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Housing market ‘in limbo’ as London house prices drop 1.4 per cent

London house prices booked a steep 1.4 per cent annual drop in August as UK house prices grew at a lower level than last year, according to the latest data.

While UK house prices posted annual growth of 1.3 per cent to beat that of 0.8 per cent in July, growth dipped below last year’s level amid a general slowdown.

London fuelled the drop as the capital suffered the UK’s biggest annual fall. followed by a 0.6 per cent decline in south east house prices.

That left the average UK house price worth £235,000 in August, the Office for National Statistics (ONS) said.

London house prices dropped to an average of £472,753.

“Annual growth in UK house prices showed a moderate pick-up in August although it remains below the increases seen throughout 2018,” ONS head of inflation Mike Hardie said.

“Wales saw the strongest growth with prices continuing to fall in London and the south east.”

Experts said the latest statistics painted a “picture of a housing market in limbo” as London suffered the worst effects of political uncertainty on the UK housing market.

“The closer we come to an apparent EU exit, the more likely it is that even the most fearless home buyer or seller will hold tight until the dust has settled,” warned Benham and Reeves director Marc von Grundherr.

“Further downward trends should be expected until the start of next year at the very least.”

Jeremy Leaf, a former residential chairman of the Royal Institution of Chartered Surveyors, said the latest figures show a small recovery in the housing market.

“Sadly, this is nothing to get too excited about because the market remains relatively flat although of course the resilience is welcome,” he added.

Better affordability and almost record-low mortgage rates are improving buyers’ and sellers’ confidence, he added.

Brexit leaves UK house prices in ‘growth rut’
However, property lender Octane Capital’s chief executive, Jonathan Samuels, warned that Brexit has left the UK housing market in a “growth rut”.

“With Brexit hanging over it, it’s as if the property market is frozen in a one per cent annual price growth rut,” he said.

“Very low single digit growth has been the narrative for well over a year now and it’s hard to see that changing anytime soon,” he added.

“London and the south east remain the primary drag on average prices, as they pay for the riotous growth of five or six years ago.

“While the market is down, low supply and stock levels, cheap mortgages and the strong jobs market are ensuring a degree of movement.”

Brexit endgame could increase volatility
Samuels warned that UK house prices could grow more volatile as the urgency for a Brexit deal increases

“We’re now approaching the Brexit endgame and the ride could get increasingly bumpy.

“It’s possible that what happens during the next few months, even weeks, could determine the fate of the property market over the next few years.”

London house prices ‘must end boom or bust cycle’
Gareth Lewis, commercial director of property lender MT Finance, said London house prices must show more modest growth to end their volatility.

“It may be the case that London and the south east need more sensible levels of price growth in order to produce a more robust market, rather than boom and bust,” he said.

EY Item Club economic adviser Howard Archer said the data showed a “renewed softening” in London house prices. He pointed out that it is the 14th successive month of decline for the capital.

Economy ‘too weak’ to prop up UK house prices
UK house prices and London house prices could benefit from a lack of housing supply, Archer predicted.

But he warned that the UK economy may not hold up house prices for much longer, a day after the unemployment rate inched upwards.

“The government’s recent – and ongoing – initiatives to boost house building will take time to have a significant effect so are unlikely to markedly influence house prices in the near term at least,” Archer said.

“However, the labour market has recently faltered and it looks likely to continue to do so in the near term at least as companies face a soft domestic economy, heightened Brexit uncertainties, an unsettled domestic political situation and a challenging global environment.”

“With the economy largely struggling and the outlook highly uncertain, we suspect that house prices will remain soft in the near term at least,” Archer added, predicting a one per cent rise across 2019.

PwC economist Jamie Durham disagreed, saying wage growth and unemployment remained sturdy supports for the housing market.

“But continued uncertainty in the market, related to Brexit among other factors, is likely to be dampening both supply and demand,” he added. “This is particularly the case in the capital and will likely continue to affect price growth over the coming months.”

By Joe Curtis

Source: City AM

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North’s house prices still 30 per cent below boom height

THE average price of a house in the north is almost 30 per cent below the height reached in the 2007 property boom.

