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Savills predicts drop in first-time buyers and boom in house prices for the north

House prices in the north-west of England will grow six times faster than in London over the next five years, Savills claims.

The agent has released its latest five-year price forecast for the housing market, with quite a few caveats.

The figures are based on an assumption that the General Election does not result in a significant shift in policy environment, that the UK ultimately achieves an orderly exit from the EU over the course of 2020, and avoids recession.

It also assumes that the bank base rate increases gradually to 2% by the end of 2024, constraining mortgage affordability and therefore house price growth.

With all that in mind, Savills predicts that first-time buyer numbers will slip back when Help to Buy is withdrawn. A new scheme is being launched in April 2021 with regional price caps that will run until April 2023.

Despite this, Savills forecasts that transactions will remain at around 1.2m, with cash buyers representing around a third of the market.

Overall, the agent expects UK house prices to rise by an average of 15.3% over the next five years to average £266,000 in 2024.

It is predicting a 0.5% increase this year, 1% in 2020, 4.5% in 2021 and 3% in 2022 , 2023 and 2024.

The north-west is forecast to see the strongest price growth at 24% between 2020 and 2024, attributed to “the strength and diversity of the regional economy and the capacity for higher loan to income borrowing”.

This will be followed by 21.6% growth in Yorkshire, 18% in Wales and 20% in Scotland, Savills said.

In contrast, average house prices are expected to increase by just 11% across the south and east of England and 4% across Greater London.

Savills said this was because these regions have already previously outperformed the rest of the UK.

Lucian Cook, head of residential research for Savills, said: “We anticipate a continuation of trends seen historically, where London and the south-east underperform markets in the midlands and north.

“This stage of the cycle appears to have begun in 2016, coinciding with the referendum, when London hit up against the limits of affordability.

“Markets further from the capital, such as Leeds, Liverpool and Sheffield, were much slower to recover post financial crisis and have much greater capacity for house price growth relative to incomes, even as interest rates rise.”

The agent also predicts that prime central London will, however, rebound and rise 3% next year, the first annual price growth since 2014, and increase 20.5% over the next five years.

Cook added: “PCL has become increasingly dislocated from the Greater London mainstream over the past five years; we expect that to go into reverse.

“Historically, a recovery in the prime markets has been sparked in prime central London, when the city’s most expensive properties start to look good value on a world stage.

“Values have been bottoming out over the past year, resulting in a build-up of new buyer registrations over recent months. Both signal that the market is set for a bounce, but this is being held up by uncertainty.”

5-year mainstream house price forecasts2019 av house price  £2019 est20202021202220232024Total5 year growth  2024 av house price £
UK231,0000.5%1.0%4.5%3.0%3.0%3.0%15.3%266,000
North West169,0004.0%2.5%6.5%4.5%4.5%4.0%24.0%210,000
Yorkshire & The Humber165,0001.5%2.0%6.0%4.0%4.0%4.0%21.6%200,000
Scotland151,0001.5%2.0%6.0%3.5%3.5%3.5%19.9%180,000
North East131,0001.5%1.5%5.0%4.0%4.0%4.0%19.9%157,000
West Midlands205,0003.0%3.0%5.0%3.0%3.0%3.0%18.2%242,000
East Midlands194,0001.0%3.0%5.0%3.0%3.0%3.0%18.2%229,000
Wales165,0001.5%2.0%6.0%3.0%3.0%3.0%18.1%195,000
South West256,000-0.5%0.5%4.0%3.0%2.5%2.5%13.1%289,000
South East321,0000.0%0.0%3.0%2.5%2.5%2.5%10.9%357,000
East291,0000.0%0.0%3.0%2.5%2.5%2.5%10.9%323,000
London462,000-2.5%-2.0%1.5%1.0%1.0%2.5%4.0%480,000

By MARC SHOFFMAN

Source: Property Industry Eye

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Average price paid for a house rose to the highest level in over a decade during third quarter

THE north hit the highest average price paid for properties on the open market for more than a decade, new research from Ulster University has shown.

The average price of home bought here rose to £171,763 between July and September .

House prices were up by five per cent in the third quarter of 2019 compared with the same period last year and 5.7 per cent up on the second quarter of 2019.

The University’s quarterly house price index, produced with the Progressive Building Society and the Northern Ireland Housing Executive (NIHE), recorded 2,339 transactions in the three months to the end of September.

