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Savills: COVID-19 will affect all aspects of UK housing market

Savills predict the coronavirus pandemic to affect all areas of the UK housing market according to their latest data.

The research by Lawrence Bowles and Lucian Cook at Savills, details that general uncertainty will weigh on consumer sentiment.

They also predict to see restrictions on people’s ability to go about their day-to-day business to impede normal estate agency, mortgage and conveyancing processes.

Looking to the stock market, Savills anticipates stocks to fall and therefore people to feel less secure about their personal financial situation.

In addition, the estate agency believes the coronavirus pandemic will have a negative impact on earnings, employment and wealth of a generation.

The government has provided support for the economy and businesses, including liquidity injections, grants and low-cost loans.

As a result, Savills believes this should help to reduce some of pandemic’s impact, as well as aiding in enabling a swift economic recovery and limit the number of households forced to sell.

By Jake Carter

Source: Mortgage Introducer

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Homebuyers left in limbo as coronavirus puts property market on ice

Families are being frustrated in their attempts to move home as coronavirus puts a freeze on the property market.

As part of measures to prevent the spread of coronavirus, Housing, Communities and Local Government Secretary Robert Jenrick has urged people to rearrange and delay moving properties to stop the spread of coronavirus.

Covid-19 has also meant restrictions for non-essential workers, such as removal van drivers, broadband installers and gas assessors making moving arrangements difficult for many.

Lewis Jones, an electrical engineer from Newport, was told by the developers of his new-build home that they would not delay his completion date, despite the fact he was unable to move due to the current restrictions.

I’m paying for a house that I may not be able to move into for some time

The lack of removal men, and the health risk of moving has left Mr Jones, 34, unable to move, meaning he now has to pay bills at his rented property as well as his new home until he is able to make the move.

“I’m frustrated with the Government as they should put a stop to this to protect people and avoid unnecessary travel,” he told the PA news agency.

He argued that the developers “could be more lenient”, adding: “I’m paying for a house that I may not be able to move into for some time.”

Stuart and Kedma Woodmansey from Hull and their six-month-old son Jacob are unable to move because they can’t get a gas safety certificate due to staff self-isolating.

The security consultant and his wife, a 39-year-old carer, were due to leave their current property next Wednesday to move to Market Weighton.

“It could be a month before we are able to complete and our house is all boxed up.”

The couple remain positive, however, with Stuart saying: “I can understand the worry and feel frustrated but it’s bad timing. We have to find a way around it as does everybody else.”

Source: Express & Star

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UK house prices surge post-election, but Covid-19 dampens outlook

House prices hit a fresh high in February, data published on Monday showed, as consumer confidence improved following last year’s decisive general election.

According to Rightmove, the UK average new seller asking price hit a record high of £312,625, a 1.0% month-on-month increase that pushed annual price growth up to 3.5%.

The number of sales agreed rose by 17.8%, the highest for the time of year since 2016. Overall, properties sold an average of 6% faster nationally and 15 days more quickly in London.

The UK housing market – and the capital in particular – has struggled in recent years. Ongoing political turmoil over Brexit and successive general elections dampened consumer confidence and saw prices dip as sales fell away.

The Conservative’s decisive general election victory and the UK’s subsequent departure from the European Union have helped ease that uncertainty, however.

In London, the price of property coming to market jumped 5.1% year-on-year, to an average of £638,826, the highest annual growth rate since May 2016. The number of sales agreed ratcheted ahead 34.4%, the highest level for four years.

However, the survey conceded that going forward, the outlook was now less certain.

“The market has been waiting for several years for a window of certainty, and 2020 seemed set to be the year when many would look to make a move and satisfy their pent-up housing needs,” said Miles Shipside, Rightmove director and housing market analyst.

“However, the current fast pace of the housing market could now be temporarily affected by the spread of the Covid-19 coronavirus. We expect that housing market statistics, like other economic indicators, could be prone to volatility over the spring and summer.”

