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London leavers bought 73,950 homes outside the capital in 2020

In 2020 London leavers purchased 73,950 homes outside the capital, the highest number in four years, Hamptons research has found.

There has been a clear increase in the popularity of London outmigration since the onset of Covid-19.

In the first half of 2020, London leavers bought 6.9% of homes sold outside the capital, equating to 24,480 sales.

However, in the second half of 2020, this figure rose to 7.8% and twice as many sales (49,470).

Aneisha Beveridge, head of research at Hamptons, said: “Despite Covid-19 closing the housing market for seven weeks, the number of homes bought by Londoners outside the capital has risen to the highest level in four years.

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“While leaving London has been a rite of passage for many, often families reaching life stage milestones, the effects of lockdown and the desire for space seems to have heightened this drift.

“Meanwhile the lure of a stamp duty holiday acted as an impetus for more buyers to bring future planned moves forward.

“The prospect of homeworking more regularly has also meant that London leavers are moving further than ever before. The average London leaver moved 10 miles further than in 2019 as buyers’ favour space over commutability.”

The average London leaver spent £372,860 on their home outside the capital.

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

The typical person leaving London from May onwards travels as far as Cambridge to the north, Colchester to the east, Brighton to the south or Didcot to the west.

It seems this is a trend that’s likely to stay, as we head into 2021.

Beveridge added: “We expect this outmigration trend to continue into the first half of next year too.

“But usually as prices in the capital begin to flatline, which we forecast to happen in the second half of 2021, more Londoners decide stay put.

“Even so, given the housing market has been anything but normal since the onset of Covid, we expect to see the total number of homes bought by London leavers next year hit 2016 levels.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Less than 20% of Britons think house prices will fall next year

An estimated 19% of individuals believe that UK house prices will fall next year according to the latest ING International Survey.

In contrast, 42% think house prices will rise in next 12 months.

The data also outlined that 35% of homebuyers in the UK offered a lower amount for their house than the asking price, compared with 30% in Europe.

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Over half (54%) of Britons spend three months or less looking to buy a home before purchase.

Additionally, the survey noted that 57% of those in the UK think that it has become more difficult to get on the housing ladder since 2015.

The survey results were based off of 13,000 respondents across Europe.

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

James Smith, economist at ING Developed Markets, said: “The surprising post-lockdown resilience in the UK housing market has translated into relative optimism among British consumers.

“But this sentiment could be tested as we head into 2021.

“The anticipated end to the stamp duty holiday is set to coincide with a rise in unemployment over the winter, both of which are likely to put renewed pressure on house prices next year.”

By Jake Carter

Source: Mortgage Introducer

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Covid-19 set to change what consumers want from property

The idea that ‘customer is king’ affects all industries, and has grown exponentially in importance for businesses and investors in recent years. The Covid-19 pandemic is having specific and significant impacts on the private rental sector through customer wants and needs.

Some of these are existing trends and changes, exaggerated by circumstance. Others are new. All must be considered by PRS investors. Two key areas of consumer need are relevant:

• What customers want, and are willing to pay for; and

• Consumer confidence.

The PRS market context

Before sharing my thoughts on how customer wants, needs and confidence are changing what works in the PRS in a post-Covid world, it is important to set the context.

National and international investors are attracted to the sector, as UK residential property investment has for many years offered compelling stability, growth, yield and a hedge against inflation.

The UK PRS is unique, partly due to our cultural obsession with home ownership that has come to dominate the wider housing market.

Key points

  • Tenant needs are changing post-Covid
  • People care more about having a garden and space to work in
  • Economic confidence will be a driver of change

The sector has doubled in size in the 20 years from 2001, from 10.2 per cent to 20.3 per cent of households, according to Savills.

Since 1997, and the widespread take-up of Buy-to-Let mortgages, the make up of investors has diversified dramatically.

Savills also found that 94 per cent of the PRS was owned by individuals in 2018, with the vast majority of landlords owning four or fewer properties, and only 1 per cent owning more than 10 different properties in 2010.

