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UK house price growth ground to a halt in August

House price growth ground to a halt in August across the UK amid signs of a “slowdown” in activity in the property market, according to the latest figures from Nationwide.

Average prices were unchanged between July and August when analysts factored out seasonal variation in the latest house price index from the building society.

The average home in Britain sold for just over £216,000 ($263,000) in August, no higher than a month earlier but up 0.6% on a year earlier.

It marks the ninth month in a row of muted price growth below 1% or even declines on an annual basis.

Marc von Grundherr, director of London estate agent Benham & Reeves, said prices were “climbing at a snail’s pace.”

“While the UK property market may have ground to a halt on a month on month basis, it is an admirable show of defiance to at least register some annual growth, given the seasonalities at play and the addition of political turbulence that continues to plague home seller sentiment,” said von Grundherr.

He said price growth could continue to stall over the next few months as prime minister Boris Johnson takes Britain closer to a no-deal Brexit, but predicted a “consistent and strong uplift” later this year or next.

Robert Gardner, Nationwide’s chief economist, said: “Surveyors report that new buyer enquiries have increased a little, though key consumer confidence indicators remain subdued.

“Data on the number of property transactions points to a slowdown in activity, though the number of mortgages approved for house purchase has remained broadly stable.

“Housing market trends will remain heavily dependent on developments in the broader economy. In the near term, healthy labour market conditions and low borrowing costs will provide underlying support, though uncertainty is likely to continue to exert a drag on sentiment and activity.”

By Tom Belger

Source: Yahoo Finance UK

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Londoners pay highest UK house price premium to live closer to a station

London home buyers are willing to pay almost 10 per cent more on a house in order to live closer to a station, according to Nationwide.

The building society found Londoners are willing to pay a whopping 9.4 per cent premium for a house located 500 metres away from a station.

That amounts to approximately £42,900 based on averages London house prices.

Data shows that – naturally – this premium falls the further away from a station a house is located.

A property located 1,250 metres away commands only a 1.9 per cent premium. At 1,000 metres this increases to 4.1 per cent and at 750 metres the premium rises again to 6.6 per cent.

London homebuyers are willing to pay much more to live closer to their nearest train station – particularly in comparison with inhabitants of Greater Manchester and Glasgow.

Nationwide suggests that “this probably reflects the greater reliance on public transport in the capital, with residents less likely to drive”.

In comparison to London’s 9.4 per cent, a premium for a property 500 metres from a station in Manchester stands at 7.8 per cent, or £12,600.

This falls to 3.8 per cent, or £5,700, for properties 500 metres from a station in Glasgow.

Average London house prices on every Tube line

While Londoners are willing to pay a premium on a home closer to a station, their average house price differs greatly depending on what Tube line they use.

Average house prices in London are most expensive where the nearest station is the Circle line, where the average cost of house is £801,000.

TfL rail serves the least costly homes, at an average cost price of £359,000.

Of the London Underground lines, average house prices are least expensive where the nearest station is on the Metropolitan line, at a £439,000 average.

Nationwide suggests that “this probably reflects that the line stretches towards the outer suburbs, with only a short section in central London.”

London house prices on every Tube line:

LineAverage House Price
Circle£801,000
Bakerloo£624,000
Victoria£573,000
Northern£563,000
Jubilee£553,000
Hammersmith and City£524,000
Docklands Light Railway£505,000
Overground£490,000
Piccadilly£485,000
District£478,000
Central£450,000
Metropolitan£439,000
TfL Rail£359,000

By Emma Tyrrell

Source: City AM

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New Housing Secretary reveals plans for shared ownership changes

The Government has announced it will shake up the shared ownership housing model, allowing buyers to increase their stakes by just 1% at a time under new proposals.

In his first major policy announcement as Housing Secretary, Robert Jenrick revealed plans which would allow people to increase their share of their homes in smaller increments.

Critics dubbed the move the “wrong priority” and urged ministers to instead “get building”.

Under the current model, buyers can only increase their share of a property in 10% chunks.

It is expected that the changes will come into effect early next year.

In addition to the shared ownership shake-up, the minister said he will look to reform the planning system with the aim of increasing housing delivery.

Homeowners using the Help to Buy incentive could also be given new freedoms which would make it easier to take out a 35-year mortgage.

It was announced on Wednesday that the Government has closed a loophole with immediate effect that had prevented people from taking out a mortgage with a term of more than 25 years.

