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Housing market spring season off to subdued start amid Brexit uncertainty

The usual spring bounce in the housing market is being delayed by Brexit uncertainty, reports show.

The average house price is 0.8% lower than it was a year ago, with Rightmove saying the average asking price in March stands at £302,002.

Despite this, prices have edged up by 0.4% – or £1,287 – month on month.

Rightmove said this was the lowest month-on-month increase seen at this time of year since 2011 and “considerably lower” than the 0.9% average increase seen over the past seven years.

It said the usual spring bounce in the housing market is, at best, being delayed by Brexit uncertainty.

Rightmove director Miles Shipside said: “While March marks the start of spring, temperatures have yet to rise in the housing market.

“Buying activity remains cooler than usual, with hesitation as some buyers await a more settled political climate.

“There’s greater resilience the further away you get from the London market, and there’s a sound bedrock of demand for the right property at the right price, reinforced by ongoing housing needs combined with cheap mortgage borrowing.”

In Scotland, asking prices have jumped by 3.1% month on month – the biggest increase in March of all Britain’s nations and regions, followed by the North West of England with a 2.2% increase.

In Wales, asking prices are up by 1.4% month on month.

Asking prices in London are down by 1.1% on the previous month, while the only other English region to record a monthly fall is the North East of England, down by 1.3%, with elsewhere in Britain seeing an increase.

London asking prices are 68% higher than they were 10 years ago, while those in the North East of England have increased by 8% over the past decade.

Mr Shipside said: “London and some of its commuter belt are suffering from a post-boom hangover, with prices now having to be far more sober to attract buyer interest.”

Rightmove said the number of sales agreed by estate agents in February was 7% below the same period in 2018, compared with a year-on-year fall of 4% recorded in January.

But search activity on Rightmove remains steady, with the number of visits to the website staying level in the year to date.

It said this indicates that home movers are “keeping a watching brief” which could lead to an eventual bounce if and when the uncertainty subsides.

Mr Shipside said: “The closer you get to the wire without the clarity of an agreed way forward, the greater the propensity for buyers to wait and see rather than acting now.

“This could be a temporary pause, and indeed market slowdowns at election time and around the original referendum result bounced back pretty quickly.

“Markets and people do not like uncertainty, though, while sales agreed numbers are down by 7%, that means they are still running at 93% of last year’s levels.

“Most potential buyers are getting on with their lives or seeing a price lull as an opportunity to get on to the housing ladder or move to the next rung, with average national asking prices being 0.8% cheaper than a year ago.”

By Kirsty Bosley

Source: Kent Live

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Hammonds’ solution to a broken housing market: a sticking plaster on a gaping wound

Despite reiterating that the economy remained “robust”, during the delivery of the Spring Statement on 13 March 2019, Chancellor of the Exchequer Philip Hammond MP emphasised that the UK is currently shrouded in a “cloud of uncertainty”.

The National Federation of Builders (NFB) remains unconvinced by the chancellor’s latest announcements on housing and planning which include an Affordable Homes Guarantee Scheme and the use of the forthcoming Environment Bill to mandate biodiversity net gain for developments in England.

As we approach the 2020 deadline by which the Government had pledged to deliver one million homes, including 200,000 starter homes, it is becoming increasingly clear that both targets will be missed.

Now, it appears the Government’s solution is to throw money at the challenge – up to £3 billion for the delivery of 30,000 affordable homes through housing associations, to be precise.

Firstly, those figures make no economic sense. If the Government, its agencies, such as Homes England, and planners had been developing sustainable relationships with lower volume house builders to deliver the numbers of homes we need, it would not be in a last-minute panic.

Further, a stumbling block to increasing demand for, or the provision of, affordable housing is the cost. As long as the cost of affordable housing is set in legislation at £450,000, it will continue to remain unaffordable.

The House Builders Association (HBA), the house building division of the NFB, expresses concerns about the chancellor’s announcement that biodiversity net gain will become compulsory for developments across England.

Rico Wojtulewicz, head of housing and planning policy for the HBA, said: “With biodiversity net gain in its infancy and the consultation barely completed, there is a real danger that mandating it, without thinking about its real world consequences, makes it a tax and not a positive outcome for the environment. For that reason, it is a serious concern that a timeline for implementation has already been set.”

