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Housing transactions predicted to drop by 38% this year

House sales are predicted to fall by 38% this year to 734,000 transactions compared to 2019, according to global property consultancy Knight Frank.

This is based on the assumption that the current lockdown will remain in place through April and May, with a gradual lifting through June.

Knight Frank also forecasts mainstream UK house prices will fall by 3% in 2020, with prices in prime central London remaining unchanged following a 25% repricing since 2014.

The firm expects prices to recover sharply in 2021 – citing an 8% growth for prime central London prices for next year.

Liam Bailey, global head of research at Knight Frank, commented: “The underlying economic forecast we have adopted points to a contraction of GDP of 4% in 2020 and growth of 4.5% in 2021. The actual outturn will be determined by the timeframe imposed by the lockdown.

“The housing market was in a strong position in January and February. A sharp uptick in sales and price growth was seen across the UK, with even the prime central London market seeing a reversal of a five-year long price decline.

“While we expect a revival in activity to continue, with volumes next year expected to be 18% above the level seen in 2019, this expansion in sales in 2021 will not fully offset the losses seen this year. Meaning that of the nearly 526,000 sales we expect to be “lost” due to lockdown this year, less than half will be carried into 2021.

“For the government to see a full recovery of the market, with all of these “lost” sales carried forward, there will be a need for substantial incentives to ease market liquidity – including a reduction in stamp duty.”

Lettings markets

In the lettings market, considering the net impact of a phased return to more normal levels of activity, Knight Frank believes that the number of tenancies agreed in the prime markets across London and the Home Counties in 2020 will be around 25% below the five-year average.

Off the back of rental values in prime central London growing by 1.2%, and in prime outer London by 1.1%, in the year to March 2020; the firm’s view is that rental values in prime central and outer London will remain flat over the course of 2020, with some upwards pressure returning the second half the year.

Bailey continued: “Once the current crisis passes and activity begins to resume, we have to expect weaker economic activity in the first half of 2020, the dislocation in the jobs market and weakened consumer sentiment will impact on prices, however the relatively finite timespan of the crisis means declines will be limited.

Agricultural land

Looking to the agricultural markets, based on the assumption that the farmland market will be back in business by the summer, Knight Frank is predicting land prices to fall during 2020 by 2%. This movement will take the average price of bare agricultural land to around £6,800.

Bailey added: “It is worth noting that Covid-19 is unlikely to be the key driver behind the agricultural land market over the next few years. The impact of Brexit in terms of the trade deal struck with the EU – delayed or not – will play a key role, as will the details of the government’s new environmental payment schemes.

“Surprisingly, the current crisis could indirectly support the land market if investors shift towards more tangible assets and greater emphasis is placed on improving food security and localising food chains.”

By Joanne Atkin

Source: Mortgage Finance Gazette

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Housing transactions slide to their lowest level for five years

Housing transactions are at their lowest for five years.

A new report out this morning says that last month an estimated 79,900 transactions completed, down 4% on the same month last year, and the lowest since 2013.

The LSL/Acadata index puts the average house price at £303,199, up just 0.1% on July but putting to an end a series of falls since March.

The average annual rate of house price growth is 1.8%, which the report says means actual falls as it is lower than 2.3% inflation. The report describes the housing market as flat.

Prices have fallen in 21 out of 33 London boroughs this year, but in the midlands and north-east house prices grew as they did in certain pockets of the market.

In the south-west, Bournemouth house prices rose 6.4% annually in August; in west Berkshire, there was a 12.7% annual rise; and in Monmouthshire, prices soared 14% annually.

The biggest faller was Westminster, where prices have gone down almost 12% year on year.

Source: Property Industry Eye

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House transactions fall amid ‘stagnant’ property market

Housing transactions slipped last month as the UK’s stagnant property market shows little sign of picking up, according to a closely-followed report.

Data from HM Revenue and Customs (HMRC) shows that the number of residential property transactions decreased by three per cent between May and June, falling to 96,370.

House sales completions were also 5.7 per cent lower in June this year compared with the same month in 2017.

Kevin Roberts, director, Legal & General Mortgage Club, said: “Overall housing transaction figures are stagnant. Barriers to moving, such as stamp duty and the high price of property in our urban areas, means that for many the maxim remains ‘improve, not move’, as they seek to renovate or develop their homes, rather than move up the housing ladder.”

Roberts added: “The biggest factor is housing supply. The nation simply hasn’t built enough new homes over the last decade to keep up with demand.”

The news comes less than a week after the Office for National Statistics (ONS) house price index showed house price growth in May slowed to its lowest annual rate in nearly five years.

On average, house prices across the UK have risen three per cent in the year to May 2018, falling from 3.5 per cent in April and dropping to the lowest yearly rate of growth since August 2013, according to the ONS.

“For us, the number of property transactions is always a much better indicator of market strength than house prices, with recent economic and political uncertainty reflected in these lower, seasonally-adjusted numbers. We certainly would have expected higher figures bearing in mind the spring buying season is generally the best for the property market” said Jeremy Leaf, north London estate agent and a former RICS residential chairman.

“However, we are not really surprised when, on the ground, we are seeing fewer buyers nervously trying to negotiate best possible terms and transaction times lengthening as a result. We don’t expect to see any great change but have noticed more listings and viewings in the past month or so, which hopefully will be reflected in slightly higher transaction numbers later in the year.”

Alex Depledge, chief executive and co-founder of, said : “After a slight uptick in transactions in May, a decrease in June will be disappointing for those looking to sell their home. Issues still remain as second time buyers are being hit by high stamp duty costs and are struggling to afford to move, halting growth within the market.”

Source: City A.M.