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Halifax: UK housing market outlook for 2020

According to the Halifax, the housing market performed in line with expectations over the past year, at the lower end of its 2% to 4% growth forecast.

Prospects for 2020 look brighter but house price inflation is expected to remain relatively weak, at between 1% and 3%.

A shortage of homes for sale, low levels of house building and challenges facing first-time buyers will continue to support high prices and constrain demand in the short-term

Russell Galley, managing director at Halifax, commented: “The housing market in 2019 followed a similar path to recent years. Modest price growth was supported by falling mortgage rates and a low volume of houses for sale, factors which can in part be attributed to elevated uncertainty. This helped to underpin a degree of resilience in the market.

“Prospects for 2020 look a bit brighter, with uncertainty in the economy falling back somewhat, transactions volumes anticipated to pick up and further price increases made possible by growth in households’ real incomes. 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.

“Longer-term, a renewed focus on housing policy and increased infrastructure investment aimed outside the South East, for example, could help rebalance regional house prices. However, it’s important to note that any policy changes would be unlikely to impact the market in 2020.

“Although prices will be supported in the near-term by insufficient new building and low interest rates, a sustained period of price growth below income growth as a result of policy action would help to address first-time buyer difficulties.”

By Joanne Atkin

Source: Mortgage Finance Gazette

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House price growth turns negative over the month – but just remains positive year-to-year

House price growth –just – crept into reverse last month. However, annual house price inflation – just – remained in positive territory.

According to Nationwide the average house price was £216,352, down just 0.2% from an average of £216,096 in August.

Annual house price inflation was up by the same amount, 0.2%.

September was the tenth month in a row where Nationwide has recorded annual house price growth of under 1%.

London was the weakest performing region in the third quarter of this year, Nationwide also reported, with prices down 1.7% compared with the same period a year ago.

The lender said that UK house prices are now “only” around 17% higher than their 2007 peak.

Mike Scott, of Yopa, said: “It now seems likely that year-on-year house price growth will dip into negative territory in the last quarter of this year as the Brxit uncertainty continues to subdue market activity.”

Separately, the latest Bank of England lending figures show that in August there were 65,000 mortgage approvals for house purchase, down from the 18-month high of 67,000 in July.


Source: Property Industry Eye

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House prices up but region is still popular

The West Midlands is predicted to see the highest house price inflation over the next two years of all UK regions, behind only Wales.

PwC’s latest UK Economic Outlook projects the region will see average house price growth of 3.4 per cent in 2019 and 4.2 per cent in 2020, compared to the UK average of 1.2 per cent and 2.1 per cent.

The average house price in the West Midlands is estimated to rise from £194,000 in 2018 to around £223,000 by 2022, according to PwC’s projections.

This comes at a time when the cost of private renting is proving to be a significant challenge for tenants, with those working in certain key public sector professions increasingly unable to afford rent.

PwC’s report warns that this will potentially lead to a shortage of employees, such as NHS workers, teachers and police officers in these regions, impeding both economic and social mobility.

Using the conventional benchmark that renting must cost less than 30 per cent of gross annual income for it to be considered affordable, the report finds an employee would need an annual salary of £23,800 to afford the median private rent in the UK, up £400 from 2017/18.

This means that the country’s median private rent has just crossed over the 30 per cent rental affordability threshold.

Currently, workers in the West Midlands between 22 and 29 years of age are spending 27 per cent of their monthly earnings on rent, just below the 30 per cent threshold generally considered affordable.

Matthew Hammond, Midlands region chairman for PwC, said: “House price inflation in the 12 months to April 2019 was strong in both the East and West Midlands at 2.9 per cent and 2.2 per cent respectively.

“The Midlands was in the top five of the UK regions for the underlying house price growth. Growth rates are forecast to continue strongly through 2019 and 2020 at between 3.1 per cent and 4.1 per cent, with the medium term average for 2021 and 2022 settling at the lower end of this range at 3.2 per cent.

“Whilst average house prices are higher across London, the South East and South West, by 2022, if the growth is as forecast, average house prices will break through the £200,000 threshold, reaching £223,000 in the West Midlands and £214,000 in the East Midlands by 2022.

“By comparison the average London house price could reach £508,000 by 2022 and £344,000 across the South East, making affordability of rented property a disproportionate cost of almost 40 per cent of the median salary for 22-29 year olds in the South East and more than 50 per cent in London.

