predicted

With offices in the UK, Spain and the Middle East, GRE Assets has an international perspective of the impact the global Covid-19 crisis has had on the UK property market.

Michael El-Kassir, managing director of GRE Assets, explains what the company has experienced in the latter half of 2020 and how he believes this will inform the market as we approach 2021.

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He said: “With the imposed lockdown restrictions meaning people have spent much more time at home this year, we believe this has led to a distinct rise in the number of people seriously considering their next property move. Low interest rates, the existing Help to Buy scheme and stamp duty incentives, have also created a sense of urgency.

“The pandemic has been a wakeup call for prospective buyers and renters, who have reassessed their priorities when looking for their next home. Not only are they spurred on to make the leap from London, they also recognise the importance of having access to green space, whether that is nearby parks, balconies, terraces, and gardens.

“The working world has also seen a vast shift, as employees and companies have adapted to working from home. While people will return to the office as the latest restrictions ease, we strongly believe businesses will continue to work flexibly moving forward, meaning adaptable space and connectivity at home is of high importance for new homeowners.”

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El-Kassir said the South East is the region to watch in 2021.

He added: “With the constraints experienced within the housing market earlier this year, we saw increased demand and lack of supply post lockdown. While UK wide we have seen a rise in house prices and activity, it is the South East that really stands out.

“The region offers the near-perfect package of high-quality, affordable homes in popular regeneration areas with excellent connectivity to London.

“Demand here is currently outstripping supply, which is something we intend to continue to address as we head into 2021.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Housing market to remain open despite national lockdown

Housing Secretary Robert Jenrick has confirmed that the housing market will remain open despite the looming national lockdown.

On Saturday Prime Minister Boris Johnson confirmed a new month-long lockdown for England beginning on November 5 and ending on December 2.

Information regarding the fate of the housing market during the lockdown was initially scarce between, however Housing Secretary Robert Jenrick has taken to Twitter over the weekend to confirm that the market will remain open.

On Sunday evening Jenrick confirmed that property moves would still be allowed and that tradespeople would still be able to enter properties.

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The residential property surveying industry has also received confirmation from the Ministry of Housing, Communities & Local Government that physical property inspections can continue to be provided.

Additionally the Prime Minister confirmed that mortgage repayment holidays will no longer be ending with further information published set to be published today.

Kate Davies, executive director of IMLA, praised the government for keeping the market open in challenging times.

She said: “While the country faces a second national lockdown, the government has rightly decided to keep Britain’s housing market open.

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

“Lenders, advisers, surveyors, and conveyancers are already experiencing unprecedented levels of demand from consumers eager to take advantage of the government’s Stamp Duty holiday, which is due to end on 31 March 2021, and also the Help to Buy scheme, which will be available only to first-time buyers from 1 April 2021.

“They now face the task of helping thousands more consumers potentially requesting payment deferrals as borrowers struggle to meet their mortgage repayments during the lockdown.

“Closing the housing market at this time would have only added to this pressure on the sector by creating yet another backlog of demand once lockdown ends.”

By Ryan Fowler

Source: Mortgage Introducer

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Two thirds of UK firms ‘fully operational’ after COVID, survey says

Two thirds of British businesses say they are now “fully operational” after the coronavirus lockdown, up from half in June, according to a survey on Sunday.

A further 21% of the firms, polled in the first half of July by the Confederation of British Industry (CBI), said they were partly operational with some premises still closed.

“With businesses gradually reopening, this month’s data seems to indicate a turning point for the economy,” said Alpesh Paleja, an economist for CBI, one of Britain’s main business lobby groups.

But many firms, especially those in consumer-facing sectors, remained in “acute financial distress”, he added.

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Britain’s lockdown has been slowly lifting since May, with the last major change on July 4 when hotels, pubs and restaurants were allowed to reopen.

However, on Friday Prime Minister Boris Johnson said he was postponing further relaxation, which would have helped some arts and entertainment venues, due to rising cases.

Businesses on average said they were operating at 85% of usual capacity due to social distancing, compared with 72% when a stricter rule generally requiring two metres of distance was in force.

