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Buying in to build-to-rent

Corporate landlords are tapping into healthy demand for rented property in the UK.

Professional landlord Tipi is urging people to “join the rental rebellion”. Its Soviet-style advert shows a clenched fist holding a key, and the tagline boasts that it is “throwing the rental rule-book out of the window and making renting better for everyone”. Its competitors have similarly utopian slogans. Get Living offers people “a new way of renting”, while Fizzy promises that it is “reinventing renting” with “zero faff”.

These companies are part of the fast-growing build-to-rent sector in the UK, where corporate landlords, often institutional investors, rent out flats in purpose-built towers. These flats are a cut above your typical grotty flatshare: they often come with access to posh gyms, cinemas and additional security. The build-to-rent model is already very popular in the US, but until recently it had been slow to take off in the UK.

The build-to-rent trend crosses the Atlantic

At the end of March there were more than 30,000 completed build-to-rent properties in the UK, according to estate agent Savills. This is an increase of 34% on the same time last year. When you include properties under construction or in planning, the total number of build-to-rent homes increases to 140,000, with the average scheme in planning comprising more than 320 flats.

There are several reasons why build-to-rent is becoming more popular in the UK. Clearly there is a shortage of affordable housing, whether for people to buy or rent, with housebuilding not keeping up with demand. In an effort to level the playing field between landlords and private buyers, the government cracked down on the buy-to-let sector, making it increasingly difficult for landlords to make money from it. As a result, landlords have left the sector in droves, further reducing the supply of rental properties (the number of landlords has fallen by 120,000 in the past three years, according to estate agent Hamptons International).

Yet, over the past ten years the number of rental households has increased by 74% to 4.7 million. So American-style corporate landlords are entering a market with healthy demand – either from people who might have accepted they’re not in a position to buy property, or who don’t want the commitment of home ownership but will pay for a slick rental flat in a fancy block. And it is a lucrative business. On average, the rent on build-to-rent flats is 11% higher than surrounding rented homes, according to an analysis of 25 rental schemes by real-estate services firm JLL. And investment in this sector is going mainstream. For example, investment bank Goldman Sachs recently made its first foray into build-to-rent, putting £184m into what is set to be Birmingham’s largest residential tower. By 2025, investors will have allocated £75bn to the professionally managed private-rented sector, says estate agent Knight Frank.

One way to invest in the build-to-rent trend is through Grainger (LSE: GRI). Grainger is the UK’s largest private landlord with 8,237 units in cities such as Manchester, Birmingham and London. In April it signed a deal with Transport for London to build 3,000 properties above and around Underground stations. Between 2017 and 2018, the group’s earnings grew by 26% to £94m, partly driven by like-for-like rental growth of 4%. Grainger’s shares currently trade at a discount of around 20% to net asset value.

By: Sarah Moore

Source: Money Week

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Property transactions dip in April

The number of residential property transactions in April fell on a monthly basis but were up from the same month a year ago, data shows.

Year-on-year, the seasonally adjusted number of property sales rose by 0.8% from 98,620 in April 2018.

Non-residential property transactions

The number of non-residential property sales in April was up on both a monthly and yearly basis.

Year-on-year, transactions rose by 7.1% last year to 11,300 from 10,550 in April 2018.

On a monthly basis, these sales saw a rise of 9.5% from March 2019 where they stood at 10,320.

Investors’ confidence brings transactions up

Joshua Elash, director of property lender MT Finance, said that it comes as no surprise to see transactional volumes in the residential space falling month-on-month.

“We expect this trend to continue while uncertainty over Brexit specifically impacts the end-user market and overly aggressive tax treatment continues to dampen investor activity and appetite.

“However, it’s a tale of two cities as investors turn instead toward commercial property where yields remain attractive and less oppressive tax policies support and encourage investment. Whatever the Brexit debate, investors are buying into commercial property and it is great to see confidence in this sector translating into transactional growth.”

Adrian Moloney, sales director at OneSavings Bank, said: “With house price growth stalling and in some areas falling, and take home pay packets increasing, there are tentative signs that some prospective buyers are taking the opportunity to purchase their first home.