“Affordability remains key in rented segments of the market. In the Midlands with its young population in major cities, for our 22-29 year olds, rental costs are estimated to account for between 23 per cent and 27 per cent of median salary.

“The relative affordability compared with London and the South East, alongside growth across key strategic sectors of the economy, is driving the increasingly popular choice of locating and developing careers across the Midlands. Medium and longer term infrastructure investment is creating conditions for good growth for the Midlands’ cities, fuelling investment.”

By James Pugh

Source: Shropshire Star

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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

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House price inflation slows to 2.7% across UK cities

House price growth across UK cities has reduced steadily across 2018 and currently stands at +2.7% when comparing December 2018 with December 2017, Zoopla’s UK Cities House Price Index has found.

The slowdown has been driven by price falls in London (-0.2%) and Cambridge, which has seen prices drop 3.8% annually while the rate of growth has slowed across Southern cities.

Richard Donnell, research and insight director at Zoopla, said: “Weaker growth in London, Cambridge and Aberdeen has been a large drag on the headline rate of house price growth across the UK cities index over the last year.

“House prices in London have been falling for almost 12 months while the rate of growth has slowed across cities in southern England, a result of growing affordability pressures, higher transaction costs and increased uncertainty.

“The strongest performing cities are outside south eastern England where affordability remains attractive and employment levels are rising.

“We expect current trends in price growth to continue across the rest of this year, with prices rising in line with earnings for much of the UK but lower growth and some house prices falls in London and the South.

“London will continue to register price falls, concentrated in inner London where prices have grown the most over the last decade. Prices continue to increase slowly in the more affordable outer and commuter areas of London.”

Northern, Midlands, Scottish and Welsh cities all lead the way for annual growth with Edinburgh’s average price up 6.8% annually; Liverpool up 6.3% and Birmingham, Nottingham and Cardiff all seeing prices increase by 5.9%.

There’s a clear North-South divide when it comes to house price growth. The 13 cities in its ‘20 cities index’ posting the highest growth are all located in the North, Scotland, the Midlands or Wales with Bristol in the South West the exception.

Other than Aberdeen, where the housing market has suffered due to oil prices, the ‘bottom seven’ cities are all in the South or East of England.

Some 10 cities have posted double digit growth since the 2016 vote, with Birmingham (pictured) (+16%) and Manchester (+15%) leading the charge.

In a reversal of fortunes, leaders in the broad recovery phase (London, Oxford and Cambridge) are now amongst the very poorest market performers post-Brexit vote.

Southern cities that outperformed during the broad recovery phase are now experiencing significantly decelerated growth, as economic and political uncertainty is more acutely felt here.

Source: Mortgage Introducer

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Average house prices still growing but at the lowest annual rate for six years

Annual house price inflation has fallen to its lowest rate for six years, Halifax has revealed.

The November Halifax House Price Index revealed that house prices grew just 0.3% annually, the slowest rate since December 2012 and down from 1.5% in October.

Prices also declined on a monthly basis by 1.4%, leaving the average at £224,578.

Russell Galley, managing director at Halifax, said: “While this is the lowest rate of growth in six years, it remains within our forecast range of 0% to 3% for 2018.

“High employment, wage growth and historically low mortgage rates continue to make home ownership more affordable for many, though the need to raise a significant deposit still acts as something of a restraint on the market.

“This is largely offset by relatively limited supply of new and existing properties for sale, which continues to sustain house prices nationally.”

Commenting on the figures, Sam Mitchell, chief executive of online agent Housesimple, said: “On first glance, these figures might set alarm bells ringing, but we need to put them into context before manning the panic stations.

“There’s an unprecedented level of political turbulence battering the country at the moment and that is inevitably feeding through to house prices.

“We didn’t see the traditional autumn bounce in transaction levels this year, but after a subdued summer and three months of Brexit wranglings, it was probably more hope than expectation that the housing market would just power through.

“All things considered, the property market is actually holding up incredibly well in extremely testing times. And there are areas of the country, such as the north-west and Yorkshire, which seemed to have brushed off Brexit fears.

“Transaction levels have been surprisingly strong and some impressive prices are being achieved, many close to asking price.

“While the affordability problem has caught up with the housing market in the south, the north is enjoying a mini boom thanks to cheaper property stock and a strong jobs market.

“Looking forward, a lot of buyers have probably decided early to wait until the New Year before making any decisions about purchasing so December is likely to be quiet. But that could all change depending on Brexit this week.”

