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Wales Continues to Experience House Price Growth

House prices in Wales have reached an all-time peak, with the average house price across the country now £193,254, despite a drop in overall sales in 2019.

The figures have been released from Principality Building Society’s Wales House Price Index for Q4 2019, which demonstrates the rise and fall in house prices in each of the 22 local authorities in Wales.

In 2019, the average house price in Wales grew by 3.3%, a £6,237 rise since December 2018 driven by first time buyers and holiday homes. Over the quarter in Wales (October – December 2019), house prices rose by 1.7%.

Despite house price growth in 2019, house sales were down by 6% in 2019 compared to the previous year. The reduction is likely to be due to the uncertainties associated with Brexit and then latterly the December General Election.

“It’s been a decent year for average house price growth in Wales, mainly supported by historically low interest rates, a shortage of housing supply and relatively high employment. First time buyers were the driving force behind housing sales, with holiday homes also performing well.

“Although Brexit uncertainty and the General Election had a greater impact on the housing market in the south of England, sales were still down by 6% in Wales in 2019 compared with 2018. Now that there is a bit more clarity politically, we will wait to see if house sales pick up in 2020, although we anticipate continued modest growth in terms of house prices as a whole.”

 Denman, Chief Financial Officer at Principality Building Society

At the end of 2019, eight local authority areas established new peak prices – Bridgend (£180,988), Denbighshire (£192,665), Gwynedd (£190,868), Merthyr Tydfil (£141,657), Monmouthshire (£298,618), Rhondda Cynon Taf (£142,733) and Swansea (£188,417).

Principality’s House Price Index figures show that the largest decrease in sales in Q4 2019 compared to Q4 2018 have been flats, down by 32.6%, followed by detached properties which were down by 12.5%. Semi-detached sales reduced by 9.6%, with terraces down by 6.5%, which supports indications that first-time buyers are now more attracted to terraced and semi-detached properties, rather than to small city centre flats.

In the past decade (December 2009-December 2019), house prices in Wales have risen by 24.5%. Over this same 10-year time span, the CPIH index for consumer price inflation has increased by some 22.6%. This means that the average house price in Wales has grown in ‘real’ terms by just 1.9% in the past decade.

Cardiff tops the list with house price growth of 41.2% for the decade, followed by Torfaen at 37.7% and Newport at 33.4%. The top nine authorities in terms of growth are all located in the south-east corner of Wales – which may indicate the extent to which Cardiff, and the Severn Bridge tolls, have had an impact on housing demand, and therefore house prices, in this area over the last 10 years.

The ‘top’ location for house price growth in the north of Wales is Denbighshire, at 23.5%.

By MARK POWNEY

Source: Business News Wales

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UK property asking prices jump by record 2.3% month-on-month at turn of year – Rightmove

Asking prices for British houses put on sale in the five weeks to Jan. 11 rose by a record amount for the time of year, property website Rightmove said on Monday, adding to signs of a post-election bounce in consumer and business confidence.

Britain’s Royal Institution of Chartered Surveyors and major mortgage lender Halifax have both reported stronger-than-expected housing market activity since Prime Minister Boris Johnson’s election victory on Dec. 12.

Business surveys from Deloitte and IHS Markit have also perked up, as the election result ensures there will be a smooth departure from the European Union on Jan. 31 and no industry renationalisation by the opposition Labour Party.

Rightmove said average asking prices of property marketed between Dec. 8 and Jan. 11 jumped 2.3% in monthly terms, the biggest increase for that period since the survey started in 2002.

Prices were up 2.7% compared with the same period a year earlier, marking the strongest growth since July 2017.

“There now seems to be a release of this pent-up demand,” Rightmove director Miles Shipside said. “The housing market dislikes uncertainty, and the unsettled political outlook over the last three and a half years since the EU referendum caused some potential home-movers to hesitate.”

Asking prices, which are not seasonally adjusted, rose by 0.8% year-on-year in December’s release.

Britain’s housing market has slowed since June 2016’s Brexit referendum, especially in London and neighbouring areas, where higher property taxes as well as concern about the impact of Brexit on the region’s economy hurt demand.

There had been some signs of a pick-up in the housing market before the election.

