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Forecast Predicts House Prices in Wales will Grow by 18% in 5 Years

Global real estate firm, Savills has forecast strong house price growth of 18% in Wales over the next five years, which would make it one of the fastest-growing markets in the UK.

While housing supply is almost meeting need, there is still a shortfall in the provision of affordable homes in Wales. The predicted house price rises are expected to put further pressure on the sector.

Caroline Jones is an associate director in Savills development team in Cardiff, specialising in residential development.

She comments:

“The value of residential property in Wales is fast catching up with the rest of the UK. The removal of the Severn Bridge tolls this time last year has already had an impact on prices in the south east of the country and this is likely to ripple out further in coming years. While this is good news for home owners, it will push the limits of affordability for more households, making the requirement for affordable provision increasingly urgent.”

2,592 new affordable homes were delivered in 2018/19, up from 2,316 in 2017/18, while the Welsh Government expects to have completed 3,569 during 2019/20. Despite the improvement in delivery rates, it currently still falls 33% short of the requirement of 3,895 more affordable homes per year over the five years[1] to March 2024, as set out by the Government earlier this year.

The average annual requirement of 3,895 affordable homes over the next five years, set out by Government earlier this year, equates to 47% of new homes built between 2019 and 2024. However, Savills figures show that only 34% of new homes completed since 2010 were affordable.

Commenting on the research, Caroline said:

“Welsh Government is aiming to build 20,000 new affordable homes over the next five years, an ambitious target in the current climate. Not only does it mean upping annual delivery to 4,000, there is already an accrued shortfall to address.

“Whilst the target to develop is welcomed, as it should contribute to addressing the affordability issue, it undoubtedly puts pressure on providers to deliver. This new drive is also an opportunity for those in the sector to innovate and ultimately to provide the quality, as well as the volume of affordable stock we need.”

“We are seeing action within the public sector, with councils gearing up to develop stock and strategic initiatives by Housing Association involving private sale to cross-subsidise the affordable housing provision.

“The challenges are significant. Availability of land is an issue, which is resulting in private and public sector housebuilders competing for the same sites. A shortage of skills and labour is another key barrier to overcome in order to upscale to this level.”

Help to Buy has been a major factor in the new build market, accounting for 20% of all new home sales since 2015 and this reached 25% of housing supply in 2018. During 2019, the number of Help to Buy sales fell back slightly to 20% of all new homes to September 2019, however it remains a key contributor to new homes delivery.

Welsh Government has yet to make a decision on whether to follow England in extending Help to Buy beyond 2021. This creates uncertainty for housebuilders, who will currently be buying land to develop after this date. Focus will also turn to affordable housing providers, who will try and address this issue by creating alternative low cost home ownership style products.


Source: Business News Wales

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Prospects looking brighter for housing market in 2020, say experts

The housing market should start 2020 with a new mood of confidence – but continued political uncertainties will keep a lid on property prices, economists predict.

Several predictions for house price growth across 2020 are clustered around the 2% mark.

Experts said the Conservatives’ recent general election win could help to bring more certainty to the market and unleash some pent-up buyer demand.

An abundance of low-rate and low-deposit mortgage deals should also support activity.

Some estate agents are even sensing there may be a “Boris bounce” for the housing market, which could in the coming months have an effect on house prices.

Lucy Pendleton, founder director of estate agent James Pendleton. said: “Not yet visible is the Boris bounce in house prices we all sense is already well under way.”

However, Brexit concerns could also pick up as 2020 progresses, making people behave more cautiously, and affordability constraints will also cap price growth in some parts of the UK, economists said.

Howard Archer, chief economic adviser at EY Item Club, said the Conservatives’ strong election win could ease some uncertainties and help house prices rise by around 2% in 2020.

But he said the economy still looks set for a “challenging 2020”.

Mr Archer said: “There will still be appreciable uncertainties, including on the Brexit front – so that the upside for house prices in 2020 is likely to be limited.”

Rightmove also predicts that the price of property coming to market will increase by 2% in 2020.

It said there is now an opportunity to release some pent-up buyer demand that had been building before the general election.

House sellers’ pricing power will be boosted by a lack of other options for potential buyers, Rightmove suggests.

