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Property industry reaction to Rightmove House Price Index

The average price of property coming to market added 0.3%, or £852, to hit an average of £341,019, which is 7.6% higher than in January 2021, the highest annual rate of price growth recorded by Rightmove since May 2016

First-time buyer asking prices reached a new record of £214,176 after a monthly jump of 1.4%.

Strong demand and continuing low numbers of available homes for sale set up the housing market frenzy to continue into the start of 2022, with early-bird sellers benefitting from increased buyer competition.

The number of buyers enquiring about homes is 15% higher than the same time last year.

The number of available homes for sale per estate agency branch dropped again to a new record low of just 12.

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Property industry reaction:

Guy Gittins, CEO of Chestertons, commented: “We expect the market to remain buoyant for at least the first quarter of 2022 as London is seeing the return of office workers, international students as well as Londoners who left the capital during the peak of the pandemic but are now seeking a return to the hustle and bustle of the city.”

“London’s property market cannot currently meet the demand from house hunters which, inevitably, has led to a very competitive market for buyers and rising prices. To secure their ideal property, buyers are advised to put themselves in the best possible position by having their finances and paperwork in place prior to starting their search as it will enable them to act fast.

North London estate agent, Jeremy Leaf, said: “Asking prices continue to rise, which is not surprising bearing in mind the lack of supply. Market appraisals are on the rise as well, but not fast enough to provide more of a balance between supply and demand.

“Rising asking prices are all very well but transaction numbers are more important and a more reliable snapshot of the health of the housing market. Lack of supply is holding back transactions, which is not good news for the property market or the wider economy.

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“It is of particular concern that first-time buyers are being asked to pay yet more to get a foot on the ladder. More realistic pricing is essential if first-time buyers are not going to be priced out of a purchase completely.”

Managing director of HBB Solutions, Chris Hodgkinson, commented: “There’s certainly been no New Year’s change where the UK property market is concerned and homebuyers are still swamping the market while house prices continue to defy the ‘what goes up must come down’ mantra.

In fact, with stock levels remaining low, this fresh wave of demand is pushing asking prices even higher than the stamp duty fuelled thresholds of last year.

When you also consider that the cost of borrowing is still very low, we can expect more of the same where property market performance is concerned in 2022.”

Director of Benham and Reeves, Marc von said: “There have been no signs of a sluggish start to the year for the property market and not only are we seeing a very strong level of buyer activity, but we’ve also been inundated with requests from potential sellers keen to make the most of these buoyant market conditions.

We’re now seeing a strong level of activity returning to the London market and the capital’s forecast is far brighter for the year ahead, having been uncharacteristically left in the shadows during the pandemic house price boom.

Overseas buyers are returning in their number and the capital is hotting up as the time to sell a home reduces and stock availability comes under pressure.

If buyers are quick there is still an element of ‘old stock’ that has been stuck on the market and these opportunities can potentially be snapped up at relatively decent price levels – for now.”

The founder and CEO of GetAgent.co.uk, Colby Short, remarked: “Many home sellers will have listed their home prior to the festive break in anticipation of a fast start to the year and this proactive approach is now paying off as many are already accepting offers on their homes.

However, for those buyers who are struggling to find their ideal home, there is hope for the year ahead. Now that the dust has settled following the final stamp duty holiday deadline, we’re seeing a significant increase in the number of sellers heading to market.

So we can expect to see a good level of fresh stock materialise over the coming months, bringing greater choice to buyers and adding yet further fuel to the house price growth furnace.”

Tomer Aboody, director of property lender MT Finance, said: “With such a lack of supply of good properties on the market, combined with plenty of cheap mortgages, buyers are pushing themselves to make sure they don’t miss out and asking prices continue to rise as sellers take advantage. If that means having to pay more for a home, then many buyers are prepared to do so.

“With inflation continuing to rise and higher mortgage rates likely at some point, this situation is unlikely to change in the short term if the supply situation does not improve. It remains to be seen what will happen as something approaching ’normality’ returns and things settle down.”

