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Experts shed light on what might happen to property market

The UK property market has been going through a confusing time lately, with buyers and sellers trying to work out what uncertainty surrounding Brexit will mean for property sales.

But while all isn’t yet clear, some housing reports have been giving clues about current market trends.

To get a snapshot of what’s been happening in recent weeks, and what might happen in the coming months, here’s a look at what some experts have been saying.

◆ If you’re looking for a home, you may not find too much choice. Average stock levels on estate agents’ books were close to a record low in March, a monthly survey from the Royal Institution of Chartered Surveyors (Rics) recently found.

There were slightly over 42 properties on average per branch in March, edging up from just under 42 in February. February’s figure was a record low for this part of the Rics survey, which started in April 1994.

Rics also found it now takes 19 weeks on average for a home to sell, from it going on the market to the sale being completed.

◆ With Brexit uncertainty still hanging over the market and recent general signs of prices drifting downwards, Rics says this indicates a modest fall in house prices over the coming months.

But not everywhere is experiencing price falls – in Scotland and Northern Ireland Rics says house prices have continued to grow.

Meanwhile, surveyors expect prices to generally be higher in 12 months’ time – with Northern Ireland, Scotland and Wales leading the way in terms of surveyors’ expectations.

◆ The strength or weakness of a housing market can depend on all sorts of factors – such as the strength of demand and the supply of properties in a particular area, and how close an area is to popular schools.

While London and the surrounding south east of England have been seeing a slowdown, other parts of the UK have been affected by the impact of other factors.

For example, the Office for National Statistics recently said there has been some strong house price growth in south east Wales “likely linked to the abolition of the Severn Bridge tolls”.

◆ The prime housing market, which includes homes in the top 5 per cent price bracket, held up “better than expected” in the first quarter of 2019, according to real estate adviser Savills.There is a growing pool of demand developing among buyers who are taking “a wait and see approach”, it said. This could mean sales pick up when the political situation becomes clearer. Savills says the prime market in Edinburgh has been performing particularly well recently, while Oxford, Cambridge, Bristol and Bath have all seen prime property prices fall annually.

◆ Some sellers may need to watch out for “gazundering”, where a buyer lowers their offer at the last minute. Some 45 per cent of people surveyed think gazundering is a serious problem, up from 40 per cent when similar research was carried out last year, the report from the HomeOwners Alliance, BLP Insurance and Resi.co.ukarchitects found. Gazundering can happen just before a sale is set to go through, with sellers sometimes feeling under pressure to accept the lower price to stop the deal collapsing.

Source: Scotsman

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Brexit delay to cause dip in property sales next year

Extended Brexit negotiations may cause the number of property sales to fall by as much as 20 per cent in 2019, estate agency haart has warned.

Buyer registrations are up by 37 per cent but Brexit uncertainty is holding back transaction levels.

House prices across England and Wales in October fell by 1.4% month-on-month and by 0.8% on the year, with the average house price standing at £220,353.

The number of properties coming onto the market rose by 1.1% and by 16.9% on the year. In October, there were over 10 buyers chasing every property across England and Wales.

But the market was less efficient, with the number of transactions falling by 3.3%, and the number of viewings dropping by 2.8%.

First-time buyers
The average purchase price for first-time buyers has fallen by 2.7% on the month and by 9.8% on the year. This comes as the number of first-time buyers registering onto the market has dropped by 3.2% on the month, but rose by 14.9% on the year.

Paul Smith, CEO of haart, said that despite negative Brexit rhetoric from Westminster and the industry, the property market remained resilient in October.

He said: “I believe that even if we encountered a hard Brexit, we would be very unlikely to see the significant price falls encountered during the credit crunch. Greater regulation in the banking and mortgage market, a shortage of supply and government support which underpins the first time buyer market means that a far more likely outcome would be a reduction in transaction volumes.

“The next couple of weeks will prove interesting. Below are my predictions of what could happen to the UK’s housing market following various Brexit scenarios – in my opinion the greatest threat is a delay to Brexit because of political posturing. We could expect a super-charged property market in 2019 if a positive Brexit deal is agreed.