New research published today by Property Pal found the £134,200 median price of a house here is 40 per cent below the UK average. The online housing portal has produced new micro-area analysis to show the five most popular places in the north to buy a house.

Carrowreagh, just outside Dundonald topped last year’s list with 180 homes sold. It came just ahead of Windsor (171), Bloomfield (137), Connswater (126) and Central Craigavon (125).

Cultra and Malone are the most expensive areas to buy a home, with median property prices of just over £400,000.

However research found over 80 locations in the north where median property prices are under £100,000.

According to Property Pal’s new economic and housing forecast, house prices grew 3.6 per cent last year. Assuming a ‘soft Brexit’ can be secured, it anticipates prices will rise by 2.9 per cent in 2019, 3.6 per cent next year and continue to rise from 3-4 percent until 2023.

The company’s chief economist Jordan Buchanan said that the north’s economy is expected to grow by 1.2 per cent this year, 1.3 per cent next year and between 1.5-2 per cent until 2023.

“The Northern Ireland economy has been performing particularly well in recent years despite an increasingly challenging backdrop,” he said.

“Firms have been hiring at record rates, economic inactivity is falling and unemployment is exceptionally low by historical standards, and amongst the lowest of any advanced nation in the world. However, the outlook remains cautious with many forward leading indicators suggesting the local economy is close to a recession.”

Focussing on the housing market, he said the north remains amongst the most affordable places in the UK to buy a home.

“Today the median house price in Northern Ireland stands at £134,200, 29 per cent below the highs of 2007 and over 40 per cent lower than the UK average (though a more sensible comparison is 34 per cent lower that Great Britain excluding London).”

Commenting on the potential impact Brexit might have on the market’s outlook, the economist added: ‘Until a Brexit deal is secured, economic and political uncertainty will restrain buyer sentiment.

“The UK wide housing market will remain price sensitive and beyond that, depending on what deal is agreed, will have an impact on the path of interest rates, wage growth and house prices.

“Fortunately from a Northern Ireland perspective, there is a case for optimism as the fundamental drivers remain encouraging. Ongoing affordability, pent up demand, a low interest rate environment – with competitive mortgage deals – and an increasingly tight labour market, with real wage growth, should support house price growth in the coming years.”

By Ryan McAleer

Source: Irish News

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House Price Growth at a Standstill

Annual house price growth in fell to 0.2% in September, the tenth month in a row that growth has been below 1%.

The latest house price index from Nationwide revealed that month-on-month, house prices fell in September by 0.2%. Compared to September 2018, average house prices have grown by just 0.2%, down from the 0.6% annual growth seen in August. This is the lowest yearly growth recorded for eight months, and only slightly higher than the six-year low of 0.1% seen in January. The average price of a home in the UK now stands at £215,352, down from £216,096 in August.

“Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensification of Brexit uncertainty,” said Robert Gardner, chief economist at Nationwide. “However, the slowdown has centred on business investment – household spending has been more resilient, supported by steady gains in employment and real earnings.

“The underlying pace of housing market activity has remained broadly stable, with the number of mortgages approved for house purchase continuing within the fairly narrow range prevailing over the past two years. Healthy labour market conditions and low borrowing costs appear to be offsetting the drag from the uncertain economic outlook.”

Regionally, the biggest fall in prices last month was seen in London and the South East, where average prices dropped annually by 1.7%. In other parts of the country, house prices are still rising but slowly. The most significant gains were seen in Northern Ireland, where house prices grew 3.4% year-on-year in September.

“With the economy largely struggling and the outlook highly uncertain, we suspect that house prices will remain soft in the near term at least,” said Howard Archer, chief economic adviser to the EY Item Club.

“Should the UK leave the EU with a deal at the end of October – or early in 2020 – we believe reduced uncertainty and gradually improving economic activity as the year progresses could see house prices rise by around 2% over 2020.

“Housing market activity – and possible to a lesser extent prices – could be given a lift in 2020 if the government cuts stamp duty significantly in the budget later this year.”