By MARC DA SILVA

Source: Property Industry Eye

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House growth continues in the region

House prices rose by up to 12 per cent in 2021, although they’re anticipated to moderate to about three per cent in 2022, according to Michael Williams, a partner at Morris, Marshall and Poole with Norman Lloyd based at Aberystwyth.

“We’ve seen record sales throughout Powys, Ceredigion, Shropshire and Gwynedd over the past year amid a significant growth in house prices throughout the region,” he said. “We anticipate growth to moderate to around three per cent in 2022, even with the Bank of England base rate increase to 0.25 per cent in December.

“Demand from house buyers in the area has been outstripping the supply of housing stock. However, following Christmas and new year we’ve seen a stepped increase in homeowners wanting to put their properties on the market.

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“It’s been an encouraging start to the year. Many homebuyers are looking for larger properties, principally because they are spending greater time at home for work and leisure following the pandemic.”

He added: “Our advice to anyone thinking of selling their home is to seek a valuation from their estate agent and place it on the market. Prices have risen and demand is there. Combine that with anticipated inflation and base rate rises and now is the time to consider a house move, whether buying or selling.”

According to the Guild of Property Professionals, which Morris, Marshall and Poole with Norman Lloyd is a member of, an estimated 1.3 million residential property transactions will take place in the UK during 2022/2023 – eight per cent higher than the long-term average.

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This is set against a private housing stock turnover of around 3.5 per cent in Powys and Ceredigion in 2021 and four per cent to 4.49 per cent in Shropshire during the same period.

The average rate of price change in Powys was 12 per cent, with the average house price at £216,998 compared to Shropshire which saw a 16.9 per cent increase and an average house price of £255,156. This equates to an average house price increase of between £21,600 and £22,700.

Demand for homes in towns ranging from Newtown and Welshpool, to Aberystwyth and Machynlleth, Llanidloes and Rhayader, and Oswestry continues to rise.

“There’s unlikely to be any further changes to the Land Transaction Tax in Wales or Stamp Duty Tax in England. And so those who have held off selling their homes should consider their options now before any Base Rate rises,” added Mr Williams.

By James Pugh

Source: Shropshire Star

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2022 Outlook for UK Property Market

The last few years have been far from predictable for the UK property market. With the impact of the COVID-19 pandemic, many experts were initially anticipating a property market crash but the property industry has thrived with property prices increasing steadily. The average house price increased by almost £34,000 since the start of the pandemic and now stands at a record £276,091 as of December 2021 (source: Halifax).

Initiatives such as the stamp duty tax holiday and the 5% deposit mortgage scheme have helped to keep the property market buoyant. However, the outlook for 2022 could be heavily affected by rising inflation and many experts are expecting a slowdown in house price increases. The end of the stamp duty holiday is predicted to have a significant impact on the numbers of sales in 2022 compared to 2021.

The Bank of England raised interest rates in December 2021 for the first time since the pandemic began, and further increases are likely to follow in the coming months; which will mean that the record low mortgage deals of 2021 will no longer be available and homeowners are therefore urged to remortgage sooner rather than later to fix on low rates.

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The ongoing impact of COVID-19 on the UK Property Market

Much like the COVID-19 pandemic, it is very difficult to predict what will happen in 2022. If new variants continue to appear then the property market will be affected by this. The uncertainty has resulted in some very mixed predictions from experts in the property industry.

Rightmove has forecast a 5% price increase in 2022, while Zoopla predicts 3% and Oxford Economics are warning of a 1.4% fall in prices.

Another consequence of COVID-19 is that it has influenced a change of trend in the desired property types and locations of where people are looking to buy property. After the first lockdown, there was a huge influx of searches for properties outside of cities, offering more space and local areas of beauty to enjoy.