The number of properties sold for under £100,000 fell by six per cent during the third quarter, accounting for 18 per cent of all deals done. The number of homes sold at below £150,000 was also down slightly to 55 per cent.

While the overall number of transactions were done on the last quarter, the number of higher value deals were up.

But the research found that Brexit and the associated economic uncertainty continued to curtail purchaser confidence and transaction levels.

Some estate agents did report an increase in house buying the first-time-buyer sector of the market over the course of the third quarter.

Head of research of the NIHE, Kathy Greene said: “These figures reflect the highest average price of properties sold on the open market in Northern Ireland for more than a decade, with a strong level of transactions reflecting ongoing demand, especially for affordable dwellings.

“There is reason to expect that the market will remain relatively healthy in the immediate future, while 2020 may bring a greater degree of clarity about some of the factors influencing the longer-term outlook.”

Lead researcher, Dr Martin Hinch from Ulster University said the third quarter reflected an element of “buoyancy” in the north’s housing market, following a prolonged period of relatively passive house price performance.

“This growth suggests robust market sustainability and displays a level of resilience through what has been an unprecedented and continued period of uncertainty,” he said.

“The ongoing Brexit situation together with the outcome of the upcoming general election will undoubtedly exert a significant short term influence upon the political and economic direction of the UK and Northern Ireland over the coming months.”

Progressive Building Society’s finance director Michael Boyd said the north remains one of the most affordable housing markets in the UK. Nevertheless, he said the rise in prices represented a welcome stimulus to the local market.

“However, there is still a reticence amongst some buyers and a requirement of a positive Brexit outcome will be crucial to supporting economic prosperity and the continuation of strong levels of transactions in the housing market.”

By Ryan McAleer

Source: Irish News

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Halifax says annual house price inflation slows to lowest growth so far this year

Average house prices were £232,249 in October, Halifax has reported.

The lender said this brought annual inflation to 0.9%.

Halifax managing director Russell Galley said: “Average house prices continued to slow in October, with a modest rise of 0.9% over the past year. While this is the lowest growth seen in 2019, it again extends the largely flat trend which has taken hold over recent months.

“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 economic uncertainty.”

The Halifax, which has recently changed how it calculates prices after criticism that its indices were out of sync with others, is still at odds with Nationwide, which also bases its numbers on mortgage approvals.

Nationwide puts the average house price in October at £215,368, saying that annual house price inflation was 0.4%.

By ROSALIND RENSHAW

Source: Property Industry Eye

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Brexit turmoil drags UK property price growth to lowest this year

UK property price growth has slowed to its lowest this year, with experts blaming Brexit turmoil for killing off the typical autumn bounce.

New figures from Halifax show 0.9% growth in average prices in October compared to a year earlier, the weakest year-on-year growth of any month in 2019 so far.

Russell Galley, managing director of Halifax, said sales and price growth will remain “subdued’ for as long as political and economic uncertainty continues.

News of the sluggish growth compared to trends over the past few decades came as Britain teetered on the brink of crashing out of the EU without a deal on 31 October.

Many businesses and analysts have warned a no-deal Brexit would be catastrophic for UK firms, jobs, consumers, and homeowners, rupturing decades of increased trade ties overnight with the EU, Britain’s biggest trading partner.

The Brexit deadline was pushed back after parliament forced prime minister Boris Johnson to delay Brexit and an election was called for 12 December.

“Perhaps a tad predictable that as we receive yet another Brexit-based encore from Westminster, the UK housing market also delivers the lowest rate of house price growth so far this year,” said Marc von Grundherr, director of London letting and sales agent Benham and Reeves.

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “Although the market remains fairly subdued, which may actually be a good thing in view of wider political and other concerns, we are finding it continues to be supported by fewer but more serious buyers.”

Adrian Anderson, director of mortgage broker Anderson Harris, said it was “not all doom and gloom” as mortgage rates are cheap.

“Lenders have to be more competitive than ever to attract business, resulting in a price war with mortgage rates falling significantly this year, benefiting borrowers,” he said.

The Halifax data showed a 0.1% month-on-month drop in prices in October, with the average price in the UK now just over £232,000.

By Tom Belger

Source: Yahoo Finance UK

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Scottish housing market has fastest sell time, research says

The time needed to sell homes in Glasgow and Edinburgh is half the average for UK cities, according to a survey.

