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UK house prices: Growth slows in October

Annual UK house price growth slowed last month due to ongoing political and economic uncertainty.

House prices were up just 0.9 per cent in October – the lowest growth seen so far this year – as the new uncertainty of a general election and the impending Brexit deadline hit consumer confidence.

Analysts said activity in the housing market picked up over the summer, after the date for the UK to leave the European Union was pushed back to 31 October, but growth has since slowed as potential buyers hold off making purchases.

On a monthly basis, house prices fell by 0.1 per cent, while house prices grew 0.2 per cent between August and October compared to the previous quarter.

The average house price in the UK last month was £232,249, according to the latest Halifax House Price Index.

Halifax managing director Russell Galley said: “A number of underlying factors such as mortgage affordability and wage growth continue to support prices, however there is evidence of consumers erring on the side of caution.

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

Mike Scott, chief property analyst and estate agent Yopa, added: “We expect a resumption of more normal levels of housing market activity once the Brexit outcome is more settled, which may then give a short-term boost to house prices, since the stock of houses for sale is quite low, and demand can react more quickly than supply once the uncertainty is lifted.

“However, affordability continues to be stretched, especially in the south and east of the country, and we do not expect any sustained above-inflation increase in house prices. But neither do we expect a house price crash, with a no-deal Brexit now looking unlikely and the economic fundamentals remaining strong.”

By Jessica Clark

Source: City AM

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Rise in number of homes let by international landlords

There has been a rise in the number of homes across Britain being let by international landlords, new research has found.

The proportion of homes let by overseas-based landlords rose to 11% during the first ten months of 2019, up from 7% during the same period last year. Hamptons International Monthly Lettings Index showed that the East of England (+8%), London (+8%), South East (+7%) and North West (+7%) has seen the biggest increase in the proportion of homes let by non-UK based investors.

In total, 18% of London’s private rental properties are let by overseas-based landlords – the highest proportion of any region across Great Britain.

Hamptons International stated that the depreciation of sterling had been a major factor in driving up the number of international investors buying UK properties. For example, for buyers using the US dollar, the average home in Great Britain now costs £53,065, or 23%, less than it did in 2014.

“The proportion of homes let by overseas based landlords rose for the first time in more than nine years,” said Aneisha Beveridge, Head of Research at Hamptons International.

“Sterling’s depreciation has made investment property in Great Britain more attractive to international investors. The average home cost 23% or £53,065 less than in 2014 for a US dollar buyer, solely due to the currency changes.”

Source: Property Wire

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Annual house price inflation stutters at under 1% for 11th month in a row

Annual house growth is just 0.4%, Nationwide has reported.

It puts the average house price at £215,368, only marginally ahead of September’s figure of £215,352.

Nationwide chief economist Robert Gardner said that annual house price inflation has been at under 1% for the 11th month in a row.

On average, house prices have risen by around £800 in the last 12 months, which he said was a “significant” slowing compared with the previous year.

In the same period to October 2016, prices increased by £9,100.


Source: Property Industry Eye

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House prices in the UK are still gently falling in real terms

Nationwide has just released its latest house price figures. In October, house prices were 0.4% higher than they were a year ago.

Your average UK home will now set you back £215,368 exactly.

Prices are rising more slowly than wages or wider inflation. That means they’re falling in “real” terms.

That’s great news…

Slowly falling house prices are a good thing

This morning’s figures from Nationwide show that UK house prices are still pretty much flat, and falling after inflation.

The economy is OK. Interest rates are low. Employment is high. Those things are likely to prevent an all-out crash.

On the other hand, rates probably can’t go much lower, while the impact of the effective removal of landlords from the housing market is still rippling through the market.

And while the resolution of Brexit might boost sentiment or activity at one level, it is also likely to lead to slightly higher interest rates, which I suspect would help to prevent a massive rebound in prices.

This is all good. As the Nationwide chart below shows, this means that affordability is gently improving.

I hope this continues. You’ve heard me say that dozens of times by now, but I like to keep reiterating it, for a couple of reasons.

One reason is that, here in the UK, we are rather attached to the idea of ever-rising house prices. I think it would be helpful for us to shed this attachment and instead recognise that hoping for a house to provide both shelter and a retirement income is a recipe for a high-stress existence.

This is unfortunately, as yet, a minority view. My colleague Merryn keeps a track via Twitter of the “how celebrities invest their money”-type interviews in the Sunday papers.

