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Double-whammy of Brexit and election hits UK housing market – survey

The number of properties put up for sale in Britain has fallen by the most in any month in more than 10 years as the combination of Brexit and an election weighs on the market, a survey showed on Monday.

There were 14.9% fewer properties put on sale in the four weeks to Nov. 9 than in the same period last year, property website Rightmove said.

That was the biggest annual fall since August 2009, shortly after the global financial crisis.

“I’ve seen lots of unusual events affecting the property market in my 40-year career, but a Brexit deadline followed by a snap general election six weeks later is obviously a new combination,” Miles Shipside, Rightmove director, said.

Prime Minister Boris Johnson has called a Dec. 12 election in a bid to break a deadlock in parliament over his plan for taking Britain out of the European Union, the deadline for which has been delayed until Jan. 31 from Oct. 31.

Rightmove said some would-be sellers of property might be waiting to see if Britain’s next government reforms the stamp duty tax on property transactions which might reduce the cost of acquiring a new home.

The average price of property coming to market rose by an annual 0.3%, in line with other measures showing house prices almost flat-lining, and the number of sales agreed was down by 2.9%, Rightmove said.

Writing by William Schomberg; Editing by Daniel Wallis

Source: UK Reuters

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Average house prices up 1.3% in the year to September

Average house prices increased by 1.3% in the 12 months to September, the ONS UK House Price Index has found.

House prices rose saw a monthly increase of 0.2% between August and September, with the average house price reaching £234,000 in September.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “More subdued numbers come as no surprise, given the political uncertainty which continues to rage, and values are holding up remarkably well considering.

“London is still seeing the lowest annual growth in prices as the capital falls more into line with the rest of the country.

“While this is welcome for those trying to buy in the capital, let’s not get carried away as it is still difficult to afford property in London and the South East.

“Lenders are doing their bit, keen to lend and offering ever-cheaper fixed rates but finding the necessary deposit is often the issue, which is why the Bank of Mum and Dad remains so prevalent.”

At a regional level the North West had the highest annual house price growth, with prices increasing by 2.8% in the year to September.

The lowest annual growth was in the capital, where prices fell by 0.4% in the 12 months to September.

Andrew Montlake, managing director of Coreco, said: “The Brexit ball and chain continues to weigh on the property market, but it hasn’t dragged it to the bottom as many predicted.

“London, once again, is at the bottom of the annual price table as it pays for its obscene growth earlier in the current decade.

“Extremely low borrowing costs and cheaper prices continue to drive sales while a strong jobs market and ever-falling inflation are giving people confidence amid the chaos.

“All eyes for now are on the December General Election.

“When we all wake up, somewhat ominously on Friday 13 December, we will know a lot more about the likely direction of the property market in 2020 and beyond.”

Tomer Aboody, director of property lender MT Finance, added: “People have had enough of elections and uncertainty – they want a resolution to government and Brexit which will enable confidence to return to the market.

“London is always going to see the biggest movement in house prices whether it is a decline or increase because it has the highest value properties.

“But what is noticeable in London is that people are looking to buy, it’s just the lack of supply.

“Not enough people are selling because of the uncertainty; people are wondering whether they would be selling at the right time or getting the right price, which accounts for the lower sales volumes.

“Until we have some clarity on the political front, nothing will happen, particularly in London.

“People are not going to spend an average of £500,000 or thereabouts in London until they know what is going to happen with the upcoming election.”

House price growth in Wales increased by 2.6% between September 2018 to September 2019, with property prices in Scotland also seeing a rise of 2.4% year-on-year.

The average house price in England increased by 1% in September 2019 compared to figures seen the year previously.

Northern Ireland house prices increased by 4% in the 12 months to September and remains the cheapest UK country to purchase a property, with the average house price at £140,000.

Gemma Harle, managing director of Quilter Financial Planning’s mortgage network, added: “It is no surprise that both house buyers and sellers are choosing to wait to survey the landscape post-Brexit rather than take a gamble in the current uncertain climate.

“However, what’s particularly concerning is that you typically would see an uptick in prices at the end of summer thanks to lots of people choosing to move before the schools go back and the dark nights draw in, but this year the rebound seems to be somewhat muted.

“Similarly, while the annual price increase across the UK stands at around 1.3% this is below the current rate of inflation meaning in real terms house prices have dropped.

“Regardless of political stance, it is hard to not take notice of the changes in the market due to the political turmoil currently gripping the nation.