Marc von Grundherr, director at London estate agent Benham and Reeves, said: “London is now back with a bang. An annual increase in asking prices of 5.1% is the highest level that we have seen in years, and is as a consequence of buyer demand coming back strongly in all price ranges.

“Covid-19 is of course a significant issue, albeit that enquiry levels and viewings do seem to be holding up for now, and we should remain optimistic for swift resolution to the pandemic followed by a robust response from markets including property.”

Rightmove measured 111,464 asking prices, which it said was around 95% of the UK market, for its latest monthly survey. The properties were put up for sale between 9 February and 7 March.

By Abigail Townsend

Source: ShareCast

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What did the Budget mean for the north’s economy and property market?

THE global and UK economies are in fragile times. A softening economic climate, falling stock prices, oil price collapse, ongoing Brexit negotiations and the most recent outbreak of Covid-19 has made a precarious global backdrop increasingly difficult. Locally, the recent collapse of FlyBe presents new challenges for ensuring regional connectivity.

Amid these challenges outlined, the new Chancellor of the Exchequer, Rishi Sunak, released the economic outlook and government spending plans for the UK.

The Chancellor’s opening speech rightly acknowledged the most pressing healthcare challenges and the likely ‘temporary disruption’ to the economy. He committed to a £30bn plan to deal with the coronavirus and hinted at additional funding for the NHS if necessary – a ‘whatever it takes’ approach. The government further committed to covering the cost of employee’s sick pay for up to two weeks in businesses with fewer than 250 employees. Whilst welcome, it’s worth noting that statutory sick pay is approximately 20% of average wages in the UK compared to closer to 70% in other European economies.

From a property perspective, the government will introduce a two per cent stamp duty tax surcharge on non-UK residents buying residential property in England and Northern Ireland from next year. This policy is largely aimed at controlling house price inflation, notably in the most expensive areas in Southern England. Any money raised from the surcharge has been committed to address rough sleeping.

Following a growing recognition of the need for investment in infrastructure, the Chancellor announced a £640bn boost for capital spending on roads, rail, broadband, housing and research over the next five years. This will provide a £210mn boost to the Northern Ireland Executive block grant in 2020-21 in addition to further funding allocations for remaining City and Growth deals.

The economic growth forecasts were produced with the sizeable caveat of development before the Coronavirus outbreak and should be viewed with due caution, particularly in the short term. The government state they can be treated as ‘informative’ for the medium term. Nevertheless, modest growth of 1.1% is forecast this year and is set to average 1.5% by 2024, significantly below long-term average rates.

Leaving the Budget aside, radical intervention from the Bank of England saw interest rates cut from 0.75% to 0.25%, the lowest level on record in the Bank’s 325-year history.

Lower interest rates are used by central Banks to encourage borrowing at lower rates to stimulate economic growth. Prior to the 2008 financial crash, interest rates were over 5% before falling to 0.25%. This also has the effect of lowering mortgage costs and may reduce the mortgage bill for a minority of homeowners who aren’t on fixed rates. Other homeowners will have to wait and see how their loan provider reacts given how competitive mortgage rates currently are. For savers and businesses with larger reserves there is likely to be little change given low returns in recent years.

This may be a temporary measure to support the economy and protect businesses and in turn the employment of people. Previous guidance from the Bank of England stated their objective to gradually increase interest rates over the next three years. This too assumes a recovery in global growth and a ‘smooth Brexit’.

As economic developments go, recent events are significantly driving change across the world. The next few months are likely to see continued turbulence as the downside risks mount.

By Jordan Buchanan

Source: Irish News

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What can the property industry expect from this week’s Budget?

In its 2019 election manifesto, the Conservative Party committed to a fundamental review of the business rates system.

With the party having gained a majority in government, we should expect more details of this review to be announced in the Budget. Any review will have to consider real alternatives to the current regime and a land value tax system has been rumoured as a possible replacement.

A move to a land value tax would certainly be a fundamental step and would raise several key questions for commercial real estate, including who would ultimately bear the cost. What would the implications be on commercial rents if rates were stripped from the occupancy cost and what might the impact be on property investment values? There would also have to be detailed consideration given to how a land value tax would be set and administered as a direct rates replacement and its interaction with agricultural land, which is currently exempt, and residential land, where council tax is currently applied.