“Nonetheless, caution has not been entirely cast aside as we are unlikely to see any significant activity without more housing stock and some closure to the political and economic uncertainty which is still in the back of many buyers’ minds.”

Written by: Antonia Di Lorenzo

Source: Your Money

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April property transactions remain stagnant

Residential property transactions remained stagnant in April but increased slightly on last year’s figures, latest official data has shown.

In its UK property transactions statistics report released today (May 21), HM Revenue & Customs estimated 99,420 residential and 11,300 non-residential transactions were made in April.

April’s seasonally adjusted residential figure saw a slight drop on the previous month — 0.3 per cent — but increased by 0.8 per cent on the same month the previous year.

The findings reflect last week’s (May 16) figures from UK Finance, which showed the number of consumers borrowing to buy a new property in March was down across first-time buyers, home-movers and buy-to-let purchases when compared with last year.

According to today’s report, non-residential transactions were up on March’s figure by 9.5 per cent and increased by 7.1 per cent compared to last year.

Kevin Roberts, director at Legal & General Mortgage Club, said the figures showed that despite government schemes and greater innovation in the mortgage market, property transactions continued to stagnate.

He said: “To really see a boost, we need to fix our country’s imbalance between supply and demand by building more homes. Not only for first-time buyers, but across all housing tenures – young and old, renters and homeowners.

“As an industry, we are working to provide the solutions needed but we also need to ensure the government is increasing supply and making the UK housing market accessible for all.”

But Joshua Elash, director of property lender MT Finance, said it came as no surprise to see transaction numbers dropping month-on-month in the residential space.

He said he expected this trend to continue while uncertainty over Brexit continued to impact the market for consumers and while “overly aggressive tax treatment” continued to dampen investor activity and appetite in the buy-to-let market.

Meanwhile head of lending at Mortgage Advice Bureau, Brian Murphy, said the figures demonstrated a level of consistency in the market.

Mr Murphy added: “While the number of sales last month doesn’t equate to a ‘spring surge’ by any means and is down slightly on the previous month, equally they potentially point to a degree of resilience in the face of ongoing political headwinds.

“[The figures] indicate that the market continues to turn over steadily, rather than any dramatic peaks and troughs, which many may suggest is no bad thing.”

By Imogen Tew

Source: FT Adviser

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UK housing market weathers Brexit clouds, but sharp gains unlikely – Reuters poll

Britain’s expensive housing market has so far weathered the uncertainty swirling around the country’s planned departure from the European Union, but average prices are unlikely to rise sharply and will fall in London this year, a Reuters poll found.

Nearly three years ago Britons surprised most of the world when they voted to split from the EU, yet it is still unclear how, when or even if the two sides will part ways.

Prime Minister Theresa May said on Sunday she would make a final attempt to get her Brexit divorce deal through parliament before she leaves office, something she has failed to manage three times already.

With no resolution in sight, Brexit uncertainty has affected property prices in the capital – long a magnet for foreign speculators – as people have shied away from investing, despite a fall in sterling since the referendum making UK housing a relatively cheaper investment.

Real estate agent Foxtons, which focuses on the London market, said on Monday UK property sales were running at record lows due to the impact of Brexit on consumer confidence.

According to the May 10-21 Reuters poll, prices will drop 2.0% in London this year, the same median forecast given in a February survey.

But that might not be a bad thing for buyers. When asked to describe the level of London house prices on a scale of 1 to 10 from extremely cheap to extremely expensive, the median response was 8.5, higher than in previous surveys. Nationally they were rated 6.0.

“It’s the same old story – housing is cheap for those with some capital behind them, given low funding costs, but very expensive in terms of the income multiple,” said Peter Dixon at Commerzbank.

The average annual British salary is about 30,000 pounds ($38,100) and yet the average asking price for a home in Britain was 308,290 pounds this month, and more than double that in London, property website Rightmove said.