There is still a high demand for these types of properties and there has also been a noticeable uplift in buying properties in the Northwest of England. The demand for homes is currently bigger than the number of available properties, so this may keep pushing property prices up in this part of the UK.

Seasonal changes to the Property Market

The seasonal pattern of the housing market is expected to continue as usual, with the typical lull in the lead up to Christmas and New Year followed by a surge of people looking to buy property in spring.

A survey conducted by Zoopla revealed that around a fifth of homeowners are eager to move house due to the pandemic, so it is unlikely that it will be a quiet year, but the general consensus is that it will not be as busy as 2021.

Outlook for First-time Buyers

First-time buyers have generally struggled in recent years due to rising house prices and the requirement to save up a large deposit. In 2022, the government’s 5% deposit scheme will help many first-time buyers to afford a property, but the increasing interest rates will price some people out of getting on the property market.

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2022 Outlook for Property Investors & Landlords

Many Buy to Let landlords have enjoyed the benefits of the huge price growth in the last 12 months, helping to raise the value of their portfolio or make quick profits by buying and selling a property a year later. In 2022, the predicted slowdown of price increases will mean that most Landlords & Property Investors and will not make as much equity in the property they buy over the next 12-month period.

In recent years, rents have been increasing and hit a 13-year high due to the high demand for rental properties and a low number of available properties. Until this imbalance is addressed, it is likely that high rents will continue.

For foreign & overseas Property Investors, the increase in tax may put some investors off, but the huge rental demand in the UK and relatively low interest rates for mortgages ensure that the UK is still one of the best places to invest when considering other options globally.

Another factor to consider for investors is the increasing requirement for UK holiday accommodation, with travel restrictions continuing and many people not wanting to risk booking a foreign holiday due to all the additional paperwork and costs this currently incurs.

People investing in holiday accommodation such as Lodges in the countryside or Apartments in coastal areas are able to charge large rents. Places like Cornwall, Wales, Scotland and the Lake District are in high demand with holidaymakers, so this type of investment should be highly profitable over the next few years.

Property Investors who can find properties in hotspots where prices are expected to continue rising or highly in demand holiday locations stand to do well, despite the predicted slowdown in price increases.

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Average property price estimates reveal an intriguing picture

In the world of surveying, common questions abound and are always being asked. ‘What is going to happen to UK house prices?’ tends to be the most common and the most general, and the answer is always, ‘We just don’t know’.

The future is not yet written and a valuation is always taken at a moment in time, and is always likely to be different at each moment.

However, what we do have as a business is a clear view on what has happened and a raft of data to give us an idea of the direction of travel that we have seen, and by viewing this, you’re likely to gain further info to form an opinion on where the market might be going next.

To that end, we recently collated average house price data for all the regions we have been active in over the last 14 months. From October 2020, for all English regions plus Scotland, Wales and Northern Ireland, we can track the average property value based on the estimate sent to us by the lender concerned when they instruct us.

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The product used is our standard mortgage valuation and all lenders/firms/surveyors are included in our data. That final point is worth emphasising – it is our data and is unique to us, but it by no means covers every single transaction that has taken place during that time and should therefore be treated in that context.

It may however outline where house prices have come from, where they most recently arrived at, when they might have peaked (if they have done), although again this does not mean we can suddenly predict what might happen in the future.

To start with, let’s look at the average estimated price for the UK as a whole – back in October 2020, according to our data, this was just over £305,000, however by December 2021 this had increased to just over £337,500, representing a 10.5% increase.

I suspect there are few shocks to be had in reading this. Most of the house price indices – and we are certainly not a sector short of these – will have reported along similar lines during the period, with average increases being in the region of 8-10% for the average UK property.

Of course, this is a notional property in and of itself, and the UK is incredibly regionalised in terms of what happens to prices. Our data, as mentioned, is broken down into 11 regions, and over the same time period (October 2020-December 2021) it may surprise you to learn that the region with the highest inflation is Greater London.