Zoopla’s UK Cities House Price index for September reveals housing market conditions are strongest north of the border despite Aberdeen being the worst performer.

Glasgow and Edinburgh properties sell within six weeks on average, compared to 12 weeks across the whole of the UK.

Aberdeen was the worst performer, with homes taking more than 15 weeks to sell and sellers discounting their homes by 9.4%.

Richard Donnell, research and insight director at Zoopla, said: “There is a continued polarisation in housing market conditions across the country set by underlying market fundamentals, albeit Brexit uncertainty has been a compounding factor for lower market activity in some areas.

“A general election seems to be a growing possibility ahead of any Brexit resolution; however, once the political outlook becomes clearer, we would expect a modest bounce-back in demand for a six–12-month period.

“Market conditions are set to remain weak in southern cities until pricing levels adjust to what buyers are willing, or can afford, to pay.

“London is three years into a re-pricing process, and we expect sales volumes to slowly improve over 2020, while house price growth remains subdued.

“There are large parts of the country where housing affordability remains attractive, fuelled by continued economic growth that supports demand for homes, resulting in reasonable sales periods and only modest gaps between sales and asking prices.”

Glasgow and Edinburgh are also the only UK cities not to register a discount from asking to selling price.

Homes in the two locations instead command an average premium of 6-7% above the asking price.

In contrast, vendors across the UK now accept offers that are on average of 3.8% or £9,800 lower than the initial asking price.

Source: Herald Scotland

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House prices in the UK are still gently falling in real terms

Nationwide has just released its latest house price figures. In October, house prices were 0.4% higher than they were a year ago.

Your average UK home will now set you back £215,368 exactly.

Prices are rising more slowly than wages or wider inflation. That means they’re falling in “real” terms.

That’s great news…

Slowly falling house prices are a good thing

This morning’s figures from Nationwide show that UK house prices are still pretty much flat, and falling after inflation.

The economy is OK. Interest rates are low. Employment is high. Those things are likely to prevent an all-out crash.

On the other hand, rates probably can’t go much lower, while the impact of the effective removal of landlords from the housing market is still rippling through the market.

And while the resolution of Brexit might boost sentiment or activity at one level, it is also likely to lead to slightly higher interest rates, which I suspect would help to prevent a massive rebound in prices.

This is all good. As the Nationwide chart below shows, this means that affordability is gently improving.

I hope this continues. You’ve heard me say that dozens of times by now, but I like to keep reiterating it, for a couple of reasons.

One reason is that, here in the UK, we are rather attached to the idea of ever-rising house prices. I think it would be helpful for us to shed this attachment and instead recognise that hoping for a house to provide both shelter and a retirement income is a recipe for a high-stress existence.

This is unfortunately, as yet, a minority view. My colleague Merryn keeps a track via Twitter of the “how celebrities invest their money”-type interviews in the Sunday papers.

She’s always very excited to spot the occasional sensible celeb who not only has a pension, but also understands that said pension holds equities. However, mostly celebs say something along the lines of “I own property. The stockmarket’s just a casino. You can’t go wrong with bricks’n’mortar.”

There’s this weird notion that investing in stocks is faintly immoral gambling, whereas taking a punt with borrowed money on the housing market (competing with people who just want a roof over their heads in the process) is honest in some way.

Anyway, once people stop making fast money from property, that will hopefully start to change.

House prices are not about physical supply and demand

The second reason stems from the other end of the spectrum. I’ve noticed that the tenor of columnists getting annoyed about the “housing crisis” is becoming increasingly hysterical, probably because we’re coming up for an election (at some point) and housing is a political hot button.

The answer for these writers is always to “build more houses”, because it’s all about supply and demand. The problem is that it’s not that simple.

It’s interesting that we’ve become obsessed with the idea of building more homes at a time when – in many parts of the UK outside London – double-digit house price growth hasn’t been seen for over a decade.

You can certainly argue that the planning system is flawed (it is) and you can certainly argue that there are not enough houses in certain areas and too many in others, and that the quality overall is poor.

And you can certainly argue that there’s really no need for British homes to be the smallest in Europe. Yes we have a relatively big population but we’re not jammed in that tightly.

But a blanket policy of just “building more” won’t help. House prices are high because the cost of borrowing is low.

Put very simply, here’s how it works. At interest rates of 10%, a £900 monthly payment will pay for a 25-year repayment mortgage of £100,000. At interest rates of 2%, £900 a month will buy you a 25-year repayment mortgage of just over £210,000.