Lawrence Bowles, senior research analyst at Savills, said: “At the top end of the market in particular, we’ve seen a strong build-up of new buyer demand.

“Greater political certainty will unlock some of that demand, but with less than a year to agree a Brexit deal, there are still many unknowns.

“As a result, we expect average house prices to rise by just 1.0% in 2020, and a higher 4.5% in 2021, as improving certainty translates into higher growth in wages and GDP.”

Looking further ahead, Savills predicts the North West of England and Yorkshire and the Humber will have the fastest house price growth over the next five years.

House prices in these areas were slower than those in southern England to recover after the financial crisis – meaning there is still more room for growth.

Mr Bowles continued: “Affordability constraints in London and the South East will cap potential price growth over the next few years.

“By contrast, prime central London – the most expensive core of the capital – now looks relatively good value on a world stage. We expect to see five-year growth totalling around 20%.”

The Royal Institution of Chartered Surveyors (Rics) has also pencilled in house growth of 2% for 2020 – but it believes rents will increase at a faster rate of 2.5% as the rental sector struggles with a lack of housing supply.

Meanwhile, Nitesh Patel, Yorkshire Building Society’s strategic economist, believes the number of house sales will hold steady at around 1.2 million annually – the total generally seen in recent years.

He said: “Sales to first-time buyers are buoyant and now account for around half of all house purchases.

“A strong jobs market and low mortgage rates are likely to support the market, but concerns around affordability may limit the number of people wanting to move home.

“Mortgage lenders are helping to maximise affordability by lending on 40-year mortgage terms, to help borrowers lower their monthly repayments.

“We’re seeing more and more lenders giving access to 5% deposit mortgages, which can be useful for those looking to buy their first home.”

David Hollingworth, associate director, communications at broker London and Country Mortgages, said that in the uncertain climate, mortgage borrowers have been locking into the low fixed-rate deals currently available, giving them certainty over their monthly repayments.

The range of longer-term fixed-rate mortgages has also been growing, he said, including deals which will lock borrowers into a single rate for 10 or even 15 years.

Russell Galley, managing director, Halifax, said housing market prospects for 2020 look “a bit brighter” than in 2019.

He continued: “However the shortage of homes for sale and low levels of house-building will continue to support high prices, while the challenges faced by prospective buyers in raising the necessary deposits may continue to constrain demand.

“As a result, our forecast for house price growth in 2020 is in the range of 1% to 3%, consistent with the pattern of weaker growth seen since 2017.”

Separate consumer research from Lloyds Bank found 43% of people think the biggest challenge for first-time buyers in 2020 will be raising a deposit, while 27% think it will be high property prices.

A quarter (25%) think the biggest challenge for existing home owners looking to move will also be expensive property prices, while 23% cited high moving costs.

Here is a round-up of house price predictions for 2020:

– EY Item Club – 2% average house price increase
– Rightmove – 2% average asking price increase
– Savills – 1% average house price increase
– Yorkshire Building Society – 0% to 2% house price increase
– Royal Institution of Chartered Surveyors – 2% average house price increase and 2.5% average increase in rents
– Halifax – House price inflation of between 1% and 3%.

By Vicky Shaw

Source: Yahoo Finance UK

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Thurrock records highest UK house price rise this decade

Thurrock in Essex has seen the largest increase in house prices this decade outside London, analysis of Land Registry data by modular housing developer Project Etopia shows.

Prices have increased by 78.2% in the past decade from £156,741 to £276,164, compared to an average rise of 38.8% across the UK, excluding London.

Joseph Daniels, chief executive of Project Etopia, said: “The staggering extremes of some of these house price increases this decade, topping 76% in 10 years, means owning a home remains an unachievable dream for many.

“In Three Rivers, for instance, buyers would now need mortgages of close to half a million pounds to buy an average home, leaving many properties out of reach for average earners.

“Healthy appreciation will be welcomed by many homeowners but for the wider country this is a totally unsustainable situation.

“The UK must accelerate house building to increase supply over the next decade and temper Britain’s affordability problems.

“Only Modern Methods of Construction can deliver new homes fast enough to meet the demand and ensure ordinary hard-working people can afford to buy property right across the UK.”