She’s always very excited to spot the occasional sensible celeb who not only has a pension, but also understands that said pension holds equities. However, mostly celebs say something along the lines of “I own property. The stockmarket’s just a casino. You can’t go wrong with bricks’n’mortar.”

There’s this weird notion that investing in stocks is faintly immoral gambling, whereas taking a punt with borrowed money on the housing market (competing with people who just want a roof over their heads in the process) is honest in some way.

Anyway, once people stop making fast money from property, that will hopefully start to change.

House prices are not about physical supply and demand

The second reason stems from the other end of the spectrum. I’ve noticed that the tenor of columnists getting annoyed about the “housing crisis” is becoming increasingly hysterical, probably because we’re coming up for an election (at some point) and housing is a political hot button.

The answer for these writers is always to “build more houses”, because it’s all about supply and demand. The problem is that it’s not that simple.

It’s interesting that we’ve become obsessed with the idea of building more homes at a time when – in many parts of the UK outside London – double-digit house price growth hasn’t been seen for over a decade.

You can certainly argue that the planning system is flawed (it is) and you can certainly argue that there are not enough houses in certain areas and too many in others, and that the quality overall is poor.

And you can certainly argue that there’s really no need for British homes to be the smallest in Europe. Yes we have a relatively big population but we’re not jammed in that tightly.

But a blanket policy of just “building more” won’t help. House prices are high because the cost of borrowing is low.

Put very simply, here’s how it works. At interest rates of 10%, a £900 monthly payment will pay for a 25-year repayment mortgage of £100,000. At interest rates of 2%, £900 a month will buy you a 25-year repayment mortgage of just over £210,000.

That’s why house prices go up when interest rates go down (assuming credit conditions slacken at roughly the same pace). Because the amount you can borrow to pay for the same house goes up.

It’s that straightforward. Physical supply and demand does have an effect – of course it does – but it’s marginal relative to the effect of the supply of credit.

So here’s the good news. Interest rates can barely go much lower, and rules around mortgage lending are tighter than they once were (there are still signs of lenders getting more excitable again but we’re not back in Northern Rock territory yet).

Meanwhile, wages are rising. So overall, rising wages should improve affordability while stable interest rates keep a lid on house price growth.

So we make some headway into the frustration caused by unaffordable homes, while buying ourselves time to take a more considered view and put in place deeper reforms that might put an end to the perpetual cycle of boom and bust.

OK, if I’m honest, I’m not optimistic about that last point – it would require too much long-term thinking. But having a bit of a breather at least from house price woes would be healthy for us all.

By: John Stepek

Source: Money Week

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Government ‘should overhaul’ stamp duty to boost housing market

The government should slash stamp duty to help boost housebuilding and encourage people to buy their own homes, a new report has stated.

Stamp duty is the second most unpopular UK levy behind inheritance tax, and a gradual rise in rates has meant the average buyer in England pays £2,300 when they buy a property.

Think tank the Centre for Policy Studies (CPS) branded stamp duty a “tax on mobility and aspiration” and urged the government to raise the threshold from £125,000 to £500,000.

The report, drawn up by former No 10 housing adviser Alex Morton, proposed that a four per cent levy be charged on properties between £500,000 and £1m, and five per cent on anything higher.

Prime Minister Boris Johnson has supported the idea of stamp duty reform. However, uncertainty over the cost of the move, coupled with chancellor Sajid Javid’s decision to cancel his planned Budget on 6 November, has cast doubts on the tax cuts.

Stamp duty currently raises £5.1bn for the government. However, the CPS argued a reform to the tax would cost only £1.6bn due to the positive impact of increased transactions.

The report estimated that a one per cent cut in stamp duty rates would increase housing transactions by roughly 20 per cent, which in turn would lead to more homes being built.

Moreover, it stated that the cost of reforming the tax could be further offset by a new three per cent levy charged to foreign buyers snapping up property in the UK. The CPS also argued that stamp duty should be kept on commercial and buy-to-let properties.

“While the Treasury are right to be fiscally focused, they need to take into account the fact that stamp duty on homes has an impact on transactions, which means cutting this tax is cheaper than expected,” said Alex Morton, CPS head of policy.

“We propose mean a far more appropriate rate for the most valuable homes – and taking nine out of 10 people who just want to buy a decent home for themselves and their family out of the tax altogether.”