Written by: National Federation of Builders

Source: Politics Home

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London property market predictions over the next 12 months

It’s no secret that the London property market has been subdued recently, but the fact that, in spite of everything, it has refrained from crashing does highlight the fact that the market is underpinned by solid foundations. That said, the London property market in 2019 is likely to be characterised by overall caution and stability rather than growth. The team at property investment firm Hopwood House look ahead to what the next 12 months might have in store for the London property market with three specific predictions.

Sales volumes will slow as buyers wait to see what Brexit will bring

Even though Brexit itself need not turn out to be a complete catastrophe, the uncertainty around the form it will eventually take can, understandably, make buyers very nervous. In principle, this issue should be resolved, one way or the other, by the end of March. If that is the case, then growth may start to return to the market towards the latter end of 2019, once buyers have had a chance to adjust to the new reality. In practice, however, there is also a feasible possibility that the negotiating period will be extended beyond the given deadline, which could lead to a longer period of uncertainty and hence subdued activity in the London property market. On the plus side, this could ultimately be of long-term benefit to everyone if it results in a better deal for the UK.

House-price growth will remain subdued

Brexit is the most obvious reason why it is unlikely that there will be major house-price growth in London for the immediate future, however there are others. For example, the London authorities have made it a priority to address the chronic shortage of housing, particularly affordable housing, through a programme of home-building, which has had the (presumably intended) effect of helping to put a brake on house-price growth. It’s also worth noting that the last 10 years have seen certain parts of London benefit greatly from the regeneration brought about by the 2012 London Olympics and other, separate, infrastructure improvements, such as Crossrail, with the result that there was unusually high house-price growth in these areas. At the current time, no such major developments appear to be in the pipeline, hence it is only to be expected that house-price growth will proceed at a slower pace, although, as always, it is to be anticipated that some parts of London will perform better than others, for example, the Notting Hill market continues to be very robust.

The rental market will be highly competitive for tenants

On the one hand, you have people who need a place to live in London, but who do not wish to buy right now. On the other hand, you have a vastly reduced number of rental listings as compared to 2018. This obviously creates a challenging situation for tenants even before factoring in the likelihood that the opening of new tech hubs will draw even more people to the capital. It will be interesting to see if this imbalance in the rental sector will lead to the government looking to encourage buy-to-let investors to focus on the capital and, if so, what form this encouragement will take.

Source: London Loves Business

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UK property: Why history proves this could be the best time for you to buy

  • New research proves how UK property investors who bought immediately following the global financial recession have made the most money on their investment in recent years
  • These “brave” investors made £93,378 in profit when selling their property in 2018, more than buyers in any other year over the last 14 years
  • Amid the wider economic uncertainty of Brexit, will those investors that buy now in 2019 make some of the highest returns over the next decade?

Does this prove that buying UK property now could help you to achieve the highest long-term returns?

Brexit, and the immediate uncertainty of the UK’s withdrawal from the European Union, means that some investors may be waiting until a conclusion is reached before entering the property market. However, the subsequent fall in the pound has also led many other investors to take advantage of this currency opportunity by buying property now.

And new data suggests that it’s the latter group of investors that could be about to achieve the biggest levels of profit over the next few years.

Published by Savills, new research shows that, between 2004 and 2018, it was investors that bought UK property in 2009, amid the fallout of the global financial recession, that achieved the biggest returns when selling their property in 2018.

On average, those buying UK real estate in 2009 made £93,378 when selling their asset last year. It underlines the importance of purchasing with the right market conditions – and taking advantage of wider economic uncertainty.

“Over the last 15 years it really has made a difference as to when and where you bought in terms of the profits you’ve made. It reinforces that it’s not a one-size-fits-all market,” said Lucian Cook, Residential Research Director at Savills.

“The mortgage markets (in 2009) were locked up, but I also suspect some of this is about whether people were brave enough to do it and whether some people in 2009 had enough accumulated equity at that point to be able to make the move.”

The UK is currently suffering a housing shortage. Housebuilding is significantly below the 300,000 new homes the government outlines is required each year. Regardless of wider economic concerns, this does not alter this supply and demand imbalance in the UK’s property market.

At the time of publication, the pound is 11% cheaper against the US dollar than it was on June 22nd 2016 (the day before the EU referendum), and many investors are taking advantage to ensure they can secure an asset with the best value and long-term growth prospects.

Source: Select Property

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A long stagnation could kill off Britain’s obsession with house prices

House prices are still struggling in the UK.

According to the latest Nationwide report, prices rose by 0.4% in February, compared to the same month last year.

The average UK house price is now around £210,000, reckons the building society.