Due to the complexities and challenges with such a significant move, any potential change would likely be seen in the long-term. As a result, some additional short-term rates relief measures are expected to be included in the Budget. These are likely to be aimed at ameliorating the high-street bloodbath and levelling the playing field upon which online and bricks-and-mortar retailers compete.

With the UK’s housing crisis posing a problem for the government that won’t go away, we will no doubt see more measures announced on residential property. Successive governments have put headlines ahead of action when it comes to tackling our housing shortage and I fear the mooted increase in stamp duty land tax for non-residents falls firmly into that category.

The proposals for a surcharge on overseas buyers are especially jarring right now. Presenting the UK as an open economy that welcomes overseas investment should be high on the government’s agenda.

Demand-side measures, be they adjusting stamp duty land tax rates or Help to Buy, have created market distortions but haven’t tackled the issue at source. Building more new homes requires supply-side intervention by the government. This would include simplifying the planning process, incentivising town-centre repurposing and where necessary, local and national government coming together to take the lead on building new homes.

Beyond these topics, the industry will be hoping most for an uneventful Budget after successive years of change. In an uncertain world, the chancellor should give the industry breathing space.

By Russell Gardner

Source: Property Week

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Landlords in the midlands most likely to increase portfolio

Landlords based in the midlands were recorded as the most likely to increase their portfolio size, a study conducted by BVA BDRC shows.

The research outlines that 24% of landlords in the East Midlands and 22% in the West Midlands plan to purchase more properties in the next 12-months.

Meanwhile, 8% of landlords in South West and 9% in Central London intend to purchase more properties within the same timeframe.

The data shows that overall, only 14% of landlords intend to purchase property, with the average preparing to buy three.

Looking at property type, 52% of those looking to expand their portfolio intend to do so by purchasing a terraced house.

This was followed by semi-detached properties at 32% and flats at 26%.

Furthermore one in four landlords are targeting HMOs, according to the research.

Nearly two thirds, 63% of landlords plan to fund their next purchase with a buy-to-let mortgage, while 17% intend to do so through releasing equity on existing properties, and 18% said they would purchase a property outright.

Richard Rowntree, managing director of mortgages of Paragon, said: “The proportion of landlords looking to purchase new property has been largely consistent over the past two years, but we are seeing regional variations and also a greater propensity for portfolio landlords to invest in property.

“Portfolio landlords have adopted a number of strategies to adapt to the tax and regulatory changes of recent years and we’re seeing trends such as these landlords buying stock from smaller-scale participants as they exit the market, or targeting higher yielding properties, such as HMOs.”

By Jake Carter

Source: Mortgage Introducer

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Gap between property supply and demand widens

The number of house hunters registered per estate agent branch increased by 22% to 382 from December to January, NAEA Propertymark’s January Housing Report has found.

However, the number of properties available per member branch fell from 41 to 38, meaning the gap between supply and demand has increased.

Mark Hayward, chief executive, NAEA Propertymark, said: “It’s positive to see the New Year has brought some much-needed confidence to the market, with a significant increase in demand from house hunters following the General Election result.

“As the Spring Budget fast approaches, we hope to see housing as a priority for the new Chancellor.

“A clear strategy is needed to tackle key issues such as stamp duty costs, which needs to be addressed in its entirety to encourage more frequent moves, improve affordability and relax punitive financial tax on home movers.”

The number of house hunters is the highest figure seen since September 2019, when there were 387 prospective buyers registered.

The amount of properties available has fallen to its lowest level since June 2019, when there were 37.


Source: Property Wire

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Signs emerge of property market recovery as mortgage completions rise

Mortgage completions for first-time buyers, home movers and landlords ended last year on the rise.

Data from trade body UK Finance shows there were 29,490 first-time buyer mortgages completed in December, up 0.3% annually, while the number of home mover loans increased 3.2% to 29,400 compared with a year before.