“House prices rise and fall in cyclical fashion and we are due a correction from a historical standpoint.

“It may be that Brexit is the trigger that sees house prices drop and enter into a downturn. Whether this downturn materialises is something we will likely have a clearer view on in in the next few months.”

By Michael Lloyd

Source: Mortgage Introducer

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UK house prices show signs of recovery

UK house prices are showing signs of recovery amidst ongoing political uncertainty, with several factors supporting the property market, including a slight increase in mortgage approvals and modest wage rises.

As the latest Halifax House Price Index figures show, UK house prices have grown by 0.9 per cent between October 2018 and October 2019, with the average house price now standing at £232,249. While house prices fell by a small 0.1 per cent over the past month, they do show a quarterly rise of 0.2 per cent.

The even better news for both home owners and those intending to sell is the increased number of property transactions in September – up by 5 per cent, which is the highest level of transactions since August 2017.

However, the figures are also showing that fewer and fewer houses are being put up for sale – likely the consequence of Brexit, the election and, of course the time of year. In fact, the level of new instructions for sale is now the lowest since June 2016, with seller anxiety matching that of the immediate post-Brexit months. Buyer demand is also declining, although not as fast as the supply of housing (15 per cent vs. 37 per cent).

Russell Galley, Managing Director of Halifax, says, ‘Average house prices continued to slow in October, with a modest rise of 0.9 per cent over the past year. While this is the lowest growth seen in 2019, it again extends the largely flat trend which has taken hold over recent months.

‘A number of underlying factors such as mortgage affordability and wage growth continue to support prices, however there is evidence of consumers erring on the side of caution.

‘We remain unchanged from our view that activity levels and price growth will remain subdued while the UK navigates political and economic uncertainty.’

BY ANNA COTTRELL

Source: Real Homes

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Brexit turmoil drags UK property price growth to lowest this year

UK property price growth has slowed to its lowest this year, with experts blaming Brexit turmoil for killing off the typical autumn bounce.

New figures from Halifax show 0.9% growth in average prices in October compared to a year earlier, the weakest year-on-year growth of any month in 2019 so far.

Russell Galley, managing director of Halifax, said sales and price growth will remain “subdued’ for as long as political and economic uncertainty continues.

News of the sluggish growth compared to trends over the past few decades came as Britain teetered on the brink of crashing out of the EU without a deal on 31 October.

Many businesses and analysts have warned a no-deal Brexit would be catastrophic for UK firms, jobs, consumers, and homeowners, rupturing decades of increased trade ties overnight with the EU, Britain’s biggest trading partner.

The Brexit deadline was pushed back after parliament forced prime minister Boris Johnson to delay Brexit and an election was called for 12 December.

“Perhaps a tad predictable that as we receive yet another Brexit-based encore from Westminster, the UK housing market also delivers the lowest rate of house price growth so far this year,” said Marc von Grundherr, director of London letting and sales agent Benham and Reeves.

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “Although the market remains fairly subdued, which may actually be a good thing in view of wider political and other concerns, we are finding it continues to be supported by fewer but more serious buyers.”

Adrian Anderson, director of mortgage broker Anderson Harris, said it was “not all doom and gloom” as mortgage rates are cheap.

“Lenders have to be more competitive than ever to attract business, resulting in a price war with mortgage rates falling significantly this year, benefiting borrowers,” he said.

The Halifax data showed a 0.1% month-on-month drop in prices in October, with the average price in the UK now just over £232,000.

By Tom Belger

Source: Yahoo Finance UK

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How can tax-efficient schemes support property developers?

Looking at the skylines of the UK’s main cities, one cannot help but be amazed by the volume of residential and commercial construction currently under way.

Rising population and demand have led to an increase in the construction of new-build developments, which are being marketed towards either first-time homebuyers, property investors seeking attractive rental yields or homeowners aiming to move up the property ladder.

As someone who works closely with small and medium-sized property developers, I have witnessed first hand the challenges they can face when taking on new projects. Moreover, with the persistent imbalance between housing demand and supply, there’s no denying the vital role SME developers are playing in a bid to address the housing crisis.

That’s why I believe it is imperative for the government to support property developers. Thankfully, it has already taken steps in this direction. Earlier in the year, the British Business Bank launched the ENABLE programme – a £1bn scheme to fund homebuilding developers.

