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Buyer demand is increasing in parts of the UK, analysis suggests

The latest industry data shows that buyer demand in the UK in the second quarter of 2019 was at 42.3%, a 1% increase on the previous quarter, with London seeing an increase of 1.4% so far this year.

The analysis, using data from the major property portals by Springbok Properties shows that the highest level of buyer activity is currently in Glasgow at 60.2%, closely followed by Edinburgh at 57.6%.

Sale is the most in-demand area in England at 57.3%, followed by Bristol at 56.6% while Worthing near Brighton recorded the biggest uplift in buyer demand since the start of the year with a 7.1% increase.

York at 6%, Woking at 5.2%, Mansfield at 5%, Basingstoke, Bristol and Exeter are all at 4.6%, St Helen’s at 4.4%, Southport at 4.2% and High Wycombe at 4.1% are also locations with some of the biggest increases in buyer demand.

Bexley remains the most sought after borough in London for buyers, along with Waltham Forest, Barking, Sutton and Havering while Redbridge recorded the largest uplift quarter on quarter at 5.4%, with Sutton and Waltham Forest, seeing some of the largest increases in demand.

Shepherd Ncube, chief executive officer of Springbok Properties, believes that buyers are getting bored of Brexit and pushing on with sales but he pointed out that the resurgence remains largely refined to the more affordable cities where home owners have seen their property potential decline at a more marginal rate, and as a result, they are happy to sell even if it means adjusting their asking price expectations.

He added that Worthing is benefiting from the ripple effect of buyers looking outside of Brighton. ‘House prices in Brighton have become inflated due to the ability for buyers to work in the city by week and spend their weekends at the seaside. Of course, while it remains more affordable now, an influx of buyer demand will always bring an uplift in prices,’ he said.

Source: Property Wire

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Property price growth continuing to cool nationally

Property price growth has slowed nationally – with Dublin showing the most significant cooling off, new figures show.

The latest report from MyHome.ie found that annual asking price inflation fell to 2.4% nationally in the second quarter of the year – the lowest level it has been in five years.

In Dublin, that figure entered negative territory for the first time since 2013. It is down to -0.6%.

Despite the downward trend in the annual inflation rate, the report – which is published in association with Davy – found asking prices are continuing to rise, albeit at lower rates.

Asking prices nationally rose by 2.1% in the second quarter of this year when compared with the previous quarter.

In Dublin, prices rose by 0.5% in the same period, the weakest second-quarter gain since 2012.

Overall, the median asking price for new sales nationally was 276,000 euro, up 5,000 euro on the previous quarter, while the median asking price in Dublin was 382,000 euro, an increase of 2,000 euro.

Outside of Dublin, there was stronger growth, with prices increasing by 7,000 euro in the quarter to 231,000 euro.

Newly-listed properties are seen as the most reliable indicator of future price movements.

The author of the report, Conall MacCoille – chief economist at Davy, said that while the price falls may fuel fears of a more damaging downturn, the reason for the price falls this time round were as a result of increased regulation.

The Central Bank of Ireland tightened its mortgage lending rules last year.

“The current slowdown in price inflation is largely due to the Central Bank’s lending rules and stretched affordability,” he said.

“These factors are preventing the latent housing demand from translating into rampant house price inflation fuelled by rising leverage on mortgage loans.

“Ireland’s economy continues to perform well and the property market will continue to be underpinned by high employment and wage growth.

“While the economy has been driven by strong foreign direct investment, export growth and a slow rebound among indigenous companies, the recovery in home building is still in its infancy.”

Angela Keegan, managing director of MyHome.ie, said the fact that we are seeing more transactions, more properties on the market and more sustainable price increases were all positives for prospective buyers.

“The environment for buyers is becoming much more favourable, with 22,600 homes listed for sale in June 2019 on MyHome, up 4.5% on the same period of 2018,” Ms Keegan said.

“The improvement is especially marked in Dublin, with 5,400 homes listed for sale on MyHome – up 9% on last year.”