Official data for November showed a 2.2% rise in house prices across Britain, the largest increase in a year, and Halifax said prices rose 4.0% in the 12 months to December, bolstered by the biggest monthly rise in almost 13 years.

But the broader economic picture in the run-up to election was downbeat, with GDP growth in the 12 months to November the slowest since 2012 at just 0.6%, and more Bank of England officials are considering cutting interest rates.

Reporting by David Milliken

Source: UK Reuters

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UK Housing Market on the Up, Says RICS

The UK housing market seems to be gathering pace following last month’s General Election, according to the Royal Institution of Chartered Surveyors (RICS).

The latest RICS survey revealed an increase in both the number of sales and buyer enquiries in December for the first time in seven months. According to RICS, house prices across the country are set to rise in 2020 due to a less volatile political and economic climate following the Conservatives landslide election win last month.

The figures were boosted by a sharp increase in sales in London and the South East of England, although in Scotland and Northern Ireland property sales fell. Heightened interest from new buyers in Wales and the North East of England also helped to drive up expectations for the year ahead.

According to the survey, 66% of RICS members expect positive house sales growth over the next year, a massive jump from the 35% that expected it just a month ago.

“The signals from the latest RICS survey provides further evidence that the housing market is seeing some benefit from the greater clarity provided by the decisive election outcome,” said Simon Rubinsohn, chief economist at RICS.

“Whether the improvement in sentiment can be sustained remains to be seen given that there is so much work to be done over the course of this year in determining the nature of the eventual Brexit deal.

“However, the sales expectations indicators clearly point to the prospect of more upbeat trend in transactions emerging with potential purchasers being more comfortable in following through on initial enquiries.

“The ongoing lack of stock on the market remains a potential drag on a meaningful uplift in activity although the very modest increase in new instructions in December is an early hopeful sign.

“Given that affordability remains a key issue in many parts of the country, the shift in the mood-music on prices is a concern with even London expectations pointing to a reversal of course both over the coming months and looking further out.

“This highlights the critical importance of the government addressing the challenge around housing supply particularly with the gradual phasing out of the Help to Buy incentive.”

Independent property expert Henry Pryor said: “Transaction volumes have held up well last year but while it feels like there may be a little more life in the market and some signs of confidence returning to the middle and upper ends there is no actual evidence of a Boris Bounce just yet.

“The data won’t be available until May as it takes time for sales that are agreed to exchange and complete and then another month to appear in the official records. However, it does seem like more people are thinking of moving, more homes are coming to market, and some buyers are bored of putting their lives on hold and want to get on with their lives.

“Will it last? Well, there are still some big icebergs ahead of us – the Budget next month, ongoing negotiations with Europe, a possible return of the Beast from the East. Any one of these could knock confidence and snuff out the fragile optimism, but if you want to buy or sell it looks like 2020 may be your year after all.”

Source: Money Expert

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Are UK house prices really on the rebound?

UK house prices rose by 2.2% in the year to November, to an average of £235,000, according to the latest data from the Office for National Statistics (ONS).

Average prices rose by 1.7% in England (to £251,000), with a 7.8% jump in Wales (to £173,000), a 3.5% rise in Scotland (to £155,000), and a 4% rise in Northern Ireland (to £140,000). In London, prices rose by 0.2% – not much, but a big improvement on the negative readings seen for most of last year.

In all, it paints a picture of a housing market that is showing signs of rallying. Particularly if you look at it on a chart, as per the ONS one below.

Putting it bluntly, that’s not necessarily good news. As we’ve been pointing out at MoneyWeek for a couple of years now at least, it would be best if house prices continued to flatten or fall gently, to allow earnings to play catch up.

In the absence of a better solution – which would involve a lot of political finesse, long-term thinking, and the tackling of a lot of vested interests, and thus seems unlikely – this is the easiest and least painful way to return house prices across the UK to some sort of semblance of affordability.

A rebound now would jeopardise that. So how seriously should we take the figures?

One point to note is that the ONS figures, while official, are relatively new compared to other long-running surveys such as those compiled by Nationwide or Halifax. You can see that they still need to iron out aspects.