Given the huge strain that the property market is currently under, however, more creative reforms are needed, thereby ensuring developers are able to carry out the task of delivering enough suitable housing.

The housing crisis

Estimates have put the number of new homes needed in England at between 240,000 and 340,000, accounting for new household formation and a backlog of existing need for suitable housing. Despite this, in 2017-18, the total housing stock increased by around 220,000.

Not only do these figures demonstrate the scale of imbalance between supply and demand, they also indicate the pressures developers face to deliver housebuilding. But despite playing a central role in achieving these ambitious targets, the number of SME developers is in decline; in 1988, small builders were responsible for four in 10 new-build homes, compared with just 12% today.

Challenges facing developers

Among the barriers standing in the way of SME developers today is access to finance – or, rather, a lack thereof. A survey prominently revealed that the majority of small developers (57%) identified this issue as the biggest obstacle they faced when attempting to take on a new project.

This can largely be explained in terms of an industry-wide shift in the culture of lending since the 2008 financial crisis – traditional lenders have become more risk averse. But this statistic should also serve as a wake-up call to the government. They need to improve both the availability and terms of financing for residential development.

For the country’s smaller developers, a lack of funding means they are often forced to take on huge risks. For instance, most SMEs building fewer than 100 to 150 homes per year are currently reliant on project finance, which is agreed on a site-by-site basis. Not only is this approach extremely inefficient (for both lender and borrower), but it also involves significant additional fees for entry, exit and legal agreements.

Can tax schemes help?

The challenge lies in ensuring that developers have access to the funding they require to purchase sites and commence building projects. So, I pose the question: can we take inspiration from some successful tax schemes that have funnelled private capital into different sectors of the economy?

Let’s use the Enterprise Investment Scheme (EIS) as an example. Since being launched in 1993-94, it has played a crucial role in supporting the country’s start-ups and SMEs – and, in turn, the growth of the wider UK economy. In short, the scheme provides tax incentives to investors that invest in small and medium-sized companies, helping those that might otherwise struggle to raise finance. Nearly 30,000 companies have received investment through EIS and more than £20bn worth of funds have been raised.

Replicating such a scheme within the housing sector would incentivise private investors to invest part of their capital into SME developers. In turn, this would widen their access to finance and ensure developers can confidently get projects off the ground.

We need proactive policymaking to help developers in their plight to realise housebuilding targets and ultimately solve the housing crisis. Importantly, introducing incentives and reforms to the tax system must come as part of a wider effort to reduce the hurdles SME developers are attempting to overcome.

By Jamie Johnson

Source: Property Week

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Reviewing the UK housing market

The UK housing market is incredibly fluid and could never be described as a homogenous mass.

By that, I mean it’s very difficult to review a ‘UK housing market’ because, lets be honest, there are great swathes of differences, not just between individual countries, or counties, or towns, but often within very small areas. The market for one street can be very different to the next.

This can make the whole notion of property value very difficult to get right. For instance, I read research from the Principality Building Society suggesting that the average house price in Wales has reached a record high of just over £191,000, with quarterly and annual house price growth up by over 2%.

In that regard, different regions across the country appear to be bucking the London/South East trend – I’ve heard a large amount of anecdotal evidence from brokers active in these regions that prices over the last 12-18 months have taken a serious hit, due to a number of factors, not least the impact that increased stamp duty charges are having on the sale and purchase of £1m-plus houses.

Indeed Rory Joseph of JLM Mortgage Services, recently talked about some of their clients who three years ago saw their neighbours selling their homes for £1.5m, and now when they are being put on the market, estate agents are advising a sale price of nearer to £1m.

You can therefore see how things can change in a relatively short space of time, plus when you add in the potential impact of Brexit negotiations during that period and look at what might happen next, who is to say how house prices might move?

Regionally, however, we appear to be seeing greater growth in prices in areas outside the South East of the country, and some might say this has been long overdue.

The gap between these regions has often been incredibly large, but perhaps not so now, and it’s perhaps therefore no surprise to see landlords much more inclined now to purchase in areas beyond the South East because of the perception they can get more for their money and can also secure a greater rental yield.

This decision obviously requires a large degree of due diligence on the part of the landlord, especially if they are unfamiliar with a locale.

The fast-changing nature of house prices however also needs to be reviewed and analysed by all housing market stakeholders in terms of the valuation of properties.

