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UK house prices set to rise 2% in 2020 – Rightmove

UK house prices will rise 2% over the next year, Rightmove said on Monday, as it revealed the smallest decline in December asking prices since 2006.

The property website said: “Home-mover confidence and activity have been dogged by political uncertainty since the 2016 referendum. With a clear majority in the election, there is now an opportunity to release some of the pent-up demand in the spring, and for some modest upwards price movement.

“Sellers’ pricing power will be enhanced by a lack of choice for potential buyers, with the proportion of estate agent stock that is available for purchase at its lowest for over two years.”

Rightmove director and housing market analyst Miles Shipside said that although the expected 2% rise is more than twice the current annual rate of 0.8%, it’s still a relatively marginal increase as it’s a price-sensitive market.

“There will be regional variations,” said Shipside. “London is finally showing tentative signs of bottoming out, and we expect a more modest price rise of +1% in all of the southern regions where buyer affordability remains most stretched. In contrast, the largest increases will be in the more northerly regions, repeating the pattern of 2019 with increases in the range of 2% to 4%.”

Rightmove said asking prices fell 0.9% in December to £300,025, marking the smallest drop at this time of year since December 2006. Prices had fallen 1.3% in November.

By Michele Maatouk

Source: ShareCast

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UK real estate to rebound by 2024 – Savills

  • The U.K real estate could rebound over the next half a decade
  • According to Savills, the average UK property prices are expected to jump by 15.3%
  • Savills warns that the growth will be slower due to higher taxes and rising interest rates

The UK real estate could be headed for a major bounce back in the next five years, after months of plummeting prices. The crisis, which has now lasted across the country for several quarters, could not-so-long from now come to an end, this is according to a Wednesday report by Savills.

Savills is a brokerage and real estate adviser based in London and its recent report predicts a 15.3% price jump for existing UK homes between the year 2020 and 2024. The report further states that the growth may not be uniform across all regions; the North-West is likely to lead with a 24% growth, while the East and South-East may experience an average growth of 11%.

“We anticipate a continuation of trends seen historically, where London and the South East underperform markets in the Midlands and North,” the head of residential research for Savills, Mr. Lucian Cook stated in the report. “This stage of the cycle appears to have begun in 2016, coinciding with the referendum, when London hit up against the limits of affordability.

The Savills’ report, however, noted that London’s luxury market would undergo a significant upswing; prime central London could rise by 20.5% on average, starting with an increase of 3% within the next year.

“Historically, a recovery in the prime markets has been sparked in prime central London, when the city’s most expensive properties start to look [like a] good value on a world stage,” Mr. Cook said in the report. “Values have been bottoming out over the past year, resulting in a build-up of new buyer registrations over recent months. Both signal that the market is set for a bounce, but this is being held up by uncertainty.”

In areas outside London, prime property prices could rise by about 14.2% by 2024 while luxury homes outside central London are expected to increase by 11.5%, the report indicated.

Scotland could experience a 20% jump in prime property prices, with units in North of England and Midlands expected to hike by 20.5%.

Rental rates are also set to rise within the next five years; in London, renters can expect a spike of about 18.8% even as annual transactions are expected to remain almost constant at 1.2 million.

But Cook warned that the growth could be slower than in the previous periods due to increased taxes and interest rates.

By Damian Wood

Source: Invezz

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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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Big house price rises are on their way, insist confident home owners

Hefty price rises are predicted for the property market over the coming months.

A home moving comparison website has forecast that house prices will rise an extraordinary 9% between now and August, while Zoopla says that home owners believe prices will rise almost 5% in the next six months – despite evidence to the contrary.

Zoopla surveyed just over 2,000 of its registered users to give their opinions on house prices.

Eight out of ten expect property values to rise in their area, with the most confident areas in the north – where 91% predict increases.

Even in the least confident area, London, 67% forecast rises.

The optimism is despite slowing price growth, with annual house price inflation dropping to 1.7% across major cities in the 12 months to April.

In London house prices have actually dropped by 0.5% over the year.

Laura Howard, spokesperson for Zoopla, said: “Despite evidence of a slowing housing market and ongoing political uncertainty, home owners remain optimistic about the future of property prices.

“Consumer sentiment plays a crucial role in the health of the housing market.”

However, she added: “Vendors fuelled with optimism for house price growth will need to listen carefully to the advice of their estate agents. Consumer positivity must be channelled to ensure that pricing is correct from the outset.”

Meanwhile, the yet more optimistic house moving website, Reallymoving, is forecasting a 9% rise in an even shorter timeframe.

Reallymoving, which has just released its inaugural house price forecast, says that it is able to provide an accurate forecast three months ahead of completions.