Source: iTV

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UK property demand may be ‘breaking through’, says report

House prices in England and Wales returned to annual growth with a 0.3% rise in May as foreign buyers returned to the property market and demand may be beginning to break through, according to a report released on Monday.

The Acadata house price index said prices grew on an annual basis for the first time since December as a favourable exchange rate and reduced prices have precipitated the return of foreign buyers, particularly in London where those from overseas were undeterred by a 0.2% annual drop in regional prices.

The report added that “there is some evidence that pent-up demand held back by events of the last few months is breaking through” despite the lack of progress in Westminster.

However, overall sales in the capital over the three month period ended May were 3% below the same period last year and 12% below the period in 2017 as prospective buyers and sellers in the Greater London region remain hesitant to take the plunge.

While record levels of employment, recent wage growth and strong competition in the mortgage market have offered some households more buying power, many potential buyers are still struggling to get a mortgage.

“In reality, the positive news on average earnings masks considerable divides – with younger and lower- and middle-income households not enjoying the same level of income inflation as those in higher wage brackets,” said the report.

Overall, average prices stood at £300,866 during the month, which constituted a 0.1% drop compared to the month before, as Wales, the North West of England and the East Midlands led annual growth with respective price increases of 3.1%, 2.5% and 1.5%.

By Duncan Ferris

Source: ShareCast

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Southern England housing market ‘feels ripple effects of London price falls’

More than a third of homes in southern England outside London are in housing markets where prices are tumbling year-on-year, as the cool down in the capital ripples outwards, a report has found.

Some 36% of homes across the South East, East Anglia and the south-west regions of England are in markets where prices are falling annually, Zoopla said.

House price falls in London accelerated from 2016.

But a previous period of rapid house price growth in the capital from 2010 means the average price of a London property is still 20% higher than it was in 2014.

The proportion of areas in London registering annual price falls peaked at 80% in October 2018 – with the number of areas with price falls later reducing as buyers’ and sellers’ price expectations now match up more closely.

Zoopla said that while housing markets in southern England are following trends in London, the general level of price falls in these areas is expected to remain “modest” – and will be more concentrated in commuter belt towns and areas where house prices are particularly high.

For example, in the South East, commuter areas such as Woking (minus 2.3%), Epsom ( minus 2.3%), Basingstoke (minus 1.9%) and Maidenhead (minus 1.6%) have seen annual house price falls, Zoopla said.

By contrast, areas that have performed relatively well for annual house price growth include Dover (3.4%), Hastings (2.9%) and Shepway (2.3%).

In the South West, higher value areas have seen lower house price growth.

Examples include Bath, where the average price is £345,575 and prices are up 0.3% annually, the Cotswolds, where the average house price is £365,630 – a 0.7% annual increase, and Poole where the average house price is £307,667 – up 0.3% annually.

In Gloucester and Taunton, where house prices tend to be more affordable, house prices have grown more strongly, by 3.2% and 4.6% respectively.

Looking ahead, Zoopla expects price falls in southern England to be more short-lived than in London, most likely extending into early 2020.

Its report said: “We are not predicting a subsequent bounce-back in average prices, but we would expect sales volumes, which have fallen by 10% in southern England since 2015, to plateau and then start to increase over time.

“In London, which is further down the road to a pricing realignment between buyers and sellers, we currently expect sales volumes to plateau and slowly start to increase over the latter parts of 2019 and into 2020.”

The report also said there is “little evidence” that the trends in London and southern England are spreading further afield.

In the Midlands, there has been only a very small increase in markets registering annual price falls, again concentrated in higher-value areas, Zoopla said.

Richard Donnell research and insight director at Zoopla, said: “The trends in London and southern England are all part and parcel of the unfolding housing cycle.

“There remains plenty of demand for housing in southern England but there are fewer buyers who are more cautious, seeking out value for money.

“For homeowners entering the market the key to securing a sale is to be realistic on pricing based on the profile of demand for homes in the local market.

“Our analysis shows how trends vary within regions and all local markets have their differences.”