That near-8% jump in Wales does rather stand out. Apparently, it’s down to two things – there was a rise in the number of expensive properties were being bought and sold in the likes of Cardiff (in other words, the typical house sold last month was more expensive than ones in previous months), and also, the large year-on-year rise was exaggerated by a “fall in prices during the same period in 2018.”

So the figures are worth taking with a pinch of salt.

That said, there are some reasons that you might expect a rally of sorts, and it’s worth considering them. November’s figures are unlikely to show any bounce related to politics – after all, these deals were all done before the election.

However, house prices have been flat or falling for some time, and importantly, mortgages have grown cheaper over the year – according to Moneyfacts.co.uk, the cheapest five-year fix for someone with just a 5% deposit, came in at 3.37% in January, but 2.75% in November. So the availability of cheaper credit combined with a sense that it might be a buyer’s market, may be helping things.

Meanwhile, the worst of the landlord exodus may be behind us – while there are still tax changes to come, those who are still hanging on in there must surely have some idea of what it’s now costing them to do so.

If indeed, cheaper loans are helping to boost prices, then it could continue – particularly if the Bank of England does decide to cut rates again. Combine it with a sense that foreign buyers are back in the market at the top end to bag a bargain while sterling is still weak ahead of Brexit, and we could see a sustained bounce in 2020.

Frankly, we hope it doesn’t happen. And arguably, credit conditions can only slacken so much further. But that’s the key thing to watch if you want an idea of where prices will go – what price is a mortgage and how easy is it to get? If they get even cheaper and more accessible than they are now, then all else being equal, prices will go up.

By John Stepek

Source: Money Week

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Savills shares jump after UK housing market improves post-election

Savills has seen shares jump after the estate agency said it saw the UK commercial and residential markets pick up after last month’s general election.

The real estate business said its full-year results for 2019 will be at the “upper end” of expectations, following an “excellent” performance in the UK.

It said Brexit uncertainty had restrained UK growth until mid-December, but saw “a strong close to the year as confidence to transact returned to the market”.

The London-listed firm also said it was particularly “resilient” as it faced challenging backdrops in both the UK and Hong Kong.

In Hong Kong, Savills said the political unrest had a severe impact on trading from the middle of 2019 and continues to press on performance in the region.

It said that, as a result of the political backdrop, its Asia Pacific region has performed “slightly below” expectations, while the company has also seen an increase in the time taken for its Australian business to bear fruit.

Elsewhere, the company delivered significant year-on-year growth in the US, as well a “strong performance” from its investment management arm.

In continental Europe, trading was broadly in line with expectations, despite declining markets in some countries.

In the trading update, Savills said: “Despite the backdrop of uncertainty, the UK performed well across all business lines, latterly benefiting from improved investor sentiment in both commercial and residential markets.

“Our residential business continued to outperform the overall market conditions, in particular taking share in the core London market.”

Savills said it believes increased political stability in the UK means it “should maintain improved sentiment”, but said it remains cautious until the full impact of Brexit is better understood.

Shares in the company increased by 7.1% to 1,231p in early trading on Monday.

By Henry Saker-Clark

Source: Yahoo Finance UK

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UK property prices are in the doldrums

House prices barely rose in 2019. Good news, says Nicole Garcia Merida.

It’s been a sleepy year for the property market. The average house cost £211,966 in January and £215,734 in November, according to figures from Halifax. That’s a gain of just 1.8%. London, which during upswings often outperforms the rest of the country, is now underperforming it. By October the average cost of a house in the capital had slipped by 1.6% year-on-year to £472,232, says the Land Registry.

The market’s lacklustre performance in 2019 continues a trend observed in the past few years; prices have made small percentage gains or trod water. This is hardly scintillating material for dinner-party dissections of the property market, but as we like to point out regularly, it is good news in the long term.

The price rises of recent years, fuelled by loose credit and government tinkering such as Help to Buy, which artificially fuelled demand, have propelled the market to unaffordable levels. The house price-to-earnings ratio is steadily declining from record peaks of over seven – but the credit bubble pushed it far beyond the usual levels of below four seen in the 1980s and 1990s.

Flat prices in conjunction with regular increases in wages are a painless and steady way for the market to fall to affordable levels. It bodes well, then, that annual wage growth has strengthened in the past year and reached an 11-year high of 3.9% in June. The bigger picture is also encouraging for those keen for the market to cool. House prices in Great Britain rose by 34% on average in the past ten years.