Not much change then since last time.

The big question is – what’s next?

People only care so much about house prices because they have to

House prices are a bit of an obsession in Britain.

This is not because the British are born with some sort of property-fetish gene. It’s because houses are both economically significant and the cause of a great deal of insecurity.

It’s similar to the way that parents with school-age kids in this part of the world obsess over catchment areas and exam results. They didn’t care when they were single and childless, and they won’t care once their kids have got into school. But try getting them to talk about anything else when they’re in the midst of the fraught school-hunting process – no chance.

So this obsession with property is simply a result of the fact that houses hang over us. This is made clear by the fact that this “national obsession” is in fact, not really national at all. You only see it in areas where houses are expensive – in the 20-odd years of my life I spent in and around Glasgow, I don’t think I had a single conversation about house prices (lots about the rain, though).

Since maybe the mid-1990s, the UK property market has been gripped by  slow-motion FOMO (“fear of missing out”). You stayed off “the ladder” to your cost.

Say that, as a young person without much money and a desire to maintain geographic flexibility, you didn’t fancy taking a huge leveraged punt on an asset of often-questionable quality. Well, that was a mistake. That property you passed up back then has probably “earned” more money each year than you ever got paid.

The old saying “you can’t go wrong with bricks and mortar” has been hammered home to the last couple of generations with brutal efficiency. If you are in the core wealth-planning target market (around 40-60 odds) then more than anything else, your present level of household wealth almost certainly depends on how much property you owned and when.

It could make all the difference between whether you are now able to think about jacking it all in for a portfolio career with a heavy dollop of golf and city breaks on the side; or whether you are looking down the barrel of another 25 years of back-breaking mortgage payments that could rocket to unaffordable, lose-your-home-at-age-65, levels on the whim of Mark Carney.

Anyway…

What if this is the “new normal” for house prices?

The question for me now is – how long will this obsession persist?

A flat or falling market doesn’t breed the same level of FOMO. There is still a big psychological hangover from the boom period. Prices in many parts of the UK are still gobsmackingly high. And there’s an assumption that prices will, at some point, renew their astonishing ascent.

But what if they don’t? On the one hand, I still can’t see an obvious trigger to turn the current slow grind lower into a full-blown crash. If interest rates stay roughly where they are for a while and people hang on to their jobs, then they’ll be able to pay their mortgages.

That means there won’t be a wave of forced selling, which is what you really need to get a full-on crash, as happened in the 1990s. (In 2008, the problem was more about credit drying up – buyers were effectively shut out of the market.)

Equally though, if you don’t get an epic crash, you don’t get an epic buying opportunity. You might just get a slow stagnation, which gradually returns prices to just about affordable levels.

House prices are generally “still very high relative to incomes”, as Capital Economics points out. But with prices in the most expensive areas (ie, London) falling hardest, and wages gradually ticking higher, that might be rectified more quickly than you’d think.

So do we end up with a “new normal” for the housing market? Unfortunately, property is still a hideously distorted market. We have the stupid Help-to-Buy scheme, which will be causing problems well down the line from here (it’s a profoundly immoral scheme, as my colleague Merryn has just written in an excellent piece, which we’ll send to you early next week).

And can “build-to-rent” create a more attractive market for renters in the UK than “buy-to-let”? That remains to be seen.

But if house prices cease to surge every year, then that in itself would make a big difference. While the last few generations learned that “you can’t go wrong with bricks and mortar”, the next few might learn the precise opposite – that a home which fails to rocket in value can actually be an expensive headache relative to other asset classes.

Source: Money Week

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UK house prices: Housing market ‘on its knees’ amid Brexit uncertainty

UK house price growth remained sluggish in February, as property experts warned the housing market is “on its knees”.

Prices rose just 0.4 per cent year on year compared to January’s 0.1 per cent rate of growth, new data published today reveals.

But prices actually slumped month on month, falling 0.1 per cent from January to an average of £211,304, down from £211,966, Nationwide’s house price index found.

“After almost grinding to a complete halt in January, annual house price growth remained subdued in February,” Robert Gardner, Nationwide’s chief economist, said, with experts attributing the lack of action to extended political uncertainty surrounding Brexit.

Pointing to “softened” market sentiment, he added: “Measures of consumer confidence weakened around the turn of the year and surveyors reported a further fall in new buyer enquiries over the same period.

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

Gardner said that despite a slow influx of new properties onto the market, momentum is firmly on the side of buyers after consumer confidence weakened in the new year.