By Vicky Shaw

Source: Yahoo Finance UK

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Second home ownership soars towards the value of £1 trillion

The number of British people owning a second home has soared by more than 50 per cent since 2001 as the value of additional property wealth nears £1 trillion, according to a new report.

Research from think tank the Resolution Foundation revealed that 5.5 million people – around one in ten of the UK population – own a second home, buy to let or overseas property, up from 3.6 million in 2001.

The jump was driven by buy to let mortgages, which have risen 15 times since the turn of the century.

Wealth from second homes owned by UK adults has also risen over the same period to £941bn.

It found that while 50 per cent of people born in the 1960s owned a property by the age of 29, that dropped to 37 per cent among those born in the 1980s.

One in six baby boomers – 1.2 million people born in the 1950s – reported owning extra property, the data from 2014 to 2016 revealed.

Despite the surge in second home ownership, the number of millennials owning a home continues to fall.

The report urged policymakers to rebalance the housing market to help first-time buyers.

Resolution Foundation policy analyst George Bangham said: “While young people in particular are less likely to own their own home than previous generations, those that do own are more likely to have more than one property.

“And as the huge stock of second homes, buy-to-let and overseas properties starts to be passed on to younger generations, Britain risks becoming a country where getting ahead in life depends as much on what you inherit, as what you earn.”

By Callum Keown

Source: City AM

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London housing market rebounds slightly after Brexit delay

The London housing market showed signs of bouncing back last month as sentiment rose to its highest level since April 2017, according to the latest forecasts.

Negative trends in agreed sales, prices and new instructions all eased in May after the Brexit deadline was extended to October, the Royal Institute of Chartered Surveyors’ (RICS) latest housing market survey revealed.

Despite fresh optimism, the survey showed that house prices are still expected to fall over the next twelve months and sales expectations remained downbeat.

When it came to London house prices, 29 per cent more respondents predicted a fall than a rise in May, up from the April net balance of -59, which RICS said showed the pace of price decline slowing.

RICS chief economist Simon Rubinsohn said: “Some comfort can be drawn from the results of the latest RICS survey as it suggests that the housing market in aggregate may be steadying.

“However much of the anecdotal insight provided by respondents is still quite cautious, reflecting concerns about both the underlying political and economic climate.”

In the lettings market, tenant demand rose slightly but landlord instructions fell, causing near term rental expectations to jump to their highest level since May 2016.

By Callum Keown

Source: City AM

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Renting More Affordable Than Buying Property

It looks like the buy to let rental market is here to stay, with renting more affordable than buying property across the UK.

Lettings platform, Bunk, looked at which was more affordable in the property market out of buying and renting, and how this differs across the UK.

They looked at the cost of a rental deposit and the cost of renting for a decade, then compared this cost to the financial barrier of a mortgage deposit, and the cost of monthly mortgage payments over a 10-year fixed term at a rate of 2.58 per cent.

Across the UK the average monthly rent is £676. With the newly introduced five-week cap, that means a rental deposit costs an average of £845 and renting at this average monthly rate over a 10-year period would cost a total £81,120 – a total cost of £81,965 when including the deposit.

The current average UK house price is £226,798 and so a 10 per cent deposit would set you back £22,680. This leaves a loan amount of £204,118 and at a 10-year fixed rate of 2.58 per cent would mean a total repayment of £231,798, a total of £254,478 including the deposit.

This means, that renting is certainly more affordable at £172,513 cheaper than owning a home over a 10-year period when it comes to the upfront and monthly costs, with the one big difference being the bricks and mortar investment secured at the end.

This most notable saving was found in Cambridge, with a difference of £341,090 over 10-years between renting and buying, with the saving in London also topping £316,247.

In Bournemouth, renting over 10-years is £183,376 cheaper than buying, with Bristol (£177,613), Edinburgh (£166,547), Cardiff (£143,984), Southampton (£138,617), Portsmouth (£137,240) and Plymouth (£128,480) all home to some of the biggest savings.