But once the figures are adjusted for inflation, they have fallen 0.3%, according to a Savills report using Nationwide data. The subdued 2010s followed a 67.1% real-terms increase in the 2000s and a 13.9% slide in the 1990s.

The outlook for 2020

There has been widespread talk of a “Boris bounce” for the property market as well as for shares. There is now certainty over our departure from the EU and a clear majority in Parliament reduces political uncertainty. However, while Brexit-related uncertainty hampered the market in the past three years, its removal doesn’t necessarily mean that the market will rocket. As Emma Powell and Alex Newman point out in the Investors Chronicle, the housing market began to slow in 2015 before the referendum.

The main problem remains affordability, notes Callum Jones in The Times. The house price-to-earnings ratio was still 6.8 in the third quarter of 2019; along with mortgage loan-to-income restrictions, this makes it difficult for buyers to muster deposits and bolster overall prices.

Throw in dwindling support from Help to Buy and the upshot, reckons Capital Economics, is that house-price growth will “only pick up a little” next year.

Where to look on the Crossrail route

In recent years there have been plenty of breathless articles in the financial press highlighting the scope for house-price rises in certain areas owing to the arrival of Crossrail, or the Elizabeth Line. But it is always hard to gauge how much a local price rise owes to a specific project and how much to a wider market upswing.

In any case, a Savills study suggests that house-price growth has faltered close to two-thirds of the Crossrail stations, as Anna White points out in the Evening Standard. How much this has to do with the delay to Crossrail and how much with the wider London slowdown is a moot point, but those in the market for a new home with good transport links should consider some of these areas. In each case, general regeneration may give prices more pep, reckons White.

One to look at is Southall, where the Crossrail station and new houses are reviving a “tired high street”. The typical house costs £310,000. Slough, once Crossrail opens, will be almost half an hour closer to Canary Wharf, while multimillion pound investment will transform the town centre, says Renata Holland in the Evening Standard. The average house will set you back £243,000. Acton, meanwhile, was once regarded as “Ealing and Chiswick’s poor relation”, says Andrea Dean in Metro, but it is now on an “equal footing”. A house costs £443,000.

Investing in empty property

Buying an empty property may seem like a straightforward way of buying a house on the cheap. There are certainly plenty to choose from: in England alone, there are over 200,000 that have been empty for at least six months, the legal definition of a long-term vacancy. Owners struggle to sell or derive an income from them so they may be keen to offload them for a reasonable price. But be sure the sums add up.

Finding a vacant property can be as easy as going for a drive around the area you’re interested in and spotting one. Otherwise, it might be worth contacting estate agents keen to make a commission, or local councils as they will be keen to get the property back into use, says Chris Menon in Moneywise. Monitor auctions around the area, too. If empty properties don’t sell you can contact the real-estate agent to discuss a price. Once you find the property, a search on the HM Land Registry website gives you the name of the owner, property limits and the risk of flooding.

Once you’ve found an empty dwelling, the key issue to consider is how much work it needs and how much it will cost. Could the sum be so high that it negates the saving on the empty house compared with a previously inhabited house needing no work? Once you begin enquiring about the price, get a structural surveyor in to produce a full report.

Factor in potential financial assistance too. There are initiatives offered by several councils that are designed to enable landlords and homeowners to apply for and receive up to £25,000 to refurbish an empty house to then rent out or sell, says Angelique Ruzicka in This is Money. The loans schemes began as a solution to housing shortages and unoccupied properties that have posed a problem for those living close by. Council loans are repayable after three years of renting out the property or when the property is sold.

Do your research and ensure you qualify for an empty home scheme, but otherwise mortgages are an option, says Menon. However, “many lenders may only lend up to 80% to 95% of the current value of the property and may withhold some funds as a ‘retention’ until works are complete”. If the property is entirely uninhabitable, you will need a broker to find you a specialist provider.

By Nicole Garcia Merida

Source: Money Week

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Top 3 predictions for the UK’s property market

Property predictions for 2020 are in with a key focus on house prices, first-time buyers and Brexit.

