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UK housing market stuck in slow gear as Brexit weighs – Nationwide

British house price growth remained weak in June as uncertainty about Brexit hung over the market, mortgage lender Nationwide said on Tuesday.

House prices increased by 0.5% compared with a year ago, slowing slightly after a 0.6% rise in May but in line with the median forecast in a Reuters poll of economists.

At the time of the Brexit referendum in 2016, house prices were growing by about 5 percent a year, according to Nationwide’s measure.

In monthly terms, house prices in June edged up by 0.1%, a slightly smaller increase than the median forecast in the Reuters poll for a rise of 0.2%.

Nationwide’s data chimed with other housing indicators which have suggested that a weakening of the market seen in 2018 might have bottomed out as investors wait for Britain to resolve its Brexit crisis.

“While healthy labour market conditions and low borrowing costs will provide underlying support, uncertainty is likely to continue to act as a drag on sentiment and activity,” Robert Gardner, Nationwide’s chief economist, said.

Price growth and transaction levels were likely to be little changed over the coming months, he said.

Britain is waiting for the ruling Conservative Party to choose its new leader who, as next prime minister, will attempt to strike a new Brexit deal with the European Union before an Oct. 31 deadline for the country’s departure from the bloc.

Nationwide’s data showed that prices in London fell for an eighth quarter in a row in the April-June period although the pace of decline moderated to 0.7% in annual terms from 3.8% in the previous quarter.

Prices in the capital were around 5% below the all-time highs seen in early 2017 and were about 50% above their levels in 2007, before the global financial crisis, Nationwide said.

Prices in Britain as a whole were only around 17% higher over the same period.

House prices in the second quarter rose most strongly in Northern Ireland and Wales, up by an annual 5.2 and 4.2% respectively.

Source: Yahoo News

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UK Housing Market Subdued in May

Month on month house prices in the UK fell slightly in May, according to the latest Nationwide house price index.

UK house prices fell by 0.2% in May compared to the previous month, with the market falling back after experiencing positive growth in April. Annual house price growth also slowed down in May, with a 0.6% annual rise compared to 0.9% annual growth in April. It is now the sixth month in a row that annual house price growth has been below 1%.

The average price of a property bought in May was £214,946, compared to £214,920 a month earlier. And despite the subdued growth, the average price of a home in the UK is at its highest level since July 2018 when the average was just above £217,000. Nationwide also said in its report that the number of transactions and mortgage approvals was stable during March, although it fell slightly from the 0.3% monthly growth seen in April.

“Survey data suggests that new buyer inquiries and consumer confidence have remained subdued in recent months,” said Robert Gardner, chief economist at Nationwide. “Nevertheless, indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable. Housing market trends are likely to continue to mirror developments in the broader economy.”

The slowdown in the UK housing market in recent months has been partly attributed to the ongoing uncertainty surrounding Brexit. Many industry analysts have suggested that both buyers and sellers are being put off the market until a solution is apparent, with many adopting a ‘wait and see’ approach. But with the trade association UK Finance recently revealing that the 42,989 mortgage approvals in April was the highest number since February 2017, there are signs that the postponement of Brexit in March has helped to pick up the housing market.

“It is possible that the avoidance of a no-deal Brexit at the end of March has provided some support to housing market activity through easing some of the immediate uncertainty and concerns,” said Howard Archer, chief economic adviser at the EY Item Club. “However, we suspect any boost to the housing market from the avoidance of a disruptive Brexit at the end of March will prove limited in both size and length. Certainly, latest survey evidence on the housing market remains largely downbeat.”

Nationwide’s data also revealed that the number of first-time buyers has been steadily growing in recent months, with a total of 359,000 in the year up to March 2019, just 10% below record levels seen in 2006. This increase is partly due to falling interest rates for mortgages with small deposits, although saving for a deposit is still one of the main barriers preventing people getting on the housing ladder. In London, where house prices are roughly double the national average, it takes around 15 years for an average earner to save for a 20% deposit on their first home.

Source: Money Expert

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Why now is the perfect time to be a first-time buyer

It argues that first-time buyers can take advantage of cheap mortgage rates and stalling house prices as well as the Help to Buy ISA scheme, which ends later this year.