The diversity of ownership has fallen since the Montague Review 2012 and a raft of regulatory changes such as mortgage interest relief via section 24.

The make-up of investors in the PRS is important because:

• It profoundly affects what the PRS actually looks like, and how it responds to Covid-19.

• In many ways, investors are considered as consumers too: you only need to watch Homes Under the Hammer, or read any major news publication, to realise how many ordinary people feel they can and should get involved with UK residential property investment.

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My own experience since studying land economy has predominantly been with PRS assets worth less than £5m, which make up more than 90 per cent of the £1.5tn sector.

I typically work with high-net-worth investors who want the benefits of PRS investment, without the hassle. During lockdown, I published a book on what works and what does not in this complex market.

The main message was that what works must be increasingly professional and efficient, while allowing the investor to be hands off.

Consumer appetite

So, how will Covid-19 affect customer appetites in PRS investment and the wider property market?

What consumers (tenants) want and are willing to pay for relates to buildings, service and confidence. Surveys suggest that people are thinking differently about their housing choices.

Perhaps unsurprisingly, people care more about having a garden, more indoor space, the right neighbours and local community, and space to work from home. It seems clear that ‘walk to work’ locations and layouts that facilitate working from home will be increasingly important.

On fabric of buildings, everything hinges on ability to pay. This may change in the aftermath of chancellor Rishi Sunak’s generous furlough scheme.

The truth is that there is a wider trend: what institutional investors often fail to consider, and many smaller landlords know well, is that many ordinary people, and in particular young people, are not willing to pay for what they say they want when you ask them.

This will need to be considered by PRS investors in a post-Covid world. What is more, appetite changes fast. The idea that ‘yesterday’s news is today’s fish and chip wrapper’ seems rather old hat to anyone who understands TikTok.

The PRS is not just about buildings, but also about service. On this, Helen Gordon, chief executive of Grainger, got it right when she described a core focus on innovation, communication and improvement. Kindness, compassion and a flexible, responsive service driven by technology is key. To an extent, the former of these have been necessitated by the ‘moratorium on evictions’ through Covid-19.

Economic confidence will also prove a key driver of change. There are widespread reports of PRS tenants handing back keys and moving back in with their families. Key life decisions are being delayed, whether due to cancelled weddings or employment status nerves.

The desire for more and better inside and outside space, combined with economic necessities and Covid-inspired nerves have resulted, in many parts of the country, in a correction in the ‘shrinking households’ phenomenon that has accompanied later settling down, and fewer/later lasting marriages, in favour of higher voids. This may not prove permanent, but it will certainly be relevant in the short to medium term.

Investors as consumers, and what they want

While tenant needs are key, there is another relevant group of ‘consumers’, who are acting as investors in the PRS. Side-line landlords have been on the decline due to market and regulatory changes, but what these investors want remains a key driver in the PRS.

What investors want in a post-Covid world is confidence, above all else. This is the currency of the era, and it seems to be worth more than data and oil combined.

They want yield and an inflation hedge. Mass government stimuli and long-term low interest rates are creating an unprecedented appetite for yield. Individual investors in a post-Covid world want this without the increased hassle (for example, more effort around health and safety, and increased need for tenant communications such as that around payment of rent and job security) associated with investing directly.

More professional delivery of PRS-focused investments targeted at ordinary investors seems essential to meet this growing demand.

The truth is, real estate is not about inanimate objects. Much like the internet, powerful businesses and governments effectively control access, and its content both shapes and reflects the pulse of the nation.

In a post-Covid world, we will of course need increased focus on public health in PRS products and services. Investors and operators must consider what tenants want, need and are willing to pay for, and do our best to deliver excellent customer service to tenants.

In many ways, I believe there has never been a better time for investors to access the PRS.

What needs to change is the way so many investors access this sector: it must be professional, efficient, and underpinned by superior technology, systems and customer service if it is to work for tenants and investors alike, in a post-Covid world.