Mr Jenrick said the proposals were particularly focused on getting lower-income buyers on the property ladder.

“Building the houses this country needs is a central priority of this Government,” he said.

“We know that most people still want to own their own home, but for many the dream seems a remote one.

“My mission is to increase the number of homes that are being delivered and to get more young people and families on to the housing ladder, particularly those on lower incomes.”

He added that reforms need to go “much further” to make the housing market work.

“I will be looking at ensuring young people from Cornwall to Cumbria aren’t priced out of their home areas and how we can build public support for more house building and better planning.

“This Government will help a new generation to own their home.”

His statement echoed one of the stated priorities of Boris Johnson, who said he wanted to give “millions of young people the chance to own their own home” in his first speech as Prime Minister.

Specialist housing charity Shelter, however, called the set of announcements from the new Secretary of State “worrying”.

Polly Neate, Shelter’s chief executive, said: “Pinning his hopes on yet another complicated housing scheme is a worrying start for the new Housing Secretary of State.

“The Government must realise that unworkable schemes, laden down with admin costs, are the wrong priority at any time – and are woefully inadequate when this country is facing the current housing emergency.

“If the new Government is serious about getting to grips with our housing crisis then it must follow through on its commitment to get building. That’s why we’re calling for three million more social homes over the next 20 years, to give more families the sort of step up they actually need in life.”

Source: Express and Star

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Study reveals rental costs before buying a first home

The average adult in Britain will pay out more than £63,000 in rent before they get onto the property ladder, a new study has found.

Researchers found that people who have bought their first home within the last five years had typically paid £625 every month in rent to their landlords.

And on average, it takes renters almost eight and a half years before they finally save up enough to buy their own home, spending a total of £63,225 in rent, according to the study from home builder Keepmoat Homes.

This means they’ll have already spent the equivalent of more than a quarter of the average £228,903 property in the UK, it points out.

‘For many people, renting is an important first step towards home independence. It offers benefits like flexibility, allowing you to test different areas and types of home, before you commit to buying somewhere,’ said Tim Beale, the firm’s chief executive officer.

‘However, this research highlights the considerable cost of renting and therefore it isn’t surprising to see that for over half of people asked, say they feel as if the dream of home ownership will never be possible,’ he explained.

‘In reality home ownership can cost less than your rent. For example with our average selling price of £156,000, the standard monthly mortgage repayments would make you approximately £100 a month better off than paying the typical £625 rent,’ he added.

The study also found that of those who had bought their first home in the last five years, or who are still renting, some three quarters believe it is ‘impossible’ to save for a home while renting.

Of those who have bought a home, they spent almost five years saving before putting down an average deposit of £24,033 on their property, more than 80% of the average adult’s salary.

However, four in 10 were able to lean on their parents for financial support when it came to their deposit, while a fifth relied on an inheritance and a quarter even ended up moving back in with their parents to save on rent while 24% considered it but were able to avoid it.

For those respondents still renting, they think it will be at least another four years before they are in a position to think about buying their own home. Researchers also found 18% of renters have taken on two jobs in a bid to save for a deposit while paying out monthly to a landlord.

One in four have forsaken holidays, and a third have cut back on luxuries like magazines, flowers in the home and TV and movie costs while 30% said that they started taking a packed lunch to work and 18% tried to do all of their shopping in the reduced section of the supermarket rather than paying full price.

Unsurprisingly, three quarters of those polled, via OnePoll, believe something needs to be done when it comes to the cost of renting to help those trying to save for their own home.

Source: Property Industry Eye

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Property sales fell considerably in July, official figures show

Residential property sales have fallen considerably in the UK, with official data showing a fall of 8.5% month on month between June and July and a year on year decline of 12.4%.

The data from HMRC shows that overall there were 86,630 residential sales and 9,760 non-residential sales in July 2019. Non-residential sales also fell, down by 2.8% on a monthly basis and 5.8% lower than July 2018.

The figures suggest that there are a number of barriers preventing people from buying and Kevin Roberts, director of the Legal & General Mortgage Club, believes that it is not just Brexit.

‘While Government schemes have helped thousands of first time buyers onto the property ladder, we need to think about those further up the ladder too. To stimulate the market, the Government needs to build more housing across all types of tenure. This will provide second steppers and last time buyers with more choice and in turn, families can up or downsize accordingly,’ he said.