We’ve certainly seen a growing number of down-valuations coming back from our own valuers when it comes to properties which we are being asked to lend against, and clearly if that initial valuation, either by landlord, adviser, or agent, is off the mark, then this can cause some significant issues when it comes to making the lending decision in a positive way.

We understand that ‘down valuations’ are incredibly frustrating for all, but there is a reason why we use independent valuers in this market, and we are not simply working off estate agent estimates. In that sense, we would ask advisers and their clients to be aware of what might happen during the valuation process and pre-empt that by being realistic about what the property’s real value might be.

Some might believe that valuers are ‘making it up as they go along’ or ‘the house down the street went for more than this just a few months ago’, but let’s not forget that the valuation we require has to be evidenced-based.

This is not just a case of sticking a finger in the air because there is a large degree of liability for that valuer should it be judged, for instance, that they have over-valued a property.

As RICS have been at pains to point out: ‘The market value is based on comparable market evidence, which is usually confirmation of a minimum of three sales transaction of similar types of properties in the local area, and also the professional’s knowledge of the local market including supply and demand dynamics.’

Now, I fully understand that agents may well argue that their knowledge of the local market is second to none, however it’s their job to get the best price for their client, whereas the valuer works on behalf of the lender or provider, and therefore that agent ‘asking price’ might not be accepted as proof positive of the value by anyone else.

Plus, as mentioned above, prices can change quite sharply in different areas and, what might have seemed realistic a few weeks or a month ago, might no longer be the case.

The point is that if there is a healthy degree of realism at the outset, then there’s less likelihood of the valuation coming back as a shock.

As a lender active in this space we always want to make the deal work, but it has to work for everyone, and that means following the result of our independent valuation.

We would like to keep those down valuations to a minimum, but it will require an understanding from all concerned of how valuations work, how their view of the market might be different to others, and an acceptance that we have to accept the valuers’ view.

By Jeff Knight

Source: Mortgage Introducer

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Will house prices crash after Brexit?

Home owners and prospective buyers alike want to know: will house prices crash after Brexit? With the huge 20 per cent house price fall prediction continuing to circulate on the web, is it really true that there will be a property market crash once we’ve left the EU?

As we’ve reported in our in-depth analysis of Brexit and house prices, while Brexit undoubtedly has affected the property market, the effect has not been uniform across the UK, and Brexit is not the only factor affecting property prices. If we ignore some of the hype that has surrounded discussions of Brexit and house prices, we can start looking at the bigger picture, with more endemic problems surrounding property and the economy coming to the fore.

By far the biggest problem with the UK housing market right now (and for quite some time past) is one of insufficient supply and growing demand. This has been exacerbated by Brexit, with home owners anxiously holding on to properties, reducing the available number of properties further still.

The UK is still massively behind new build targets, which is deepening the housing crisis. For illustration’s sake, the UK has twice the population of Canada, but is building half the number of new homes. So, while house prices are unlikely to crash as such after Brexit, the reasons behind this are not a strong economy, but the economy of scarcity.

The other growing problem with housing is yet another growing borrowing bubble, with some economists already predicting a 2008-style recession in the near future. Property economist Andrew Burrell points to an overinflated property market which is at capacity in terms of growth: ‘It’s just a matter of 30 years’ of falling interest rates, people taking out bigger and bigger mortgages – you’ve now reached the size where it’s probably about as big as we can manage.’

A combination of high levels of debt at low interest rates with stagnant incomes sounds uncomfortably familiar. However, there is one important difference: the UK economy is not currently ‘booming’, as was the case prior to 2008, so any property market slump is unlikely to come in the form of a spectacular crash. What we’re most likely to see is a sluggish property market with slow growth in most areas of the country, and perhaps some further price falls in premium property segments (e.g. central London).

Are you planning on buying or selling a house? Don’t think about Brexit too much and stick to your plans.

BY ANNA COTTRELL

Source: Real Homes

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Market slows as Brexit uncertainty continues

The UK property market has continued to slow in the face of Brexit uncertainty – except for an 8% increase in first-time buyers exchanges – the TwentyCi Property & Homemover Report for Q3 2019 has shown.

The report found that whilst property exchange volumes held up with 966,464 homes exchanged in Q3 (marking a 2.2% growth year-on-year) there was a decline of new properties coming on the market.

Q3 saw a total of 1,715,395 new instructions, 212,319 fall throughs and 801,013 withdrawals in the market, to change agent, or withdraw in this quarter.