The lowest saving was in Glasgow where renting for 10-years is just £43,145 cheaper than buying in the city, though still certainly more affordable.

Co-founder of Bunk, Tom Woolard, commented: ‘Of course the big difference between renting and buying is that one leaves you with a sizable financial asset as a reward for your years of hard work making mortgage payments.

‘However, more and more of us are opting to rent long-term and what we wanted to highlight is that while the rental market is generally viewed in a negative light due to high rental costs, it is actually a considerably cheaper option when compared to home ownership, even with almost record low-interest rates.’

Source: Residential Landlord

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Positive changes in the West Midlands housing market as more properties listed

The West Midlands’ housing market shows initial signs of progress, as the number of new properties being listed for sale rise, according to the May 2019 RICS UK Residential Survey.

For 12 months, the number of new properties being listed for sale has fallen, and despite remaining in negative territory in May, only minus 20 per cent of respondents reported a fall in new instructions, up from minus 71 per cent in April.

Despite the pick-up in the number of new properties being listed for sale, new buyer enquiries are struggling to pick-up and average stock levels remain close to record lows.

This does mean that West Midlands respondents are yet to change their opinion for the three month outlook in terms of sales with the indicator remaining flat.

As stock levels remain close to low, house prices continue to rise. In May, plus eight per cent more respondents reported a rise in prices over the last quarter and whilst price expectations are flat for the coming three months, plus 42 per cent expect them to rise over the coming 12 months – up from plus 30 per cent in April.

Mike Arthan, of Barbers property agents in Shropshire, said: “There has been more sales activity than anticipated. A shortage of stock generally is helping maintain house prices.”

In the lettings market, tenant demand increased slightly for a fourth month in a row. At the same time, landlord instructions declined, a persistent theme over much of the past three years.

Given this imbalance, near term rental expectations are now more elevated than at any other point since May 2016, with rents seen rising across all regions/countries of the UK.

Simon Rubinsohn, RICS chief economist, said: “Some comfort can be drawn from the results of the latest RICS survey as it suggests that the housing market in aggregate may be steading. However much of the anecdotal insight provided by respondents is still quite cautious, reflecting concerns about both the underlying political and economic climate.

“Another significant point made by respondents is that there continues to be considerable emphasis on the need for realistic pricing on the part of vendors, which while not a new story, is indicative of the ongoing challenges in the sector.

“Meanwhile the lettings numbers are a source for some concern with rental expectations beginning to accelerate. It remains to be seen whether the pick-up indicated in our data materialises but the deterioration in the net return for landlords certainly provides reason why it is a possible outcome of recent changes in the tax treatment of buy to let investments.”

By James Pugh

Source: Express and Star

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Is the UK property market ready for a land value tax?

For years, there’s been growing talk in politics of introducing a new land value tax to replace the old system of council tax and business rates. It even featured in the Labour party’s manifesto at the 2017 general election.

The principle is self explanatory: A land value tax is a tax on the value of land. That’s different to the current system because it only taxes the land and doesn’t take into consideration the value of the buildings that sit on it, whereas council tax and business rates both do.

This makes the current system a particularly acute problem for businesses because it disincentivises productive investment in improving property or buying heavy machinery, for example. If you make any improvements to your business’s commercial buildings, it will lead to higher rates.

It’s a similar argument with council tax, which is banded by property value. In theory, making home improvements and adding value to your property should lead to higher council tax. However, in practice, council tax bandings have not changed in nearly three decades — though a revaluation is often mooted.

A land value tax theoretically removes this problem of taxing productive investment, which could result in greater economic activity, more jobs, and wealth creation. Another advantage is that because there is essentially a fixed supply of land, taxing it does not mean you get less as a consequence, unlike, say, taxing the production of manufactured goods.

Campaigners for a land value tax say it would result in more efficient use of the land by removing the current penalties for development. They also argue this tax would help deter speculators from hanging on to land because they would face a regular levy, encouraging them to develop it or sell it.