Jeremy Leaf, former residential chairman of RICS, said: “What these figures tell us is that there hasn’t been much change in the market. On the ground, we have seen more serious buyers and sellers determined to find some middle ground and particularly for longer-term purchases such as larger flats and family houses where short-term uncertainties seem to be less relevant.”

Source: Money Expert

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Annual house price growth ‘running at below 5% across all UK’s biggest cities’

None of the UK’s biggest cities saw annual property growth hitting 5% or more in August – marking the first time this has happened since 2012 as the market adjusts to more realistic pricing, according to an index.

Zoopla’s index, which covers house price movements in the UK’s 20 biggest cities, found that the fastest rate of year-on-year house price growth in August was in Leicester, at 4.8%, according to Zoopla.

It was the first time since December 2012 that the city with the fastest house price growth had an annual rate of price inflation below 5%.

Leicester was followed by Liverpool, where average house prices increased by 4.6% compared with a year earlier, and Manchester with a 4.5% uplift.

The biggest house price fall in August was in Aberdeen, where house prices were 4% lower than a year earlier, according to the cities index.

Oxford also saw house prices edge downwards, with property values there falling by 0.4% annually.

In London, house prices increased by just 0.2% annually, while in Cambridge they lifted by 0.3%.

Year-on-year house price growth was 4.0% in Edinburgh, 4.1% in Cardiff and 3.6% in Belfast.

Richard Donnell, research and insight director at Zoopla, said the housing market is “throwing off mixed signals”.

He said: “This is at a time when Brexit is dominating the headlines again and further complicating the outlook”.

He said southern cities in particular have seen a reduction in cash buyers – “and we believe this is down to a decline in investment-buying across high value cities”.

Mr Donnell continued: “This has compounded the slowdown in price rises, which we see as a return to a more sustainable pace of price growth rather than an impending re-correction.

“The London market continues to see greater realism in pricing and there are signs of a modest increase in market activity.

“This isn’t a precursor to price rises, but we do expect sales volumes to start rising once again.”

By Vicky Shaw

Source: Yahoo Finance UK

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London house price growth remains below UK city average

House prices in London edged up 0.2 per cent in August but inflation remained below the UK average growth rate for cities of 1.9 per cent.

However, mortgages for home purchases in London have been increasing slowly following the lower numbers seen since late 2014, suggesting that the decline in London housing sales has bottomed out.

Data from Zoopla and Hometrack shows that 9.7 per cent of live listings had the price reduced – the lowest level for three years.

“We do not expect house price growth to increase but builders and agents in London will welcome any improvement in market activity,” the House Prince Index report said.

Leicester is the fastest growing city as house prices have increased 4.8 per cent, while Aberdeen has the lowest growth in the country with a rate of minus four, according to research by Zoopla and Hometrack. August was the first time since 2012 that no big city saw annual property growth rise above 5 per cent.

Bentham and Reeves director Marc von Grunderr said: “London continues to act as a house price growth anchor for the time being and this is largely being driven from the inside out as those who have seen the largest decline in property values continue to hold fire for greener pastures on the other side of the Brexit bridge.

“However, to view the capital as down and out when it comes to its property pedigree would be very foolish indeed. London is currently a sleeping giant rather than a crumbling carcass and once stability returns, so too will buoyant house price growth.”

The acceleration in house price inflation since 2013, which reached almost 20 per cent in London in 2014, and the slowdown since 2016 are “part of the unfolding house price cycle”, the research said.

CityCurrent price% year-on-year August 2019
London£483,8000.2 per cent
Leicester£182,9004.8 per cent
Liverpool£124,7004.6 per cent
Manchester£173,0004.5 per cent
Cardiff£211,8004.1 per cent
Edinburgh£235,4004 per cent
Birmingham£168,3003.8 per cent
Belfast£136,4003.6 per cent
Leeds£168,9003.5per cent
Glasgow£127,0003.3 per cent
Nottingham£155,3003.1 per cent
Sheffield£139,6002.8 per cent
Bristol£283,0002.2 per cent
Newcastle£128,9002 per cent
Bournemouth£293,6001.3 per cent
Southampton£228,3000.5 per cent
Cambridge£429,5000.3 per cent
Portsmouth£237,8000.2 per cent
Oxford£409,100-0.4 per cent
Aberdeen£158,800-4 per cent
20 city index£257,9001.9 per cent
UK£220,7002.1 per cent

By Jessica Clark

Source: City AM

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House prices in selected UK regions on the rise

House prices in Wales, Scotland and Northern Ireland are expected to continue their upward trajectory, reallymoving has predicted.