Property experts said market confidence had “shattered” despite a strong employment rate, ultra-low borrowing rates and below-target inflation.

The latest English Housing Survey showed a slight rise in the home ownership rate last year to 63.5 per cent, up from 62.6 per cent in 2017.

March madness?

But property lender Octane Capital’s chief executive, Jonathan Samuels, warned “the UK property market remains firmly on its knees”.

He added: “The home ownership rate may have improved but the relationship many people have with bricks and mortar is changing irreversibly.

“March could be the month the property market finally succumbs to madness.”

All the ingredients for success

Andy Soloman, chief executive of business growth expert Yomdel, blamed the approach of Brexit uncertainty as a deal looks unlikely to be approved by parliament.

But he added: “With unemployment falling and wage growth on the up, we have all the ingredients required for a buoyant housing market, it’s just a case of sitting tight and waiting for the clouds of uncertainty to lift.”

Status quo until we leave the EU

Lucy Pendleton, founder director of independent estate agents James Pendleton, warned the current uncertainty clouding the market will be the norm until after the UK leaves the EU on 29 March.

“Assuming there’s no delay to Article 50, this is going to be the mood music until we get through to April,” she said.

“The market is falling in real terms but in the more expensive parts of the country, particularly London, it’s going to take a more significant retreat in prices to pull first-time buyers to the table in significantly greater numbers.”

Source: City AM

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Help to Buy smashes through £10bn milestone

The Help to Buy equity loan scheme allowed 1,000 sales a week to be completed in 2018, according to the Ministry of Housing, Communities and Local Government.

The ministry’s statistics, published today (February 26), showed Help To Buy equity loans exceeded £10bn for the first time in the third quarter of 2018.

Kate Davies, executive director of the Intermediary Mortgage Lenders Association, said the statistics show that Help to Buy has become a cornerstone of the UK property market.

Ms Davies said the government’s programme continues to stimulate the bottom of the housing ladder, providing essential support to the whole of the UK property sector.

However in Budget 2018, chancellor Philip Hammond announced Help to Buy will come to an end in 2023.

She said: “These figures show a continuing trend in what looks set to be the strongest year so far for Help to Buy sales, with total completions since the scheme began likely to have passed the 200,000 mark by the end of 2018, with around 1,000 sales a week completing with the support of Help to Buy in 2018.

“We expect Help to Buy to remain invaluable in supporting home buyers into the next decade.

“The support will also help keep the property market on an even keel during a period of heightened uncertainty as a result of the UK’s expected departure from the EU this year.

“Given the important role Help to Buy plays in lifting households into home ownership and the large number of people who have not been able to climb onto the first rung of the property ladder, long-term solutions are required to ensure the continuing prosperity of the housing market, post-2023.”

Mark Dyason, managing director of the specialist property broker Thistle Finance, said in an increasingly glacial market, Help to Buy has kept the new build sector afloat and enabled many first time buyers to get on the ladder.

But he warned when it finally comes to an end, the fallout for the biggest developers that have benefited from it the most could be devastating.

Mr Dyason said: “The major property developers have done exceptionally well out of Help to Buy but at some point the supply of the drug will stop and they will have to go cold turkey.

“Help to Buy is in much the same vein as low rates since the Global Financial Crisis. They have kept the economy going but equally they have kicked the can down the road.

“The Help to Buy scheme is arguably a hollow victory with the potential to cause all manner of problems both for the buyers who have used it and the developers that have offered it.

“We live in an era of short-termism but the fall-out from artificial props like Help to Buy could be long-term.”

Source: FT Adviser

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Research reveals small and large UK property owners’ biggest concerns

Owning a property is an essential aspect for every individual. Wait, are we discussing purchasing a house in the UK? Of course, yes. Affordability of housing merely affects an individual’s condition- both mentally and physically. Did you know, 2/3rd of the UK residents are still living in the rented sector? Well, the reason is pretty visible- due to unaffordability factors in the locality, and the cost of the property. Well, location is another major concern for the majority of residents in the country.

Research says, nearly 12,000 tenants have chosen to live in the rented sector by their own choice and not due to the prices of houses. How about the rest? The remaining group of individuals has no options left but to live as a tenant. The current rent or tenant statistics is 5 million, and it is expected to be 5.80 million households in the next two years. Of course, the tenants would be elderly, retirees and the youngsters of the country. What are the reasons for rising prices in the real estate market?