For those already on the property ladder, borrowing money is cheap. The Bank of England has set Bank Rate at 0.75 percent and is not expected to raise it any time soon. [ECILT/GB]

YOU AIN’T SEEN NOTHING YET

Looking nationally, over 80% of respondents to an extra question in the poll said the housing market had so far weathered the Brexit uncertainty and price rises are expected to prove fairly robust.

Home values will gain 1.2% nationally this year – lagging expectations for general inflation – 2.0% next year and 2.5% in 2021, the poll of 23 housing market watchers said.

“The UK market has remained remarkably resilient,” said Russell Quirk at property website Vyomm.com. “So, just imagine the enormity of the ‘happy-ending’ that will prevail when the current political paralysis ends.”

Economists in another Reuters poll conducted earlier this month said Britain would eventually agree a free trade deal with the EU and London home prices are expected to rise 1.0% next year and 2.5% in 2021.

However, as negotiations to leave the club Britain joined in 1973 have proved protracted it does not bode well for when talks over future deals with global partners need to be agreed. Over three-quarters of respondents to an additional question said the risks to their forecasts were to the downside.

“Whilst everyone is conscious of Brexit we face a further 2-3 years after the Brexit Agreement to deal with the so-called implementation phase,” said independent buying agent Henry Pryor. “If you think getting the Withdrawal Agreement done was hard work, I expect you ain’t seen nothing yet!”

Polling by Sarmista Sen and Hari Kishan, Editing by William Maclean

Source: UK Reuters

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London house prices: How Brexit uncertainty has hit house prices in every borough

London is “acting as a drag” on the rest of the UK housing market, with prices across the capital falling in the last year, according to new figures from property giant Rightmove.

While some regions in the UK such as the midlands and the north west started to kick the Brexit uncertainty that has gripped the housing market in recent years, Greater London average asking prices fell 2.5 per cent annually.

A sales slump in central London saw average asking prices fall 3.8 per cent annually to £757,773 in inner-city areas, while the average in outer London, including cheaper boroughs such as Bexley, Barking and Dagenham fell 0.9 per cent to £512,726.

This came despite the annual spring surge in prices, which only drove Greater London up 1.2 per cent on a monthly basis.

The slumps compared to a record-breaking year in other parts of the UK, however, as average asking prices in Wales, the Midlands and the north west of England bucked any Brexit blues to hit all-time highs, Rightmove found.

London boroughs

Worst hit in the capital was Westminster, where average asking prices fell 6.3 per centannually – but still clocked in at an eye-watering £1.4m. The same was true of Britain’s most expensive area to live, Kensington and Chelsea, where average asking prices fell 3.9 per cent year-on-year to £1.6m.

Kensington And Chelsea Street, Egerton Crescent Named Most Expensive For Second Year Running
Kensington and Chelsea saw a 3.9 per cent annual fall (Source: Getty)

The only boroughs to see an annual rise in average asking price were Bexley and Barking and Dagenham, two of London’s cheapest areas. Bexley rose 0.6 per cent to £408,233, while Barking and Dagenham rose 0.9 per cent to £316,839.

Meanwhile in zones one and two, Lambeth fell 4.7 per cent to £632,590Hackney fell 4.9 per cent to £626,000 and Tower Hamlets fell 6.1 per cent to £559,475.

Jeremy Leaf, north London estate agent and a former Royal Institution of Chartered Surveyors (Rics) residential chairman, said: “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.”