Lack of demand from customers continued to be businesses’ most common challenge to resuming normal operations, the CBI said. More than two thirds of firms named it as a barrier to normal operations, down slightly from three quarters in June.

The Bank of England is due to set out new quarterly forecasts on Thursday, as different sectors of the economy recover at different rates from the unprecedented economic damage.

Whether the main barrier to growth is lack of consumer demand, or businesses’ difficulties meeting it, will be key to the central bank’s decisions on stimulus later this year.

Reporting by David Milliken

Source: UK Reuters

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UK house prices surge the most in 11 years as lockdown lifts

UK house prices jumped the highest in 11 years this month, adding to signs that parts of the economy are rebounding rapidly as coronavirus restrictions are eased.

Mortgage lender Nationwide said average house prices leapt by 1.7% in July, above all forecasts in a Reuters poll of economists and the biggest monthly increase since August 2009, when the market was recovering from the financial crisis.

“The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions,” Nationwide chief economist Robert Gardner said.

The Bank of England reported that mortgage approvals – a first step to house purchases – quadrupled in June after hitting a record low in May, though they remained more than 40% below pre-pandemic levels.

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Prices are now 1.5% higher than they were a year ago, though Nationwide said that on a seasonally adjusted basis, they were 1.6% below a peak reached in April.

The mortgage lender said it expected price gains to continue in the short term, helped by a temporary cut in property purchase tax which finance minister Rishi Sunak announced this month to help what he saw as an ailing market.

But these price increases risked proving a “false dawn” if unemployment surged later this year when temporary job support measures end, Nationwide’s Gardner warned.

Britain’s economy shrank by a quarter over March and April due to the unprecedented hit from the coronavirus lockdown.

Some Bank of England officials fear that while there might be an initial rapid bounceback, this will rapidly slow and it could take years for the economy to regain its former size.

Retail sales are almost back at pre-pandemic levels, for example, but many pubs, restaurants and entertainment venues are closed or operating below capacity due to social distancing restrictions and public concern about the coronavirus.

Reporting by David Milliken

Source: UK Reuters

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Lockdown results in positive financial impact for a third of first-time buyers

A third of first-time buyers across the country have revealed that the lockdown has resulted in a positive impact on their finances, with this group of property hunters making up a third of those hoping to purchase a property in the next 12 months according to analysis from money.co.uk.

In regards to location, the data shows that over a quarter (28%) of first-time buyers are looking to purchase a home in London in the next year, with Barnet being the most sought after area for Help to Buy purchases. The top five London hotspots for first-time buyers also include Tower Hamlets, Lewisham and Greenwich.

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Additional insights reveal that the process of taking out a mortgage has become more difficult during the pandemic. Of those who have applied for a mortgage, 44% have claimed that there has been a reduced number of mortgage products available to them.

Salman Haqqi, personal finance expert at money.co.uk, said: “Since the UK went into lockdown in March, we have seen a huge impact on the property sector as a whole. However, following the recent reopening of the market, there has been an increase in the number of people purchasing the properties they had to put on hold due to COVID-19 restrictions.

“For those looking to buy, there are currently fewer mortgage products available than pre-COVID-19 but there are still some good deals to be found. With the base rate at a historical low at the moment, prospective buyers should really do their homework and research their options.

“If they have any doubts, they should speak to a mortgage advisor to ensure they are getting the right deal for their personal affordability, and circumstance.”

Source: Property Wire

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UK housing market enjoys ‘mini-boom’ as asking prices soar in July, says Rightmove

Residential property asking prices soared in July as coronavirus lockdown restrictions were lifted, sparking a “mini-boom” in the UK housing market.

The average asking price of property coming to market in July was up 2.4 per cent compared to March, before the coronavirus lockdown was announced.

The 3.7 per cent annual rate of increase recorded in July is the highest since 2016, according to the latest analysis by property platform Rightmove.

Year-on-year buyer enquiries were up 75 per cent in Britain since the beginning of the month, and 44 per cent of new listings that came up for sale in the first month after restrictions were eased in May have been marked as sale agreed.