Rates on high loan-to-value (LTV) mortgages, which require borrowers to have a small deposit so are popular with first-time purchasers, are at a record low.

The average interest rate on a two-year fixed 95% LTV mortgage has fallen from 3.95% a year ago to 3.23% today, Defaqto data shows.

First-time buyers can also benefit from a weakening housing market.

Nationwide, the UK’s largest building society, last week reported that annual house price growth was just 0.9% in April, marking the fifth straight month of weak house price inflation.

Figures from The Royal Institution of Chartered Surveyors in March show that the number of properties coming onto the market has fallen for the past eight consecutive months.

But Defaqto warns first-time buyers need to hurry if they want to take advantage of the government’s Help to Buy ISA scheme, which closes to new entrants on 30 November 2019.

The scheme, which was specifically designed to help people get on the property ladder, lets savers put away up to £1,200 in the first month and then £200 a month after that, and the government will add 25% tax-free up to a maximum of £3,000 (or £6,000 if two people are buying together).

Savers can continue to save into a Help to Buy ISA until 1 December 2030.

Katie Brain, insight analyst at Defaqto, said: “Buying a home is an expensive undertaking and for many years we have seen that first rung of the property ladder move further out of the reach of first time buyers.

“Now, with stalling house prices and cheaper borrowing, we are entering a period of opportunity for buyers looking to make their first home purchase.

“For those looking to get a mortgage, it is important to do your sums and check exactly what you can afford to borrow. While interest rates are low, an increase of just 1% can add hundreds of pounds to a monthly repayment and thousands to the overall cost of a home.”

first-time buyers

Written by: Joanna Faith

Source: Your Money

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First Time Buyers Helped by Weak House Price Growth

House price growth in the UK remained subdued for the fifth month in a row in April, according to the latest figures from Nationwide.

House prices in the country grew 0.9% in April compared to the same time last year – a slight rise from the 0.7% annual growth seen in March. Annual house price growth has in fact been below 1% every month since December 2018. However, house prices actually fell month-on-month in April, dropping by 0.4% in April. According to the Nationwide House Price Index, the average price of a home in the UK is now £214,920.

Before the Brexit referendum in 2016, house prices in the UK were growing by around 5% each year. But as many market analysts have mentioned Brexit uncertainty as a cause of the subdued growth seen recently, the stagnating prices have helped to attract a growing number of first-time buyers to the market.

The number of mortgages being taken out by first-time buyers today is approaching the levels seen before the global financial crisis in 2008. As well as the slow growth of property prices, first-time buyers are also being attracted to the housing market due to high employment rates, real wage growth and low mortgage rates.

“While the number of properties coming onto the market has also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of supply and demand in favour of buyers in recent months,” said Robert Gardner, chief economist at Nationwide.

“While the ongoing economic uncertainties have clearly been weighing on consumer sentiment, this hasn’t prevented further steady gains in the number of first-time buyers entering the housing market in recent quarters. Indeed, the number of mortgages being taken out by first-time buyers has continued to approach pre-financial crisis levels in recent months.”

While low mortgage rates, the strength of the labour market and projects such as the government’s Help to Buy scheme are helping first-time buyers get onto the property ladder, the biggest obstacle remains raising a large enough deposit.

“First time buyer numbers have been supported by the strength of the labour market conditions, with employment rising at a healthy rate, and earnings growth slowly gathering momentum,” said Gardner. “While house prices remain high relative to average earnings, low mortgage rates have helped to support mortgage affordability. Indeed, raising a deposit appears to be the major barrier for prospective first-time buyers.”

Jeremy Leaf, former residential chairman at RICS, said: “Soft growth in the last set of figures from Nationwide is continuing and confirmed on the high street. Clearly, Brexit uncertainty in the minds of homebuyers is still outweighing almost record low mortgage rates and employment numbers as well as improved affordability. A glimmer of good news is that first-time buyers are taking advantage, particularly of help to buy and deposits from the bank of mum and dad, not forgetting reduced competition from landlords.”