Borough

Avg. price May 2019

Monthly change

Annual change

Barking and Dagenham £316,839 1.0 per cent 0.9 per cent
Bexley £408,233 1.2 per cent 0.6 per cent
Hammersmith and Fulham £931,171 0.9 per cent -0.2 per cent
Sutton £470,697 2.5 per cent -0.3 per cent
Southwark £634,232 -1.8 per cent -0.5 per cent
Islington £770,123 1.1 per cent -0.8 per cent
Hillingdon £492,585 1.7 per cent -0.9 per cent
Bromley £530,492 0.5 per cent -0.9 per cent
Waltham Forest £481,926 0.8 per cent -1.0 per cent
Enfield £457,398 0.8 per cent -1.2 per cent
Ealing £555,611 0.8 per cent -1.4 per cent
Havering £406,075 -1.2 per cent -1.5 per cent
Brent £577,818 1.5 per cent -1.5 per cent
Camden £980,210 1.2 per cent -1.5 per cent
Newham £407,868 -0.3 per cent -1.8 per cent
Merton £645,116 2.7 per cent -2.0 per cent
Hounslow £540,484 -0.9 per cent -2.0 per cent
Croydon £437,195 1.2 per cent -2.2 per cent
Kingston upon Thames £610,076 0.4 per cent -2.3 per cent
Harrow £549,634 0.4 per cent -2.3 per cent
Redbridge £451,503 -0.4 per cent -3.2 per cent
Richmond upon Thames £832,012 2.7 per cent -3.3 per cent
Wandsworth £793,014 -2.4 per cent -3.5 per cent
Lewisham £464,200 1.3 per cent -3.5 per cent
Barnet £639,192 0.7 per cent -3.5 per cent
Greenwich £441,287 -0.1 per cent -3.5 per cent
Haringey £602,170 -0.1 per cent -3.7 per cent
Kensington and Chelsea £1,590,380 4.8 per cent -3.9 per cent
Lambeth £632,590 0.8 per cent -4.7 per cent
Hackney £626,095 0.1 per cent -4.9 per cent
Tower Hamlets £559,475 -0.5 per cent -6.1 per cent
Westminster £1,400,270 -1.7 per cent -6.3 per cent

The rest of the UK

The rest of the country painted a very different picture, according to Rightmove.

For homes coming to market this month in Wales, the Midlands and the north western England, average asking prices hit all-time highs, as a shortage of demand pushed prices up.

Wales broke through the £200,000 barrier for the first time ever, at £200,386, rising 4.1 per cent year-on-year, while houses in the west Midlands rose three per cent to £232,247.

Travel Images Of Manchester
The north west of England, including Manchester (pictured) saw an annual rise in prices (Source: Getty)

But for those commuting into central London from outside the capital, prices fell. In the south east of England, the annual average asking price fell 1.1 per cent to £407,239.

Rightmove director Miles Shipside said buyers were largely ignoring Brexit, with buyers spurred into action in the record-breaking regions.

“Despite the ongoing political uncertainty, agents are reporting that the lure of the right property at the right price still attracts good interest. In spite of some of the challenges in the market, interest in property remains very high,” he said.

By Alex Daniel

Source: City AM

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Why now is the perfect time to be a first-time buyer

It argues that first-time buyers can take advantage of cheap mortgage rates and stalling house prices as well as the Help to Buy ISA scheme, which ends later this year.

Rates on high loan-to-value (LTV) mortgages, which require borrowers to have a small deposit so are popular with first-time purchasers, are at a record low.

The average interest rate on a two-year fixed 95% LTV mortgage has fallen from 3.95% a year ago to 3.23% today, Defaqto data shows.

First-time buyers can also benefit from a weakening housing market.

Nationwide, the UK’s largest building society, last week reported that annual house price growth was just 0.9% in April, marking the fifth straight month of weak house price inflation.

Figures from The Royal Institution of Chartered Surveyors in March show that the number of properties coming onto the market has fallen for the past eight consecutive months.

But Defaqto warns first-time buyers need to hurry if they want to take advantage of the government’s Help to Buy ISA scheme, which closes to new entrants on 30 November 2019.

The scheme, which was specifically designed to help people get on the property ladder, lets savers put away up to £1,200 in the first month and then £200 a month after that, and the government will add 25% tax-free up to a maximum of £3,000 (or £6,000 if two people are buying together).

Savers can continue to save into a Help to Buy ISA until 1 December 2030.

Katie Brain, insight analyst at Defaqto, said: “Buying a home is an expensive undertaking and for many years we have seen that first rung of the property ladder move further out of the reach of first time buyers.

“Now, with stalling house prices and cheaper borrowing, we are entering a period of opportunity for buyers looking to make their first home purchase.