Estate agents hailed the figures, saying that such levels of activity were “unheard of” within the UK market, saying that they expected prices to rise further.

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The property market was brought to a standstill during the UK coronavirus lockdown, as estate agents closed, construction work was paused and prospective buyers were unable to view houses.

The government opened the English property market on 13 May, and has since announced a stamp duty holiday to reignite the market.

The number of monthly sales agreed jumped 15 per cent in England compared to last year and soared 35 per cent in the five days after the government increased the stamp duty threshold from £125,000 to £500,000.

Rightmove housing market analyst Miles Shipside said: “The unexpected mini-boom continues to gather momentum as more nations reopen.

“The busy until interrupted spring market has now picked up where it left off and has been accelerated by both time-limited stamp duty holidays and by homeowners reappraising their homes and lifestyles because of the lockdown.”

James Forester, managing director of Barrows and Forester, said: “Such significant levels of buyer activity are unheard of within the UK market and should ensure a nitrous-oxide fuelled return to form for the UK property market.

“While the market will return to a more familiar form of ‘normality’ as this demand levels out, it has truly defibrillated any fears of a downturn in home values”.

However, former RICS chairman Jeremy Leaf said that the signs were that many expected this surge to be a brief one.

“We get the impression too that many recognise this may be a relatively short-term surge as government support schemes start to fall away and news about the economy is not very encouraging”, he said.

“Looking forward, we don’t expect prices to increase particularly strongly as the number of new listings is also rising, providing more balance between supply and demand. The market remains price-sensitive.”

By Jessica Clark

Source: City AM

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Buyers return to UK housing market as lockdown lifts

Buyers returned to the UK’s housing market last month as it reopened after months of standstill during the coronavirus lockdown, however activity remained low, the latest research showed.

The latest survey by the Royal Institution of Chartered Surveyors found that a net balance of 61 per cent of its members reported a rise in new buyer enquiries in June following a result of minus 94 per cent the previous month.

The number of new properties being listed for sale also jumped during the month, with a net balance of 42 per cent of Rics members reporting an increase rather than a decrease.

Despite the increase in supply, the average number of properties on estate agents’ books remained close to all-time lows, with just 39 on average per branch.

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The results of the survey were published the day after the chancellor announced a year-long stamp duty holiday, raising the payment threshold from £125,000 to £500,000, in a bid to boost activity in the market.

Simon Rubinsohn, Rics chief economist, said: “Key activity indicators in the Rics survey suggest that the market is enjoying a short term bounce following ending of the lockdown, with sharp spikes in the metrics tracking both buyer enquiries and new instructions.

“However, there are worrying signs that this rebound may quickly run out of steam against the backdrop of a tightening in lending criteria by mortgage providers, and the uncertain macro environment particularly with regard to the employment picture.

“Respondents to the survey highlight both of these issues in explaining the broadly flat picture regarding sales expectation beyond the immediate uplift.

“Meanwhile, the issues around the sales market appear to be shifting sentiment in the lettings market with, somewhat ominously given the prevailing economic climate, rent expectations beginning to edge upwards once again.”

By Jessica Clark

Source: City AM

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Stamp duty holiday: What does it mean for the UK housing market?

In a “mini-budget” spring statement tomorrow chancellor Rishi Sunak is expected to announce a range of measures to boost the economy which has been ravaged by the coronavirus crisis.

As part of the package the chancellor is reportedly planning to cut stamp duty for properties worth up to £500,000 in a bid to reinvigorate the housing market after it was brought to a standstill by the coronavirus lockdown.

Data published this morning by Halifax showed that UK house prices fell for the fourth month in a row in June – the first time since 2010.

Estate agents and property industry groups have been urging the government to grant a stamp duty holiday throughout the coronavirus crisis, in a bid to encourage nervous buyers.

The Royal Institution of Chartered Surveyors (Rics), Knight Frank and Zoopla were among those in the sector to call for a cut to stamp duty.

What is a stamp duty holiday?

Stamp duty is a tax paid by property buyers, and the amount paid depends on the area of the UK, the value of the property or land and whether or not you are a first time buyer.