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It has gone from an average price of just shy of £590,000 to £718,000, representing close to a 22% increase. In much of the other house price data I have seen, certainly central London prices appear not to have increased by anywhere near the same levels as other regions; in fact it tends to be quite lower. However, this is a greater London region which might go some way to showing why it’s a heftier increase.

Conversely, it is the North East which currently sits bottom of our inflationary table, up only 0.8% over the period from just over £232,000 to £234,000.

Again, this appears to go against the grain slightly in terms of regions deemed to have seen bigger inflationary rises. From what I have seen, the larger increases appear to have been in regions such as Wales, the North, Scotland, etc.

Our data shows double-digit house price inflation in Wales (15.14%), the North West (12.84%), Scotland (11.39%), and Northern Ireland (10.96%), while the East Midlands (9.14%) and East of England (8.91%) are not too far behind either.

The rest of our regions are made up of the South East (7.16%), the South West (5.9%), and the West Midlands (2.05%).

Again, these figures might be surprising to some, but at the top end of the scale, they certainly seem to be in keeping with many other indices and the ‘mood music’ around what prices are doing.

Interestingly, during the time period, only one region – Scotland – had its peak average price in the last month covered, December 2021. All others had ‘peaked’ prior to that – one region in September 2021, seven in October 2021, and three others in November 2021.

That seems interesting in itself, given the stamp duty holiday finished in England at the end of September 2021 and yet prices continued to peak after that.

Admittedly, they have now come off that peak and may continue to do so. It’s therefore entirely plausible that house prices might plateau during the rest of the year, or merely inch up again following that slight drop-off.

What we can say is that the UK continues to suffer from a shortage of property supply, coupled with strengthening demand which looks unlikely to peter out. Lenders want to lend, many people want to move/buy, and they outstrip the current property numbers available.

This basic law of economics tends to see prices, at the very least, trending slightly upwards. It will be interesting to see if this is how the market does play out through the year ahead and we will certainly review the data we collect to track its progress.

By Simon Jackson

Source: Mortgage Introducer

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Room for growth: UK housing market will continue ‘its upward climb’

Residential property prices ended 2021 at a record high with annual growth at its strongest in 15 years, and yet there appears to be plenty more room for growth in 2022.

The average price of a home hit £254,822, an increase of almost £24,000 compared to the previous year, according to Nationwide. In cash terms it is the largest yearly rise on record.

Prices rose by 10.4% in the 12 months to December, up from 10% in November, owed in part to the low supply of homes on the market.

Average prices hit a year-high of £254,822 in December, marking a £23,902 rise on the same month last year, while they were 1% higher month-on-month.

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“Prices are now 16% higher than before the pandemic struck in early 2020,” said Nationwide chief economist Robert Gardner.

Wales was the strongest performing region, with house prices up by almost 16% year-on-year. London recorded the weakest rate of growth at 4.2%.

The South West was the strongest performing English region, with annual price growth of 11.5%, the largest calendar-year increase in the region since 2004.

Industry reaction to the latest Nationwide House Price Index: :

Iain McKenzie, CEO of The Guild of Property Professionals, said: “The property market ended 2021 on a high, and it’s incredible to think that average house prices have soared almost £24,000 this year.

“This was the year that Britons took stock and decided it was time to find their dream home, and the trend shows no signs of slowing.

“Mortgage approvals are still well above pre-Covid levels, and with demand outstripping supply, prices are still being pushed up.

“We expect 2022 to start the same way, with fears over the Omicron starting to subside. Buyers will have one eye on soaring inflation, but the housing market continues its upward climb.”

Nicky Stevenson, managing director at Fine & Country, commented: “To close out the year at an all-time high on a wave of double digit annual growth sums up what has been an unstoppable rally that has surprised at every turn.

“Earlier this year, the performance of house prices was being described as a ‘mini-boom’ but the market has substantially outgrown that moniker now. The rally still hasn’t run out of steam, with buyers in December shrugging off the rise of Omicron and a rise in central bank interest rates.