Values have been forecasted to rise by 8.7% in Wales, 3.8% in Scotland and 1.9% in Northern Ireland over the next three months.

Rob Houghton, chief executive of reallymoving, said: “Considering the current political situation, the UK housing market continues to show remarkable resilience.”

Average house prices in England and Wales are set to see an average 0.9% monthly drop over the next three months.

London is set to see a moderate increase of 1.5% overall in the three-month period from September to November.

Year-on-year, house prices are on course to remain in positive territory throughout the Autumn.

A 3% annual increase forecast for September will be the highest rate of annual house price growth for almost a year, followed by 2.7% in October and 2.1% in November 2019.

However, average house prices in England and Wales are set to see an average 0.9% monthly drop over the next three months.

Houghton added: “House prices are on course for minor monthly falls in September, October and November, but while the temptation is to attribute this to Brexit, in fact it is largely down to seasonality with the market following its usual pattern of peaking in August then tailing off steadily through Autumn.

“The London market has proved to be most vulnerable to the political situation and the data suggests buyers were more cautious in August when No Deal Brexit rhetoric peaked, prompting a 2.3% monthly fall in prices agreed which will translate to completions in November.

“Nationally, annual growth is set to remain in positive territory throughout the Autumn, indicating that people are continuing to press ahead with home moves and the underlying value of the housing market remains stable.”

By Michael Lloyd

Source: Mortgage Introducer

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House prices fall in rare September slump

Rightmove has revealed that UK house prices have decreased for the first September since 2010 as the usual autumn rebound failed to transpire.

The average price of UK property coming on the market fell by 0.2%, or £730, to £304,770, as the number of agreed sales dropped 5.5%. Underlying housing fundamentals remain strong, yet the October 31st Brexit deadline and the prospect of no-deal have discouraged buyers.

Miles Shipside, Rightmove director, said the approaching deadline was “causing some to hesitate”. If it lasts, the traditional autumn bounce in completions may be “missed altogether”.

Excluding London, the UK housing market has been somewhat resilient since the 2016 referendum. House prices in London have been in decline since March 2018, but that has been explained by a reduced interest from international buyers. Other regions have remained resilient against uncertainty.

The Rightmove figures have indicated that the intensity of no-deal Brexit concerns are impacting the larger market.

Mr Shipside said: “As the deadline gets closer and tensions heighten, there has been a big swing with sales agreed now over 5 per cent below those of a year ago. Buying activity is still at nearly 95 per cent of what it was a year ago, but sellers in all regions are seeing fewer sales go through.”

People selling property are also holding back, but prices continue to fall. The number of newly-marketed properties decreased by 7.8% this month compared with last year, with all regions down on the previous year, Rightmove found.

The most recent Office for National Statistics (ONS) data shows prices increasing 0.9% across Britain in June, but falling by 2.7% in London, continuing a trend since March 2018. Prices in the south-east decreased by 0.6% in the same month.

A total of 53% of homes were taken off the market in the most exclusive boroughs of central London instead of sold in the second quarter of the year, according to Lonres. The figure has risen gradually since 2014, when it ranged between 30 and 40%.

Marcus Dixon, head of research at Lonres, said that changes to stamp duty and the uncertainty surrounding the EU referendum in 2016 had hit the market. He said: “Indeed, since 2016 more properties have been removed from the market due to a withdrawal than a sale.”

Source: Scottish Housing News

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London house prices flat or falling for 16th month in a row

House prices in London have now been flat or falling for a longer period than was seen during the economic downturn of 2008 and 2009, according to an official report.

Property prices in the capital have failed to grow year on year for 16 months in a row, with the latest figures showing a 2.7% annual decrease in June, a report from the Office for National Statistics (ONS), Land Registry and other bodies shows.