There were 5,700 new buy-to-let home purchase mortgages completed in December 2019, up 3.6% annually.

Commenting on the figures, Sam Harhat, head of financial services at Andrews Property Group, said: “This latest data shows that chaos can often be a catalyst for action.

“While the closing stages of 2019 were among the most volatile for decades politically, many people decided to cut their losses and move home before any further potential upheaval.

“There’s a sense that first-time buyers were particularly wary that if our departure from the EU didn’t bring the roof in, they could soon be left behind.

“Fears of Brexit ultimately proving benign and the market rebounding caused many first-time buyers to make their move in 2019.

“What’s also encouraging is that buy-to-let completions were also up on the previous year. The buy-to-let market appears to have stabilised and is showing it has got fight left in it yet.

“Since the second half of January, the new climate of political certainty has unleashed a lot of pent-up demand.

“Mortgage approvals look set to continue to pick up during the Spring, with the aspirational buyers that have been missing for so long taking up the slack.”


Source: Property Industry Eye

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The biggest risk facing the UK housing market right now

For house prices to stagnate or even fall would be healthy for the property market, says John Stepek. But there is a distinct danger that isn’t going to happen.

We got proper confirmation of a post-election bounce in the housing market this morning.

Asking prices and housing market activity rose sharply during the past month, according to property website Rightmove.

So is this a “sugar high” from all that pent-up demand? Or is something more fundamental underpinning all this?

The election relief rally is a short-term driver for house prices…

Rightmove reckons that the average asking price for a house in the UK is now standing at more than £309,000. That’s just about matching the previous record high set in June 2018.

Meanwhile, the property website says it has seen a 7.2% jump in traffic compared to the same month last year, while agreed sales were up by 12.3% across the UK, and 26.4% in London.

Now, you have to take Rightmove with a pinch of salt. Asking prices are aspirational. A seller can ask what they want for their house – the question is, will buyers pay up?

But like it or not, Rightmove can at least indicate sentiment. And if buyers feel comfortable about setting higher prices, and their agents are relaxed enough about the number of sales they’re getting to encourage them to do so, then it indicates a hotter market.

Also, the Rightmove data is hardly an outlier. The most recent RICS (Royal Institution of Chartered Surveyors) report suggested that buyer demand across the UK is rising at its fastest rate in more than four years.

So what’s going on?

Clearly the leap in activity – particularly in London – is at least partly driven by people deciding that, with the election over, they can go ahead with previous plans.

There’s probably an element of buying from overseas investors too. Anyone who thought the sterling “Brexit discount” would vanish rapidly will have been disappointed. But there’s no doubt that Britain is less politically unstable than it has been since mid-2016.

These are short-term factors. They are purchasing decisions that were delayed and that are now going through.

Does that mean the bounce will fizzle out before long? Or are there other factors that could keep it going?

… but maybe there are some longer-term drivers pushing higher too

Perhaps a better question is this: why did the UK housing market fizzle in the first place? Why did London in particular, take such a big hit over the last four or five years?

And the answer is this: because the government made it more expensive for landlords and overseas buyers to purchase houses.

House prices are primarily driven by one simple thing: the cost and availability of credit. Those dictate the level of buying power in the market. And far more than anything else – yes, including physical supply of property – buying power is what drive house prices.

The cost of buying for landlords specifically has been driven higher in the last four years by regulatory changes. As a result, landlords have been a diminished force in the market.

However, it looks as though those changes might be reaching a trough. The FT cites a statistic from estate agent Hamptons International, which found that the number of private landlords has dropped to its lowest level in seven years. That’s no surprise given the changes to the market.

However, on the other hand, a record proportion – 30% – of the remaining landlords now own more than one home. That’s the logical result of the private housing rental market being forcibly professionalised.

For “amateur” or “accidental” landlords, the carrying cost of a house has become too great. It is no longer feasible to run a buy-to-let as a low-hassle second income stream. But for landlords for whom it’s a business, it’s worth the effort to stay in the market and also to incorporate (owning the properties through a company means you can retain some tax advantages).