CEO Rob Houghton said: “Prices agreed this spring will show in Land Registry data in the summer.

“However, our customers registering for home move services as soon as their deal is agreed are giving us unique insight into what lies ahead for the housing market.

“Our forecasts suggest that sellers are growing tired of the ‘wait and see’ approach and once the Brexit deadline passed at the end of March, with no further clarification, sellers decided to press ahead with their move.

“This new buyer demand and a continued shortage of quality housing stock is on course to drive strong price growth between May and August, with particular surges in regions benefiting from strong demand such as the north-east and the south-west, where affordability remains attractive and wages are rising.

“Annually, average UK prices have been falling since the start of the year, but in June we can expect prices to see a return to positive growth with a rise of +1% year on year, followed by 0% change in July.

“This suggests that a strong market performance over the spring will see prices make up the value lost in the first part of this year and are set to recover to 2018 levels this summer.

“There is considerable pent up demand in the market following three years of uncertainty and with many doubting that Brexit will be resolved any time soon, people are increasingly making the decision to move on regardless.”

Separately, referencing firm HomeLet reports that new rents last month rose 1.6% on May last year, to an average of £934 per month. Rents outside London are up 1.7%, and within London up 1%.

In London, the average rent is now £1,602, and outside London £776. Rents have risen in every region apart from Yorkshire & Humberside and the north-east.

By ROSALIND RENSHAW

Source: Property Industry Eye

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A long stagnation could kill off Britain’s obsession with house prices

House prices are still struggling in the UK.

According to the latest Nationwide report, prices rose by 0.4% in February, compared to the same month last year.

The average UK house price is now around £210,000, reckons the building society.

Not much change then since last time.

The big question is – what’s next?

People only care so much about house prices because they have to

House prices are a bit of an obsession in Britain.

This is not because the British are born with some sort of property-fetish gene. It’s because houses are both economically significant and the cause of a great deal of insecurity.

It’s similar to the way that parents with school-age kids in this part of the world obsess over catchment areas and exam results. They didn’t care when they were single and childless, and they won’t care once their kids have got into school. But try getting them to talk about anything else when they’re in the midst of the fraught school-hunting process – no chance.

So this obsession with property is simply a result of the fact that houses hang over us. This is made clear by the fact that this “national obsession” is in fact, not really national at all. You only see it in areas where houses are expensive – in the 20-odd years of my life I spent in and around Glasgow, I don’t think I had a single conversation about house prices (lots about the rain, though).

Since maybe the mid-1990s, the UK property market has been gripped by  slow-motion FOMO (“fear of missing out”). You stayed off “the ladder” to your cost.

Say that, as a young person without much money and a desire to maintain geographic flexibility, you didn’t fancy taking a huge leveraged punt on an asset of often-questionable quality. Well, that was a mistake. That property you passed up back then has probably “earned” more money each year than you ever got paid.

The old saying “you can’t go wrong with bricks and mortar” has been hammered home to the last couple of generations with brutal efficiency. If you are in the core wealth-planning target market (around 40-60 odds) then more than anything else, your present level of household wealth almost certainly depends on how much property you owned and when.

It could make all the difference between whether you are now able to think about jacking it all in for a portfolio career with a heavy dollop of golf and city breaks on the side; or whether you are looking down the barrel of another 25 years of back-breaking mortgage payments that could rocket to unaffordable, lose-your-home-at-age-65, levels on the whim of Mark Carney.

Anyway…

What if this is the “new normal” for house prices?

The question for me now is – how long will this obsession persist?

A flat or falling market doesn’t breed the same level of FOMO. There is still a big psychological hangover from the boom period. Prices in many parts of the UK are still gobsmackingly high. And there’s an assumption that prices will, at some point, renew their astonishing ascent.

But what if they don’t? On the one hand, I still can’t see an obvious trigger to turn the current slow grind lower into a full-blown crash. If interest rates stay roughly where they are for a while and people hang on to their jobs, then they’ll be able to pay their mortgages.

That means there won’t be a wave of forced selling, which is what you really need to get a full-on crash, as happened in the 1990s. (In 2008, the problem was more about credit drying up – buyers were effectively shut out of the market.)

Equally though, if you don’t get an epic crash, you don’t get an epic buying opportunity. You might just get a slow stagnation, which gradually returns prices to just about affordable levels.

House prices are generally “still very high relative to incomes”, as Capital Economics points out. But with prices in the most expensive areas (ie, London) falling hardest, and wages gradually ticking higher, that might be rectified more quickly than you’d think.

