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Bank of Mum and Dad will drive housing market recovery

The Bank of Mum and Dad will be a key driving force behind the post-coronavirus recovery within the UK housing market, according to new analysis.

Nearly one in four housing transactions – 23 per cent – will be supported by the Bank of Mum and Dad (BoMaD), a four per cent rise since 2019, according to new research by Legal and General.

And 24 per cent of borrowers are now more reliant on financial support from family due to the pandemic.

The amount the BoMaD will lend this year is almost half of the total of 2019 as the housing market effectively locked down during the peak of the pandemic.

Families will lend £3.5bn to loved ones this year, compared to £6.3bn a year earlier, which will fund 85,000 fewer home purchases.

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Of those who have recently bought a house and received support from loved ones, 65 per cent said it would have been “unlikely” without the BoMaD. L&G’s analysis shows the BoMaD will be even more generous than usual this year, lending on average £20,000 towards deposits.

Homebuyers in London are set to receive the most, with the average BoMaD “loan” standing at £25,800.

“While the Bank of Mum and Dad is leaning in to help those lucky enough to have its backing, a generation of hopeful buyers without the support of BoMaD could find themselves locked out of the housing market”, said Nigel Wilson, L&G chief executive.

The government reopened the UK housing market on 13 May after lockdown, and has since announced a stamp duty holiday to reignite the housing market.

While there was a collapse in purchases in the first half of the year, L&G’s analysis shows the BoMaD will be involved in 175,000 housing transactions with an estimated transaction value of £50.3bn.

Wilson added: “Whilst the generosity of the Bank of Mum and Dad is undoubtedly helping hundreds of thousands of loved ones to realise their homeownership goals every year, it remains a symptom of our broken housing market.”

“Our reliance on BoMaD is unfair and unsustainable, and it’s putting retirements at risk as parents and grandparents try to help their kids to have a similar standard of living as they enjoyed.”

By Angharad Carrick

Source: City AM

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House-Buying Surges, Gazumping Is Back

Recent house-buying interest has been so great that property portal Rightmove has thought fit to issue guidance on how to avoid gazumping.

July, which is typically a quieter time for the property market, was extraordinarily busy across the UK, reported Rightmove.

‘We saw a massive £37bn worth of property sales-agreed in July – the busiest month for home buying since we started tracking this data over ten years ago. Our latest weekly-sales agreed figure is also up by 60 per cent compared to the same week in 2019 as buyers continue to press ahead with their home-moving plans’.

The portal has also recorded all-time highs in seven regions for new seller asking prices, with rising popularity of countryside locations driving up prices in places such as Devon and Cornwall.

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‘More property is coming to market than a year ago in all regions, and at a national level the new supply and heightened demand seem relatively balanced’, commented Rightmove’s’ Miles Shipside. ‘However, those expressing most desire to move on are unsurprisingly in London and its commuter belt.

‘London has 69 per cent more properties coming to market, with the South East at 60 per cent and the East at 56 per cent. With work and transport patterns potentially changing most around the capital, commuter-belt properties need to have more appeal to prospective buyers than just proximity to a station.

‘Many buyers do appear to be satisfying their new needs in these regions, as the number of sales agreed in each is also at a record level. The out-of-city exodus has helped push prices to record levels in Devon and Cornwall, for example, where working from home means a different lifestyle much closer to your new doorstep’.

Source: Residential Landlord

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Property transactions start to rebound

There were 70,710 property transactions in July, 14.5% more than in June but still 27.4% less than in July last year, the HMRC’s seasonally adjusted figures show.

The HMRC said the stamp duty holiday announced on July 2020 is unlikely to impact transactions until late August or early September.

Anna Clare Harper, author of Strategic Property Investing, said: “The upward trend in transactions data reflects a piece of positive news for all of us: the housing market is moving again after a complex start to the year. This change reflects a release of pent-up demand and supply.

“What we’re seeing in the market, which will be reflected in August’s and September’s data, is the further influence of recent and temporary policies.

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“The temporary stamp duty land tax change is helping those home buyers and investors who are looking to buy a property worth less than £500,000 in particular.

“We don’t know for sure what will happen next: economically, or in policy. But what we can predict accurately is that two crucial factors – economic confidence and policy – will prove fundamental to the future of the UK housing market.”

Jonathan Sealey, chief executive at bridging lender Hope Capital: “Although there’s clearly a long way to go for the market as a whole to get back to where it was, at Hope Capital we are seeing stunning levels of inquiries, way up on last year.

“Covid-19 has created changing patterns of demand, as people adapt to a slightly different lifestyle, with less commuting and more working at home. This is also likely to feed through into increased transaction volumes, with many people considering a move away from large towns and cities.

“As the recovery unfolds, we’re expecting to see a lot of demand from buy-to-let landlords, taking advantage of the Stamp Duty cut to expand their portfolio and provide rented housing that meets people’s desire for somewhere quiet to work at home, and better access to the great outdoors.”