By James Warrington

Source: City AM

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UK property asking prices show weakest October rise since 2008 – Rightmove

Asking prices for British houses put on sale in October showed the smallest seasonal increase since the financial crisis, as all but the most determined sellers waited for greater certainty over Brexit, industry figures showed on Monday.

Rightmove said that the average asking price for homes sold via its website was 0.6% higher in October than in September, well below the average 1.6% rise seen for the time of year and the smallest increase since October 2008.

“With upward pricing power now pretty flat, some sellers who are motivated by maximising their money seem to be holding back. They may be waiting for more certainty around both achieving their price aspirations and also the Brexit outcome,” Rightmove director Miles Shipside said.

Average asking prices in October were 0.2% lower than in October 2018, compared with an annual rise of 0.2% in September.

Britain’s housing market has slowed since June 2016’s referendum on leaving the European Union, and official data last week – based on completed sales – showed annual house price growth of 1.3% in the year to August, up from a near seven-year low of 0.8% in July.

Consumers have become warier about making major purchases in general.

A quarterly survey of consumer sentiment by accountants Deloitte, also released on Monday, showed morale fell to its lowest since late 2018 in the third quarter of 2019, despite wages growing at their fastest rate in a decade.

“Up to now we have seen a slowdown everywhere but in the jobs market and in the consumer economy,” Deloitte economist Ian Stewart said. “A decline in consumer confidence this quarter, combined with a fall in official unemployment figures, show that the period of remarkable resilience … is coming to an end.”

Reporting by David Milliken, editing by Andy Bruce

Source: UK Reuters

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UK properties taking longer to sell

UK properties are taking almost two weeks longer to sell than last year according research by Post Office Money.

The ‘City Rate of Sale’ report, developed with the Centre of Economics and Business (Cebr) reveals on average it takes 114 days to sell a property in the UK.

Homes in Oxford take the longest to sell, staying on the market for an average of nearly five months.

Glasgow and Edinburgh saw properties sell the fastest in the UK spending 47 and 45 days on the market respectively.

Properties in Stoke have seen the largest increase in time spent on the market rising by 47% from 57 days to 84 days in the past year.

The report looked at the average time it takes for a property to sell in 66 major cities across the UK.

Ross Hunter, spokesperson for Post Office Money, said: “Properties are taking almost two weeks longer to sell compared to last year, but this doesn’t mean that interest in moving up the housing ladder is waning.

“At Post Office we have continued to see a rise in mortgage applications and approvals in the last year. There is political uncertainty at the moment, and the housing market can fluctuate, so it pays to be prepared.

“Whether you are a first-time seller or someone looking to sell up and downsize, it is more important than ever to understand the market in your area to ensure a smooth transaction.

“Our online tool allows you to find out how quickly you could sell your home across the UK, allowing you to plan ahead.”

By Jessica Nangle

Source: Mortgage Introducer

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First-time buyer numbers close to 12 year high

The number of first-time buyer mortgages in August 2019 edged towards the highest monthly total since August 2007, according to the latest data from UK finance.

In August this year, 35,010 first-time buyer mortgages completed compared to 35,070 in August 12 years ago just before the financial crisis struck.

The August 2019 rise was 0.7% on the same month in 2018.

There were 35,380 homemover mortgages in August 2019, a drop of 5.5% on the same month a year earlier.

A downturn in remortgaging

Remortgages with additional borrowing in August, fell by 2.9% year-on-year to 18,640 cases and the average additional amount borrowed was £55,000.

There were 18,100 new pound-for-pound remortgages (with no additional borrowing) in August, 2.3% fewer than in the same month a year earlier.

Buy-to-let numbers fall

A total of 5,900 new buy-to-let mortgages completed in August 2019, representing a drop of 3.3% from August 2018.

There were 13,800 remortgages in the buy-to-let sector, 0.7% fewer than in the same month the previous year.

Rob Barnard, sales director at Masthaven, commented: “This summer has been encouraging for the mortgage market. Lending activity has remained steady and first-time buyers continue to reap the benefits of Help-to-Buy.

“Remortgagers are taking advantage of the competitive deals available with lenders intensifying competition in the market by offering innovative products to homeowners who would rather stay put than move in the current climate.

“However, affordability and complex financial circumstances still leave many customers unable to secure a mortgage. With Help to Buy coming to an end in 2023, the mortgage market needs to continue to provide innovative solutions to encourage individuals onto-and-up the property ladder.”