House prices fell in just three parts of the country in the last 10 years — Blackpool (-7.8%), Redcar and Cleveland (-1.0%) and Hartlepool (-0.4%).


Source: Property Wire

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Zoopla says lower house price growth is ‘the new normal’

Lower house price growth is “set to be the new normal,” according to analysis by property site Zoopla.

It said in a report published on Monday the average home in UK cities had increased by 54% over the past decade, up £90,000 in value.

But it predicted lower average growth of 3% in cities in the year ahead, compared to an average of 4.4% a year over the past decade.

The past three years have seen a slowdown in the property market, particularly in London, the south and east of England as Brexit uncertainty, tax reforms, and a weaker economy have dampened growth.

Growth in London has edged upwards recently to 1.7%, with a lower number of homeowners willing to sell fuelling increased competition. But that still marked a growth rate just a third of the 5.4% average for the past 10 years.

Zoopla predicts only a limited level of pent-up demand to increase sales and prices in the wake of the election result, with average city price growth of 3% forecast in 2020.

Richard Donnell, research and insight director at Zoopla, said: “The election result provides an element of certainty for households looking ahead to 2020, but the result changes very little in terms of housing market fundamentals.

He said affordability was key, and would “dictate the level to which prices will increase” in the year ahead.

Donnell said falling prices and rising wages had given only a “modest” boost to affordability in southern cities such as London, Oxford, and Cambridge.

The price-to-earnings ratio, a key measure of affordability, has dropped by 10% in London from a 20-year high of 14 times average incomes in 2017. But prices remain 12.7 times higher than average pay in the capital, with many Londoners’ chances of getting on the property ladder still slim.

Zoopla’s analysis suggests the boost to prices from lower interest rates has run its course, “which means house prices are set to rise at a lower rate in future,” closer to average earnings.

But the picture varies significantly by region, with cities where property is cheapest typically recording the highest recent, current, and predicted future growth.

Zoopla said the most affordable cities, such as Glasgow, Liverpool, and Belfast, had seen growth twice as fast as the UK average over the past decade.

While the property site’s analysts expect the affordability problem to hold down growth to 2% across London in 2020, they expect growth of up to 4% in the most affordable cities.

The figures also show Edinburgh, where the average home costs around £21,000 more than the UK average at around £241,000, has seen the fastest growth over the past year. Prices rose 5.4% in the year to November 2019.

Donnell added: “As we start the next decade in housing, a top priority for the new Government is to ensure we look to remove the barriers to households moving home, with housing policy catering to the different market conditions across the country, while increasing housing choice across all tenures.”

By Tom Belger

Source: Yahoo Finance UK

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House price growth slowed to seven-year low in October before ‘Boris bounce’

The Land Registry has revealed that house price growth slowed to its lowest rate since September 2012 during October in an index that is now said to be “catching up with history”.

The figures relate to a period before the General Election results and the so-called Boris bounce, where agents have since reported a resurgence in activity.

Land Registry figures show house prices increased by 0.7% annually during October, down from 1.3% a month before and the lowest rate of growth in seven years.

Prices also fell 0.7% on a monthly basis, suggesting an average UK house price of £232,944.

House price growth was strongest in Northern Ireland where prices increased by 4% annually, while the lowest was in London with a 1.6% decline.

Provisional estimates for sales in August suggested transactions fell by 5.5% across the UK, dropping by 4.1% in England, 4% in Scotland and 2.5% in Wales but increased by 4.9% in Northern Ireland.

However, Lucy Pendleton, founder director of independent estate agents James Pendleton, suggested the market now looks very different since the election outcome.

She said: “The spinning compass of uncertainty and doubt have been dislodged by the north star of a new PM, and the market has reacted immediately.

“As a result, the tired and frustrated reality that is still faintly visible in this Land Registry report reflects a status quo that is already a distant memory.

“Not yet visible is the Boris bounce in house prices we all sense is already well under way. The UK house price index has well and truly been overtaken by events.

“The index will now spend the next two months going through the motions while it catches up with history. Meanwhile, there’s every sign on the high street that buyers and sellers are returning to the fold.

