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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

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UK house prices surge 5.7 per cent in June

UK house prices shrank by 0.3 per cent in June compared to the previous month, according to data released today.

But the growth rate rocketed 5.7 per cent on an annual basis last month, according to Halifax’s latest house price index, to take the average UK house price to £237,110.

That compares to May’s £237,837, when Halifax recorded an annual growth rate of 5.2 per cent – the best in two years until today’s figures.

Russell Galley, managing director of Halifax, said: “This extends the largely flat trend we’ve seen over recent months.

“More generally the housing market is displaying a reasonable degree of resilience in the face of political and economic uncertainty.

“Recent industry figures show demand looking slightly more stable, with mortgage approvals ticking along just above the long-term average.”

However, he warned that a “major restraining factor” for the UK housing market was the lack of houses up for sale.

“With the ongoing lack of clarity around Brexit, people will be looking for more certainty in the coming months, both to encourage them to list their property and to create the confidence needed to encourage buyers,” Galley added.

“Of course, the likelihood of continued historically low mortgage rates will underpin prices in the near term.”

Halifax figures are a ‘complete outlier’
Howard Archer, chief economic adviser to the EY Item Club, dismissed Halifax’s data as a “complete outlier in annual terms”.

It compares to Nationwide’s annual growth rate of just 0.5 per cent in June and Office for National Statistics (ONS) data of 1.4 per cent growth for April.

“There are signs that housing market activity may have got a little help from the avoidance of a disruptive Brexit at the end of March, but the overall benefit looks to have been limited,” Archer said.

“Improved consumer purchasing power and robust employment growth has also recently been helpful for the housing market but this has recently shown some signs of levelling off.”

Meanwhile, former Royal Institution of Chartered Surveyors (Rics) chairman, north London estate agent Jeremy Leaf, also questioned the figures.

“It paints a confusing picture with the annual house price increase actually greater than it was last month while comparative figures from 12 months ago are also unreliable,” Leaf said.

Buyers ‘looking beyond Brexit’
Leaf added that Brexit uncertainty has softened UK house prices, with today’s figures likely to dampen buyers’ appetites as prices continue to fall.

However, he said that many buyers have stopped delaying purchases and are pushing ahead with house hunts even amid the political uncertainty hitting the market.

“We are finding that some buyers, including some investors, are looking beyond Brexit and political uncertainty and are prepared to go ahead if they can perceive value,” he said.

Brian Murphy, head of lending for Mortgage Advice Bureau, said: “The market trend continues to follow a similar direction of travel to the one that we’ve observed since the beginning of this year; those who need to move are doing so, regardless of politically-driven news headlines, and are far more likely to make the decision to purchase based on their own circumstances should the need dictate.

“The availability of competitive mortgage products is also providing many with support, as lenders remain very much ‘open for business’ with some repricing downwards of late in order to gain more traction in the market.”

What will UK house prices do after Brexit?
EY’s Archer predicted that even in the event of a Brexit deal, the UK’s prolonged departure from the bloc will hamper growth of UK house prices over 2019.

The accounting giant predicts prices to rise only around 1.5 per cent this year.

“Prolonged uncertainty will weigh down on the economy and hamper the housing market,” Archer said.

“Consumers may well be particularly cautious about committing to buying a house, especially as house prices are relatively expensive relative to incomes.”

While a lack of homes on the market and very low interest rates should prop up the market in the meantime, Archer warned the nature of Brexit will dramatically impact UK house prices.

With a deal, house prices could grow by around two per cent over 2020.

But in a no-deal Brexit, Archer warned house prices could “quickly drop” by as much as five per cent.

By Joe Curtis

Source: City AM

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House prices rise monthly but fall yearly

House prices across England and Wales rose by 0.6% on the month but fell by 2.7% on the year, with the average house price now sitting at £219,060, estate agent haart has found.

New buyer registrations have risen by 2.5% on the month and by 3.8% annually. The number of properties coming onto the market this month fell by 1.1% and by 5.9% on the year.