This compares with 15 months of prices falling over the year in London during the economic downturn of 2008 and 2009.

However, prices in the capital recorded sharper falls during the 2008 and 2009 period than has been the case more recently, the report said.

The average London house price in June was £467,000, compared with £230,000 across the UK generally.

Across the UK, house prices increased by 0.9% annually in June – a figure unchanged from May.

UK house price growth has slowed over the past three years – mainly driven by parts of southern and eastern England.

Average UK house prices peaked at £232,000 in August 2018.

In June, average house prices increased year on year by 4.4% in Wales to reach £164,000, by 1.3% in Scotland to £152,000 and by 0.7% in England to £247,000.

In Northern Ireland the average house price is £137,000 – 3.5% higher than a year earlier.

Within England, the Midlands is showing the strongest house price growth, with prices up by 3.2% year on year in the East Midlands and by 2.6% in the West Midlands.

Howard Archer, chief economic adviser at the EY Item Club said: “We believe, with Brexit due to occur on October 31 – and it currently very unclear what will happen then – uncertainty will weigh down on the economy over the next few months at least and hamper the housing market.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “It is steady as she goes for the housing market, which is no mean feat given that it is the summer months when things traditionally get quieter and the backdrop of Brexit uncertainty.

“London is still creating a drag on average house price growth, with prices falling 2.7% over the year to June.

“However, this was an improvement on the May fall of 3.1%, suggesting price falls could be slowing and the market stabilising.”

Referring to the London market, Jonathan Hopper, managing director of Garrington Property Finders, said: “Prices in the capital are now falling more slowly, but the direction of travel remains clear.

“After 16 consecutive months of softening, sliding, and occasionally dropping, prices, the correction is still under way.”

By Vicky Shaw

Source: Yahoo Finance UK

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Liverpool sees biggest decline in house prices since 2008

Liverpool has seen the highest drop in house price value since 2008 in England and Wales, according to the latest research by GetAgent.

GetAgent investigated Middle Layer Super Output Areas (MSOAs) and compared the average house price change for these areas since the financial crisis.

Using MSOA area codes, the research revealed that the 023 area of Liverpool saw the biggest drop in value with a decline of 44.21% from £116,821 to £65,178.

The 044 area of Bradford, 005 area of Hartlepool and parts of County Durham also saw declines in house price value.

Colby Short, founder and chief executive of GetAgent.co.uk, said: “While we tend to focus on top-line statistics the UK housing market is made up of thousands of micro-markets and so what is happening in one area can be the polar opposite to another.

“Looking at these more granular levels of data provides an interesting insight that differs from the usual blanket, generic observations and demonstrates how even in the same city, the market can perform differently from one area to the next.”

London saw major growth in house prices since 2008 with Camden (022) and Lambeth (003) seeing growth of 389.82% and 322.74% respectively.

In Greater London, the 010 area of Cambridge (156.71%) and 008 area of Winchester (149.11%) have also experiences high house price growth.

Short continued: “Currently, we’re seeing the London market struggle with other major cities in the Midlands and further north enjoying stronger price growth.

“However, looking at the long-term picture since the financial crisis, we can see a real contrast across the different areas of the UK with the capital flourishing overall, while other macro-areas have experienced really difficult recoveries.”

By Jessica Nangle

Source: Mortgage Introducer

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London house prices are tumbling: will it spread across the UK?

London house prices are falling at the fastest rate since the tail-end of the financial crisis.

The latest house price reading from the Office for National Statistics found that prices in the UK’s capital slid by 4.4% year-on-year in May.

That’s the biggest fall since 2009.

The big question is: will this spread across the UK?

Why London has been hit hardest by the housing downturn
The Office for National Statistics house price index is quite new. But it’s also quite comprehensive and it does come out a lot later than the other surveys, so the data is as close to “finished” as you’ll get.

So while a 4.4% slide in London house prices does seem like a big drop, there’s no obvious reason to discount it. And it does make sense, for reasons we’ll go into in a moment.