By Anna Clare Harper

Source: FT Adviser

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Rents rise in most regions

The cost of renting increased across six out of eight regions of the UK – with particularly strong increases in the North East and East Midlands, Goodlord’s rental index has found.

In July the typical cost of renting was £838.24 in the North East, up from £652.61 in June.

The East Midlands also saw a rise of 17% increase, with rents rising from £795.24 in June to £961.34 in July.

The only regions where rents didn’t increase were the West Midlands (0%) and Wales (-5%).

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Tom Mundy, chief operating officer at Goodlord, said: “July’s numbers confirm that the post-lockdown bounce we were expecting was more than a flash in the pan.

“The market has found its feet once more and is retaining momentum. Comparisons to 2019 data are highly encouraging; showing a return to predicted levels of activity and, in some instances, exceeding expectations.

“In addition, rental prices and void periods both bode well for the sector as we head into August, which is also a traditionally busy month for the industry.”

BY RYAN BEMBRIDGE

Source: Property Wire

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UK mortgage approvals beat expectations as housing market reopens

UK mortgage approvals beat expectations and rocketed in June as the housing market reopened from the coronavirus lockdown, the latest figures have shown.

The number of mortgages approved by UK banks rose to 40,000 in June after May’s record crash to just 9,300, the Bank of England said today. Analysts had predicted a rise to 34,000.

However, approvals were still 46 per cent below the February level of 73,700.

“The mortgage market showed some signs of recovery in June, but remained relatively weak in comparison to pre-Covid,” the Bank of England said.

An increase in house purchases helped consumer borrowing trends take a step closer to normality in June.

UK households pay down debts as mortgage approvals rise

Households repaid £86m of debt last month. But that was lower than the repayments totalling £15.6bn over the March to May period.

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People have been paying down their debts and saving money as there has been little to spend on during lockdown. The net repayments of the last four months contrast with an average of £1.1bn of borrowing per month in the year and a half to February.

The UK government has gradually loosened the country’s coronavirus restrictions over the last two months. In May it allowed the housing market to reopen, leading to June’s uptick in mortgage approvals.

In June the government allowed “non-essential” shops to reopen. And earlier this month pubs, cafes and restaurants were allowed to serve customers again.

The Treasury has unveiled a number of policies to encourage people to part with their lockdown savings. It hopes a VAT cut for the hospitality and tourism sectors and “eat out to help out” vouchers will boost the economy.

Chancellor Rishi Sunak’s stamp duty holiday has already helped the London housing market after just two weeks, data showed yesterday. London house sales rocketed 27 per cent after the property tax was slashed, housing website Zoopla said yesterday.

By Harry Robertson

Source: City AM

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Coronavirus: Housing market rebounds as sales increase by 137%

The property market has bounced back from a freeze over the coronavirus peak thanks to a build-up in demand and homeowners realising the shortcomings of their properties while cooped up during lockdown.

More homes were sold last week than this time last year and buyer demand is 54 per cent stronger than it was before the market was frozen on March 27.

Richard Donnell, director of research at Zoopla, the property portal, said that sales had risen by 137 per cent since the market reopened on May 13.

“The rebound in housing demand is not solely explained by a return of pent-up demand,” he said. “Coronavirus has brought a whole new group of would-be buyers into the housing market. Activity has grown across all pricing levels, but the higher the value of a home, the greater the increase in supply and sales as people look to trade up. New sales in London are lagging as buyers look at commuting and moving to the regions.”

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The data was backed by analysis from TwentyCi, a market statistics company, which reported that 24,341 homes were sold subject to contract last week, compared with 22,880 this time a year ago.

Asking prices are 6 per cent above the level this time last year, according to Zoopla. In the week the market was frozen the average asking price was £245,000; in the week it opened last month it was £280,000, according to TwentyCi. Anecdotal evidence suggests, however, that buyers are chipping prices down by 5 to 10 per cent.