Source: Property Wire

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Property viewings up 30% in July

Property instructions and viewings were up in July following the stamp duty holiday, according to data published by property group Andrews.

Viewings saw a monthly increase of 29% in July, with physical viewings up 45% as buyers returned to the market. There were almost 6,000 viewings in July compared to just 20 in April, with a third of those viewings still being carried out virtually. Offers made and accepted by sellers were also up 12% in July. Instructions were up by more than a fifth (22%) from June, with valuations up by a third.

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David Westgate, group chief executive at Andrews Property Group, said: “What a difference four months makes. In April viewings and instructions across the industry fell off a cliff as the country was gripped by coronavirus and the Government asked us to stay at home. But the rebound has been swift as lockdown eased and the Chancellor’s stamp duty announcement at the start of July gave the market a timely boost.

“Buyers and sellers alike have shown renewed vigour in the past six weeks. With a lengthy window of opportunity to purchase before the stamp holiday comes to an end, we expect buyer activity to remain buoyant over the coming months. And we saw an immediate uplift in valuations and instructions since stamp duty was frozen, with sellers keen to take advantage of motivated buyers and more confidence to list thanks to stable house prices.

“It won’t be all plain sailing from here, but the Government has shown how important it sees a healthy and stable property market for the general wellbeing of the overall economy. And house prices have proven to be extremely resilient in the past when faced by strong economic headwinds, which suggests the market is well placed to cope with some potentially heavy bumps in the road ahead.”

Source: Property Wire

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Benham and Reeves: Foreign buyers should invest in UK property now

With the temporary changes to the stamp duty threshold in place until March 2021, and a 2% surcharge for foreign buyers set to come in from April, now is the time for overseas buyers to invest in UK property, according to Benham and Reeves.

The current stamp duty holiday means that foreign buyers are able to save £14,573 on the average London property purchase.

The April 2021 surcharge will take the average the cost of stamp duty up to £38,579.

For foreign buyers making their move now, this means an additional £24,006 saved in addition to the sum already wiped off by the stamp duty holiday.

Kensington and Chelsea offers the most significant additional saving for foreign buyers transacting at the moment; the cost of stamp duty on a current purchase has reduced from £125,243 to £110,243, a saving of £15,000.

Come April next year, this stamp duty requirement will climb to £153,165 with the additional foreign buyer surcharge, so international buyers transacting before this are saving a further £42,922.

Similarly, foreign buyers looking to buy in Westminster can save £36,699 by transacting now, while Camden (£32,621), Hammersmith and Fulham (£29,943) and Hackney (£27,773) were also found to offer some of the best savings.

In the last year, house prices in the City of London have fallen by £60,868 on average; combined with the £30,851 stamp duty saving made by buying now, foreign buyers would be £91,720 better off on average at present.

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In Brent, a £28,463 reduction in property prices coupled with a £21,287 stamp duty saving means that foreign buyers would be £49,750 better off buying now.

Richmond has also seen property prices decline by £12,875 in the last year; with the addition of a stamp duty saving of £27,670 ahead of April’s surcharge, foreign buyers would be £40,545 better off on average as a result of buying now.

Marc von Grundherr, director of Benham and Reeves, said: “The recently implemented stamp duty holiday has not only rejuvenated domestic buyer demand, but we’re also seeing foreign buyers starting to return to the capital in their numbers. In fact, the vast majority of our buyer interest coming from Asia has only been concerned with homes falling under the £500,000 threshold.

“This has been intensified due to the sour taste of a two per cent stamp duty surcharge on the horizon as the government continues to dampen what is a vital sector of the London property market.

“In any case, the stamp duty savings currently on offer have been heavily bolstered by the additional saving made in comparison to buying from April next year and this has caused an immediate uplift in buyer demand from foreign shores.

“Great news for developers who with stock currently, or due to hit the market in the coming months.

“What’s more, some boroughs have seen property prices reduce over the last year and so foreign buyers are not only able to save considerably where stamp duty is concerned, but they’re securing even better value in terms of the price of the property itself.

“London remains the pinnacle of homeownership for many foreign buyers, and while a ramped-up level of stamp duty will be hard to swallow, it certainly won’t deter buyers in London’s high-end market.

“However, with many rushing to make the most of the savings currently on offer, any negative price trends that have plagued the capital in the last 12 months are sure to be short-lived as demand starts to outweigh supply.”

By Jessica Bird

Source: Mortgage Introducer

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Good Move: Housing market could return to ‘normal’ by the end of the year

Despite the significant impact of COVID-19 on the UK property market, positive signs of growth suggest a return to normal could be on the cards by the end of the year, according to Good Move.

Ross Counsell, chartered surveyor and director at Good Move, said: “COVID-19 has had a detrimental effect on the British economy, and this too included the property market.