That’s why house prices go up when interest rates go down (assuming credit conditions slacken at roughly the same pace). Because the amount you can borrow to pay for the same house goes up.

It’s that straightforward. Physical supply and demand does have an effect – of course it does – but it’s marginal relative to the effect of the supply of credit.

So here’s the good news. Interest rates can barely go much lower, and rules around mortgage lending are tighter than they once were (there are still signs of lenders getting more excitable again but we’re not back in Northern Rock territory yet).

Meanwhile, wages are rising. So overall, rising wages should improve affordability while stable interest rates keep a lid on house price growth.

So we make some headway into the frustration caused by unaffordable homes, while buying ourselves time to take a more considered view and put in place deeper reforms that might put an end to the perpetual cycle of boom and bust.

OK, if I’m honest, I’m not optimistic about that last point – it would require too much long-term thinking. But having a bit of a breather at least from house price woes would be healthy for us all.

By: John Stepek

Source: Money Week

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Will house prices crash after Brexit?

Home owners and prospective buyers alike want to know: will house prices crash after Brexit? With the huge 20 per cent house price fall prediction continuing to circulate on the web, is it really true that there will be a property market crash once we’ve left the EU?

As we’ve reported in our in-depth analysis of Brexit and house prices, while Brexit undoubtedly has affected the property market, the effect has not been uniform across the UK, and Brexit is not the only factor affecting property prices. If we ignore some of the hype that has surrounded discussions of Brexit and house prices, we can start looking at the bigger picture, with more endemic problems surrounding property and the economy coming to the fore.

By far the biggest problem with the UK housing market right now (and for quite some time past) is one of insufficient supply and growing demand. This has been exacerbated by Brexit, with home owners anxiously holding on to properties, reducing the available number of properties further still.

The UK is still massively behind new build targets, which is deepening the housing crisis. For illustration’s sake, the UK has twice the population of Canada, but is building half the number of new homes. So, while house prices are unlikely to crash as such after Brexit, the reasons behind this are not a strong economy, but the economy of scarcity.

The other growing problem with housing is yet another growing borrowing bubble, with some economists already predicting a 2008-style recession in the near future. Property economist Andrew Burrell points to an overinflated property market which is at capacity in terms of growth: ‘It’s just a matter of 30 years’ of falling interest rates, people taking out bigger and bigger mortgages – you’ve now reached the size where it’s probably about as big as we can manage.’

A combination of high levels of debt at low interest rates with stagnant incomes sounds uncomfortably familiar. However, there is one important difference: the UK economy is not currently ‘booming’, as was the case prior to 2008, so any property market slump is unlikely to come in the form of a spectacular crash. What we’re most likely to see is a sluggish property market with slow growth in most areas of the country, and perhaps some further price falls in premium property segments (e.g. central London).

Are you planning on buying or selling a house? Don’t think about Brexit too much and stick to your plans.

BY ANNA COTTRELL

Source: Real Homes

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UK house price growth hits a six-year low in September

House prices grew at their slowest pace since April 2013 last month, in keeping with the predominantly flat trend seen over recent months.

On a monthly basis, house prices were actually down by 0.4% in September, while prices were up 0.4% quarter-on-quarter, according to the results of the most recent house price survey from Halifax.

Versus a year ago, the mortgage lender’s House Price Index was ahead by just 1.1% to reach £232,574.

The report also included some revisions to previous months’ figures following an update to the index’s methodology, with Halifax revising August’s monthly rise down to 0.2% from 0.3%.

Halifax’s managing director Russell Galley said: “Underlying market indicators, including completed sales and mortgages approvals, continue to be broadly stable.

“Meanwhile for buyers, important affordability measures – such as wage growth and interest rates – still look favourable.”

Galley added that looking forward, Halifax expects activity levels and price growth to remain subdued while the current period of economic uncertainty persists.

However, the monthly Halifax house price index was just one of many that track the UK market and has periodically been higher than others.

Nationwide building society said annual house price inflation slowed to 0.2% last month, while the Office for National Statistics, which uses data from the Land Registry, estimated it at 0.7% in July.

London estate agency Benham & Reeves’ director Marc von Grundherr said: “These most recent of statistics from one of the country’s volume mortgage lenders are the latest in a very mixed picture and one that adds to confusion as to what on earth the property market is really doing.