Deals agreed have been particularly strong at the top end of the market. Those priced at more than £1 million have doubled in the past week to 664, compared with 494 a year ago. However, the largest number of sales last week — 8,956 properties sold subject to contract, compared with 7,744 this time last year — was for homes valued between £250,000 and £500,000.

Lucian Cook, director of research at Savills, estate agency, says: “That resurgence in sales at the top end tallies with our own numbers, Savills sales rose by 108 per cent last week and were particularly across the home counties where they went up by 148 per cent. This is a rebound far beyond what we expected.”

Mr Donnell sounded a note of caution, however. “The charts are off the scale but I do think this is a one-off surge in demand, a temporary jump,” he said. “No one truly knows what the economic impact of coronavirus is going to be. The housing market is purely an extension of the economy and I am very cautious about the second half of the year.”

One of Britain’s biggest housebuilders has said that sales will be “severely constrained” until the lockdown is lifted. Bellway has reported a 69 per cent drop in its weekly net reservation rate between March 23, when the lockdown started, and the end of last month.

The Centre for Economic and Business Research revised its house price forecast up from a fall of 13 per cent this year to one of 8.7 per cent.

Analysts have said the government’s furlough scheme and mortgage holidays are “softening the blow”. When they end it is feared that the market will be hit by unemployment and affordability concerns, leading homeowners to sell and driving prices down.

By Carol Lewis

Source: The Times

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House prices set for steady growth in 2020 experts believe

THE housing market should start 2020 with a new mood of confidence – but continued political uncertainties will keep a lid on property prices, economists predict.

Several predictions for house price growth across 2020 are clustered around the two per cent mark.

Experts said the Conservatives’ recent general election win could help to bring more certainty to the market and unleash some pent-up buyer demand.

An abundance of low-rate and low-deposit mortgage deals should also support activity.

Some estate agents are even sensing there may be a “Boris bounce” for the housing market, which could in the coming months have an effect on house prices.

However, Brexit concerns could also pick up as 2020 progresses, making people behave more cautiously, and affordability constraints will also cap price growth in some parts of the UK.

Howard Archer, chief economic adviser at EY Item Club, said: “There will still be appreciable uncertainties, including on the Brexit front – so that the upside for house prices in 2020 is likely to be limited.”

Rightmove also predicts that the price of property coming to market will increase by 2% in 2020.

It said there is now an opportunity to release some pent-up buyer demand that had been building before the general election.

House sellers’ pricing power will be boosted by a lack of other options for potential buyers, Rightmove suggests.

The Royal Institution of Chartered Surveyors (Rics) has also pencilled in house growth of two per cent for 2020 – but it believes rents will increase at a faster rate of 2.5 per cent as the rental sector struggles with a lack of housing supply.

Russell Galley, managing director, Halifax, said housing market prospects for 2020 look “a bit brighter” than in 2019.

He continued: “However the shortage of homes for sale and low levels of house-building will continue to support high prices, while the challenges faced by prospective buyers in raising the necessary deposits may continue to constrain demand.

Separate consumer research from Lloyds Bank found 43 per cent of people think the biggest challenge for first-time buyers in 2020 will be raising a deposit, while 27 per cent think it will be high property prices.

A quarter think the biggest challenge for existing home owners looking to move will also be expensive property prices, while 23 per cent cited high moving costs.

By Martyn Smith

Source: Hereford Times

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Prospects looking brighter for housing market in 2020, say experts

The housing market should start 2020 with a new mood of confidence – but continued political uncertainties will keep a lid on property prices, economists predict.

Several predictions for house price growth across 2020 are clustered around the 2% mark.

Experts said the Conservatives’ recent general election win could help to bring more certainty to the market and unleash some pent-up buyer demand.

An abundance of low-rate and low-deposit mortgage deals should also support activity.

Some estate agents are even sensing there may be a “Boris bounce” for the housing market, which could in the coming months have an effect on house prices.