“The UK is certainly experiencing a resurgence in activity but we won’t know for a couple of months whether, on balance, this will begin to push prices higher or whether greater supply will have a moderating influence while brokers and agents enjoy a pick-up in volumes.

“New enquiries for property picked up the day of the election result and foreign buyers are matching their domestic counterparts for renewed enthusiasm.”

Mike Scott, chief property analyst for Yopa, said: “The figures are based on completions in October, where the purchase price will have been agreed around June, and other indicators have already shown that there was a slowdown over the summer.

“We expect that the rate of increase will recover in future releases, though with another brief slowdown in the figures during the first quarter of next year as the political uncertainty of October and November works its way into this report.

“For the year as a whole, we expect a return to slow but steady house price growth, roughly in line with wage increases and general inflation.”


Source: Property Industry Eye

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UK House Prices Grow at Fastest Rate in Seven Months

Average house prices in the UK grew at their fastest rate for seven months in November but was below 1% for the twelfth month in a row, according to Nationwide.

The latest housing index from the Nationwide has revealed that average house prices grew by 0.8% in the year to November, the strongest annual increase since April. On a monthly basis, house prices grew by 0.5% in November compared to October. The average price of a home in the UK now stands at £215,734.

“Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensification of Brexit uncertainty,” said Robert Gardner, chief economist at Nationwide. “To date, the slowdown has largely centred on business investment, while household spending has been more resilient.

“On the whole, prevailing trends have been maintained just before, during and after UK general elections. Broader economic trends appear to dominate any immediate election-related impacts. It appears that housing market trends have not traditionally been impacted around the time of general elections. Rightly or wrongly, for most home buyers, elections are not foremost in their minds while buying or selling their home.”

Howard Archer, chief economic adviser to the EY Item Club, said: “House prices can be volatile on a month-to-month basis and we would not read too much into November’s pick-up in prices reported by the Nationwide. With the economy largely struggling, Brexit uncertainties extended and the UK facing a General Election on 12 December, it seems unlikely that the housing market will see any significant pick-up in the near term at least. Consequently, annual house price increases are likely to remain limited to around one per cent in the near term.”

David Westgate, chief executive of Andrews Property Group, said: “A lot of people are fed up with the noise of politics and are getting on with their lives. Exceptionally low mortgage rates and more affordable prices are making that decision a bit easier. Some sellers are still proving stubborn on price but overall there is a bit more realism than there was earlier in the year.”

Source: Money Expert

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The UK cities where property prices are rising fastest

Leicester has the fastest-rising property prices in the UK of any major city over the past year, according to new figures.

The average property in the cathedral city in the East Midlands has increased 4.8% in value over the past year to £182,900, according to Zoopla.

The growth compares to an average of 1.9% across the country, the data from Zoopla and Hometrack’s UK cities house price index suggests.

Liverpool in north-west England had the second-fastest rising prices, up 4.6% to a still lower-than-average £124,700.

Manchester, Cardiff and Edinburgh also recorded growth of at least 4%, while Birmingham, Belfast, Leeds, Glasgow and Nottingham prices were up more than 3% in the year to August.

Meanwhile several more expensive cities have seen prices decline or stagnate amid a sluggish market, Brexit uncertainty and tax reforms in recent years.

Oil capital Aberdeen in north-east Scotland saw the biggest drop, with prices down 4% and still below their 2007 peak. University city Oxford was the only other city that saw prices decline, down 0.4% but still high at an average of £409,100.

Portsmouth, London, Cambridge and Southampton also saw growth of less 1%.

A report by Zoopla and Hometrack published on Wednesday noted that values had stagnated in southern cities for much of the past four years, but were still 56% higher than their 2007 peak.

It said its experts expected current trends to continue in the near-term.

“There is no sign of any sudden weakening in market conditions as the Brexit debate returns to centre stage. Market trends are being dictated by the fundamentals of local economies and the affordability of housing across cities,” it noted.

The report added: “The acceleration in house price inflation since 2013, reaching almost 20% in London in 2014, and the subsequent slowdown since 2016 are part of the unfolding house price cycle.

“Price growth has slowed to more sustainable levels as the market adapts to a changing profile of demand, resulting from tax and policy changes and increased mortgage regulation.”