Source: Property Industry Eye

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House prices fall across half of London

House price inflation in UK cities hit 3.2 per cent in September, down from 3.8 per cent a year ago. Latest figures from Hometrack showed that 54 per cent of London City postcodes are registering annual price falls.

This is more than the 45 per cent reported six months ago but less than in June as more areas start to register monthly price increases.

However it wasn’t all bad news across the country with house prices in five UK cities increasing by more than 6 per cent a year.

Liverpool recorded annual inflation at 6.9 per cent, followed by Birmingham (6.5 per cent) and Leicester (6.4 per cent).

Danny Belton, head of lender relationships at Legal & General Mortgage Club, said: “The North/South divide has truly been turned on its head, as more and more first-time buyers and homemovers turn towards regional cities for better value for money.

‘Strong economic hubs in the Northern powerhouses are making bricks and mortar in these locations particularly attractive to younger generations here and buy-to-let landlords.

“However, with rising living costs, saving for a deposit remains one of the biggest challenges for potential buyers. Affordability challenges remain, which means that speaking to a mortgage adviser is still a sensible first step.”

City Average price Trough-current Peak-current Last 12 months Last 3 months Last month
Aberdeen £163,200 6.50% -5.50% -4.40% 0.50% 0.30%
Belfast £129,700 28.40% -41.90% 3.80% 0.50% -0.90%
Birmingham £163,500 41.30% 19.40% 6.50% 2.60% 0.50%
Bournemouth £290,400 52.00% 25.00% 3.20% 0.00% -0.20%
Bristol £277,600 71.60% 39.20% 1.20% -0.50% -0.50%
Cambridge £435,500 88.30% 56.60% 0.40% 1.30% -0.30%
Cardiff £206,200 39.90% 16.80% 4.50% 1.00% 0.20%
Edinburgh £231,700 29.80% 9.10% 4.70% 1.60% -0.20%
Glasgow £122,800 22.60% -0.40% 6.20% 1.40% 0.20%
Leeds £164,900 31.40% 8.60% 4.30% 1.00% 0.10%
Leicester £174,800 46.60% 23.40% 6.40% 1.90% 0.50%
Liverpool £120,500 22.70% -3.80% 6.90% 2.80% 0.70%
London £484,400 84.80% 56.10% -0.40% 0.40% 0.10%
Manchester £167,800 39.60% 17.10% 6.20% 1.90% 0.40%
Newcastle £129,300 17.10% -2.20% 2.80% 1.30% 0.40%
Nottingham £152,300 41.50% 19.00% 5.40% 1.30% 0.00%
Oxford £423,300 75.70% 49.80% 5.50% 2.30% 0.60%
Portsmouth £240,600 53.20% 30.30% 2.90% 0.60% 0.30%
Sheffield £139,500 28.50% 10.10% 5.80% 3.30% 1.10%
Southampton £228,200 48.60% 24.50% 1.90% 0.40% 0.00%
UK £217,400 41.40% 20.20% 3.40% 1.40% 0.30%

In chancellor Philip Hammond’s Budget on Monday (October 29) there was good news for first-time buyers.

The Help to Buy equity loan scheme was extended by two years, now running until 2023 rather than 2021.

Additionally, the new scheme will be for first-time buyers only and a new regional property price cap will be applied to the scheme from April 2021 onwards.

The chancellor also announced that stamp duty relief will be extended to those who purchase properties up to a value of £500,000 through the shared ownership scheme.

This policy will be backdated to the last budget so that anyone who has purchased a property through the scheme since 22 November 2017 will be entitled a refund.

Source: FT Adviser

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Insolvencies among millenials soar as housing costs shred ‘cash cushions’

The number of insolvencies among millenials has climbed rapidly in the past three years, as rising housing prices leave younger people without a “cash cushion” to fall back on.

House price inflation is partially driving the trend, which has seen the number of insolvencies among under 35s rise by nearly a fifth during the past year, according to professional services firm Moore Stephens.

Meanwhile, the number of insolvencies – which can often lead to bankruptcy – among over 55s has dropped, falling by 9 per cent among the baby-boomer category of over 65s.

“The rates that millennials are going insolvent is very worrying, and the problem is worsening,” said Jeremy Willmont, head of restructuring and insolvency at Moore Stephens. “Millennials have more than twice as much of a chance of insolvency than baby boomers; this is a major cause for concern.”

Last year, 4.3 in 10,000 over 65s and 9.6 in 10,000 under 25s went insolvent, the firm found, adding that millennials often have “little left to act as a cash cushion” if they suddenly lose an income stream.