Lucy Pendleton, founder director of estate agent James Pendleton. said: “Not yet visible is the Boris bounce in house prices we all sense is already well under way.”

However, Brexit concerns could also pick up as 2020 progresses, making people behave more cautiously, and affordability constraints will also cap price growth in some parts of the UK, economists said.

Howard Archer, chief economic adviser at EY Item Club, said the Conservatives’ strong election win could ease some uncertainties and help house prices rise by around 2% in 2020.

But he said the economy still looks set for a “challenging 2020”.

Mr Archer said: “There will still be appreciable uncertainties, including on the Brexit front – so that the upside for house prices in 2020 is likely to be limited.”

Rightmove also predicts that the price of property coming to market will increase by 2% in 2020.

It said there is now an opportunity to release some pent-up buyer demand that had been building before the general election.

House sellers’ pricing power will be boosted by a lack of other options for potential buyers, Rightmove suggests.

Lawrence Bowles, senior research analyst at Savills, said: “At the top end of the market in particular, we’ve seen a strong build-up of new buyer demand.

“Greater political certainty will unlock some of that demand, but with less than a year to agree a Brexit deal, there are still many unknowns.

“As a result, we expect average house prices to rise by just 1.0% in 2020, and a higher 4.5% in 2021, as improving certainty translates into higher growth in wages and GDP.”

Looking further ahead, Savills predicts the North West of England and Yorkshire and the Humber will have the fastest house price growth over the next five years.

House prices in these areas were slower than those in southern England to recover after the financial crisis – meaning there is still more room for growth.

Mr Bowles continued: “Affordability constraints in London and the South East will cap potential price growth over the next few years.

“By contrast, prime central London – the most expensive core of the capital – now looks relatively good value on a world stage. We expect to see five-year growth totalling around 20%.”

The Royal Institution of Chartered Surveyors (Rics) has also pencilled in house growth of 2% for 2020 – but it believes rents will increase at a faster rate of 2.5% as the rental sector struggles with a lack of housing supply.

Meanwhile, Nitesh Patel, Yorkshire Building Society’s strategic economist, believes the number of house sales will hold steady at around 1.2 million annually – the total generally seen in recent years.

He said: “Sales to first-time buyers are buoyant and now account for around half of all house purchases.

“A strong jobs market and low mortgage rates are likely to support the market, but concerns around affordability may limit the number of people wanting to move home.

“Mortgage lenders are helping to maximise affordability by lending on 40-year mortgage terms, to help borrowers lower their monthly repayments.

“We’re seeing more and more lenders giving access to 5% deposit mortgages, which can be useful for those looking to buy their first home.”

David Hollingworth, associate director, communications at broker London and Country Mortgages, said that in the uncertain climate, mortgage borrowers have been locking into the low fixed-rate deals currently available, giving them certainty over their monthly repayments.

The range of longer-term fixed-rate mortgages has also been growing, he said, including deals which will lock borrowers into a single rate for 10 or even 15 years.

Russell Galley, managing director, Halifax, said housing market prospects for 2020 look “a bit brighter” than in 2019.

He continued: “However the shortage of homes for sale and low levels of house-building will continue to support high prices, while the challenges faced by prospective buyers in raising the necessary deposits may continue to constrain demand.

“As a result, our forecast for house price growth in 2020 is in the range of 1% to 3%, consistent with the pattern of weaker growth seen since 2017.”

Separate consumer research from Lloyds Bank found 43% of people think the biggest challenge for first-time buyers in 2020 will be raising a deposit, while 27% think it will be high property prices.

A quarter (25%) think the biggest challenge for existing home owners looking to move will also be expensive property prices, while 23% cited high moving costs.

Here is a round-up of house price predictions for 2020:

– EY Item Club – 2% average house price increase
– Rightmove – 2% average asking price increase
– Savills – 1% average house price increase
– Yorkshire Building Society – 0% to 2% house price increase
– Royal Institution of Chartered Surveyors – 2% average house price increase and 2.5% average increase in rents
– Halifax – House price inflation of between 1% and 3%.