By Tom Belger

Source: Yahoo Finance UK

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UK house prices: Growth slows in October

Annual UK house price growth slowed last month due to ongoing political and economic uncertainty.

House prices were up just 0.9 per cent in October – the lowest growth seen so far this year – as the new uncertainty of a general election and the impending Brexit deadline hit consumer confidence.

Analysts said activity in the housing market picked up over the summer, after the date for the UK to leave the European Union was pushed back to 31 October, but growth has since slowed as potential buyers hold off making purchases.

On a monthly basis, house prices fell by 0.1 per cent, while house prices grew 0.2 per cent between August and October compared to the previous quarter.

The average house price in the UK last month was £232,249, according to the latest Halifax House Price Index.

Halifax managing director Russell Galley said: “A number of underlying factors such as mortgage affordability and wage growth continue to support prices, however there is evidence of consumers erring on the side of caution.

“We remain unchanged from our view that activity levels and price growth will remain subdued while the UK navigates political and economic uncertainty.”

Mike Scott, chief property analyst and estate agent Yopa, added: “We expect a resumption of more normal levels of housing market activity once the Brexit outcome is more settled, which may then give a short-term boost to house prices, since the stock of houses for sale is quite low, and demand can react more quickly than supply once the uncertainty is lifted.

“However, affordability continues to be stretched, especially in the south and east of the country, and we do not expect any sustained above-inflation increase in house prices. But neither do we expect a house price crash, with a no-deal Brexit now looking unlikely and the economic fundamentals remaining strong.”

By Jessica Clark

Source: City AM

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Annual house price inflation stutters at under 1% for 11th month in a row

Annual house growth is just 0.4%, Nationwide has reported.

It puts the average house price at £215,368, only marginally ahead of September’s figure of £215,352.

Nationwide chief economist Robert Gardner said that annual house price inflation has been at under 1% for the 11th month in a row.

On average, house prices have risen by around £800 in the last 12 months, which he said was a “significant” slowing compared with the previous year.

In the same period to October 2016, prices increased by £9,100.


Source: Property Industry Eye

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UK house prices: Growth ‘subdued’ in wake of Brexit slowdown

House price growth remained below one per cent for the 11th consecutive month in October, as hopeful homeowners sat tight amid Brexit uncertainty.

House prices in the 12 months to October rose 0.4 per cent to £215,368, according to the new figures from Nationwide.

On a monthly basis, house prices climbed 0.2 per cent.

Robert Gardner, Nationwide’s chief economist, said: “Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensifying of Brexit uncertainty.

Gardner added: “To date, the slowdown has centred on business investment, while household spending has been more resilient.”

According to Nationwide, solid labour market conditions and low borrowing costs
seem to be offsetting the drag from the uncertain economic outlook.

“The question is whether this pattern will continue,” said Gardner.

No immediate recovery in sight

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that there was “no immediate recovery in sight”.

A slowdown in hiring by companies, which has been primarily driven by uncertainty over Britain’s imminent departure from the EU, will “also likely ensure that demand remains week”, Tombs forecasted.

The latest modest rises underline concerns over a slowdown in activity in the UK’s housing market, particularly in London and the South, despite a recent improvement in earnings and employment.

“It’s hard to see the market emerging from this sub-one per cent annual growth rut until there is clarity on Brexit,” said David Westgate, chief executive of Andrews Property group.

“The sheer level of political uncertainty has left the property market in a protracted limbo.”

Data released by Rightmove earlier this month found that the price of property coming to market has endured its weakest month-on-month rise at this time of year in over a decade.

Prospective home buyers have been undeterred by the approaching Brexit deadline, while sellers have been put off by ongoing uncertainty over UK house prices, according to to the real estate platform.

North London estate agent and former Rics residential chairman Jeremy Leaf said that the data confirms “that we are not seeing or expecting to see any fireworks in the market over the next few months or at least until the smoke from the political situation begins to clear.”

Guy Harrington, chief executive of property lender Glenhawk, said that the recent news of a potential general election has added to market jitters, creating “a near perform storm of unsupportive conditions for growth”.

By Sebastian McCarthy

Source: City AM