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First-time buyers losing interest in city living

City living is losing its appeal among first-time buyers, with the vast majority now preferring more subdued locations, Trussle has found.

As it stands just 29% of first-time buyers plan to buy in a city, compared to 53% in a suburb.

Miles Robinson, head of mortgages at online mortgage broker Trussle, said: “The pandemic has increased the financial pressure many first-time buyers were already feeling, as well as creating a seismic shift in what people expect from their home.

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“As a result, financial pressures and rising house prices, alongside a desire for more outdoor space, means demand in more affordable rural locations is currently outpacing that for urban destinations.

“But lenders are starting to return to the market with higher LTV products, which could make more expensive homes in the city more accessible again.

“And, we may see renewed interest in city living once the vaccine has been rolled out and things begin to return to normality.

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

“As such, only time will tell if the current lust for country properties is a long-term trend or more of a spontaneous response.”

Higher house prices in urban locations are likely to play a huge factor in this trend, with 65% saying it’s ‘impossible’ to get on the housing ladder.

The research found that the average budget for a first home was £174,266.

BY RYAN BEMBRIDGE

Source: Property Wire

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UK house prices up 7.3 per cent – strongest annual growth in six years

UK house prices enjoyed their strongest annual growth for six years in 2020 as the market was spurred on by tax breaks and changing demand amid the pandemic, according to latest figures from Nationwide Building Society.

The average UK house price jumped 7.3 per cent this year to £230,920 after rising 0.8 per cent in December alone.

Broken down by region, England saw prices rising 6.9 per cent year-on-year in the fourth quarter.

Wales was the next best price performer, with a 6.6 per cent rise, followed by Northern Ireland (up 5.9 per cent) and Scotland (up 3.2 per cent).

The report revealed that prices have jumped 5.3 per cent since March, when the pandemic struck, after demand was sent surging by a stamp duty holiday and the shift to homeworking.

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Nationwide said the stamp duty boost had brought forward people’s home-moving plans, while changing working patterns had increased demand for larger homes in less densely populated locations.

Robert Gardner, Nationwide’s chief economist, said: “The resilience seen in recent quarters seemed unlikely at the start of the pandemic.

“Indeed, housing market activity almost ground to a complete halt during the first lockdown as the wider economy shrank by an unprecedented 26 per cent.

“But, since then, housing demand has been buoyed by a raft of policy measures and changing preferences in the wake of the pandemic.”

However, he added that the outlook for the housing market remains “highly uncertain” as restrictions to control the virus tighten across the UK and with government support measures and the stamp duty holiday set to end in the spring.

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He said: “Housing market activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.”

Howard Archer, chief economist at the EY Item Club, also warned that the property market will see a reversal of fortunes in 2021 and could fall by around 5 per cent by the end of next year.

He said: “We believe that the housing market is likely to come under mounting near-term pressure as the economy is hampered by pandemic-related restrictions, while there may well still be a significant rise in unemployment despite the furlough scheme being extended until April.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors, said: “We are in a very different place now as optimism following the initial rollout of a vaccine and the possibility of a Brexit deal has been replaced by realisation that the effects of the virus will get worse before they improve, as well as recognition of the negative impact on confidence and values.

“However, the determination of the overwhelming majority of buyers and sellers to conclude sales agreed prior to Christmas, relatively few price renegotiations and approval of the Oxford/AstraZeneca vaccine bodes well, provided present constraints prove relatively short term.”

Source: The Irish News

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Sales agreed on £62bn more homes in 2020 than 2019

More activity at higher price points means the value of homes selling is 26% higher than in 2019, with the value of sales agreed in 2020 up £62bn on the previous year, the latest Zoopla House Price Index shows.

Zoopla found that the pandemic has driven a seismic search for space and quality of location, with 40% more buyers across the whole of 2020 compared to 2019 – despite 2+ month closure of UK housing market.

The highest rates of price inflation are in regional housing markets, but greatest increase in market activity has been concentrated in London, the South East and Eastern England.

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Richard Donnell, director of research & insight, Zoopla, said: “The housing market is ending 2020 strongly with more buyers looking for a home than this time last year. More sales at higher prices have boosted the value of homes selling in 2020, led by a strong rebound in southern England.

“The ‘once in a lifetime re-assessment of housing’ kick-started by the pandemic has further to run in our view and this will support demand into 2021. With a long Christmas weekend, and many households isolating in smaller groups, we expect interest in housing to be stronger than usual ahead of the traditional Boxing Day bounce when interest in housing jumps and the next tranche of would-be buyers.