Source: Money Expert

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UK wage growth finally outstrips house price growth

Despite the continuing uncertainty about the UK’s exit from the European Union, there are signs of optimism, at least where the UK’s job market is concerned. UK employers are continuing to hire, and wages are growing at a higher rate than house prices, giving potential homeowners some hope of catching up with the high UK housing prices and at least narrowing the property affordability gap.

According to the latest Rightmove Property Index, UK wage growth currently stands at 3.4 per cent, as opposed to house price growth of two per cent. Of course, these figures have different implications at different regional levels, with prospective home buyers in some parts of the country in a particularly strong position.

While asking house prices are lower this year than last  year in three out of four regions in southern England, the higher (and rising) costs of living there means that not all potential homeowners will have benefited from the wage increase rates. This is particularly true of rail commuters, since the costs of rail travel went up by 3.1 per cent in January.

The people who are likely to benefit the most from wage growth outstripping house price growth are those in areas with a generally better income to living costs ratio, notably the North West of England, which remains a property hot spot for both buyers and investors.

House prices in Manchester are growing at Brexit-defying rates, but, with the average price of £195,000, property there is still highly affordable in comparison with the South East, especially in conjunction with the lower costs of living in this city compared to London. Manchester is being constantly redeveloped, too, making it an attractive city for investor buyers. For instance, Manchester’s already iconic MediaCity UK development in Salford is entering its second, £1 billion stage that will see the site double in size.

Jonathan Stephens, MD, of  specialist property investment agency  Surrenden Invest, comments, ‘Such vast developments bring a wealth of opportunities, both for those who live in the city and for those looking to invest there. They can also trigger fundamental shifts in demand in the local housing market, with sudden increases in the need for rental accommodation meaning that the private sector has to rapidly up its game in terms of the number of properties on offer.’

BY ANNA COTTRELL

Source: Real Homes

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Number of homes ‘earning’ more than their owners shrinks amid property cooldown

The proportion of homes which are “earning” more than their owners is shrinking as house price growth continues to slow, analysis has found.

The average rise in house prices over the last two years has outstripped post-tax earnings in less than one in 10 (8%) local authority districts, Halifax said.

This proportion is dwindling compared with nearly one in five (18%) in 2017 and nearly a third (31%) in 2016.

Across the UK, the average house price has increased by £14,975 over the past two years, while the average take-home pay over two years has been £46,225 – £31,250 more than house price growth.

Earnings exceeded house price growth consistently at a national and regional level across the UK – from £19,649 in London up to £35,250 in Scotland.

Leafy London borough Richmond-upon-Thames was identified as the local authority area where house price growth outpaces take-home pay the most.

The average house price there has increased by £55,483 more than typical net earnings over the past two years – equating to £2,312 per month – Halifax said.

The next biggest gap was found in Winchester, home to much of the South Downs National Park, in the South East of England – where average house price growth has outpaced average net wages over the past two years by £45,016 according to the research which used the Halifax house price database and Office for National Statistics (ONS) earnings figures.

Russell Galley, managing director, Halifax, said: “The majority of areas where house price inflation outpaced owners’ take-home pay are still to be found in London and the South East.”

Here are the top 10 areas where house price growth has outpaced wages over the past two years, according to Halifax, with the two-year increase in house prices followed by net average earnings over the two years and the difference:

1. Richmond-upon-Thames, London, £119,075, £63,592, £55,483
2. Winchester, South East, £103,196, £58,180, £45,016
3. South Buckinghamshire, South East, £97,806, £56,430, £41,376
4. West Devon, South West, £75,659, £40,198, £35,460
5. Windsor and Maidenhead, South East, £88,437, £60,153, £28,284
6. Wandsworth, London, £90,482, £62,247, £28,234
7. Bromsgrove, West Midlands, £77,621, £52,317, £25,303
8. Chichester, South East, £73,769, £48,778, £24,991
9. North Dorset, South West, £58,289, £43,158, £15,131
10. Harborough, East Midlands, £69,604, £55,167, £14,437

By Vicky Shaw

Source: Yahoo Finance UK

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UK house prices see further slowdown amid weaker growth in England and Scotland

House prices increased at their slowest annual pace in nearly six years in January as property values tumbled in London but increased relatively strongly in places including the Midlands, Wales and Northern Ireland, official figures show.