By Joanne Atkin

Source: Mortgage Finance Gazette

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Brexit impasse leads to stand-off in housing market as buyers and sellers both stay away

Both buyers and sellers are sitting on their hands, as the unpredictable Brexit crisis wears on.

The RICS said that there is little sign of the impasse in the housing market ending, with appraisals down on this time a year ago.

It said that new instructions across the UK have slipped to the weakest in three years, with sales, buyer demand and supply all in negative territory.

The RICS said that average stock levels on estate agents’ books are at record lows, with activity among buyers and sellers slipping in virtually all parts of the UK.

House prices have slipped across London and the south-east, said the RICS, but are up in Northern Ireland, Scotland and the north-west.

Most of the RICS estate agents responding to the latest survey, covering September, expect no pick-up for the rest of this year.

However, looking further ahead, 18% more RICS agents expect prices to rise over the next year than do not.

RICS chief economist Simon Rubinsohn said: “There are good reasons for thinking the latest dip in both buyer enquiries and vendor instructions is a response to the endless wrangling about Brexit, as the October 31 deadline approaches.

“However, unless there is a speedy resolution to the ongoing impasse, it does seem inevitable that the stand-off between purchasers and sellers will deepen, making it harder to complete transactions.

“This will not only be a direct hit on the housing market itself but could have ramifications for the wider economy as the normal spend on furniture, fittings and appliances that typically accompanies a house move is also put on hold.”

The RICS this morning also reported a decline in landlord instructions but a rise in tenancy demand.

The survey sample drew 323 responses, covering 547 branches.


Source: Property Industry Eye

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UK property market remains subdued but growth expected in next year

Residential property sales remained subdued in September and buyer demand and supply slipped into negative territory, the latest industry housing market survey shows.

New instructions across the UK reached its weakest in three years and buyer enquiries have fallen as uncertainty deters house purchases, according to the report from the Royal Institution of Chartered Surveyors (RICS) but it still expects prices to rise at a national level over the next year.

It says that much of the anecdotal commentary from the survey respondents working in the market blames heightened economic and political uncertainty and the market seems unlikely to gain impetus over the next three months, though sentiment for a year ahead is more resilient.

In September, following three consecutive months of a stable trend, a decline is reported in home listings coming on to the housing market. Comments from contributors are suggesting that the Brexit impasse is dissuading vendors. The new instructions net balance fell to -37% in September, the weakest reading since June 2016.

Average stock levels on estate agents’ books, unsurprisingly therefore, remain near record lows. As contributors are reporting that appraisals are down compared to a year earlier, there is little prospect of a pick-up in the immediate future.

Alongside this, a more cautious approach from buyers is visible in the September results. After holding steady in the last four months, the new buyer enquiries net balance fell to -15%. In keeping with this, newly agreed sales fell, with a net balance of -27%, from -11% previously, with activity reportedly slipping in virtually all parts of the UK.

As far as the near-term outlook is concerned, sales expectations stand at -9%, suggesting sales will remain subdued in the coming three months.

The headline price balance sees a flat trend in house price inflation. However, there is once again a mixed picture across the UK with negative momentum in London and the South East, and solid gains in Northern Ireland, Scotland and the North West.

Looking ahead, price expectations for the coming three months stand at -16% pointing to a modest decline on a UK wide basis. However, the 12 month outlook points to a turnaround, with 18% more respondents expecting prices to rise rather than fall over the coming year.

In the lettings market, the latest set of results see demand from prospective tenants rising firmly for an eighth month in a row. Alongside this, landlord instructions remain in decline. With demand still outstripping supply, rent expectations for the coming three months remain positive at a net balance of 24%.

‘There are good reasons for thinking the latest dip in both buyer enquiries and vendor instructions is a response to the endless wrangling about Brexit, as the October 31st deadline approaches,’ said Simon Rubinsohn, RICS chief economist.

‘Indeed, much of the commentary from respondents based further away from London and the South East remains relatively sanguine, which is also reflected in some of the metrics capturing expectations. However, unless there is a speedy resolution to the ongoing impasse it does seem inevitable that the stand-off between purchasers and sellers will deepen making it harder to complete transactions,’ he explained.

‘This will not only be a direct hit on the housing market itself but could have ramifications for the wider economy as the normal spend on furniture, fittings and appliances that typically accompanies a house move is also put on hold,’ he added.

Source: Property Wire