Properties valued at £300k and below sold best in Q3, with exchanges up across all property price bands to this value compared to the same period last year.

More properties were also exchanging from lower income household bands from £15,000 upwards. Overall households with income bands of £20,000-£50,000 were proportionally buying and selling more properties covering a total of 126,941 exchanges.

Colin Bradshaw, chief customer officer at TwentyCi, said: “Consistent to our previous reports, this last quarter has again shown an overall slower moving market, reflecting the current unpredictable trading environment.

“Consumers are showing caution when it comes to both buying and selling property. With the likely outcome of Brexit still unclear, the uncertainty over both the economy, consumer confidence and the housing market will persist at least in the short-term.”

Nationwide, there is a clear North-South divide with any growth in average asking prices across the North of the UK and the Midlands, while London and the south show a small percentage reduction in average asking prices.

The figures reveal a 7% growth in Scotland, 5% in North East, 4% in Yorkshire and the Humber and 2% in the North West and East Midlands.

However there was a fall in asking prices of -3% in London, -2% in South East and -1% in South West.

But across the UK’s major cities average asking prices have been more resilient overall with more major cities reporting an increase for example, Leeds (7%) and Nottingham (5%) or holding steady – with the exceptions being Birmingham (-1%), London (-3%) and Southampton (-3%).

By Ryan Fowler

Source: Mortgage Introducer

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Private senior living housing supply forecast to grow 30% in next five years

The value of the senior living sector’s private rental market is expected to increase by £2.1bn by 2024, according to global property consultancy Knight Frank.

Knight Frank’s latest Senior Living Annual Performance Review predicts a 30% increase (an additional 50,000 units) in private senior living units over the next five years.

Tom Scaife, Head of Senior Living at Knight Frank, (pictured), said: “The rental market for senior living is very likely to increase in line with the changing tenure trends across the UK’s wider housing market. As well as increased interest in purpose-built rental, for-sale operators are also increasing their allocation of private rented units pepper potted in their schemes.”

Knight Frank said growth would be concentrated in the South East, South West, Midlands and East of England with the number of units priced at more than £1,000 per sg ft in London rising from 300 to 2,000 by the end of 2023.

There are more than 4,000 existing senior living private rental units currently in the UK, with 93% incorporated within wider for-sale schemes, with the remaining 7% is being delivered by purpose-built rental accommodation.

Knight Frank estimated the value of the private rental market will increase from £1.3bn in 2019 to £3.4bn by 2023 with growth driven by private equity and institutional capital looking to diversify their real estate assets into alternative markets.

By LEE PEART

Surce: Care Home Professional

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Best UK Locations For Property Investment

New research has shown up the best UK locations for property investment, either for pure investment or buy to let.

Lettings platform Howsy, has looked at what UK locations are currently the best place to invest in bricks and mortar, and where is the best location to invest in a buy to let to combine the best of both worlds in tough market conditions.

They looked to find the UK locations with the best property value growth over the last year, where is home to the highest rental yields and where is the best option for a mix of both when investing on your doorstep.

Investment Property UK Locations

For pure property value growth, North Devon tops the table at 15 per cent growth year on year, followed by Merthyr Tydfil and Blaenau Gwent in Wales, both at 13 per cent, along with a third Welsh option in Caerphilly, up 11 per cent.

Camden is the best bet in London with house prices up 10 per cent in the last year, with West Devon, Forest Heath, Rochdale and Monmouthshire all up 9 per cent, and Trafford seeing annual growth of 8 per cent.

Buy to Let UK Locations

When it comes to current buy to let rental yields, the best UK locations list was topped by Glasgow, with a return at 7.5 per cent, with Scotland also accounting for the next best three in Midlothian (6.8 per cent), East Ayrshire (6.8 per cent) and West Dunbartonshire (6.7 per cent).

Burnley and Belfast are home to current yields of 6.5 per cent, while Inverclyde (6.4 per cent), Falkirk (6.3 per cent), the Western Isles (6.2 per cent) and Clackmannanshire (6.1 per cent) complete the top 10.

Founder and CEO of Howsy, Calum Brannan, commented: ‘The face of the lettings sector has changed quite considerably with the advent of technology-based solutions to traditional problems, and now even the most amateur of buy to let landlords can own a home on the other side of the UK and manage their investment efficiently and effectively.’

Source: Residential Landlord