This is how the system would work in practice: an assessment of a land’s market value then a tax levied on the landowner calculated as a percentage of that value, perhaps annually.

“Properly applied, land value tax would support a whole range of social and economic initiatives, including housing, transport, and other infrastructural investments,” according to LandValueTax.org. “It is an elementary fiscal measure that would go far towards correcting fundamental economic and social ills.”

Not everyone agrees. In a critique of the land value tax, the pro-market think tank Adam Smith Institute wrote that opportunity cost is already a significant incentive for owners to use their land productively.

“If you choose to use your land as a garden instead of a block of flats to rent out, you are ‘paying’ the cost of doing so in the rent you’re forgoing,” the ASI wrote. “Adding an additional tax to that would make things less efficient even if it raised GDP numbers — a bit like taxing leisure time, it would increase cash output at the cost of actual wellbeing.”

The debate will continue. But it’s worth understanding the land value tax and the arguments around it because it is now on the table in British politics. After the next election, you might find yourself paying it.

Source: Yahoo Finance UK

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Drop in first-time buyers a concern

The housing market would face a disaster if the number of first-time buyers entering continues to drop, according to housing experts.

This month (May 16) UK Finance lending trends showed there were about 28,800 first-time buyers with new homes in March — 2.4 per cent fewer than in the same month in 2018 and the first month there had been a year-on-year decrease since September 2018.

Up until then the ailing housing market had been largely bolstered by this group of buyers.

Steve Brown, branch manager at Winkworth Estate Agents in Blackheath, said it would be “disastrous” for the housing market if this continued as “first-time buyers hold all the cards”.

He said: “These buyers coming in at entry level means the people in those houses can now sell, often moving to family homes or larger properties.

“If the first-time buyers aren’t there, these people become stuck and the market would slow considerably as part of the knock on effect.

“House prices would be hit hard. You would see a drop in house prices fairly quickly of about 5 to 10 per cent.”

Mr Brown went on to say that first-time buyers had become even more vital to the housing market since changes in the buy-to-let market meant it was no longer financially viable for those struggling to sell to rent out the property instead.

Landlords saw an additional 3 per cent stamp duty surcharge on second homes in April 2016 alongside phased cuts to mortgage interest tax relief, while buy-to-let borrowers are now subject to more stringent affordability testing under the Prudential Regulation Authority’s tightened underwriting rules.

Mark Harris, chief executive of SPF Private Clients, also said the decrease in the number of new buyers after a period of continuous growth was concerning for the market.

He said: “First-time buyers are so important for the overall health of the housing market, ensuring transactions further up the chain can happen.”

Dan White, of White Financial Services, agreed that the market should “absolutely be worried” if first-time buyer numbers started to slip and stressed there was not enough innovation being pushed to help those looking to make their first steps onto the property ladder.

He added that the market was not an easy one for first-time buyers, particularly as the current generation of new buyers were suffering from huge inflation to house prices over the previous years and a restriction in wage growth in the majority of sectors.

He said: “The income to house price ratios just don’t correlate. Even in the most affordable towns, first-time buyers are still faced with at least a six or seven times income multiple.

“Once you look at the mortgage affordability assessments with lenders and take into consideration their lending restrictions on income multiples at certain loan to value levels, it leaves the first-time buyer with very little options.”

But others say it’s “too soon” to tell if the UK Finance stats are part of a long-term trend that would cause concern for the market.

Carmen Green, adviser at Xpress Mortgages, said: “I have witnessed several occasions where first-time buyers have grabbed a bargain as they jump in to fix chains that have collapsed in an otherwise shaky market.

“Particularly in the south east, the fall in property prices has given opportunity to first-time buyers who otherwise wouldn’t be able to afford to buy.”

Steve Patterson, director at Teeside Money, agreed that although a drop in the number of new buyers could cause a domino effect on the market, he said he “was not concerned at this stage”.

He said: “I think it will just be a blip. I don’t think there will be a big decline in the numbers unless there is a major impact to lending.”

By Imogen Tew

Source: FT Adviser