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“There are two main headwinds on the horizon, as Covid fears begin to ease. The first is inflation and the unpredictable pace at which the Bank of England will raise rates. Given property transactions are relatively slow affairs, this is one of the more difficult nettles to grasp for buyers who are stretching their budgets and trying to plan ahead. This affects those buying at the top end of the market as much as it does first-time buyers.

“The second is consumer confidence. In the shadow of Covid, the UK has dodged an economic day of reckoning so far, largely thanks to government support, but there’s plenty of uncertainty left to navigate in 2022 from employment prospects and wage inflation to new Covid variants and rises in the cost of living.”

Lucy Pendleton, at estate agents James Pendleton, said: “December has capped off an extraordinary year that will go down as one of the market’s outliers. All parts of the economy seemed to be on manoeuvres in 2021.

“It was the year that policymakers kept pouring fuel on a fire that was already raging, London’s bellwether housing market consistently trailed the rest of the country and first-time buyers refused to lose interest despite soaring prices.

“You almost never see these three trends together but nothing surprises us anymore. It was very difficult to foresee any of this.

“For starters, the pandemic caused the so-called ‘race for space’ which was impossible to predict. Its legacy was that many buyers never got to enjoy the stamp duty discount because prices rose so fast that house price appreciation quickly eclipsed the tax break.

“It’s unlikely, armed with hindsight, that the government would intervene in this way and on that scale if it had its time again.

“Strong inflation would normally prompt an exodus of first-time buyers, particularly as interest rates would normally be on the march as well. That didn’t happen. The cost of borrowing remained mercifully low while the price of everything else took off.

“This delicate status quo can’t last forever and that’s what experts are watching as we head into 2022. New blood is crucial to the housing market and if December’s interest rate hike by the Bank of England indicates the direction of travel, wage increases may not be enough to counteract higher rates next year.

“Consolidation has to be on the cards but weaker performing regions like London could buck the national trend. Weaker affordability on average has held the capital back in terms of annual growth this year but wage increases and returning interest from international buyers next year could turn that trend around.”

By MARC DA SILVA

Source: Property Industry Eye

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Hot Housing Market to Normalise Next Year: Zoopla

UK house prices have reached an all time high according to a regular monthly assessment of the market, although 2022 should see a buoyant market rationalise amidst increasing mortgage costs.

Zoopla’s monthly House Price Index revealed strong buyer demand and lower housing stock volumes have boosted average house prices by £16K in the last 12 months.

This gives a 7.1% rise in average house prices, down from 7.6% in August.

Zoopla says buyer demand is currently seen to be easing in line with seasonal trends, but they anticipate it will build sharply again after Christmas ahead of a moderation.

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Rising household equity, coupled with movers looking for additional space, will underpin activity – delivering new supply, and demand – into 2022 said Zoopla.

Nationwide – who conduct the UK’s leading house price measurement – said annual house price growth increased slightly in November to 10.0%, with prices going up 0.9% month-on-month.

“Underlying activity appears to be holding up well. The number of mortgages approved for house purchases in October was still running above the 2019 monthly average. Early indications also suggest that labour market conditions remain robust, despite the furlough scheme finishing at the end of September. If this is maintained, housing market conditions may remain fairly buoyant in the coming months,” said Robert Gardner, Nationwide’s Chief Economist.

But Zoopla says the market should normalise in 2022 following the hefty gains in prices seen over recent months.

“The speed at which the market is moving will start to normalise next year,” said Zoopla.

A significant potential headwind to further house price gains comes in the form of higher mortgage interest rates as credit markets anticipate a higher Bank Rate at the Bank of England over coming months.

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

“New mortgage rates already have jumped to reflect expectations that the MPC would hike Bank Rate,” says Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics.

The Bank of England last week hiked interest rates by 10 basis points to 0.25% and economists expect further rate hikes will follow in 2022.