“A no deal Brexit would likely result in a short term blow for the property market, at what would normally be a peak time of the year for activity. The most likely impact would be a slower market, with fewer transactions taking place as both buyers and sellers hit the brakes on their plans.

“Whilst a no deal scenario would potentially be quite damaging, an extended period of Brexit negotiations beyond the set date of March 2019 could prove just as detrimental.”

Source: Your Money

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Housing market hits a brick wall as sales plunge across the UK by up to 29%

Property sales were down by a fifth across the UK during March, and plunged by almost 30% in London.

New Land Registry data paints yet another gloomy picture of the market, showing that the number of transactions completed in March across the UK fell 20.3% annually to 73,977.

The biggest falls were in London where sales were down 29% annually to 6,180, and in the south-west with a 24% decline to 6,640.

Overall sales in England were down 21.8% to 58,203 on a yearly basis, while transactions in Scotland declined 16.1% to 7,861.

Northern Ireland recorded a 12.4% decline to 4,545 sales and the Welsh market fell 13.8% annually to 3,368 sales during March.

The Land Registry data also shows house prices growing at the slowest rate since August 2013, up 3% annually in May to £226,351.

This was a slowdown from the 3.5% annual growth recorded in April.

Average prices rose just 0.1% on a monthly basis to £226,351.

The largest annual growth was in the east midlands, with prices up 6.3% to £190,216 on average.

London saw the steepest annual fall with average prices down 0.4% to £478,853.

Commenting on the figures, Andy Sommerville, director at Search Acumen, said: “The slowing UK housing market has now effectively hit a brick wall.”

Jeremy Leaf, north London estate agent, said: “These figures are interesting, as this is the most comprehensive survey of UK house prices, and confirm what we have seen in others and on the ground.

“In other words, property prices cannot be sustained indefinitely by low stock and mortgage rates. Lower demand is forcing vendors to be more realistic, with fewer, more nervous buyers who are prepared to shrug off Brexit concerns.”

Source: Property Industry Eye

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Property sales bounce back in all but one UK region as first-time buyers replace investors

Residential property transactions rebounded in most UK regions during February, HMRC data shows.

The taxman’s UK Property Transaction Statistics for February 2018 shows 83,230 sales last month on a non-seasonally adjusted basis.

This is an improvement on the 81,580 recorded in January and reverses two consecutive months of falls.

England saw a 3% increase on a monthly basis to 72,140, while Wales was up 1.8% to 3,790.

Northern Ireland saw a 14% jump to 1,950, while Scotland was the only region to see a fall, down 14.2% to 5,350.

However, on a seasonally adjusted basis, HMRC says the transaction figures are down 0.3% on a monthly basis to 101,010, down 0.7% annually.

Brian Murphy, head of lending for Mortgage Advice Bureau, said: “What we can interpret from the statistics is that the housing market is continuing on a steady course, with transaction numbers broadly unchanged on the previous month and only very slightly reduced on the same time last year.

“This underscores industry forecasts that the market will continue to perform at the same level this year with a relatively steady number of transactions at a topline level, although the mix of buyers is changing as we see fewer investors, but the slack being picked up at entry level by first-time buyers.

“Having said that, as we continue to see a diverging regional picture with some areas experiencing a significant upturn in buyer activity, this overall trend masks the fact that some towns and cities have seen higher than anticipated levels of buyer activity in the first two months of this year.

“This ‘two tier’ market is therefore propping up the more subdued levels of activity in London and the south-east, a reversal of what we’ve seen in previous years, and potentially an indicator of what we may see over the course of the next few months.”

* However, haart’s monthly report found that transactions were down in February.

The agency said that buyer demand surged 20% last month and was up by 14% on February last year.

It also reported a rise in viewings and a 15% increase in transactions in London.

But transactions generally across England and Wales were down, however, by nearly 7% on the month and by 3% year on year.

Haart also says that house prices at exchange are down 2% on the year.

All the figures are from haart’s own network of some 100 branches in England and Wales.