“For those looking to get a mortgage, it is important to do your sums and check exactly what you can afford to borrow. While interest rates are low, an increase of just 1% can add hundreds of pounds to a monthly repayment and thousands to the overall cost of a home.”

first-time buyers

Written by: Joanna Faith

Source: Your Money

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Manchester’s Property Market “In a League of Its Own”

Job numbers in the city are rising faster than other major regional cities in the UK, further increasing the demand for real estate in an already significantly undersupplied property market.

Summary:

  • Sustained economic growth in Manchester continues to impact the city’s commercial and residential property markets positively
  • Manchester will have 10,000 more office workers in the city by 2021 than it did in 2018, while it also had the greatest volume of inward investment deals compared to five other major UK cities
  • As a result, Manchester’s property market “isn’t just already outperforming other cities but the opportunities in front of it are rich and diverse”

More jobs and more workers mean demand for real estate in Manchester continues to rise.

The city’s property market has been described by adviser JLL as being “in a league of its own”, as employment growth and sustained inward investment is driving returns for investors in Manchester’s real estate sector.

According to the firm’s latest North West Market Update, Manchester city centre is expected to boast over 10,000 more office workers by 2022 than it had just last year.

Compared with the UK’s five other big regional cities (Glasgow, Edinburgh, Birmingham, Leeds and Bristol), Manchester also had the highest uplift in the number of new office take-ups in 2018. 1.75 million sq.ft. of office space was bought last year, over double the 10-year average for these regional economic hubs.

Furthermore, Manchester’s 23 inward investment deals in 2018 was also the highest of any other major regional city.

“When thinking of the UK’s strongest property markets, Manchester continues to be in a league of its own,” commented Elaine Rossall, UK Head of Offices Research at JLL. “Job creation is at record levels and is spread across a range of sectors. Commercial development is increasingly catering to occupier demand and this is translating into positive, continued growth across the other property markets.”

She also added: “The current strength is also against a backdrop of the UK economy performing better than expected in the run up to Brexit, with Manchester really bucking expectations.”

Manchester’s young population of city centre workers has already established it as one of the strongest places in the UK for investors to capitalise on the demand for central apartments, with high-quality facilities and amenities, demanded by affluent millennial tenants.

But the sustained economic growth, JLL reveals, is also creating opportunities for investors to provide city centre homes for older tenants looking to downsize.

Such is the demand for residential property in Manchester, older workers are also being drawn into city centre living in the same way as their younger counterparts. This creates an opportunity for investors to provide high-spec apartments for this tenant demographic, too.

Source: Select Property

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Forecasting the housing market is tricky

It is fair to say the contrary evidence and forces at play in the UK’s housing market (let alone any expectations of international economic fillips or headwinds) are making forecasting the short-term future a tricky business.

At the end of March, the Office for National Statistics reported that British consumers had spent more than they earned for a record ninth consecutive quarter at the end of last year and in doing so offset falling business investment to underpin a measly rate of quarterly economic growth.

Consumers have underpinned Britain’s economic expansion since the Brexit referendum as businesses have slowed or ceased investing. But this support has come at a cost as spending has grown despite a fall in the pound that has reduced real incomes, meaning consumers have had to either borrow more or dip into their savings.

Could this behaviour explain the optimism reported in March by the Halifax that reported a 5.9% increase in February in house prices that lifted the average property price to £236,800?

This news predictably divided pundits (some arguing it was a correction to January’s poor figures) but another report by HMRC showed that the number of residential transactions totalled 101,170 in January 2019 – a monthly rise of 0.8% and an increase of 1.3% compared to January 2018.

All this would suggest that the housing market remains quite stable, and many maintain that the market should expect circa 1.2 million home sales for this year, as there have been in every year since 2013.

But completions data is clearly based on sales agreed as much as three months ago. Certainly at the front end of the value chain, few estate agencies are sounding overly positive about sales.

News of closures is not uncommon and Winkworth’s trading statement released in March reflected a common sentiment that while its rental side blossomed, sales suffered thanks to the familiar cocktail of Brexit, uncertainty and affordability issues.