In England and Northern Ireland buyers pay the tax on properties sold for more than £125,000, although first-time buyers only pay stamp duty on deals worth more than £300,000.

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For non-first-time buyers the tax is two per cent up to £250,000, five per cent up to £925,000, 10 per cent up to 1.5m and 12 per cent above £1.5m.

Sunak is expected to say he will raise the property tax threshold to as high as £500,000, four times its current level. That would exempt most homebuyers from paying any stamp duty for up to a year, the Times reported.

Who would benefit from the changes?

Experts said that buyers with big deposits that are looking to purchase a home in a more expensive area will benefit the most from the tax cut. First-time buyers could benefit depending on where they are looking to buy a house.

Legal & General Mortgage Club director Kevin Roberts said: “The latest stamp duty holiday proposals look to be another step in the right direction and make for positive reading for first-time buyers.

“Our new research suggests that first-time buyers could be the engine that drives the housing market forward this year, with 93 per cent still planning to purchase a property in 2020.

“A stamp duty holiday would bring more savings to these people planning to step onto the ladder. Our research revealed that many prospective homeowners have already been managing to save extra during the lockdown – an average of £107 a week in fact.”

However, Rightmove property expert Miles Shipside said that a stamp duty holiday would not benefit most first-time buyers without better mortgage availability.

Rightmove’s Property Expert Miles Shipside said: “Buyers in higher priced areas with bigger deposits would benefit most if the stamp duty threshold was raised to £500,000.

“If it is included in the summer update it needs to be made clear what it would mean for people home hunting or currently going through the conveyancing process right now, as an announcement now that doesn’t come into play until the autumn will only lead to people delaying their plans.”

“There have been similar packages in the past which were focused on people buying their first home, but the suggestions are that this new proposal will be for all buyers,” Yorkshire Building Society’s strategic economist Nitesh Patel added.

“This will benefit homeowners looking to upsize and downsize, as well as first-time buyers in high-value areas.”

What would a stamp duty holiday mean for the UK housing market?
Property experts anticipate that tomorrow’s announcement could boost housing activity, although they warned that changes must be implemented straight away to avoid buyers holding out until autumn.

Yorkshire Building Society’s strategic economic Nitesh Patel said: “We have yet to see the full details of a stamp duty holiday package, but if the speculation is correct then buyers purchasing a property of up £500,000 from the Budget announcement in the Autumn stand to save between £10,000 and £15,000 – which is a substantial amount and should boost housing activity.

“But, it would be even better if the changes came into force straight away rather than waiting until the Autumn.”

Patel added: “ Mortgage rates are near to record-lows, which is also likely to help the housing market over the coming months, particularly for those buying more expensive properties. I would also expect more homes to come on to the market, particularly around this price bracket, as the stamp duty cut would improve the saleability of their home.”

Bricks & Logic founder Matthew McDwyer added: “We may not see an immediate spike in asking prices to the level we saw in 2015, but it will definitely support the market and we will perhaps see slight price increases for the cheaper to middle range of the market.”

“However, any reduction in stamp duty on second homes or investment properties could spike new demand from overseas investors or landlords,” McDwyer said.

By Jessica Clark

Source: City AM

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UK economy set to return to growth in third quarter after coronavirus chaos

The UK economy’s coronavirus-induced downturn eased in June as key health indicators hit a four-month high, according to a closely-followed survey.

The UK’s economic output hit a measure of 47.6 on IHS Markit’s flash purchasing managers’ index (PMI), a four-month high.

Anything below 50 represents a contraction. But it was a stark improvement from May’s score of 30 after April’s lockdown saw the UK economy sink to an all-time low score of 13.8.

IHS Markit’s chief business economist, Chris Williamson, said it was a sign the UK looks set to return to growth between June and September.

“June’s PMI data add to signs that the economy looks likely return to growth in the third quarter, especially given the further planned easing of the lockdown from 4 July,” he said.

“June saw a record rise in the PMI for a second successive month,
confirming that the economy is moving closer to stabilising after the worst of the immediate economic impact from the Covid-19 pandemic was felt back in April.”