Source: Property Industry Eye

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Buy-to-let hotspots: Biggest profits made in 2017

The average profit made by landlords selling their property in 2017 was £86,651, according to Countrywide Monthly Lettings Index.

This figure was slightly higher than it was the year prior. In 2016, the average landlord selling their property made a gain of £86,302.

Across all of England and Wales, 88 per cent of landlords selling made a profit. ‘House price growth has driven investor gains. In 8 of those last 9 years house prices have risen,’ said Johnny Morris, Research Director at Countrywide.

However, Landlord gains were slightly behind owner occupiers, who on average made £92,886 when selling their home in 2017.

Unsurprisingly, gains were not spread evenly across all regions. London and the South East have seen the strongest growth in house price rises in recent years and so saw higher average profit of landlord sellers.

The average sale profit of a London landlord was £253,081. For the South East, that figure was £108,073.

Eight of the top 10 local authorities in England and Wales that made the highest percentage gains for landlords were based in London, with Brent topping the list (135 per cent average profit). Maldon in Essex (118 per cent) and Pendle in Lancashire (109 per cent) were the only two exceptions.

At the same time, the proportion of London landlords doubling their money from a sale was 28 per cent. By contrast, the South East saw significantly less landlords double their money, at 15 per cent, but still slightly above the national average.

The region did, however, see the highest proportion make a profit, at 97 per cent, with London slightly behind ay 96 per cent.

Other regions saw less attractive returns. However, as Morris notes: ‘Even in areas where price growth has lagged behind most landlords have made a profit from rising prices.’

Landlords in the North Eats made the smallest returns. Just 9 per cent of landlords in the region doubled their money and 25 per cent made no profit at all.

The area with the worst returns, however, was Selby in North Yorkshire. The average landlord here saw profits on sale of around 14 per cent, or £9,703 on average.

Source: Money Observer

 

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Residential property market – national overview January 2018

 With low interest rates and supply constraints acting to support prices, the regions that suffered most in the crash are bouncing back.

SLOWER PRICE GROWTH EXPECTED IN NEXT TWO YEARS

House prices continued to show modest growth in the last quarter of 2017, but in parts of the market activity has stagnated. For the most part this means London and the South East, but is also the case for ‘top of the ladder’ properties elsewhere. An analysis of house prices in cities across the UK shows that those that experienced the weakest price growth since 2009 now have the fastest rising prices.

Low mortgage rates and healthy employment continue to support demand, while supply constraints remain a challenge for buyers and are likely to provide support for house prices overall. The Bank of England appears to be reluctant to raise interest rates further in light of the current inflationary environment and the resulting squeeze on real earnings.

Prices across the UK are expected to show only very modest growth over the next two years while the government manages the process to leave the EU. Things are expected to pick up again after 2020 when confidence returns, releasing pent-up demand.

For buyers looking for somewhere to live, supply constraints are likely to be a key challenge. For buy-to-let investors, the environment remains challenging given the unfavourable tax environment, low yields and limited capital growth prospects.

REGIONS DEFY GLOOM IN SOUTH EAST

The Nationwide House Price Index shows modest price growth. UK house prices rose by 2.6% in 2017, compared with 4.5% in 2016. The West Midlands, South West, East Midlands and the North West show the strongest annual house price growth, while London remains at the bottom of the list.

The Halifax House Price Index reported similar figures, with prices up 2.7% in 2017. Halifax expects national house price growth to stay low again in 2018.

Analysis by Rightmove shows that asking prices rose by just 1.1% in the year to January 2018. First-time buyer asking prices rose by 1.9%, ‘second-stepper’ asking prices rose by 3.2%, while ‘top of the ladder’ prices increased by a mere 0.2%.

Hometrack provides insights into performance across UK cities. Their latest data shows that Glasgow has the fastest growing house prices at 7.9%, followed by Edinburgh at 7.6%, Leicester at 7.5% and Birmingham at 7.3%. Cities with the weakest price growth since 2009 are currently recording the highest rates of price inflation. Hometrack expects city house price growth to be 5% in 2018 as regional cities support the headline growth rate.