By Vicky Shaw

Source: Yahoo Finance UK

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Why new homes are key to UK prosperity

The U.K. faces a significant housing challenge. In simple terms, there are not enough new homes being built each year to meet the demands of the population.

The U.K. government has set a target to see 300,000 new homes built annually by the mid-2020s in an attempt to solve the national housing shortage. So there is serious work to be done.

Lloyds Banking Group has an important role to play in helping people across Britain to get a home. The organization has made several pledges around housing as part of its most recent prosper plan and is making good progress towards them. A healthy housing market is a key indicator of broader economic strength and that’s why housing is core to the Group’s commitment to help Britain prosper.

Forming a new type of partnership

Housing Growth Partnership (HGP) is a social-impact equity investor. It was established in 2015 as a joint venture between Lloyds Banking Group and Homes England. The formation was unique — the first housing focused public—private partnership with the U.K. government.

When we established the partnership, we had two very clear and specific goals in mind: to support the sustainable growth of regional residential developers across the U.K. through investment and mentoring; and to accelerate housing delivery. We know that one of the chief obstacles preventing small firms from growing and developing in the housing industry is capital constraints, and we established the partnership to help with this. HGP invests in residential projects, freeing up housebuilder equity that can be used on other schemes.

HGP was founded with an initial £100 million of seed capital and, following additional investment, now has nearly £1 billion-worth of homes under construction across the U.K. — over 3,000 new homes.

We’ll kick start the construction of another 1,000 homes by 2020 and aim to have delivered 10,000 homes by 2025.

First and foremost we’re focused on building homes. We’re already funding the build of thousands of new houses across the country. We’ll kick start the construction of another 1,000 homes by 2020 and aim to have delivered 10,000 homes by 2025.

Funding is one part of the puzzle, but the role of HGP goes beyond simply investing money. It seeks to be a genuine partner. We’re developing long-term relationships with smaller housebuilders, helping them to grow their businesses and the number of homes they are able to build across Britain. In fact, over the last 12 months our senior adviser panel of housing experts from across the U.K. has delivered more than 1,000 hours of free mentoring to small housebuilders. We all benefit when these firms can overcome those initial entry barriers, establish themselves in the industry and grow.

Addressing systemic challenges in the housing industry

It’s clear through the conversations we have with U.K. housebuilders that they face challenges at all stages of the development process.

A fundamental issue is the supply of skilled labor. I’m meeting with more and more of our partners who are looking to address this by employing apprentices. Many have formed connections with their local colleges and education centers, and are actively encouraging young people into the sector. Getting youngsters involved and engaged in housing helps create a pipeline of future leaders and also brings in a diverse range of innovative thinking.

This is where the partnership can make the most impact. By investing in companies across the housing supply chain, we can help firms employ more people, develop specialist skills and create more opportunities in the future.

We also lobby for crucial change across the industry and drive financial innovation in the sector. The determination of planning permissions, alongside the growing number of consented conditions to satisfy ahead of starting work on-site is a particular area of concern for housebuilders.

It’s clear through the conversations we have with U.K. housebuilders that they face challenges at all stages of the development process.

This complex and often difficult process limits their ability to grow their businesses and, in turn, increase the supply of new homes to the U.K. market. We are working hard with our partners to understand the key issues within the U.K. planning system and identify what can be done to address them. Alongside this, we are also looking at how we can support developers to introduce Modern Methods of Construction into their building processes.

Finding new solutions to the challenge of a skills and labor shortage, alongside the need to increase the speed of production and develop more energy-efficient homes will be key to the future success of the industry.

New solutions to housing challenges

We’re often asked ‘what comes next?’ There is so much innovation and development in housing at the moment and it’s evolving quickly. At the moment we are seeing a strong focus on Modern Methods of Construction.

What’s fascinating about this type of production is how efficient it is to produce units in a controlled environment — an environment that crucially, is weather proof. This could be a real game changer in the U.K.