Moore Stephens pointed to older people spending proportionately less on housing, and said many can rely on a partner for emergency money in the event of a job loss of illness. Recent figures from the Office for National statistics showed that 4 per cent of the UK’s net property wealth was held by under 25s, with over 65s holding 41 per cent.

“In addition to high rents and mortgage repayment costs, millennials can often find it difficult to save significant amounts,” said Willmont. “Millennials are at risk of falling into debt through using credit cards and loans to cover living costs such as buying and maintaining a car, which can easily be set up without taking financial advice.”

Source: City A.M.

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House prices fall again in September to four-month low

Halifax reported a steadying of house price inflation as last month’s prices dropped to their lowest since May. The latest Halifax house price index found annual growth slowed to 2.5 per cent in September from 3.7 per cent in August, as quarterly change – July to September – remained at 1.8 per cent for the second month.

On a monthly basis, house prices fell by 1.4 per cent in September to sit at an average of £225,995 – the second consecutive monthly fall and down from July’s year high of £229,776.

Russell Galley, managing director at Halifax, said the measures suggested house price inflation was steadying.

He said: “This is set amongst mortgage approvals and completed house sales remaining broadly unchanged, although a gradual pickup in wage growth has helped to support household finances.

“The annual rate of growth is near the top of our forecast range of 0-3 per cent for 2018, as a low supply of new homes and existing properties for sale, combined with historically low mortgage rates and a high employment rate, continue to support house prices.”

Kevin Roberts, director at Legal & General Mortgage Club, said limited housing supply was still hindering the ambitions of borrowers in the UK.

He said: “Whether it is first-time buyers, second steppers or people looking to downsize, a lack of suitable housing is still preventing many from making their first or next purchase.

“There is good news – steadier house price growth, schemes like Help to Buy and a wider choice of mortgages are making it easier for some first-time buyers to take a step onto the ladder. However, more support from the government is needed.”

Steve Seal, director of sales and marketing at Bluestone Mortgages, said despite the steadying in price growth there were still “significant” barriers when it comes to securing funding.

He said: “Whilst the average growth of house prices remains steady, this does not necessarily mean all doors are open for aspiring homeowners.

“Lifestyle and financial habits are changing – and it is unfair that some potential buyers are turned away for not fitting an outdated computer scoring system.

“A missed phone or credit bill, or unforeseen costs for an accident shouldn’t mean you are barred from home ownership.”

Mr Seal said these customers instead need a personalised underwriting experience that ensures the nature of their situation is fully understood.

He said: “It is vital that specialist lenders continue to find the best solutions for all of their clients, based on a rounded and fair view of their individual financial situation.”

Source: FT Adviser

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Liverpool sees highest city property price inflation at 7.5% growth

The home of the Beatles, Liverpool, is outstripping any other city with property price inflation of 7.5% while cities including Aberdeen, Cambridge and London have seen no growth at all this year.
The fastest growing UK cities are the most affordable, with four cities including Liverpool, Newcastle, Aberdeen and Belfast, yet to recover to 2007 levels, data from Hometrack revealed.

Hometrack said: “Despite uncertainty around Brexit compounding the market slowdown in London, our analysis of income to buy indicates there is further scope for price growth in the most affordable cities, where prices are currently rising fastest.”

Overall, UK city house price inflation is running at 3.9%, up from 3.6% a year ago, largely driven by accelerating price growth in those affordable cities.

Struggling cities

The cities still in negative growth this year – Aberdeen at -3.8%, London at -0.3% and Cambridge at -0.1% – are suffering from both affordability and economic pressures.

Aberdeen has suffered as the oil industry has struggled, with house prices continuing to decline for the last three years. From a recent high of £198,000 in December 2014, average house prices have fallen back to £164,000, a decline of 17%, wiping out similar sized gains made between 2012-2014.

Two weeks ago, governor of the Bank of England Mark Carney said in the worst case scenario a chaotic no-deal Brexit could crash house prices by as much as 35% over three years and send another financial shock through the economy.

National data for housing sales and mortgage approvals for home purchase have remained broadly flat since 2015 and this slowdown has been focused on south eastern England, and primarily London.

Hometrack said: “In our view, the referendum result was a compounding factor for the slowdown in London house price growth since 2015. The primary drivers were stretched affordability, the impact of lending regulations and housing related tax changes, like stamp duty.”

Source: Your Money