Whether the next rate comes in February or May is up for debate, but money markets show investors are anticipating Bank Rate to go to 1.0% by the time 2022 is done and this will be reflected in mortgage levels.

20% of the stock of existing mortgages are on variable rates, making them the most ‘at risk’ category.

“Most households which refinance their fixed-rate mortgage over the coming months won’t end up paying any more in interest, given that most of them obtained their mortgage five years ago, when rates were higher,” says Tombs.

Pantheon Macroeconomics say they forecast the Bank of England will raise interest rates to 0.50% in May, rather than in February as markets presently expect.

Written by Gary Howes

Source: Pound Sterling Live

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Will house prices rise in 2022? The outlook for the housing market next year

The housing market has soared in the past 12 months despite the adverse impact the global pandemic has had on the UK economy, as people sought more living space and locked into cheap mortgage borrowing costs.

One of the major factors driving up prices over the past year was the stamp duty holiday, introduced in July 2020, which finally ended on 31 September after being phased out over the summer period.

The scrapping of stamp duty on properties worth less than £500,000 prompted record numbers of transactions, as buyers were able to save up to £15,000. Yet despite the ending of the tax break the housing market has remained relatively strong.

House prices grew by 7.1% in November, Zoopla said, meaning the average house has now gained around £16,000 in value over the last 12 months. In most regions of the UK prices have grown by more than 2019 and 2020 combined.

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The average price of a home currently stands at £240,900, according to the property portal, owed in part to the widening supply-demand imbalance in the market. But will the trends driving the residential property market continue into 2022?

Grainne Gilmore (GG) and Richard Donnell (RD), from Zoopla’s Research & Insights team, discuss the outlook for the UK housing market next year.

GG: Richard, our latest house price report reflected what has happened in the market over the past 12 months. Prices are up 7.1% on the year, and 6.6 million homes have risen in value by more than £30,000. This is not what many would have predicted at the start of the pandemic back in March last year.

RD: Yes, the market in 2021 has been remarkably busy for agents, considering we are in a global pandemic. But, the pandemic itself has been one of the drivers of buyer demand, with many households taking lockdowns as an opportunity to reflect on where they were living, and the space in which they were living. Add to this the stamp duty holiday, and we have seen transactions rise to 1.5 million – translating into around one in 16 privately-held homes changing hands in 2021.

They believe the the pandemic-inspired ‘search for space’ has further to run in 2022.

GG: The rise of Omicron is causing more uncertainty for the households, and the wider economy, in the coming weeks. Our data shows a slowing in buyer demand, but it is very much in line with the usual seasonal trends. We expect a bounceback in demand in the days following Christmas and into the New Year. However, could Omicron have any impact on supply?

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RD: The housing market is usually busiest in the first couple of months of the year with a spike in new listings as well as a surge in buyer interest. Starting last year with restrictions and schools closed put off many sellers. So long as schools remain open and we don’t see widespread restrictions then we would expect a strong flow of new instructions.

But looking through the current trends to the rest of 2022, what other factors will be at play?

GG: There will be more economic headwinds next year, but the ‘pandemic-led’ search for space has further to run. Office-based workers will still be recalibrating their working practices and their home life, and some may choose to make a move because they no longer have to live so close to their workplace. This will continue to put upwards pressure on houses situated in wider commuter zones and more rural and coastal areas. There is more room for prices to grow in the more affordable areas, and we forecast average price rises of 4% next year, and 1.2 million transactions, roughly the same level as between 2014 and 2018. How long do you think the pandemic will continue to impact the housing market?

RD: When we look back at the pandemic in five to ten years we will recognise it marked a major turning point in the link between home and work and people’s attitudes to their home. The pandemic has engendered some seismic changes in how people want to work, and how they will work in the future. This trend has further to run, as more office-based workers decide how far they can live from the office if they do not have to be there every day into 2022 and 2023. Together with other structural factors such as an ageing population, the result should be a greater proportion of homes trading each year, bucking the decline over the last five to ten years and supporting the size of the market for agents and lenders.