But it could be the usual summer slump exaggerated by Brexit uncertainty, according to Marc von Grundherr, director of Benham and Reeves. He also thinks sellers are reluctant to accept lower prices.

‘Although mortgage affordability remains fairly good, the huge stamp duty costs facing many buyers will do little to stimulate demand at the other end and continue to act as a financial anchor for those looking to climb the ladder,’ he explained.

But Joseph Daniels, founder of modular developer Project Etopia, does put the blame on Brexit. ‘Brexit has cemented caution into the attitudes of buyers and sellers and the sales slump is all but nailed on now until the political uncertainty settles down,’ he said.

Neil Knight, business development director of Spicerhaart Part Exchange and Assisted Move, believes it is more complicated than that. He pointed out that the figures follow the recent construction output figures which showed that overall construction output dropped by 1.3%, and the UK Finance mortgage trends report which showed levels of remortgaging, home mover mortgages and first time buyers all fell in June.

‘It feels like a fairly gloomy picture for the housing market. However, when you take into account that the drop in construction output was mainly driven by a 6% decline in private housing repair and not new housing and that while nationally, mortgage transitions are down, actually, when you look at a regional picture, it is only London where the market is struggling, it paints quite a different picture,’ he said.

He also pointed that the latest figures from the National House Building Council show that builders and developers registered the highest number of new homes for 12 years during the last three months.

‘These figures tie in much more with what we are seeing. While overall, the housing market may be subdued, the new homes market is much more buoyant. At Spicerhaart Part Exchange and Assisted Move, we are busier than ever, working with developers across the UK to offering part-exchange and assisted move services. We are being led to believe that the house building industry as almost ground to a halt, but that is simply not true,’ he added.

‘The demand is there and the activity is too and it is great to see such confidence in new-build housing despite uncertain economic and political times. Let’s hope it filters through to the rest of the market,’ he concluded.

Source: Property Wire

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House prices are going up – yet properties becoming more affordable in priciest cities

Property buyers in UK cities and major towns are having to pay up to 13 times their salaries to get a home.

London is the most expensive city in terms of the salary to house price ratio, but Cambridge, Oxford, Bournemouth and Bristol are not far behind.

Across 20 UK cities and major towns, buyers are paying a house price that is an average of 6.7 times their earnings.

In all of these cities, with the exception of Aberdeen, house prices have risen.

However Zoopla – which produced the figures – says that affordability is actually improving in 12 cities, including the most expensive four, where earnings growth is outstripping house price inflation.

Richard Donnell, research and insight director at Zoopla, said: “Housing affordability is slowly starting to improve in London as earnings growth outstrips house price inflation.

“There has been a clear downward trend in the ratio of house prices to average earnings over the last two years.

“However, the scale of improvement is relatively modest.

“While welcome news, the gap between earnings and prices needs to close further in order to make a material difference to would-be purchasers.

“The changing picture is not limited to London. There are 12 cities where the annual growth in house prices is below the growth in average earnings which is running at 3.7%.

“Lower-priced cities in northern England are actually getting less affordable than their southern counterparts when you consider that the annual percentage growth in house prices is outstripping earnings growth.”

By ROSALIND RENSHAW

Source: Property Industry Eye

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Interest in Right to Buy grows

There has been a growing interest in the government’s Right to Buy scheme as data showed brokers searched for lenders’ criteria on the scheme more times in July than any other previous month.

The data from Knowledge Bank, a criteria searching system for mortgage brokers, showed Right to Buy was the fourth most searched for lender criteria in July — the first time it had ever appeared in the top five searches.

According to the searching system, the rise in searches followed prime minister Boris Johnson’s hints earlier this month that he wanted to extend the Right to Buy scheme to housing association tenants, having previously suggesting it had no place in modern housing policy.

The scheme currently exists for council tenants to buy their properties at a discount, the size of which is determined by how long the tenant has lived in the property.

Tenants can apply to buy their council home if it’s their only or main home, they are a secure tenant, have no legal issues with debt and they have had a public sector landlord for three years.

The discount for a house ranges between 35 per cent and 70 per cent depending on how long the tenant has been a resident there, while for a flat the discount sits between 50 per cent and 70 per cent.

Chris Sykes, mortgage adviser at Private Finance, thought consumers were asking their broker about Right to Buy because they were looking for security in the lead up to Brexit, coupled with low house prices and attractive mortgage deals increasing the number of consumers who could potentially afford their property.