Paul Smith, chief executive of estate agent haart, said: “Brits’ appetite to move home remained very health in May, as buyer registrations continued to creep up by 4% across England and Wales, and by a very significant 9% in London.

“At the same time, housing stock continues to diminish, and as a result, there are now 28 buyers chasing every instruction across London, and 12 across England and Wales.

“While we normally see the market cool down after a spring bounce, vast pent up demand will ensure momentum continues into June and July.

“In particular, families looking to be in their new home for the new school year are having to scramble to find a suitable property in time. A lack of larger homes on the market means that families paid £9,085 more for detached homes last month, than they did the year before.

“A lack of new homes to move into is also forcing large numbers into rental accommodation. In fact, we have seen a 30% increase in tenant demand on the year in London. Landlords who are considering selling up should bear this in mind.

“The reality is that tenant demand will always outstrip rental supply, and the yields to be gained are still far more favourable and a safer bet than the majority of other investment opportunities available.”

Haart said that hopefully, the result of the Conservative Party leadership contest will provide the country with the reassurance to move forward.

Smuth added: “Despite political uncertainty, the need to move home will always be there. But the reality is that the UK housing market thrives under positivity.

“If the new Prime Minister can provide a strong vision of the UK’s post-Brexit future, greater stability and confidence will follow, which should lead to an uptick in transactions.”

In May, there were 12 buyers chasing every property across England and Wales. The market has become less efficient this month, as the number of transactions fell by 4.5% on the month, while the number of viewings has increased by 1.9%.

The average purchase price for first-time buyers has risen by 1.4% on the month and by 4.4% on the year. This comes as the number of first-time buyers registering onto the market has risen by 5.2% on the month but fallen by 18.1% on the year.

The average amount first-time buyers are paying for a deposit has fallen by 1%, while also falling by 3.7% on the year.

The average property price in London has risen by 2.2% on the month but has fallen by 1.1% year-on-year. Meanwhile the number of new buyers entering the market has risen by 3.5% from the previous month and by 8.7% from the same time last year.

The number of tenants entering the market across England and Wales has risen by 6.7% on the month and by 5.5% on the year.

The average rent is down 1.5% month-on-month and 3.8% year-on-year and now sits at £1,261 pcm across England and Wales.

Tenant demand in London has increased by 8.8% on the month, and has risen by 30.6% on the year. London rents are down 0.3% month-on-month but have risen by 7.1% year-on-year.

By Michael Lloyd

Source: Mortgage Introducer

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UK house prices near record high for new homes on market

UK house prices for newly-marketed properties neared a record high this month, spurred on by a cluster of UK regions shrugging off recent political uncertainty.

Four northern regions witnessed their highest ever asking prices in June, pushing property prices nationally up 0.3 per cent to just £91 below June 2018’s record figure of £309,439.

According to Rightmove, the regions of East Midlands, the North West, Wales and Yorkshire & the Humber all enjoyed record asking prices.

That is despite newly-marketed houses in the capital falling in price by an average of 0.4 per cent this month.

“More buoyant markets in the north and midlands are helping to nudge up prices due to the seemingly relentless strength of buyer demand,” said Miles Shipside, Rightmove director and housing market analyst.

“Buyers in four regions are seeing higher new seller asking prices on average than ever before.”

In London, Shipside blamed a combination of stretched affordability, moving costs including stamp duty and Brexit uncertainty for the 0.4 per cent drop in the capital, where prices in June have fallen for the last three years.

Brian Murphy, head of lending at the Mortgage Advice Bureau, said: “The complex current market dynamic is driven by varying levels of consumer sentiment.

“One might suggest that those areas which are seeing more ambitious asking prices are somewhat insulated from the ongoing turbulence at Westminster – that or buyers and sellers in those areas are opting to ignore the headlines and carry on regardless, according to their personal circumstances.”

The scale of the UK’s housing problems were underlined this morning, with new research showing that less than one in 10 towns offer affordable property for nurses, teachers, paramedics, police and firefighters.