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“While market activity is being boosted by latent demand unlocked by the pandemic, the housing market is not immune to economic forces and rising unemployment. Economic pressures are already impacting in parts of the market, reducing the volume and share of sales in less wealthy areas, for example.

“Looking ahead to 2021 we expect house price growth to reach 5% by mid Q1 and then slow to +1% by the end of the year as demand starts to weaken over 2021 H2. The number of completed housing transactions will be buoyed by a strong Q1 with sales agreed over 2020 Q4 completing early next year.

“Overall, we expect the number of completed housing transactions to match 2020 levels at 1.1m.”

By Ryan Fowler

Source: Mortgage Introducer

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2021 house price growth to reach 4%

House prices should inflate by 4% in 2021, Rightmove’s House Price Index found.

The firm said housing will be a high priority for people but price rises for newly marketed properties should be more modest than this year.

Prices this year have jumped by 6.6%, while the first quarter of next year is expected to be very busy due to the stamp duty deadline.

After that however it’s expected that things slow down, though cheap mortgage rates should continue to support the market.

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Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Interestingly, Rightmove is forecasting solid price growth for 2021, despite activity clearly slowing as 2020 draws to a close.

“At the coalface, we are experiencing much the same but expecting a busy first quarter as buyers and sellers rush to take advantage of the stamp duty concession. However, we don’t anticipate a cliff-edge scenario at present.

“Nearly all sales agreed seem to be proceeding to exchange of contract, unless exceptional circumstances prevail and prices are not being widely renegotiated in anticipation of a market fall due to Brexit, the pandemic or potentially worsening economic news.”

The possibility of the stamp duty holiday being extended was discussed once again.

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Sam Mitchell, chief executive of online estate agent Strike, said: “It’s hard to predict what will happen in the next few months, particularly with so much uncertainty around Brexit deal talks and rising unemployment levels as a result of the pandemic.

“However, people’s increased home working flexibility and desires for more space and rural locations is likely to keep demand ticking by. Plus, the recent breakthrough with the vaccine news has injected a newfound confidence in those who might have been on the fence about buying or selling.

“There’s no doubt that the government will also continue its commitment to the country’s economic recovery with continued support for the UK property market included.

“Who knows, maybe they’ll consider an extension to the stamp duty scheme or turn their focus back to helping first time buyers get a foot onto the property ladder.”

Tomer Aboody, director of property lender MT Finance, said: “What a crazy year it has been for the property market, one which has to go down on record as the biggest rollercoaster in terms of market sentiment, transaction numbers and even a complete standstill.

“Whether we ever see this again, who knows but what is for sure is that buyers’ demands and priorities have changed. Space is at a premium, with families especially prioritising the commuter belt and local village amenities.

“Confidence is set to continue for the first quarter of next year until the furlough scheme ends and possibly stamp duty relief at the end of March. Thereafter, we are at the government’s mercy – will it extend the stamp duty holiday and extend the feel-good factor for the market?”

BY RYAN BEMBRIDGE

Source: Property Wire

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Property market expected to start 2021 with a bang

With pent-up demand after lockdown and news of a Covid-19 vaccine, the UK property market should expect a promising start in 2021, property developer GRE Assets has predicted

With offices in the UK, Spain and the Middle East, GRE Assets has an international perspective of the impact the global Covid-19 crisis has had on the UK property market.

Michael El-Kassir, managing director of GRE Assets, explains what the company has experienced in the latter half of 2020 and how he believes this will inform the market as we approach 2021.

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He said: “With the imposed lockdown restrictions meaning people have spent much more time at home this year, we believe this has led to a distinct rise in the number of people seriously considering their next property move. Low interest rates, the existing Help to Buy scheme and stamp duty incentives, have also created a sense of urgency.

“The pandemic has been a wakeup call for prospective buyers and renters, who have reassessed their priorities when looking for their next home. Not only are they spurred on to make the leap from London, they also recognise the importance of having access to green space, whether that is nearby parks, balconies, terraces, and gardens.

“The working world has also seen a vast shift, as employees and companies have adapted to working from home. While people will return to the office as the latest restrictions ease, we strongly believe businesses will continue to work flexibly moving forward, meaning adaptable space and connectivity at home is of high importance for new homeowners.”