Combining data from last year, the property experts at Good Move have predicted what we are likely to see take place this year based on a number of factors. Whether you’re planning on buying your first home or looking into moving house, take a look at how the property market is shaping up for 2020.

1. House prices

Research found that house prices in 2019 grew ‘incredibly slowly’ due to political and economic uncertainty in the UK, leading to rises of just 1% in England. While there were some increases in areas across the country, as a whole, the property market was looking bleak.

For 2020, we could be expected to see more significant growth in property prices, albeit not a large one. The February Budget is also expected to affect the market, however it’s largely expected that house prices will increase.

Elsewhere, they also found that the cost of renting could increase by an even greater rate, as the number of letting properties is currently low (which could prompt a rise in prices).

2. First-time buyers

Large deposits can put a lot of people off when it comes to getting on the property ladder for the first time, and while there are many banks doing what they can to encourage people to buy, more can still be done. Ross Counsell, director at Good Move, says: ‘The Lifetime ISA scheme is helping people to afford the initial lump sum, but more needs to be done to support those looking to get on the property ladder.’

While the number of homes currently on the market is lower than in previous years, first-time buyers could struggle to find a suitable property, but renewed industry confidence could lead to a surge in the number of properties being listed. And if house prices do rise, many first-time buyers could find it a challenge to save for a deposit.

‘The positive news is that mortgage rates remain low. They may rise in 2020, but any increase is likely to be modest,’ he continues.

3. Brexit

With the UK set to leave the European Union on 31st January, this is of course going to bring some levels of uncertainty surrounding the housing market. While none of us are certain what is to happen, the outcome of a ‘no-deal’ Brexit could mean we see house prices fall.

Recent research conducted by Good Move found that three quarters of Brits over-estimate how badly Brexit has affected their local property prices, showing just how difficult it is to forecast.

Ross says: ‘While the economy is still languishing, the weak pound could actually make the UK property market more appealing to foreign investors, as their money will go further.

‘This, however, depends on current property owners being prepared to sell. Most will likely jump on the increase in market confidence and list their homes straight away, but others may hold on to see just how far house prices rise before making a decision.’

BY LISA WALDEN

Source: House Beautiful

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London house prices rose twice as fast as the rest of UK in 2010s

London house prices rose twice as fast as the UK average during the 2010s, a new report has shown, notching up a 66 per cent growth rate that was far faster than any other region.

In the country as a whole, the average house price rose 33 per cent over the last decade as it recovered from the financial crisis, the report from Nationwide said. The figure was far lower than the 117 per cent rise seen in the 2000s.

Andrew Harvey, Nationwide’s senior economist, said the London price expansion came “despite recent weakness”. Political wrangling caused big-ticket purchases to dry up in 2019, sending prices in London tumbling by 2.9 per cent.

Houses in Britain once again became less affordable in the 2010s as price growth outstripped the 20 per cent increase in earnings.

Price growth in the housing markets in Britain’s northern regions was weak over the last decade, with prices slow to recover from the financial crisis of 2008-9. House prices in the north grew by 11 per cent during the 2010s, for example.

“The 2010s has been the weakest decade for house price growth since the 1990s.”

Andrew Harvey, Nationwide’s senior economist

In the 1990s, house prices grew by 21 per cent. This followed an enormous 180 per cent increase in the 1980s, when policies such as Margaret Thatcher’s Right to Buy and the relaxation of mortgage lending rules led to a property boom.

UK house price growth over the last 40 years

Region1980s1990s2000s2010s
London215%40%111%66%
Outer Met222%29%95%54%
Outer SE219%18%114%43%
E Anglia227%6%115%43%
S West206%19%122%38%
E Mids244%3%120%36%
W Mids196%16%108%33%
Wales163%7%135%17%
N West183%23%124%17%
Yorks & H203%-9%137%17%
North178%9%127%11%
Scotland125%28%127%8%
N Ireland23%115%123%2%
UK180%21%117%33%

Harvey said that over the last decade it was not just central London houses that rose rapidly in price. “The neighbouring outer metropolitan region – which includes places such as Slough, Guildford, Crawley and Chelmsford – also significantly outperformed, with prices rising 54 per cent during the 2010s,” he said.