It’s clear that, notwithstanding our current turmoil, certain long-term factors continue to impact the market. We are missing our new build targets and we have higher numbers of people who want to buy, living in private rented accommodation.

The chances of owning your own home, if you were born since the 1980s, have melted away. Supply, affordability and a lack of transactions continue to thwart society. The housing market needs more policy thought, more supply and more delivery if it is to deliver a meaningful economic and political purpose.

In the short-term, everyone appears to be hoping for a post Brexit bounce that will temporarily unlock the market and allow sellers to come forward and deliver buying demand and increased transactions.

But whatever the next few weeks bring for our nation, we should not mistake any short-term improvement in activity for a ‘fix’ to our market. Our energy and our efforts should be refocused on dealing with our housing market’s longer-term problems.

By Joanne Atkin

Source: Mortgage Finance Gazette

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UK housing market: Limited supply holds back spring bounce

House prices in the UK have seen a noticeable slowdown over the last two years, and despite Brexit being kicked down the road to October, things haven’t perked up much for the property market. Brexit uncertainty, coupled with a lack of available stock, continue to make people feel nervous about buying and selling their homes and there seems to be little sense of a turnaround anytime soon.

According to the Royal Institute of Chartered Surveyors (RICS) sentiment survey, the balance between the proportion of surveyors seeing house prices rise to those seeing a fall in April has remained unchanged at -23%. This is in line with recently released government numbers which suggest average prices in the UK grew by a marginal 0.6% in February compared to a year earlier – the smallest rise since September 2012.

Despite all the doom and gloom, it’s worth noting that price expectations for UK houses over the next twelve months are modestly positive

London and the South East appear to be the weakest link where things appear to be particularly troubling, as prices in London alone fell by 3.8% year-on-year. Brexit uncertainty, coupled with changes to stamp duty and tax treatment of rental income, has hit the capital harder than the rest of the country. Property valuations in London are typically much higher and rental yields lower than in other UK regions.

But there is also a clear divergence in the number of properties on the market. In London, estate agents are reporting fairly average levels of properties on their books, resulting in very poor sales-to-stock ratios, and thereby putting further pressure on prices. Elsewhere in the country, the stock is much more limited and in many cases, well below average. The RICS survey suggests fewer properties are coming to the market too, as sellers continue to withhold stock thereby limiting choice for potential buyers. A net balance of 35% of surveyors has seen a fall in instructions during April – the poorest reading since June 2016.

But despite all the doom and gloom, it’s worth noting that price expectations for the next twelve months are modestly positive. Scotland and Northern Ireland have already been bucking the trend where prices continue to rise.

What’s going on in the lettings market?

As affordability bites, first-time buyers continue to postpone their purchases to save for a larger deposit, which increases the size of the rental sector.

The survey suggests the upcoming letting fees ban, which prevents landlords from charging tenants for credit checks and references and proposed plans to get rid of section 21, which allows them to evict tenants at short notice, could potentially make some landlords leave the market altogether. These changes come on top of the recent stamp duty changes which have seen buy-to-let investors facing an extra 3% charge, prompting another sharp fall in landlord instructions.

However, in the long-term, these changes need not necessarily be viewed negatively, as a larger rental market may offset tax distortions that currently discourage renting in the UK.

What does all of this mean for the economy?

Given how important consumer confidence is for the housing market, the temporary dip in Brexit noise, rising wage growth story and a strong jobs market should all, in theory, be positive factors, at least in the near-term. However, the latest Bank of England credit conditions survey suggests that demand for secured lending for house purchases is expected to decrease further in 2Q, suggesting the tide in the property market is not likely to change rapidly.

Still, we don’t expect the property market to feature too heavily in the Bank of England’s future decision on interest rates. Over half of mortgage holders are on a fixed-rate product, compared to around 30% back in 2012.

This means that consumers are generally less exposed to the impact of gradual rate rises and the outlook for interest rates will continue to hinge on the outlook for investment, which we expect to remain pressured by ongoing uncertainty. We currently don’t expect a rate hike this year, although having said that, recent comments from Governor Mark Carney suggest a November move shouldn’t be ruled out if Article 50 is extended again.