Some eight per cent of towns offer affordable housing for key public sector roles, tumbling from 24 per cent five years ago.

Central London remained the least affordable area, while the top three most affordable towns in Britain for key workers are all in the north west.

Halifax, which produced the results, said the gap is due to UK house prices outpacing earnings growth for public sector workers.

Average house prices have risen by 32 per cent compared to key worker average annual earnings growth of seven per cent.

By Sebastian McCarthy

Source: City AM

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Average Property Values Continue To Rise In May

Average property values rose by 5.2 per cent over the past year, according to the latest May Halifax Property Price Index – a dramatic jump in property values by recent standards.

The increase represents the biggest annual rise since the start of 2017, and brings average property values to £237,837

However, the lender stated that the overall message was one of ‘stability’ and that May’s sharp rise in prices was against a backdrop of ‘particularly low’ growth in the same period last year.

On a monthly basis, property values rose by 0.5 per cent, down from a 1.2 per cent rise the previous month, while in the quarter to the end of May prices were 2.5 per cent higher, compared to 4.2 per cent growth in the previous quarter.

Britain’s housing market has slowed since 2016’s Brexit referendum, driven by price falls in London and neighbouring areas, exacerbated by higher purchase taxes on homes costing over 1 million pounds and on second homes and small landlords.

The figures stated by Halifax are in contrast to the latest data released by Nationwide, which reported a much lower annual growth rate in property values of just 0.9 per cent, and a monthly growth rate of 0.6 per cent.

Managing director at Halifax, Russell Galley, said: ‘We saw a slight increase in house prices between April and May, but the overall message is one of stability.

‘Despite the ongoing political and economic uncertainty, underlying conditions in the broader economy continue to underpin the housing market, particularly the twin factors of high employment and low interest rates.’

Mr Galley said that this was supported by industry-wide figures, which suggest ‘no real change’ in the number of homes sold each month, while Bank of England data show the number of mortgages being approved rose by almost 6 per cent in April, reversing the softness seen in the previous month.

He concluded: ‘We expect the current trend of stability to persist over the coming months, though clearly any downturn in the wider economy would be keenly felt in the housing market.’

Source: Residential Landlord

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UK house prices show biggest annual rise since Jan 2017 – Halifax

UK house prices rose at the fastest annual rate since the start of 2017 during the three months to the end of May, mortgage lender Halifax said on Friday, though it added the figure was flattered by weak growth a year ago.

Halifax said house prices in the three months to May were 5.2% higher than in 2018, up from 5.0% annual growth in the three months to April, their highest since January 2017 and beating a forecast in a Reuters poll of economists.

Britain’s housing market has slowed since 2016’s Brexit referendum, driven by price falls in London and neighbouring areas, exacerbated by higher purchase taxes on homes costing over 1 million pounds ($1.27 million) and on second homes and small landlords.

Halifax said prices rose 0.5% on the month in May, in contrast to predictions of a fall, and April’s monthly house price growth was revised up to 1.2% from 1.1%.

“The overall message is one of stability,” Halifax managing director Russell Galley said.

“Despite the ongoing political and economic uncertainty, underlying conditions in the broader economy continue to underpin the housing market, particularly the twin factors of high employment and low interest rates,” he added.

Since the start of this year, Halifax house price data have been consistently stronger than figures from rival mortgage lender Nationwide, which reported annual price growth of just 0.6% in April.

The most recent official data showed house price inflation of 1.4% in the year to March, and Pantheon Macroeconomics economist Samuel Tombs said he expected price growth to remain around this level for the rest of this year..

“Households’ real incomes still are rising at a solid rate, while the recent decline in interest rate expectations should reduce mortgage rates soon,” he said.

Reporting by David Milliken; Editing by Alistair Smout

Source: UK Reuters

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UK house price growth eases, London a drag

UK house price growth slowed in May, while all but two London boroughs saw a decline, according to the latest survey from Rightmove.