What’s clear though is that the U.K.’s housing challenges cannot be solved in isolation. Genuine collaboration, both across the industry and in partnership with the U.K. government, will be crucial in driving further innovation and overcoming the challenges that the industry faces.

By ANDY HULME

Source: Politico

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UK house prices are stuck in the doldrums

UK house prices are set to tread water while incomes rise, making property more affordable, says Merryn Somerset Webb.

The numbers aren’t looking good for residential property investors. House price growth in the US fell to a mere 1% at the beginning of this year, according to the latest report from the Dallas Federal Reserve. Look at global data across the 18 largest economies in the world and things don’t look much more encouraging. This could be the year in which we see “global growth dip to its lowest pace in a decade”. Investment is slowing fast, says Oxford Economics.

The UK is no outlier here. The Nationwide index and the Rightmove Asking Prices index show prices and asking prices respectively to be all but flat. The Halifax House Price index shows a better annual number but suggests prices fell mildly in June. You can see the same trend in Hometrack data, which suggests that the falling prices we have seen in London are beginning to spread: over a third of homes are now in areas with annual price falls (the higher value the market the more likely this is), although the absolute levels of falls is small. So what next? Most analysts expect the market to tread water from here (at best) – although if a new PM were to pull a Brexit deal from the hat we could of course see a little London bounce.

A flat market…
This is probably correct. There is still some support for prices. Housing starts are falling slightly (so the supply of housing is not rising much). Interest rates are low and will go lower if Brexit goes horribly wrong. The banks’ wholesale funding costs have also edged down, and that should soon feed into mortgage rates. At the same time wages have jumped (year-on-year growth excluding bonuses hit an 11-year high in April) and household disposable incomes are also on the up.

That makes houses – even at today’s silly prices – seem more affordable. Prices, says Nationwide, are likely to be at least supported by “healthy labour market conditions and low borrowing costs.” That said, there isn’t much to push prices up either. They are still high relative to incomes. The tax and regulatory hit to buy-to-let is discouraging buyers in that market. An unwelcome (to big property owners, at least) overhaul of property taxation may be on the way. And the Help to Buy scheme (which has played a clear part in pushing prices up) is likely to be at least scaled back soon. Put all those factors into the mix and it is hard to see a rebound in prices in 2019 “or beyond” says Capital Economics.

… is good news
The key thing to bear in mind there is that this is not bad news – unless you very recently paid too much for a house. One thing we have all agreed on in the UK for decades now is that houses are too expensive relative to average earnings. That makes it tough to get on the ladder and tough to move up the ladder. Add today’s high levels of stamp duty to your cost of buying and it’s nasty out there.

But the fact that house prices are not really rising in nominal terms, combined with the small real rise in wages over the last two years, is beginning to change this situation. In 2007 Nationwide’s house price to earnings ratio for the UK was 5.42. At the end of 2016 it was 5.25. Today it is 5.03 times. That’s not ideal – but if this gentle drift down continues and we end up at more like four times, it will suddenly be an awful lot easier to buy (and sell) houses. That would be a very good thing.

Head for Hampshire
Nevertheless, for those of you determined to find the next hot location in the property market and make your fortunes the easy way, Anne Ashworth writing in The Times has an idea for you. She suggests checking out age profiles. Why? Because the younger the crowd, the higher the potential for growth. In areas with an older demographic, you can expect to see sales and downsizing (the cash from which then gets spread around children and grandchildren who won’t necessarily live in the area). In one with a younger demographic you can expect to see the opposite.

Look back over the last decade, says Lucian Cook of Savills and you will see this in action. Those areas with large concentrations of people in their 40s have seen much greater price appreciation (up 56%) than elsewhere. With that in mind, look at somewhere such as Aldershot in Hampshire. There 39% of households are headed by someone between 31 and 40. They won’t be downsizing any time soon.

By: Merryn Somerset Webb

Source: Money Week