So do we end up with a “new normal” for the housing market? Unfortunately, property is still a hideously distorted market. We have the stupid Help-to-Buy scheme, which will be causing problems well down the line from here (it’s a profoundly immoral scheme, as my colleague Merryn has just written in an excellent piece, which we’ll send to you early next week).

And can “build-to-rent” create a more attractive market for renters in the UK than “buy-to-let”? That remains to be seen.

But if house prices cease to surge every year, then that in itself would make a big difference. While the last few generations learned that “you can’t go wrong with bricks and mortar”, the next few might learn the precise opposite – that a home which fails to rocket in value can actually be an expensive headache relative to other asset classes.

Source: Money Week

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UK property prices in 2018 grew in Manchester but fell in London

  • Property prices in London fell by 0.2% in 2018, underlining the current lack of sentiment for real estate in the capital
  • However, research shows significant annual growth in prices in key regional cities, such as Birmingham and Manchester
  • Investors should look at areas where “affordability remains attractive and employment levels are rising” to achieve the highest levels of growth

The numbers confirm what many have accepted as the reality for some time now. In 2018, property prices in London fell. But, in other cities in the UK, it was a completely different story.

New data from online agent Zoopla shows that average prices in London last year fell by 0.2%, underlining the slowdown in activity the market has witnessed in recent months.

Prices reaching an affordability ceiling and increased purchasing costs are just some of the factors attributed to the slowdown, as London’s property market begins to look increasingly unattractive to many global investors.

“House prices in London have been falling for almost 12 months, while the rate of growth has slowed across cities in southern England, a result of growing affordability pressures, higher transaction costs and increased uncertainty,” analysed Richard Donnell, Research and Insight Director at Zoopla.

But, the research shows high growth has been recorded in other UK cities. Since June 2016, property prices in Manchester have increased 15%, while there’s also been a 16% uplift in average prices in Birmingham, too.

Donnell added: “The strongest performing cities are outside south eastern England where affordability remains attractive and employment levels are rising. We expect current trends in price growth to continue across the rest of this year, with prices rising in line with earnings for much of the UK but lower growth and some house prices falls in London and the South.”

With increased levels of commercial investment and job numbers, more people are moving to live in Manchester – and this is having a significant impact on the performance of the city’s undersupplied property market.

In addition to capital growth, investors in Manchester are also enjoying better yield growth from their property, compared with those with real estate in London.

The latest figures from LendInvest’s rental index suggest that average yields in Manchester are currently 69% higher than the average for the Greater London area.

Source: Select Property

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Rightmove: UK property prices fall 1.7%, largest drop in six years

UK property pricing coming to market have fallen by £5222 this month, representing a 1.7% decline and the largest drop since November 2012, according to the latest Rightmove house price index data.

With Christmas fast approaching leaving many more strapped for cash and on-going uncertainty surrounding Brexit, new sellers are pricing ‘more realistically’ to offset pre-Xmas ‘buyer humbug’ syndrome, the online estate agent and property website said.

‘New sellers and their agents are reacting to market forces and lowering their pricing aspirations by more and sooner than usual,’ Rightmove Director Miles Shipside said. ‘Stretched buyer affordability and the cooling markets in the south and in upper price brackets have combined with the ongoing political uncertainty to change pricing optimism into pricing realism.

‘This is a welcome effort by sellers to minimise the usual pre-Christmas market slowdown. Some new-to-the-market sellers and their agents have acted early to try to improve the buying mood and avoid the traditional “buyer humbug” dislike of Christmas housing activity,’ he added.

Christmas comes early for home buyers

The larger than average decrease in house prices is sharper with the UK economy showing signs of cooling down with retail sales falling this quarter.

Housing prices fell across all regions of the UK, but the most significant decline was seen in the south of England.

The average asking price fell from £307,245 to 302,023, with homes at the top of the housing ladder seeing an average decline of 2.4%, down to 531,775 from 545,020, according to the Rightmove’s house price index.

‘While many thought that the down-to-the-wire Brexit deal uncertainty would hold people back from buying, more buyers have actually jumped in,’ Shipside said.

‘Some buyers see this pre-Christmas price lull as a gift to their negotiations. It proves that people need to get on with their lives and will continue to buy homes if the underlying economic fundamentals remain strong,’ he added.

Source: IG

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UK annual house price growth picks up to nine-month high – Halifax

British house prices rose in the three months to August at their fastest annual rate since November last year, figures from major mortgage lender Halifax showed on Friday, bolstered by a gradual pick-up in wages and limited supply.

Halifax said house prices in the period were 3.7 percent higher than a year earlier, up from a 3.3 percent growth rate in the three months to July but a slightly smaller increase than the average forecast in a Reuters poll.