PROPERTY SALES VOLUMES DOWN

Buyers remain very price sensitive. The latest data from Rightmove shows that sales activity is down, with sales agreed in the last quarter of 2017 down 5.5% on the same period a year ago.

The latest Royal Institution of Chartered Surveyors (RICS) survey suggests that new buyer enquiries have edged lower and sales are slowing, particularly in the South of England and the Midlands, but improving in other regions. In the wider South East area new buyer enquiries have declined markedly and vendor instructions have increased, suggesting that negotiating power in the region is going to be with buyers at the start of 2018.

REMORTGAGES ON THE RISE

Data from the Council of Mortgage Lenders (CML) highlights the extent to which various changes to stamp duty in recent years have reduced the capacity for home movers. The number of mortgages for London movers in Q3 last year was 20% below the 2013-15 average, and less than half the average level recorded between 2005 and 2008.

The Bank of England’s Monetary Policy Committee (MPC) meets again on 8 February to set the base interest rate, currently 0.5%. One of the key reasons analysts have suggested that the MPC should wait before hiking again is that it would hit households already struggling to cope with the squeeze on real earnings as a result of inflation – currently at 3%, 1% above the bank’s target rate. As a result, if inflation does start to fall back, then the squeeze should abate which would make further interest rate increases more manageable.

NEW BUILD STARTS UP 134% ON 2009 SLUMP

The budget introduced a government target for building 300,000 new homes a year by the mid-2020s, a level that hasn’t been achieved since 1978 when local authorities built 145,000 homes.

The latest data from the Department for Communities and Local Government (DCLG) shows that all new build starts are now 134% above the trough in the March quarter of 2009, and just 18% below the peak in the March quarter of 2007. All completions are 56% above the trough in the March quarter of 2013, and 19% below their March quarter 2007 peak.

The RICS survey noted that new instructions to sell continued to decline at the headline level, extending a run of 23 months. Average stock levels on estate agents’ books remain close to historic lows, which is proving a challenge for buyers.

KEY TAKEAWAYS

House price growth has slowed in 2017, with a rise of 2.6% in 2017 compared with 4.6% in 2016. Sales activity in Q4 2017 was down by -5% compared to Q4 2016. For buyers looking for a place to live, supply constraints are likely to be a key challenge. For buy-to-let investors, the environment remains challenging given the unfavourable tax environment, low yields and limited capital growth prospects.

Source: Coutts

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Property sales in UK confirm housing market is moving ahead steadily

Residential property sales in the UK increased by 1.7% between September and October 2017, some 9.2% higher than the same month in 2016, official figures show.

The data from HMRC also shows that there were 105,260 residential property sales and 11,280 non-residential sales.

It is more evidence that the property market is progressing at a steady pace despite political and economic uncertainty and the decision to leave the European Union with Brexit having no impact.

Stephen Wasserman, managing director of West One Loans, pointed out that stamp duty hikes have had more of an impact on the housing market and believes that further change to the property tax paid by buyers could boost the market.

‘The uptick in property transactions demonstrates the underlying stability of the sector, and is a positive message to the market ahead of Wednesday’s Budget, which is expected to be largely housing focussed,’ he said.

‘It will take some time for the market to fully recover from the upheaval of stamp duty hikes and economic uncertainty caused by Brexit negotiations, but if Hammond scraps stamp duty for first time buyers, as it’s rumoured he may do so, we could see the market grow at a faster rate,’ he added.

According to Shaun Church, director at mortgage broker Private Finance, while there have been no impressive monthly increases in the number of property transactions this year, annual comparisons are favourable. ‘Transaction levels are also now back to where they were before the stamp duty changes which came as a shock to the system in 2016,’ he explained.

‘High demand for housing and low mortgage rates will continue support activity in the long term, but for a markedly improved performance next year issues surrounding property supply and the stamp duty system must be addressed. The industry will be hopeful that tomorrow’s Budget unveils decisive action on these two fronts,’ he added.

Source: Property Wire