England and Scotland saw a slowdown in annual house price growth, while in Wales and Northern Ireland property values are rising relatively strongly.

In Wales, the abolition of the Severn crossing tolls is helping to drive prices up in the south-east of the country, according to the report released jointly by the Office for National Statistics (ONS), Land Registry and other bodies.

Average house prices in the UK increased by 1.7% in the year to January 2019, down from 2.2% in December and the lowest annual rate since June 2013 when it was 1.5%, the report said.

UK house price growth has been slowing for the past two-and-a-half years, driven mainly by a slowdown in the South and East of England.

In London, house prices fell by 1.6% annually, while in the East of England prices fell by 0.2% over the year.

In the East Midlands, prices increased by 4.4% in the year to January 2019, while the West Midlands saw 4.0% growth.

Across the UK, the average house price was £228,000 in January.

ONS head of inflation Mike Hardie said: “While average UK house prices increased over the year, the rate is down from last month, and is at its lowest in almost six years.

“London property prices continued to fall, seeing their steepest drop since the end of the financial crisis, with Wales, the East Midlands and the West Midlands driving the overall growth.”

House prices in England increased by 1.5% annually in January, slowing from 1.9% growth in December. The average house price in England was £245,000 in January.

House prices in Scotland grew at a slower rate than other countries in the UK, increasing by 1.3% in the year to January, down from 2.0% in the year to December, taking the average house price in Scotland at £149,000 in January.

By contrast, house prices in Wales increased by 4.6% annually in January, reaching £160,00 on average.

The report said: “This continues to be driven by strong house price growth in south-east Wales, likely linked to the abolition of the Severn Bridge tolls.”

In Northern Ireland, house prices increased by 5.5% over the year, taking the average house price to £137,000.

Howard Archer, chief economic adviser at EY Item Club said: “Most recent data and surveys have pointed to muted housing market activity, indicating that heightened economic and Brexit uncertainties are weighing down on a housing market that is already under some pressure from overall challenging conditions.”

He continued: “It should be noted that the overall national picture has been dragged down by the particularly poor performance in London and parts of the South East.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “As always, national average house prices conceal significant regional differences.

“London continues to see the largest annual price fall as those worried about the Brexit fallout err on the side of caution.

“That said, the year has got off to a remarkably good start on the lending front despite ongoing political uncertainty.”

He said several lenders have trimmed rates in an effort to encourage more business.

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said in some areas the market is patchy at best, whereas in others there is more optimism.

“This is borne out perhaps more in the numerous micro markets of London where local factors are often much more relevant than the national picture,” he said.

“Sadly, while political uncertainty remains, stronger demand is likely to remain pent up at least for a little while longer.”

By Vicky Shaw

Source: Yahoo Finance UK

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Sluggish house price growth led by Wales

House prices edged up for the third consecutive month in February, rising 0.5% to take the average value of a home in England and Wales to £302,435.

The Your Move House Price Index showed that price growth was led by Wales, where it increased by 3% annually.

There was a spike in price rises in early last year, explaining why prices are down 0.5% compared to this time last year. Overall, prices remain subdued with an estimated 59,100 sales in February 2019.

There is a distinct North/South divide. Most of the major conurbations outside London continue to see growth, led by Cardiff, up 5.3%.

Oliver Blake, managing director of Your Move and Reeds Rains estate agents said: “Whilst a challenging market it’s a mixed picture with some regions still experiencing price rises; there clearly continues to be demand for property and a need for more homes to come to market.”

As of last month, the North/South divide largely persists in the regions of England and Wales, with annual falls concentrated in the South Eastern corner of the country.

The South East region itself is seeing the fastest falls in prices, with the average house values down 1.7%, despite strong growth in the Isle of Wight (up 7.0%) and Southampton, up 4.2% annually to set a new peak average price.

The picture is complicated by modest growth in the South West (up 0.3%).

There, growth in Bournemouth (up 7.3%) and new peak average prices in Bristol (up 0.3%), Gloucestershire and Somerset (up 3.8% and 3.9%, respectively) remains enough to outweigh downward pressure from Bath and North East Somerset (down 10.2%) and North Somerset (down 5.4%).