By MARC DA SILVA

Source: Property Industry Eye

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UK house prices up 10.2% in year to October

UK house prices increased by 10.2% in the year to October 2021 as the market cooled following the tapering of the Stamp Duty holiday.

However, figures from HM Land Registry also show that the average house prices in the UK decreased by 1.1% between September and October 2021, this compares to a 0.8% rise in the same period in 2020.

Despite this, the annual growth will be continued welcome news for homeowners.

And that growth was strongest in Wales where prices were by a whopping 15.5%. Unsurprisingly, the lowest annual growth was in London, where prices still managed to increase by 6.2% in the year to October.

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These rises show little sign of abating for now as continued strong demand and a lack of available housing stock continue to push prices up.

Indeed, the Royal Institution of Chartered Surveyors’ (RICS) recently pointed to a limited choice in available stock as a key factor in continued house price growth.

Whilst the Bank of England’s Agents summary of business conditions 2021 Q3 reported ongoing strong demand for housing across most parts of the UK which is also pushing up prices.

Alan Davison, head of distribution at Together, said: “House prices have continued to rise in what has been a record-breaking year for the property market. UK average house prices increased by 10.2% over the year to October 2021, with the average house price now sat at £268,000, that’s £24,000 higher than this time last year.

“Many people expected a rapid cooling of the market following the end of the Stamp Duty holiday, but the latest research published this week by the Building Societies Association (BSA), reveals 45% of people now expect prices will continue to rise.

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“These increases, coupled with inflation and slow wage growth, may mean first-time buyers will find it even more difficult to get on the housing ladder. In fact, the BSA survey found that raising a deposit remained the biggest barrier to homeownership for this group.

“However, mortgage rates remain at historically low levels, and the Bank of England’s announcement that it is easing strict lending affordability rules should help more people into their first homes. Borrowers will be looking for flexibility from mortgage providers during these uncertain times and we expect a growing need for specialist lenders to support their financial ambitions in the months to come.”

Rob Barnard, director of intermediaries at  Masthaven Bank, added:  “Ongoing levels of high demand, a shortage of available properties, and resilience from the labour market, have combined to keep property activity levels and house prices buoyant.

“Despite the end of the Stamp Duty initiatives, house prices are continuing their steady upward trend. With the potential return of some lockdown measures looming, the ongoing “race for space” also looks set to continue, driving up demand for typically more expensive properties with more rooms and outside space.

“While it is encouraging to see the market remain busy, household budgets may well be squeezed in the coming months, with rising inflationary pressures and the emergence of the new Omicron variant perhaps denting economic confidence.”

Source: Mortgage Introducer

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UK house prices hold steady as demand outstrips supply

House prices held steady in November, industry research showed on Thursday, as the number of people putting their homes on the market continued to ease.

According the latest Residential Market Survey from the Royal Institution of Chartered Surveyors, the net balance of surveyors reporting that house prices have risen over the past three months remained unchanged in November at +71, a touch above consensus for +70.

The new buyer enquiries balance rose to +13 from +11 in October, with demand recovering from a slight dip in September, when stamp duty returned to its traditional threshold.

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But only a small number of homes are being put up for sale, with the new instructions balance holding steady at -18. The average estate agent had just 37 homes on their books, RICS found.

It said: “The continuing drought in new listings was a significant factor holding back the market nationwide.”

Simon Rubinsohn, the body’s chief economist, added: “Unless this trend is reversed soon, transaction levels may flatline in 2022 with limited choice proving more significant that any shift in the interest rate environment for new buyers.”

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Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: “The current strong imbalance between demand and supply likely will not be maintained next year. Mortgage rates jumped in November in response to the recent increase in risk-free rates, and they have further to rise.