Reasons for unaffordable growth in the housing sector

Well, here are some of the significant concerns that we need to look upon, and make it affordable for every individual though. Mentioned below are some massive factors:

  • The higher cost of living
  • The absence of rent control measures
  • Increase in Private Landlords
  • Too much of the wealth gap in the country
  • Non-diagnosing of the root causes from media and government

How can we make it affordable?

Well, this cannot be a single person’s thought or action. This needs many hands and brains to work upon and raise the concerns. The reasons are already known to most of us. Not only buying houses have become expensive, but even the roof repairs and maintenance also have been costly. Well, research says that owning a property in the United Kingdom is the most luxurious asset. To prevent the rise in prices, we can act upon some specific policies:

  • Why not free up those local authorities to invest or purchase in a new property?
  • Private landlords and their pricing modules need to be monitored and manage with necessary regulations.
  • Land and property taxations need to be reformed once again.
  • Land Hoarding can be replaced with Development in the sector.

However, acting upon being a single individual is nearly impossible. Did you know many of the individuals have started moving to other places leaving London altogether? Most of them are young buds. Approximately 7,000 people are homeless and are spending their cold nights on the busy streets. Not just the UK, many countries need to reform their real estate sector and housing policies. This will undoubtedly make the living of every individual better and improved. Well, as mentioned already some of the tenants have entered the rental sector with their own choice, may be due to their work, or other factors, but the majority of them have chosen to be a rented citizen due to their unaffordability.

Inevitably, the private rented sector will grow to enhance in the tenant demands, but is this working well for the whole industry? Don’t you think there’s a need to act upon these issues?

Source: London Loves Business

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UK property asking prices rise by least since 2009 – Rightmove

Asking prices for British homes rose by the least in a decade over the past year, property website Rightmove said on Monday, adding to signs of a slowing housing market ahead of Brexit.

Rightmove said prices for newly advertised property were up by just 0.2 percent in February compared with a year earlier, the smallest increase since 2009, although they increased by 0.6 percent on the month, in line with the seasonal average.

With wages rising at an annual rate of more than 3 percent, according to official data, the affordability of houses was improving at its fastest since 2011, the company said.

“In theory the scene would be set for an active spring if it were not for the uncertain political backdrop,” Rightmove housing market analyst Miles Shipside said.

Britain is on course to leave the European Union without a transition deal on March 29 unless Prime Minister Theresa May can broker a revised agreement with the bloc that is acceptable to her divided party and parliament.

British house prices have slowed over the past year, mostly in London and nearby regions, as Brexit worries added to the headwinds from stretched affordability and higher purchase taxes for rental properties and houses costing over 1 million pounds ($1.28 million).

Official data last week showed annual house price growth slowed to 2.5 percent in December, the lowest since 2013, while surveyors see the weakest near-term outlook for prices since 2011.

Rightmove’s data is based on property advertisements on its website, which it says accounts for 90 percent of residential property on sale in the United Kingdom.

Source: Investing

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Housing market off to ‘subdued’ start in 2019

The Royal Institution of Chartered Surveyors (RICS) has described the housing market as ‘subdued’, noting that new buyer enquiries fell in January for the sixth successive month.

In its latest residential market survey, the trade body confirmed that demand declined to some degree across almost every region in the UK, with Scotland the only exception. Even north of the border however the trend was flat.

A drop in demand has been accompanied by a fall in new listings also, to the weakest level seen since July 2016, while agreed sales fell further as well.

What’s ahead?

The RICS survey found that sales expectations are negative for the next three months both nationally and across most parts of the UK, though surveyors are positive in expecting sales to rise over the next year.

Prices are expected to continue to slip, with London and the south east subject to the most negativity from surveyors. RICS noted that these regions have seen strong house price growth in recent years, making them less affordable.

A mixed picture for landlords

The survey revealed a mixed picture for the lettings market. While demand picked up modestly, for the third straight quarter, new landlord instructions fell for the eleventh successive quarter.

Surveyors expect rents to increase by around 2% over the next year.

Simon Rubinsohn, chief economist at RICS, noted that while some respondents had enjoyed a stronger start to the year than anticipated, the majority were continuing to find the market a tough one in which to do business.

“Resolution of the Brexit negotiations is widely seen as critical to encouraging potential buyers back into the market, although whether that will be sufficient in London and parts of the south east where affordability remains stretched and the tax changes are most penal remains to be seen,” he added.

Source: Your Money