By James Smith

Source: Think Ing

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UK house prices: Experts warn of ‘volatile’ UK housing market after sharp April growth

Experts today warned that volatility is affecting the UK housing market as Halifax recorded a sharp annual jump in house prices in April.

UK homes are now worth an average £236,619 following the stark five per cent rise for the three months to April, compared to the same period in 2018, Halifax’s house price index revealed.

House prices also climbed 4.2 per cent in the latest quarter compared to the previous three months, while April saw a 1.1 per cent rise compared to March.

London helped push up April’s house price growth after a higher volume of London sales and pricier new build properties.

However, Halifax warned demand and supply also “remained subdued”.

Russell Galley, managing director of Halifax, said: “The index has seen a weaker pace of growth over the last three years, which is consistent with the easing of transactions volumes and housing market activity reflected in Rics, Bank of England and HMRC figures.”

UK house price volatility

Howard Archer, chief economic adviser to the EY Item Club, warned that the Halifax index has been “particularly volatile” in recent months and called the five per cent growth figure “very much an outlier”.

It compares to Nationwide’s weak 0.9 per cent annual growth estimate and the Land Registry’s even worse estimate of 0.6 per cent growth.

“There are overall signs that house prices may have picked up slightly from the lows at the start of the year, which may well be the consequence of recent improved consumer purchasing power and robust employment growth,” Archer admitted.

“Nevertheless, conditions still look pretty challenging for the housing market.”

He pointed to steep house prices, and London house prices and the south east acting as a brake on the wider market.

Jeremy Leaf, north London estate agent and a former Rics residential chairman, said the figures signal “a spring bounce but not as great as we might have expected”.

“The market is quite volatile, bearing in mind the fall in prices last month,” he added. “The price increases recorded are probably more to do with shortages of stock and lower transactions than sustainable market strength.”

Brian Murphy, head of lending for Mortgage Advice Bureau, said the latest data “proves yet again how erratic any monthly changes to average property prices can be”.

“The year on year growth figures in April appear more consistent with the picture from the previous month, although it’s likely that this is being supported by the ongoing lack of properties for sale in many parts of the UK,” he said.

“With the usual spring market perhaps not quite as bouncy as usual, we’re seeing continued lender competition as mortgage rates remain at or close to record lows.”

Sam Mitchell, chief executive of online estate agents Housesimple, said: “This bumpy ride is symptomatic of a property market that continues to be held back by low stock levels and ongoing uncertainty around Brexit which is making buyers hesitant to commit.”

Is UK housing market recovery really on?

Halifax faced criticism when it said UK house prices grew 5.9 per cent in February, but

Jonathan Hopper, managing director of Garrington Property Finders, said the latest annual rise suggests February’s data “was no blip, but the start of a fightback”.

“April was that rarest of beasts – a month in which Brexit uncertainty eased substantially. While this backdrop explains some of the market’s ‘relaxation rally’, it’s worth noting that it also released some pent-up buyer demand,” he said.

“The question now is whether a return to Brexit deadlock will put the cork back in the bottle, or whether the market has gathered enough momentum to continue to flow freely.”

Sam Mitchell, chief executive of online estate agents Housesimple, said: “This bumpy ride is symptomatic of a property market that continues to be held back by low stock levels and ongoing uncertainty around Brexit which is making buyers hesitant to commit.”

Housesimple’s Mitchell added that the extended Halloween Brexit deadline could benefit the housing market.

“We could well see a late spring bounce, as sellers and buyers take advantage of this window of opportunity while there is less political turmoil swirling around, to progress a sale or purchase,” he said.

However, while EY’s Archer admitted avoiding an imminent no-deal Brexit in March may provide a “modest boost” to house prices, the new delay will just fuel market hesitancy.

“Prolonged uncertainty will weigh down on the economy and hamper housing market activity. Consequently, we suspect house prices will rise only one per cent over the year,” he predicted.

By Joe Curtis

Source: City AM