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El-Kassir said the South East is the region to watch in 2021.

He added: “With the constraints experienced within the housing market earlier this year, we saw increased demand and lack of supply post lockdown. While UK wide we have seen a rise in house prices and activity, it is the South East that really stands out.

“The region offers the near-perfect package of high-quality, affordable homes in popular regeneration areas with excellent connectivity to London.

“Demand here is currently outstripping supply, which is something we intend to continue to address as we head into 2021.”

BY RYAN BEMBRIDGE

Source: Property Wire

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UK house prices grew at fastest rate since 2015 in November

UK house prices grew at an annual rate of 6.5 per cent in November, the fastest rate since January 2015, as the sector batted off the second national lockdown.

According to Nationwide’s house price index, prices also increased on a month-on-month basis to be up 0.9 per cent compared to last November.

As a result, the average house price in the UK now stands at £229,721, up from £227,826 last month.

Nationwide said that despite the second lockdown, which has seen economic activity shrink in other sectors, the housing market has remained “robust” through November.

Property transactions hit 105,600 in the period, the highest since 2016, while mortgage approvals reached their highest levels since 2007.

Robert Gardner, Nationwide’s chief economist, said: “The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy.

“Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.

“However, housing market activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.”

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Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: ‘These figures feel like the storm before the calm as buyers and sellers rushed to take advantage of the stamp duty holiday before the March deadline, despite continuing Covid restrictions in October, the possibility of a no-deal Brexit and economic growth stalling.

‘That frenzy has been since replaced by a quieter, but just as determined mood to complete sales previously agreed. We don’t see any signs either of significant price adjustments, irrespective of whether there is an extension to the stamp duty holiday, with activity continuing to be supported by a shortage of listings and longer-term low interest rates.’

Housing market set to come under pressure

EY Item Club’s chief economist Howard Archer warned that the elevated levels of activity in the market were unlikely to last.

“The EY Item Club suspects that house prices could be around 5 per cent lower than now by mid-2021″, he said.

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“The housing market is likely to come under mounting near-term pressure amid rising COVID-19 cases and lockdown restrictions, while there is likely to be a significant rise in unemployment even though the furlough scheme has been extended until March. Meanwhile, earnings have been limited and are likely to remain so.

“There is also likely to be a fading of the pent-up demand effect on housing market activity, while pandemic-related restrictions may also have some dampening impact on the housing market and consumer confidence.

“Indeed, consumer confidence declined further in November to be at a six-month low, which may increase the caution of many people in making major spending decisions.

Nationwide’s figures came after banker Halifax revaled that consumer confidence in the housing market had shrunk last month.

Just 14 per cent of people surveyed by Halifax said that they believed their home had become more valuable this month, compared with 17 per cent in September and October.

Despite the slip, the figure remains high above the four per cent recorded during the first national lockdown in May.

By Edward Thicknesse

Source: City AM

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October housing demand still very high

The average number of prospective buyers registered per estate agent branch reached 451 in October, the highest number ever recorded for that month, NAEA Propertymark’s October Housing Report found.

In October last year there were 341 house hunters on average per branch.

However there were still fewer than the 525 recorded in September.

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Mark Hayward, chief executive, NAEA Propertymark, said: “Typically, we see the property market slow down as we approach the festive period and people put their sale on hold until the New Year.

“However, the pressure of completing sales ahead of the Stamp Duty holiday ending means that we have seen the number of potential buyers and the number of sales completed remain unusually high for this time of year.

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“This boom has been hugely beneficial for the housing market; however, we are increasingly concerned about the impact of the stamp duty cliff edge on 31st March 2021.

“This cliff edge has already increased pressure on service providers within the industry, causing delays for buyers and sellers, and could cause thousands of sales to fall through at the final hurdle as buyers realise their sale will not be completed ahead of the deadline.”

The number of properties available stood at 39 per branch in October, falling from 41 in September.

BY RYAN BEMBRIDGE

Source: Property Wire

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UK house prices stage rapid recovery in third quarter

UK house prices enjoyed their strongest quarterly increase since before the financial crisis in the third quarter as lockdown restrictions eased.

Prices rebounded quickly in the third quarter after the broadbased closure of the market during the previous quarter.

Prices rose 3.3 per cent in the three months to September, according to the Halifax Property Index, the strongest increase recorded since the end of 2006. On an annual basis prices were 5.5 per cent higher, the sharpest rate of inflation since the final quarter of 2016.