“Granted the link between changes in mortgage rates and hose prices is not always firm. The share of household income absorbed by mortgage payments can oscillate, and currently it is only slightly above the long-run average. But with household real disposable income set to fall in 2022, and consumer confidence currently subdued, we think house price growth will fail to maintain its recent momentum.”

Pantheon Macroeconomics is currently forecasting house prices will flatline in the first half of 2022 before rising slowly in the second half.

By Abigail Townsend

Source: ShareCast

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House prices rise for fifth month in a row, reports Halifax

The average UK house price rose for the fifth month in a row to hit a new record high of £272,992 in November, says the latest index from Halifax.

This means a monthly change of 1% and an annual growth rate of 8.2%.

Halifax also notes that the quarterly change – up by 3.4% – is the highest seen since late 2006.

In Wales specifically, yearly growth totalled 14.8%, leading to the average house price in the country pushing past £200,000 for the first time ever.

And Scotland saw significant yearly growth, too. Here, the average house price went up by 8.5%, putting the average house price at £191,140 – also a newly minted record.

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The report states that since March 2020, which it deems the start of the pandemic, house prices have increased by £1,691 a month on average, a total of £33,81 so far.

Halifax managing director Russell Galley believes that a stock shortage is driving the market, with a “strong labour market and keen competition among mortgage providers keeping rates close to historic low.”

He also points out that for first-time buyers, house prices have increased by 9.1% over the year compared to 8.8% for homemovers.

“We see this across different property types too,” he says, “with double-digit annual price inflation for flats (10.8%) over the last year compared to slower gains for detached properties (6.6%).

“This could suggest the ‘race for space’ is becoming less prominent than it was earlier in the pandemic, with industry data also showing the overall number of completed transactions has fallen back since the end of the stamp duty holiday.”

On the subject of flat prices outpacing that of houses, Hargreaves Lansdown personal finance analyst Sarah Coles says: “There are a few forces at play here. The ‘fear of missing out’ plays its part.

She explains: “Once prices start to rise quickly, anyone trying to get onto the property ladder starts to feel that unless they buy soon, prices will rise out of the reach of their deposit. It means they’re asking for help – both from government schemes like the Lifetime ISA and Help to Buy equity loan, and from their families.

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

“The Bank of Mum and Dad have seen the value of their own home rise, so they’re more comfortable about dipping into the equity in order to find a deposit for their offspring.

“And once they have the deposit in place, rock bottom mortgage deals are a major attraction, because first timers can fix at such low rates that it makes their monthly payments manageable.”

Coles continues: “But it’s not just first timers. Some of these smaller properties are likely to be second homes and buy-to-lets.”

This is a view shared by UK Finance, which just yesterday stated that an increasing amount of equity being withdrawn peaked in June 2021 – at the same time as when house purchasing activity was at its highest.

The peak amount being withdrawn – £106,000 – “together with the timing of this peak, suggest strongly that much of this has indeed been used to fund or part-fund additional property purchases,” UK Finance comments.

Quilter mortgage expert Karen Noye says: “At this stage, two months post stamp duty holiday withdrawal, it was hoped we might finally see a downtick in house prices.

“The still rising prices demonstrates that while the scheme did have an impact on house prices, it was not the only driver. The race for space appears to still be going strong, and when combined with the current demand outweighing supply, prices are still being pushed higher.

“Interest rates will be key over the coming months, and an increase would push mortgage rates up which will likely put potential buyers off. However, the new Omicron variant may have thrown a spanner in the works of any major changes planned by the Bank of England, meaning we are unlikely to see a rate rise just yet.

“While that may be the case, rock bottom mortgage rates are likely to creep up as an interest rate rise is still anticipated, it is just a question of when.

“Those waiting out the housing market boom in hopes of lower prices will likely have to wait a while longer yet.

“Regardless of whether house prices begin to drop, the likely increase in mortgage rates will contribute further towards the unaffordability of homeownership.”

By Gary Adams

Source: Mortgage Finance Gazette

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