If we’re just about through with the impact of the tax changes – and if competition in the buy-to-let mortgage market is picking up (which it is) – then the headwind created by the great landlord exodus may now be past its worst.

The risk is that house prices keep going higher

So where does that leave us?

At the end of the day, if you want to see house prices stagnate or decline (which would be healthy, given how expensive they are), then it needs to become harder or more expensive, or both, for a significant group of buyers to raise the money to buy a house. That’s what happened to landlords and caused much of the stalling in the last five years.

The problem (for anyone who’d rather avoid another boom and bust, which is the big risk) is that there’s no sign of mortgages getting more expensive. You can argue that there’s not much room for them to get cheaper, but that’s only partly true.

Interest rates are at rock bottom levels, for sure. They could fall a bit but unless the economic data deteriorates an awful lot, that seems unlikely. But in boom times, banks compete on other things. Remember the 125% mortgage? Yep, that’s the sort of thing I’m talking about.

I’m definitely not suggesting you go out and buy a wee house somewhere as an investment. That’s a headache, and something to look at as a business decision rather than a punt on house prices.

What I am saying is that there’s a danger that house prices become a political hot button once again, after a brief period in which it looked as though we might get some respite in the market.

That would be bad news – particularly if the government decides that a bout of rising prices would encourage the “feel-good” factor again. You’d like to hope that they’ve learned their lesson – but let’s keep a close eye on the budget (whenever it might happen now) for any housing market measures in the vein of “Help-to-Buy”, just in case they haven’t.

By: John Stepek

Source: Money Week

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Sales pick up as confidence in housing market translates into activity

Increased optimism from buyers has led to a pick-up in sales activity in the Scottish housing market, according to the January 2020 UK Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS).

Whilst the picture regarding the number of homes being listed for sales was flat during January, the number of people looking to buy rose, according to a net balance of +22% of Scottish respondents.

This resulted in the number of newly agreed sales increasing over the month, with a net balance of +11% of surveyors saying that there were more newly agreed sales in January compared to December.

Prices also continue to rise last month, according to the survey. A net balance of 32% of Scottish respondents said that prices increased, the highest since July 2019, and higher than all UK regions other than Northern Ireland.

Looking ahead, respondents to the survey in Scotland remain confident about the outlook, with sales anticipated to rise both in the near term and for the year to come. A net balance of +70% of Scottish respondents expects prices to be higher in a year’s time. A net balance of 54% expects sales activity to increase over the next 12 months.

Despite the improvement in buyer demand though, instructions to sell have not picked up, with the balance for instructions to sell flat.

This follows a sustained period of falling supply, meaning that stock levels are low. Indeed, anecdotally, a number of respondents in Scotland say that there is an under-supply of good properties available to meet the demand, and that this is the main risk to the market at present.

Grant Robertson, MRICS of Allied Surveyors in Glasgow, said: “Sales remain strong when there is something to sell. The modest post-election surge bodes well for 2020 but stock needs to start releasing or values will surge and kill the market.”

Graeme Lusk MRICS of Walker Fraser Steele based in Glasgow and Renfrewshire, added: “The market is beginning to come out of its winter slumber. But there is still an under-supply of quality properties on the market and buyers waiting. A good time to put your property on the market.”

In the lettings market, demand for rental properties in Scotland rose in the three months to January (seasonally adjusted quarterly series), with a net balance of +29% of respondents citing an increase.

At the same time, the balance for landlord instructions rose for the first time in 16 months, though only very modestly (a net balance of +6%). Despite the slight pick-up in landlord instructions, there is still a mismatch between demand and supply, and rents are therefore expected to rise in the next three months.

Simon Rubinsohn, RICS chief economist, said: “The latest survey results point to a continued improvement in market sentiment over the month, building on a noticeable pick-up in the immediate aftermath of the General Election.

“It remains to be seen how long this newfound market momentum is sustained for, and political uncertainty may resurface towards the end of the year. But, at this point in time, contributors are optimistic regarding the outlook for activity over the next twelve months.”

Source: Scottish Construction Now