The pound was broadly flat against the dollar this morning to stand at $1.2462.

It follows earlier PMI showing the eurozone economy also hit a four-month high, led by France’s recovery.

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Manufacturers lead UK recovery

The manufacturing sector led the UK’s June recovery to post growth of 50.8. But the UK services industry slipped again, though not nearly as badly as it did in May. The industry posted a score of 47, compared with May’s 29.

The UK’s private sector also said confidence hit a four-month high in June as firms raised their expectations for the year ahead.

Easing of lockdown restrictions amid the coronavirus pandemic helped UK economic activity improve after its April collapse.

Uncertainties loom for UK economy

But industry figures told IHS Markit underlying demand remained “very subdued”, with cutbacks in spending holding back business activity.

And Williamson warned the UK economy’s longer term prospects are plagued by uncertainty.

“Demand clearly remains weak, as indicated by a further steep decline in backlogs of orders and an ongoing fall in new orders,” he said. “Many Covid-19 restrictions and social distancing measures will also need to stay in place until an effective treatment or vaccine is available, curbing demand in a variety of service sectors in particular.

“Uncertainty over recovery prospects and job prospects also mean demand for many goods, especially non-essential big-ticket items, is likely to remain weak for many months.”

Doubt over whether the UK can strike a trade deal with the EU before the Brexit transition period ends in December 2020 is also a worry for firms.

That led IHS Markit to forecast the UK economy to contract by 11.9 per cent this year before expanding by 4.9 per cent in 2021.

‘Solid start’ to UK economy’s recovery

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the June data suggests a solid rebound in GDP. But he warned gains will be harder to come by as the UK economy struggles to return to normal.

“A range of daily data are consistent with output rising significantly in June, after a sluggish start to the recovery in May,” he said.

“Nonetheless, the pick-up in activity partly reflects firms working through backlogs of work that accumulated during the peak of the pandemic. In addition, firms still are cutting headcounts rapidly.

“With restrictions to suppress Covid-19 likely to impose a hard ceiling on activity in certain sectors of the economy until a vaccine is found, and low levels of consumers’ confidence pointing to elevated saving, a full recovery in GDP in the second half of this year remains unlikely.”

Pantheon Macro stuck to its base case that GDP will stand five per cent below its pre-lockdown peak in the fourth quarter.

Thomas Pugh, Capital Economic’s UK economist, added that the pace of the UK economy’s recovery was pleasing.

“The economy seems to be recovering a little quicker from its nadir in April than we had first expected,” he said. “This trend should continue in July as bars, restaurants and cinemas will probably be able to open from 4 July and a reduction in the official social distancing measure from 2m to 1m would allow those firms that are open to serve significantly more customers. “

By Joe Curtis

Source: City AM

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UK economy still shrinking but pace of decline eases – PMI

UK economy remained in a severe downturn in May although the pace of the slump moderated from April’s crash and some companies benefited from the easing of coronavirus lockdowns around the world, a survey showed on Wednesday.

The IHS Markit Purchasing Managers’ Index (PMI) combining Britain’s huge services sector and manufacturing rose to 30.0 from 13.8 in April, up from a preliminary May reading of 28.9.

The index for services alone was also slightly higher than the preliminary figure but at 29.0 it was the second-weakest on record after April’s crash to 13.4.

Companies lost orders as clients slashed spending.

“Consumer demand also remained very subdued, with large areas of the service economy still in the planning stage of restarting business operations,” Tim Moore, economics director at IHS Markit, said.

Expectations rose modestly for a second month from March’s low. But businesses dealing face-to-face with customers were extremely concerned that social distancing measures would hold them back and push up costs.

On the positive side, some companies saw new orders from the Asia-Pacific region, where the recovery is more advanced, and from new online sales efforts.

But export orders continued to fall and some services firms said they were not taking work from abroad due to severe restrictions on travel.

Britain’s services PMI does not include retailers, who have been hardest hit by store closures since the March 23 lockdown, or many of the self-employed.

Writing by William Schomberg

Source: UK Reuters