But Sarah Drakard, independent financial adviser at Cruze Financial Solutions, thought it was more likely down to a rise in the number of young potential property owners who had struggled to get on the housing ladder, trying “any means possible” to achieve that goal.

She said: “I have experienced young professionals, who may have been tenants within a family member’s council home for a few years, try and get on the housing ladder using Right to Buy.

“Perhaps where younger people are seeing there are no other options and they’re just trying to make Right to Buy work.”

Knowledge Bank’s findings also showed interest-only mortgages appeared for the first time in a year, mirroring research earlier this month which showed brokers thought interest-only products were still popular and accounted for about a fifth of sales.

Most searched-for lending criteria by brokers, in each mortgage market
 RESIDENTIALBUY-TO-LETSECOND CHARGEEQUITY RELEASE
1Maximum age at end of termFirst-time landlordMaximum loan-to-valueGrade II listed buildings
2Self-employed – one year accountsLending to limited companiesMortgage or secured loan arrears or defaultsEx-local authority houses
3Defaults – Registered in the last three yearsMinimum income – interest only/Part and part single applicantCapital raising – business purposes on second chargesSolar panels
4Right to BuyRequirement to be a homeownerMixed-use properties/part commercialEx-local authority flats
5Interest-onlyFirst-time buyersPayday loansNon-standard construction

Ms Drakard said she was “increasingly seeing” older and more experienced borrowers opting for interest-only mortgages, while Mr Sykes said there was “definitely more flexibility” with lenders in the interest-only space.

Mr Sykes said: “It’s more of a professional client or an older borrower opting for interest-only products. I think it’s down to people wanting to make sure they have affordability in the future if anything does happen, to keep their monthly costs down.”

In the buy-to-let sector ‘first-time landlord’ and ‘first-time buyers’ both made the top five search in terms of buy-to-let. 

Mr Sykes thought this was down to the fact first-time landlords market was very niche, so brokers had to do more research, but also because more first-time buyers were opting for the buy-to-let sector over the residential market at the moment.

He said: “I’ve got a few clients who cannot afford to buy in London, particularly the type of property they want, but are keen to get on the housing ladder.

“One way they get around this is to purchase a buy-to-let property up North, perhaps in their university city, and rent it out. This way they’re on the property ladder and get an income from it, but get to stay renting somewhere central in the city.”

According to Ms Drakard, the reason more first-time landlords were coming to the market was because more experienced landlords were holding off on increasing their portfolios due to the “tricky” buy-to-let landscape at the moment.

Landlords have experienced multiple tax and regulatory changes in the past few years — from a 3 per cent surcharge in stamp duty to reduced mortgage relief — which has triggered a number of landlords to sell up.

Nicola Firth, chief executive of Knowledge Bank, said: “Our tracker reveals a few shifts this month with interest-only making an appearance in residential searches for the first time this year, most likely as a result of a several new products and criteria changes to this sector.

“It was outstanding to discover that we have seen almost 30,000 mortgage criteria changes year to date, which just goes to show the pace at which our industry is making changes.”

Ms Firth said it was “simply not possible” for any broker to remember the 91,000 pieces of criteria, and that even the best help desks would struggle to update the 28,524 changes the industry has already had in 2019.

By Imogen Tew

Source: FT Adviser

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UK house sales stronger than normal in August – Rightmove

August, normally a quiet month for Britain’s property market, has seen a surge in sales, possibly due to buyers seeking to conclude transactions before the country leaves the European Union on Oct. 31, property website Rightmove said on Monday.

Rightmove said sales in the August period, which cover the four weeks to Aug. 10, were 6.1% higher than a year earlier and their strongest for the month since 2015, bucking a generally sluggish trend since June 2016’s referendum on leaving the European Union.

“While the end of October Brexit outcome remains uncertain, more buyers are now going for the certainty of doing a deal, with some having perhaps hesitated earlier in the year,” Rightmove director Miles Shipside said.

New Prime Minister Boris Johnson has promised to take Britain out of the EU by Oct. 31, even if that means leaving without a transition deal – something most economists think will cause major disruption to businesses and overseas trade.

But British consumers have largely shrugged off Brexit worries so far, bolstered by a strong labour market and the fastest increases in wages in 11 years, in contrast to businesses, which have held back from making major investments.