The housing market has been buoyed by government interventions such as the stamp duty holiday introduced over the summer.

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And last week Boris Johnson announced plans to turn “generation rent” into “generation buy” by allowing people to purchase homes with a five per cent deposit.

Paul Smith, economics director at IHS suggested the resurgence in prices was also due to “strong demand driven by a desire for more space – either as a reaction of the lockdown or the structural economic effects of increasing home working”.

The upturn in prices meant the standardised house price edged close to the £250,000 mark during the third quarter. Price inflation has picked up across all buyer and property types, with existing property inflation – 5.8 per cent – outstripping that of new houses – +4.1 per cent.

Properties in greater London remain comfortably the most expensive, with the typical house now costing more than £500,000 and around 1.5 times higher than in the South East.

Wider economic issues, particularly the rise in unemployment due to coronavirus, suggest activity and the rapidly rising prices are unlikely to be sustained.

The recent rise in prices has led to a tightening of affordability constraints, with the house price-to-earnings ratio reaching a record high level of 6.5 by the end of the third quarter.

It surpassed the previous records of 6.4 set prior to the financial crisis.

Unsurprisingly London has the highest ratio of close to 9, and the immediate regions surrounding the capital, with ratios all above 7, where affordability remains a key issue.

By Angharad Carrick

Source: City AM

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Housing fuels service sector recovery

With interest rates at a record low and buyers benefitting from the current stamp duty holiday, the property market is going from strength to strength, with both transactions and prices increasing, and it is this improvement that is helping to drive the service sector recovery, according to new figures.

Estate agents and related businesses enjoyed strong growth last month, the latest analysis from the IHS Markit/CIPS’s services purchasing managers’ index (PMI) shows.

The index stood at 56.1 last month, up from just 13.4 at the peak of coronavirus restrictions and lockdown in April. Anything above 50 is considered a sector in growth.

However, September’s reading is down from 58.8 in August, primarily due to the end of the Eat Out To Help scheme.

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Chris Williamson, chief business economist at IHS Markit, which compiles the survey, commented: “The UK service sector showed encouraging resilience in September, with business activity continuing to grow solidly despite the government’s Eat Out To Help Out scheme being withdrawn.

“Unsurprisingly, spending in the restaurant sector slumped after spiking higher in August, and many other consumer services activities showed a similar slide back into contraction as renewed lockdown measures were introduced, causing the overall rate of expansion to moderate.”

Despite recent growth, there are signs that optimism in the service sector is starting to cool amid concerns that there could be a second Covid-19 wave, while Brexit uncertainty is also having an adverse impact.

Growth in the service sector has been hindered by tighter restrictions introduced during the past few weeks, while the lack of international tourists is hurting businesses, and this in turn means potential job cuts.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “Once again job losses remained the black spot amidst these pockets of recovery.

“With the seventh consecutive monthly drop in job numbers, redundancies have replaced job hiring in an attempt to shield firms from rising input costs, but these strategies will devastate local communities.”

Source: Property Industry Eye

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The South West leads the way on rent rises

The South West of England is the leading UK region when it comes to rent increases, as they were 6.6% higher in September than the same month last year.

HomeLet’s Rental Index shows that rents averaged at £902 in the South West in September 2020, up from £846 in September 2019.

There were also strong annual increases in the North East (4.3%), East of England (4.3%) and the North West (4.2%), considering the year we’ve had.

At the other end of the spectrum, Greater London saw rents fall by -2.8%, while they also decreased by -2.4% in Northern Ireland.

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Martin Totty, chief executive at HomeLet, said: “Whilst it’s undoubtedly the case many landlords are being supportive of their tenants and agreeing temporary reductions or deferrals, it will be encouraging for them to see rents agreed on new tenancies, in almost all parts of the country, are continuing to hold up and generally edge forward.

“This is likely because tenant demand remains strong whilst supply may be a little more constrained if some landlords are selling into a stronger sales market, even if that could be a short term phenomenon. It also doesn`t help tenants much if, for them, the prospect of securing first time mortgage finance remains as elusive as ever.

“So, those landlords committed to the sector for the long term and having shown their willingness to confront the multiple headwinds of: taxation change; new regulatory requirements; and, in certain circumstances, longer notice periods to gain possession of their properties, may still be rewarded for their flexibility and their perseverance with reasonable returns on their investment risk.”

BY RYAN BEMBRIDGE

Source: Property Wire