“The various indexes of late have not only contradicted each other but often contradict themselves month-on-month – in fact, the numbers have bounced around like a beach-ball on a bungee rope since the beginning of the year.”

Von Grundherr also said the fact that the year-on-year numbers were still positive “defies the gravity” of the current political situation.

Shares in housebuilders like Persimmon and Taylor Wimpey were down in early trade.

By Iain Gilbert

Source: Sharecast News

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North’s house prices still 30 per cent below boom height

THE average price of a house in the north is almost 30 per cent below the height reached in the 2007 property boom.

New research published today by Property Pal found the £134,200 median price of a house here is 40 per cent below the UK average. The online housing portal has produced new micro-area analysis to show the five most popular places in the north to buy a house.

Carrowreagh, just outside Dundonald topped last year’s list with 180 homes sold. It came just ahead of Windsor (171), Bloomfield (137), Connswater (126) and Central Craigavon (125).

Cultra and Malone are the most expensive areas to buy a home, with median property prices of just over £400,000.

However research found over 80 locations in the north where median property prices are under £100,000.

According to Property Pal’s new economic and housing forecast, house prices grew 3.6 per cent last year. Assuming a ‘soft Brexit’ can be secured, it anticipates prices will rise by 2.9 per cent in 2019, 3.6 per cent next year and continue to rise from 3-4 percent until 2023.

The company’s chief economist Jordan Buchanan said that the north’s economy is expected to grow by 1.2 per cent this year, 1.3 per cent next year and between 1.5-2 per cent until 2023.

“The Northern Ireland economy has been performing particularly well in recent years despite an increasingly challenging backdrop,” he said.

“Firms have been hiring at record rates, economic inactivity is falling and unemployment is exceptionally low by historical standards, and amongst the lowest of any advanced nation in the world. However, the outlook remains cautious with many forward leading indicators suggesting the local economy is close to a recession.”

Focussing on the housing market, he said the north remains amongst the most affordable places in the UK to buy a home.

“Today the median house price in Northern Ireland stands at £134,200, 29 per cent below the highs of 2007 and over 40 per cent lower than the UK average (though a more sensible comparison is 34 per cent lower that Great Britain excluding London).”

Commenting on the potential impact Brexit might have on the market’s outlook, the economist added: ‘Until a Brexit deal is secured, economic and political uncertainty will restrain buyer sentiment.

“The UK wide housing market will remain price sensitive and beyond that, depending on what deal is agreed, will have an impact on the path of interest rates, wage growth and house prices.

“Fortunately from a Northern Ireland perspective, there is a case for optimism as the fundamental drivers remain encouraging. Ongoing affordability, pent up demand, a low interest rate environment – with competitive mortgage deals – and an increasingly tight labour market, with real wage growth, should support house price growth in the coming years.”

By Ryan McAleer

Source: Irish News

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House prices in selected UK regions on the rise

House prices in Wales, Scotland and Northern Ireland are expected to continue their upward trajectory, reallymoving has predicted.

Values have been forecasted to rise by 8.7% in Wales, 3.8% in Scotland and 1.9% in Northern Ireland over the next three months.

Rob Houghton, chief executive of reallymoving, said: “Considering the current political situation, the UK housing market continues to show remarkable resilience.”

Average house prices in England and Wales are set to see an average 0.9% monthly drop over the next three months.

London is set to see a moderate increase of 1.5% overall in the three-month period from September to November.

Year-on-year, house prices are on course to remain in positive territory throughout the Autumn.

A 3% annual increase forecast for September will be the highest rate of annual house price growth for almost a year, followed by 2.7% in October and 2.1% in November 2019.

However, average house prices in England and Wales are set to see an average 0.9% monthly drop over the next three months.

Houghton added: “House prices are on course for minor monthly falls in September, October and November, but while the temptation is to attribute this to Brexit, in fact it is largely down to seasonality with the market following its usual pattern of peaking in August then tailing off steadily through Autumn.

“The London market has proved to be most vulnerable to the political situation and the data suggests buyers were more cautious in August when No Deal Brexit rhetoric peaked, prompting a 2.3% monthly fall in prices agreed which will translate to completions in November.

“Nationally, annual growth is set to remain in positive territory throughout the Autumn, indicating that people are continuing to press ahead with home moves and the underlying value of the housing market remains stable.”

By Michael Lloyd

Source: Mortgage Introducer