“However, we are now seeing positive signs that signal growth in the property market as we re-emerge from lockdown.

“We’ve seen asking prices increase in July, up 2.4% compared to March, which signals a ‘boom’ in the property market and is a fantastic sign for sellers and estate agents as they can expect higher offers for homes.

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“Rishi Sunak’s stamp duty holiday also saw properties in London soar in sales by 27% in the weeks following the announcement in July, although this only increased by 6% in the rest of England.”

Counsell added that the impact of COVID-19 might change the shape of the market moving forwards.

He said: “Following the impact of coronavirus, we predict buyers will be looking for homes with a garden and a home office space, in the suburbs and countryside for added outdoor space rather than in cities.

“Sellers on the other hand need to adapt to the change in buyer preference.

“As we know, space is now at the forefront of buyer’s minds and they’re going to consider every single detail of a house before putting an offer in.

“Therefore, we advise sellers to instruct a chartered surveyor to perform a property survey, so they can take steps to rectify any major issues that will put buyers off or reduce the value of their home.

“For estate agents, we expect house prices to continue to increase across the UK, as well as more and more people looking to sell their home now the housing market has re-opened.

“We’ll see many estate agents working around the clock to support their clients and find the best possible deal for them to help protect their finances long-term.

“With everything considered, we fully predict the market to be back to ‘normal’ by the close of the year.”

By Jessica Bird

Source: Mortgage Introducer

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Zoopla: New sales agreed in June ran 28% above pre-lockdown levels

New sales agreed ran 28% above pre-lockdown levels in June, as the surge in demand converted into actual sales, according to the monthly House Price Index by Zoopla.

The market suspension during lockdown reduced the flow of new supply and sales agreed by 90%.

While these measures are now rising ahead of their pre-COVID levels, the increase in sales and supply since the start of the year is lagging 20% behind compared to 2019.

In contrast, in June 2020 demand from buyers was double that of the same period in 2019.

On a cumulative basis, since January 2020, demand ran 25% higher than the same period in 2019 despite the lockdown and market closure.

Zoopla’s analysis suggested that this was primarily ‘catch-up’ demand for what was lost over lockdown, and estimated that returning buyers accounted for 80% of levels that would have been expected over this period in 2020 had COVID not struck.

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Regional cities across the north of England recorded stronger growth in demand in the first half of 2020 compared to 2019, while new supply was hit countrywide as a result of the market closure.

Top of the list for demand are Sheffield, Liverpool, Manchester and Nottingham, which are all in the top fastest growing cities in terms of house price growth.

Short-term demand for city living is holding firm, despite predictions that it would fall. Research has suggested that COVID-19 has boosted demand for homes outside major cities; however, Zoopla said it expects this to be a one-off factor rather than a long-term shift in consumer attitudes.

London ranks fifth for growth in demand since the start of 2020; this demand has seen a modest shift away from the centre, towards the suburbs and commuter belt.

Despite an overall decline in annual transactions, London enjoyed an immediate boost to sales agreed following the temporary stamp duty holiday implemented by the government.

New sales agreed increased by over a quarter (27%) in just two weeks in London, which was geared to benefit most from the changes.

This boost to transaction volumes was not replicated in other regions, where average property prices are lower and less responsive to stamp duty amends.

While stamp duty relief will support demand in higher value markets across southern England, Zoopla said this was unlikely to sustain demand indefinitely into 2021.

UK house price inflation in the 12 months to June 2020 rose to +2.7%, registering the highest level of annual growth for almost two years.

By contrast, the monthly rate of growth has halved to 0.2% and the city level price indices registered slower growth still as a result of lockdown and reduced pricing evidence.

While there was a wide variation in annual growth rates across the country, there was no evidence of material, localised annual price falls at a regional or city level.

Based on current trends, Zoopla predicted that the headline annual rate of growth is set to remain positive, as the growing imbalance of supply and demand is set to support prices for the remainder of the year.

Richard Donnell, research and insight director at Zoopla, said: “COVID and the lockdown have shifted the dynamics of supply and demand across the housing market.

“The staggered reopening of housing markets across countries and the added impetus from the stamp duty holiday mean we expect buyer demand and new sales volumes to hold at current levels over the next two months.

“The net result will be continued support for house price growth at current levels over the second half of the year.

“Regional cities in northern England and the Midlands have the strongest underlying trends.

“For those operating in the market, and others looking in, the latest forecasts for increased unemployment and a sharp economic contraction over the next 12 to 18 months certainly seem at odds with current levels of sales market activity.

“We expect rising unemployment to weigh on market activity over the final quarter of 2020 and into the first half of 2021.

“The impact on pricing looks set to be pushed into 2021 as a result of sizeable government support for the economy.