House prices rose 0.9% on the month in May compared to a 1.1% increase in April. On the year, prices were 0.1% higher, versus a 0.1% drop the month before.

Rightmove said four out of 11 regions were “bucking the Brexit blues”, with Wales, the West and East Midlands and the North West all setting new asking price records for newly-marketed property.

However, in the capital, just two of the 32 boroughs – Barking and Dagenham and Bexley – saw prices increase.

Mile Shipside, Rightmove director and housing market analyst, said: “Price increases are the norm at this time of year, with only one fall in the last ten years, as new to -the-market sellers’ price aspirations are under pinned by the higher buyer demand that is a feature of the spring market.

“Indeed the 0.9% monthly rise is consistent with the previous two years’ average rise of 1.0% over the same period. What will seem inconsistent to some, given the ongoing uncertainty of the Brexit outcome, is that four out of eleven regions have hit record highs for new seller asking prices.”

North London estate agent and former RICS residential chairman, Jeremy Leaf, said: “Asking prices are not selling prices, which explains why some of these figures do not match results from other recent housing surveys. Overall, although there has been little change, that masks some considerable regional differences. For instance, London is acting as a drag on the rest of the UK housing market and prices don’t include inflation so have risen or fallen further in real terms.

“The spring bounce is taking place but not reaching to the heights we would have expected and certainly not in the capital.

“Looking forward, we are not expecting significant changes one way or the other, at least until Brexit is clarified.”

By Michele Maatouk

Source: ShareCast

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House Prices Recover in April

House prices in the UK grew 1.1% in April after a fall in March, according to the latest figures from Halifax.

The Halifax house price index revealed in March that house prices fell 1.3% over the month. However, prices rebounded in April with a 1.1% monthly rise, pointing to the volatility in the country’s housing market. House prices had been expected to fall by 1.6% over the month. The average price of a home in the UK now stands at £236,619, according to the country’s largest mortgage lender.

Average property prices were also up compared to last year. In the three months to March 2019, UK house prices grew sharply by 5% compared to last year, while a growth of only 4.5% was expected. This annual growth rate was almost double that seen in the previous month, when house prices grew 2.6% year-on-year in the three months to March. It is also higher than the average annual house price growth seen over the last decade. For the last ten years, the average price of a home in the UK has risen by £81,956, or an average of 4.3% each year.

However, surveys from other lenders show differing results than those from Halifax. According to the Nationwide Building Society, for example, annual house price growth in the UK has been below 1% for the last five months in a row.

“The blistering volatility of this index has returned as the Halifax house price weather vane spins itself into a frenzy once more,” said Lucy Pendleton, founder and director of estate agents James Pendleton. “The index has already come under scrutiny this year after months of erratic monthly growth figures. These can be more sprightly than the smoothed annual and quarterly numbers, but even so, they’ve been turning heads with the extremes with which they have been moving.

“One explanation for ricocheting growth figures like this is persistently low stock levels. In sought after areas, this can lead to demand being supercharged one minute and gone the next, with price rises coming in waves as brief competitions for limited numbers of homes come and go.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Less volatile measures point a far more subdued picture. For instance, Rightmove’s measure of online asking prices fell by 0.1% year-over-year in April, while Nationwide’s measure rose by a mere 0.9%. That said, we doubt that house price growth at the national level is about to turn negative for a sustained period.

“Mortgage rates have held steady for low LTV loans and have fallen steadily over the last year for high LTV products, offsetting some of the impact of Brexit uncertainty on high demand. In addition, maximum mortgage terms have continued to lengthen, pushing down monthly repayments and thereby making home ownership initially appear more attractive.

“Meanwhile, year-over-year growth in households’ real incomes remains on track to pick-up this year to about 2.5%, from 2.2% in 2018, thanks to lower inflation and more supportive fiscal policy. Accordingly, we still think that year-over-year growth in the official measure of house prices will pick up to around 1.5% by the end of 2019, from 0.6% in February.”

Source: Money Expert