House price inflation has slowed since June 2016, according to official figures. But this has largely been driven by price falls in London and surrounding areas, which have been most affected by higher property taxes on expensive housing and fears of post-Brexit job losses in the financial services sector.

Rightmove said asking prices on its website were down 1.0% on the previous month – a smaller fall than normal for August, when many buyers are away on holiday – while prices were 1.2% higher than a year earlier.

Sales rose fastest in northeast and eastern England, and the biggest fall in asking prices was in southeast England excluding London.

Rightmove based its data on more than 130,000 prices collected between July 7 and Aug. 10 from its website, which it says advertises 90% of residential property on sale in Britain.

Reporting by David Milliken; Editing by Cynthia Osterman

Source: UK Reuters

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London house prices flat or falling for 16th month in a row

House prices in London have now been flat or falling for a longer period than was seen during the economic downturn of 2008 and 2009, according to an official report.

Property prices in the capital have failed to grow year on year for 16 months in a row, with the latest figures showing a 2.7% annual decrease in June, a report from the Office for National Statistics (ONS), Land Registry and other bodies shows.

This compares with 15 months of prices falling over the year in London during the economic downturn of 2008 and 2009.

However, prices in the capital recorded sharper falls during the 2008 and 2009 period than has been the case more recently, the report said.

The average London house price in June was £467,000, compared with £230,000 across the UK generally.

Across the UK, house prices increased by 0.9% annually in June – a figure unchanged from May.

UK house price growth has slowed over the past three years – mainly driven by parts of southern and eastern England.

Average UK house prices peaked at £232,000 in August 2018.

In June, average house prices increased year on year by 4.4% in Wales to reach £164,000, by 1.3% in Scotland to £152,000 and by 0.7% in England to £247,000.

In Northern Ireland the average house price is £137,000 – 3.5% higher than a year earlier.

Within England, the Midlands is showing the strongest house price growth, with prices up by 3.2% year on year in the East Midlands and by 2.6% in the West Midlands.

Howard Archer, chief economic adviser at the EY Item Club said: “We believe, with Brexit due to occur on October 31 – and it currently very unclear what will happen then – uncertainty will weigh down on the economy over the next few months at least and hamper the housing market.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “It is steady as she goes for the housing market, which is no mean feat given that it is the summer months when things traditionally get quieter and the backdrop of Brexit uncertainty.

“London is still creating a drag on average house price growth, with prices falling 2.7% over the year to June.

“However, this was an improvement on the May fall of 3.1%, suggesting price falls could be slowing and the market stabilising.”

Referring to the London market, Jonathan Hopper, managing director of Garrington Property Finders, said: “Prices in the capital are now falling more slowly, but the direction of travel remains clear.

“After 16 consecutive months of softening, sliding, and occasionally dropping, prices, the correction is still under way.”

By Vicky Shaw

Source: Yahoo Finance UK

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Liverpool sees biggest decline in house prices since 2008

Liverpool has seen the highest drop in house price value since 2008 in England and Wales, according to the latest research by GetAgent.

GetAgent investigated Middle Layer Super Output Areas (MSOAs) and compared the average house price change for these areas since the financial crisis.

Using MSOA area codes, the research revealed that the 023 area of Liverpool saw the biggest drop in value with a decline of 44.21% from £116,821 to £65,178.

The 044 area of Bradford, 005 area of Hartlepool and parts of County Durham also saw declines in house price value.

Colby Short, founder and chief executive of GetAgent.co.uk, said: “While we tend to focus on top-line statistics the UK housing market is made up of thousands of micro-markets and so what is happening in one area can be the polar opposite to another.

“Looking at these more granular levels of data provides an interesting insight that differs from the usual blanket, generic observations and demonstrates how even in the same city, the market can perform differently from one area to the next.”

London saw major growth in house prices since 2008 with Camden (022) and Lambeth (003) seeing growth of 389.82% and 322.74% respectively.

In Greater London, the 010 area of Cambridge (156.71%) and 008 area of Winchester (149.11%) have also experiences high house price growth.

Short continued: “Currently, we’re seeing the London market struggle with other major cities in the Midlands and further north enjoying stronger price growth.

“However, looking at the long-term picture since the financial crisis, we can see a real contrast across the different areas of the UK with the capital flourishing overall, while other macro-areas have experienced really difficult recoveries.”

By Jessica Nangle

Source: Mortgage Introducer