Harvey added that although London has long been the least affordable region in Britain, the issue has grown in recent years.

London’s house price earnings ratio reached 10.2 in 2016, Nationwide said, meaning a house was 10.2 times more expensive than the average yearly earnings in the region.

By 2019, it had dropped to 8.8, but this was still well above the 6.1 figure seen at the start of the decade.

By Harry Robertson

Source: City AM

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House prices set for steady growth in 2020 experts believe

THE housing market should start 2020 with a new mood of confidence – but continued political uncertainties will keep a lid on property prices, economists predict.

Several predictions for house price growth across 2020 are clustered around the two per cent mark.

Experts said the Conservatives’ recent general election win could help to bring more certainty to the market and unleash some pent-up buyer demand.

An abundance of low-rate and low-deposit mortgage deals should also support activity.

Some estate agents are even sensing there may be a “Boris bounce” for the housing market, which could in the coming months have an effect on house prices.

However, Brexit concerns could also pick up as 2020 progresses, making people behave more cautiously, and affordability constraints will also cap price growth in some parts of the UK.

Howard Archer, chief economic adviser at EY Item Club, said: “There will still be appreciable uncertainties, including on the Brexit front – so that the upside for house prices in 2020 is likely to be limited.”

Rightmove also predicts that the price of property coming to market will increase by 2% in 2020.

It said there is now an opportunity to release some pent-up buyer demand that had been building before the general election.

House sellers’ pricing power will be boosted by a lack of other options for potential buyers, Rightmove suggests.

The Royal Institution of Chartered Surveyors (Rics) has also pencilled in house growth of two per cent for 2020 – but it believes rents will increase at a faster rate of 2.5 per cent as the rental sector struggles with a lack of housing supply.

Russell Galley, managing director, Halifax, said housing market prospects for 2020 look “a bit brighter” than in 2019.

He continued: “However the shortage of homes for sale and low levels of house-building will continue to support high prices, while the challenges faced by prospective buyers in raising the necessary deposits may continue to constrain demand.

Separate consumer research from Lloyds Bank found 43 per cent of people think the biggest challenge for first-time buyers in 2020 will be raising a deposit, while 27 per cent think it will be high property prices.

A quarter think the biggest challenge for existing home owners looking to move will also be expensive property prices, while 23 per cent cited high moving costs.

By Martyn Smith

Source: Hereford Times

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UK house prices end decade on a high with 1.4 per cent growth

House prices were 1.4 per cent higher year-on-year in December, the first rise of more than one per cent for 12 months.

According to research from Nationwide, after seasonal factors had been considered prices rose by 0.1 per cent in December.

Numbers of first time buyers have also continued to recover, reaching 354,400 in the twelve months to October.

The figure is more than double the 155,000 recorded in 2009 and 12 per cent below the 2006 peak.

Nationwide’s chief economist Robert Gardiner said that despite volatile economic indicators for much of 2019, the UK’s housing market had remained broadly stable.

He added: “Looking ahead, economic developments will remain the key driver of housing market trends and house prices.

“Much will continue to depend on how quickly uncertainty about the UK’s future trading relationships lifts as well as the outlook for global growth.

“Overall, we expect the economy to continue to expand at a modest pace in 2020, with house prices remaining broadly flat over the next twelve months.”

However, London prices fell for the tenth consecutive quarter, with an overall annual decline of 1.8 per cent.

Despite the continued decline, prices remain only five per cent below the all time highs of 2017.

David Westgate, chief executive at Andrews Property Group, welcomed the news:

“Christmas and the small matter of a General Election made December difficult to read but the fact that annual price growth was above one per cent for the first time in a year will be seen by many as a positive precursor to 2020.

“There is an exceptional amount of pent-up demand in the market that has the potential to drive prices higher. Add to that continued low borrowing costs and the strong jobs market and you have all the ingredients for growth.”

Jonathan Samuels, chief executive of housing lender Octane Capital, said he expected London’s performance to improve this year:

“London may have been the weakest performing region in 2019 but that may well change this year.

“The capital certainly won’t be returning to the obscene growth rates of yesteryear but it may drag itself off the bottom of the table.”

By Edward Thicknesse

Source: City AM