The figures contrast with data from rival mortgage lender Nationwide last week, which reported prices were up just 2 percent on the year in August, the joint-smallest increase in five years.

Britain’s housing market began slowing in the run-up to June 2016’s Brexit vote. The biggest slowdown has been in London, due to reduced appetite from foreign investors and concerns about the financial services industry, with less of an impact in other parts of the United Kingdom.

A “stable, yet constrained” supply of new homes was supporting prices, as was a gradual pick-up in wage growth, Halifax managing director Russell Galley said.

Looking at the month of August alone, house prices rose 0.1 percent from July, when they jumped by 1.2 percent.

Howard Archer, an economist at consultancy EY ITEM Club, said he did not see an upturn on the way for British house prices and expected annual house price growth of 2.5 percent this year and next.

“Consumer confidence is fragile and appreciable caution persists over engaging in major transactions. Potential house buyers may also be concerned that they are likely to face further interest rate hikes over the medium term following August’s hike,” he said.

The Bank of England raised interest rates to 0.75 percent in August in only its second increase since before the global financial crisis. BoE Governor Mark Carney said market expectations of one rate rise per year over the next few years would be a good rule of thumb for households.

Source: UK Reuters

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House prices pick up in London over Q2

London City house price growth has picked up over the last quarter as the capital’s housing market starts to stabilise, the latest Hometrack UK Cities House Price Index has found.

In the three months to June house prices rose by 1.8%, having fallen by 1% over the previous six months.

After two years of weak demand and falling sales there are signs that London’shousing market is beginning to steady, although the annual rate of growth remains low at +0.7%.

Richard Donnell, insight director at Hometrack, says: “After two years of falling sales volumes and rising discounts to achieve a sale there are some signs of life returning to the London housing market. Discounts are finally starting to narrow as sellers become more realistic over pricing.

“While prices in London have picked up over the last quarter, we expect the annual rate of growth to remain weak for the foreseeable future. The positive news is that greater realism on the past of sellers will support transactions, which have fallen by 20% since 2014.

“The UK market is operating at two-speeds at the moment, with growth in regional cities in the Midlands and North West far outstripping those in the South.

“However, affordability pressures in the South East in particular are having a slowing effect on house prices as borrowers are priced out of the market.”

The recent trend is supported by the fact that 61% of postcodes in London are currently registering month-on-month price rises according to Hometrack’s most granular indices.

This modest improvement in market conditions reflects greater realism on the part of sellers in the wake of a two-year re-pricing process. The discounts sellers must give buyers to achieve a sale has started to narrow across London, reversing a two year upward trend where the discount grew from 1% in Q2 2016 to 5% in Q1 2018. It has fallen back to 4.8%.

London is in a group of six cities where house prices are failing to keep pace with the rate of goods inflation (CPI) and where house prices are falling in real terms – Southampton (2.1%), Oxford (1.9%), Belfast (1.4%), London (0.7%), Cambridge (-0.2%) and Aberdeen (-2.8%).

House price growth was strongest in cities in the Midlands and North West of England. Manchester is registering the highest annual growth rate (7.4%), followed by Liverpool (7.2%), Birmingham (6.8%) and Leicester (6.5%).

The level of discounting from the asking price to achieve a sale was lowest in Manchester (2.2%) where market conditions have remained strong for the last two years. Discounts have fallen in Liverpool, where prices are rising off a low base, but remained above average at 4.8%.

Source: Mortgage Introducer

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UK house prices just had their first quarterly fall in nine months

House prices in the UK had their first quarterly fall for the first time in nine months, a closely-watched index has shown.

Prices fell 0.7 per cent in the three months between December and February, the Halifax house price index showed – the first time since May last year the figure has fallen into the red.

On an annual basis, prices rose 1.8 per cent in the year to February, while they edged 0.4 per cent higher between January and February. Average UK house prices hit £224,353 during the month.

However, Halifax suggested there was some hope for the market, after the number of homes sold in the UK reached 100,000 for the 13th month in a row, while mortgage approvals rose sharply in January.

But it added indicators of both demand and supply remain weak.

“[The] latest survey evidence largely points to still lacklustre housing market activity early on in 2018,” said Howard Archer, chief economic adviser to the EY Item Club.

“In particular, the Royal Institution of Chartered Surveyors’ influential survey for January reported that “New buyer enquiries, instructions and sales all continue to drift lower (in net balance terms), while near term expectations point to a flat outturn for activity in the coming months.

“Having said that, there is a little more optimism regarding the 12 month sales outlook which is now at least modestly positive in virtually all parts of the country. New buyer enquiries were down for a 10th month running while agreed sales fell for an 11th month.”

Source: City A.M.