Likewise, the North East refuses to conform to the pattern. Prices there are down 1.6, with significant falls in Redcar and Cleveland (falling 7.3%) and Middlesbrough (down 6.5%).

Outside these areas, though, growth continues and the majority of local authorities (59 out of 108) saw averages prices rise. For the most part the increases are modest.

In England, the North West sees the strong growth with average prices up 1.3% annually. This is supported by strong performance in Manchester, which set a new peak average price in the month and where values have increased 3.1% in the last year.

The West Midlands also performs well, with growth of 1.7%, but in the East Midlands and Yorks & Humber regions growth is under 1.0%. The strongest performing region by far, however, remains Wales, where growth of 3.0% remains comfortably ahead of inflation.

Its performance is strengthened by strong growth in the capital Cardiff, where prices are up 5.3% annually at a new peak average of £241,036, benefiting in part from the abolition of the toll on the Severn Bridge.

The same is probably true for Wales’ third city, Newport, another new peak (one of five in Wales), with prices up 6.7% annually.

In London, prices have risen for the last five months, leaving the average price in the capital at £622,494.

By Michael Lloyd

Source: Mortgage Introducer

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Challenging market continues as house price growth stalls

House price growth slowed for a second consecutive month in February, with just one region beating the rate of inflation.

Data from Your Move shows average prices fell by 0.5% annually last month to £302,435.

This was the same level of annual decline recorded in January.

Prices grew by 0.5% on a monthly basis after two months of zero movement previously.

The fastest growing region in February was Wales, which saw prices grow 3% annually to £188,077.

This compares with the inflation rate of 1.8%.

All other regions either posted annual growth below this rate or registered a decline.

The next fastest growing region was the west midlands, up 1.7% to £227,032.

The largest annual fall was in the south-east of England where prices fell 1.7% to £371,791.

London remained the region with the highest house prices at £622,494, which was down 1.5% annually.

Oliver Blake, managing director of Your Move, said: “Whilst a challenging market, it’s a mixed picture with some regions still experiencing price rises.

“There clearly continues to be demand for property and a need for more homes to come to market.”

By MARC SHOFFMAN

Source: Property Industry Eye

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House price growth slows to six-year low

House price inflation slowed to 2.5 per cent during December, according to the Office for National Statistics.

This was the lowest annual rate of house price inflation since July 2013 and continued the slowdown seen in the housing market over the past two years.

The average UK house price was £231,000 in December 2018 – £6,000 higher than a year previously.

On a month-on-month basis, house prices only rose by 0.2 per cent between November and December.

Dilpreet Bhagrath, mortgage expert at Trussle, said: “Even with the slight increase in prices, it’s clear that Brexit nerves and uncertainty is still affecting the market. Not to mention the ongoing lack of supply, with more risk-adverse sellers staying put until the economic picture becomes clearer.

“That said, for new buyers, the current low interest rate climate coupled with the government’s commitment and extension of the help-to-buy scheme will offer further support for those hoping to get a foot on the ladder.

“For the slightly more cautious first-time buyers, opting for fixed rate mortgage deals might be favourable, giving complete clarity over how much your mortgage costs each month so that you can plan ahead.”

Steve Seal, director of sales and marketing at Bluestone Mortgages, added: “Slower house price growth is no doubt a reflection of potential buyers choosing to adopt a ‘wait and see’ approach before committing to the biggest purchase of their life – a home.

“To tackle this, lenders are offering near record low deals to reassure borrowers that there is still plenty of opportunity to lend.”

The lowest annual growth was in the North East, where prices fell by 1 per cent over the year to December 2018, followed by London where prices fell 0.6 per cent over the year.

House prices in London have now fallen from a peak of £488,527 in July 2017 to £473,822 in December.

Meanwhile house price growth was strongest in Northern Ireland, where prices increased by 5.5 per cent, and Wales, where house prices increased by 5.2 per cent.

The ONS said the increase in house prices in Wales was driven by strong growth in the south east of the nation, likely linked to the abolition of tolls on the Severn Bridge.

Despite the strong house price growth in Northern Ireland, it remains the cheapest area of the UK for property, with the average home costing £136,669 compared to £247,886 in England.

Source: FT Adviser