“Further support cannot be ruled out while forbearance by lenders, and the availability of the mortgage payment deferrals, which can start up until the end of October for three to six months, is likely to limit the scale of downside for house prices.

“Much depends on how businesses respond to the outlook and their decisions on staffing levels and the knock-on impact for unemployment.”

By Jessica Bird

Source: Mortgage Introducer

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Property asking prices jump to a record high

The average price of property coming to market in Britain is at a record high of £320,265, data from Rightmove has revealed. In addition to the rise in property asking prices, the number of people contacting estate agents about house viewings is up by 75% so far in July compared to the same period last year.

The average asking prices are 2.4% higher than in March pre-lockdown. The number of sales agreed this month is also now exceeding last year’s figures in England, Scotland and Wales. Almost half (44%) of new listings that came up for sale in the first month after the market re-opened on the 13 May have already been marked as sale agreed, compared to 34% at the equivalent time last year.

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The number of monthly sales agreed is up 15% in England on last year, and in the five days after the stamp duty announcement it jumped to 35% up on the same days a year ago. Total available stock has also reportedly recovered to being 13% down in Britain following a steep decline, with Rightmove claiming that the stamp duty holiday may encourage more sellers to the market to ensure they have ample time before the 31 March deadline.

Miles Shipside, resident property expert at Rightmove, said: “The busy until interrupted spring market has now picked up where it left off and has been accelerated by both time-limited stamp duty holidays and by homeowners reappraising their homes and lifestyles because of the lockdown.

“The strength of buyer demand has contributed to record prices, with the 3.7% annual rate of increase being the highest for over three and a half years.

“There is a window of opportunity for sellers to come to market and to find a buyer who is tempted by the stamp duty savings. Although March next year may sound like a long time away, in reality sellers need to find a buyer before Christmas, to allow a further three months for completion of the legal process to beat the deadline.

“While property is selling much faster than a year ago, it’s important not to over-price and miss this window. It’s still a price sensitive market with buyers having limits on what they are able to borrow, and the uncertain economic outlook making them more cautious.”

Source: Property Wire

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Pent up demand fuels resurgence in the rental market

Lettings market activity in June was significantly higher than the same month last year, the Rental Index from Goodlord has shown.

After number of new tenancy applications were received during May, June saw that demand translate into completed lets.

The number of completed lets stayed above 2019 averages for all but six days of June, marking an extremely busy month for the industry.

The cost of renting rose by 3% across the England and Wales between May and June.

Void periods also dropped in five out of eight regions.

Tom Mundy, chief operating officer at Goodlord, said: “If May was characterised by a release of pent up market demand, then June was that demand translating into action.

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“The numbers throughout the month were incredibly impressive and show how hard the industry has been working to serve as many tenants and landlords as possible.

“We saw an unprecedented number of lets completed each day in June. It’s therefore no surprise to see those levels of demand starting to affect average rental costs and void periods.”

The biggest rent rise was seen in the South West, which saw average prices increase by 11% – from £859 per month to £965.

Wales wasn’t far behind, posting a 9% rise in average rental costs.

The average salary of a UK renter dipped slightly month-on-month, from £25,068 to £24,613.


Source: Property Wire

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Reopening of housing market ‘not so smooth but welcome’, says Wellington estate agent

The reopening of the property market is a ‘truly wonderfully cautious first important step in the right direction’, a Shropshire estate agent has said.

Dean Millington, business proprietor of Harwood The Estate Agents, Wellington, said the Government’s green light for agents to return to work had been akin to ‘dropping the bombshell onto the property world’.

“Nothing like a little advance notice whilst also forgetting to mention the finer details to the public and the agents,” said Mr Millington.

“They have since released the really important reality about viewing restrictions, guidelines and practices agents must implement and put into practice sharpish before being able to commence safely.

“The Government and the National Association of Estate Agents have now given strict guidelines on how things are to be handled and the safety measures that should be implemented.

“I have noticed that the media language is now a little less gunhoe and more subtle, such as ‘the property market has been released from some elements of the lockdown’.

“I believe it truly would have been all round a more common sense approach to have distributed the guidelines of the return to agents in advance, then made a more timely announcement of a forwarding date to enable agents to fully prepare correctly and safely.

“That all said, it truly is a wonderfully cautious first important step in the right direction, although the property world has been slightly thrown into a little turmoil.”

He added: “I have been in live webinars, client calls, emails, texts and a constantly non-stop avalanche of communications since the announcement explaining the finer details and I am pleased to say we are now ready.

“At the end of the day we truly wholeheartedly support the Government in their amazing efforts during these incredibly testing times and will continue to play our small part in ensuring the safety of our clients, staff and the public.

“We are so proud and in awe of all the key workers and our NHS and we pray, hope and plan for brighter days ahead.

“We must keep faith, things will always get better – and they will.”

By Lisa O’Brien

Source: Shropshire Star