All I would say is that if you live outside London, and are hoping for a big slide elsewhere in the UK (prices across the country rose by about 1.2% in May), I wouldn’t necessarily expect it to spread.

There are three main reasons to believe that London is an outlier here. For a start, London prices went up by a lot more than those elsewhere in the country. It’s easy to forget this, because a lot of property comment is written by people living in London, for people living in London.

But the reality is that not every part of the UK has seen the ludicrous price boom that London has enjoyed/endured (delete according to whether you own a house or not). As a rule of thumb, in England and Wales, the further from London you go, the less wild the price appreciation.

Scotland is somewhat different in that Edinburgh is the centre of property price gravity, while Aberdeen has its own unique cycle linked to the price of oil. But prices have still lagged the southeast of England considerably.

As for Northern Ireland, prices there have yet to catch up with their 2007 peak, because Northern Ireland was swept up in the Irish property bubble and the epic bust that followed.

So London is now falling hardest because prices there soared the most.

Secondly, London was always the most vulnerable to all the legislative changes that have been made to try to cool the housing market.

London was the buy-to-let capital. But it also offered the lowest yields (because prices were so high). So over-leveraged London landlords were the first to feel the pain when the withdrawal of tax relief on buy-to-let mortgages kicked in.

Right after the changes were announced, one of the big banks calculated that London house prices would probably fall by about 20% overall as a result, and that now looks like it was a pretty good forecast.

And it’s not just buy-to-let. London was also the main destination for all the footloose and fancy-free global capital that wanted to find a secure bolthole. Once foreign investors started being taxed more heavily, and their affairs began to attract ever-so-slightly more scrutiny than before, the market at the top end of London felt the squeeze more than anywhere else.

Finally, there’s Brexit. I think it’s a pretty minor factor – relative to tax changes and increased suspicion of wealthy foreign buyers – but if it’s going to hit anywhere, then it’s London. (That said, the slide in the pound does have the side effect of making London property appealing to those globetrotters who do still want to buy here.)

Here’s what it would take to create a UK-wide property crash
Of course, if you’re outside London, then I wouldn’t despair either. Prices elsewhere in the UK aren’t exactly rocketing.

Overall, house price growth across the board (at around 1.2%) is now significantly lower than wage growth (around 3.6%). It’s also lower than inflation (about 2% or 2.8%, depending on your favoured measure).

In other words, house prices are falling in “real” (after inflation) terms across the board. Which is just what we’ve been hoping for.

Why are we hoping for that? If house prices fall in real terms, then they become more affordable. That defuses a lot of the political tension in the atmosphere (for most people, property ownership defines which side of the “wealth inequality” divide they feel they are on).

Another benefit of prices falling in real terms but staying basically flat in nominal terms, is that it doesn’t look too scary to existing homeowners. People will learn to cope with owning a house that doesn’t appreciate by roughly double their annual wage every year. But no one likes the idea that they might fall into negative equity.

So a fall in real terms keeps household and bank balance sheets looking healthy, while making life easier for potential first-time buyers.

For a harder fall or a full-on crash, you’d realistically need to see a rise in unemployment, a rise in interest rates, or both. Both of those factors create large numbers of people who suddenly can’t pay their mortgages, and therefore become forced sellers (sometimes via repossession).

Neither of those seems likely in the near term. And ideally, by the time we get to an economic environment where either of those things rise sharply, we’ll have a more affordable market in any case.

That might be too much to hope for – particularly as politics can always throw a spanner in the works – but I’ll keep my fingers crossed.

Of course, it means that the huge numbers of people who seem to be relying on property to provide their pension as well as a roof over their heads, might have to think about diversifying their portfolios.

If you’re nearing the stage of your life where you’re wondering how you’ll maintain your income and your standard of living once you stop working, I’ve got a seminar you should attend.

On the evening of 9 October, The Week’s City editor, Jane Lewis, will be talking to MoneyWeek’s David Stevenson and Charlotte Ransom of challenger wealth manager Netwealth about how to plan for the retirement you deserve. We’ve run these events before and they’ve always proved very popular, so grab your ticket now before they sell out.

By: John Stepek

Source: Money Week