Homes in Hants

The total stock of property for sale in the UK has fallen to a new post economic crisis low with 45% fewer properties for sale than in November 2007, according to the latest index report.

It also shows that average annual asking price growth in England and Wales increased further to 7.3%, driven by lack of supply with the shortage affecting all regions but particularly London, the South East and the East of England.

Consequently, prices in these regions continue to rise at an alarming rate, well ahead of the national average. Over the last 12 months, asking prices in London, the East and South East of England have risen by 12.5%, 9.8% and 9.4% respectively. Meanwhile, the number of properties coming on to the market in the same regions is down by 15%, 13% and 10% respectively.

However it is not a uniform picture, according to the asking price index from Home.co.uk. Prices have slid in the North East and Yorkshire during the last month. Asking prices were down 0.1% month on month in Yorkshire and Humberside and down 0.5% in the North East where prices are also stagnant compared to a year ago.

Indeed, as a whole prices in the northern regions and Wales continue to stagnate. Annualised price changes for the North East, North West and Yorkshire of just 0.0%, 1.2% and 1.9% respectively indicate that demand levels remain depressed relative to the South.

Welsh property has fared a little better with home prices rising by 2.7% over the last year, but still a long way behind the mix-adjusted average price rise for England and Wales of 7.3%.

Overall, the current mix-adjusted average asking price for England and Wales is now 25.8% higher than it was in November 2010. Further upward pressure on this headline figure will come from London, the East and South East of England over the next year.

North of the border, Scottish home prices are rising more quickly, up 4.7% over the last year and 6.4% since November 2010. Sellers there are obviously patient, as the typical time on market is 114 days, 16 days longer than the figure for England and Wales.

The Aberdeen property market has been adversely affected by plunging oil and gas prices, and properties on the market there have been piling up. Meanwhile, the Edinburgh market is experiencing a boom, with prices driven up 13% over the last year and supply falling away. Further south, the northern English regions show relatively poor home price growth.

 Of those, the North East property market has suffered the most over the last five years. Prices are falling in many towns in the region, such as Billingham, mainly due to the downturn in the petrochemical industries. Crime and joblessness continue to adversely affect many of the larger urban areas. However, pockets of significant growth do exist, such as prosperous market towns like Yarm.

The South East continues to show massive price growth and the report says that this overheating region has been the fastest moving property market in the UK since February, when it displaced London from pole position. The typical time on market for unsold property there is just 63 days. Correspondingly, prices have risen 9.4% over the last 12 months and 33% over the last five years.

There are ever fewer properties for sale is because there are fewer owners who wish to sell, according to Doug Shephard, the firm’s director.

‘The last large dip in the number of properties for sale was in 2010, when 30 months of perpetual monthly price falls had eroded confidence in the market. Thanks …

Sales of affordable homes in London more than halved in the first eight months of 2015 compared to the same period last year, according to a new analysis.

The lowest value segment of the market, homes under £250,000, saw a 51% decline in sales, the steepest of any price point across London, the report from Cushman & Wakefield also shows.

The data shows that just 10,449 homes in this band were sold in the first eight months of this year compared to 21,337 in the same period in 2014 as the supply of homes coming to market below £250,000 dries up.

Total sales of London residential properties fell from 79,226 to 58,322 with volumes in the first eight months declining across the board. A range of factors have contributed to the decline including mortgage availability, the General Election and changes to Stamp Duty which have made buying property over £1 million more expensive.

However, the contrast in the rates of decline between price bands is stark. Sales of homes over £250,000 declined by an average of 17%, far less than the 51% drop off below the quarter of a million mark.
 
‘While Stamp Duty’s impact on sales is undeniable, the rate of decline for homes below £250,000 is far more severe than above the much talked about million pound threshold. Even sales of London’s most expensive homes, above £10 million, where Stamp Duty costs are highest haven’t dropped off to the same extent,’ said Candice Matthews, a director in Cushman & Wakefield’s London residential team.

‘The biggest problem at the value end of the market in London is lack of supply and our analysis is a clear indictment of London’s increasing unaffordability. Rising prices have steadily eroded the number of homes coming to market for less than £250,000. Londoners with this budget are instead being locked into renting where they often face much higher monthly outgoings as a result,’ she added.

Since December 2014, stamp duty has been applied like income tax: 0% up to £125,000 of the purchase price, at 2% between £125,000 and £250,000, at 5% over £250,000 to £925,000, at 10% over £925,000 to £1.5 million and at 12% for everything above.

David Ramsdale, research analyst at Cushman & Wakefield, believes that the Government is likely to look at revising the tax over the next 12 months, particularly once the Stamp Duty revenue figures for the financial year are released next summer.

‘We believe the greatest focus needs to be on homes below £250,000. One thing that would help affordability in London would be to adjust the Starter Homes Initiative. This helps first time buyers under 40 years old get on the property ladder by making homes available at 80% of the market value up to a limit of £450,000 in the capital,’ he explained.

‘The transaction figures suggest this should be lowered to the national figure of £250,000 in order to have a significant impact,’ he added.

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Paying for a mortgage is still more affordable than renting in the United States but saving enough money for a down payment has become increasingly difficult for first time buyers.

According to the latest analysis report from real estate firm Zillow this is particularly the case in markets where home values are rising rapidly. 

With the majority of renters in the largest metros putting about 30% of their monthly income toward a rental payment, saving money for a 20% or 10% down payment is extremely difficult.

The report suggests that first time buyers and millennials are left trying to find other ways to break into the housing market, turning to friends and family for financial help. In 2014 alone, 13% of home purchases were bought using a loan or gift from friends or family for the down payment.

Rental affordability has worsened in 28 of the 35 largest metros over the past year, and mortgage affordability worsened in just 18 of them, according to the report covering the third quarter of 2015.

Residents of the Denver metro can expect to spend about 21% of their income on a mortgage, compared to 34% on rent. In the US as a whole home owners can expect to spend 15% of their income on a mortgage and 30% on rent.

But getting that mortgage payment requires a home buyer to have saved $62,760 for a 20% down payment, the industry standard, on a median valued Denver home, which is $313,800.
In the Boston and Miami markets, the median monthly mortgage payment requires just 22% and 20% of monthly income, respectively.

Renting is substantially more expensive, influencing many renters to start thinking about purchasing a home. Some 35% of the median income pays the median rent in Boston and 44% in Miami. However, to purchase a home in Boston a 20% down payment is $76,220 while in Miami, buyers need to have saved $44,680.

The report also shows that breaking into the housing market is less of a challenge in more affordable markets, like Cleveland. A 20 % down payment on a median home there is $25,000, or $12,500 for a 10% deposit. Residents of Cleveland can expect to spend 11% of their monthly income on a mortgage while for renters it is 27% of their monthly income.

‘In general, paying a mortgage is more affordable than renting, and has been for some time. Unfortunately, many current renters aren’t able to realize the savings that come with homeownership because as home values and rents keep rising, it’s getting increasingly difficult to clear the down payment hurdle,’ said Zillow chief economist Svenja Gudell.

‘It’s not uncommon for a 20% down payment on even a modest home to represent savings of $50,000 or more in some areas. And that number itself is a moving target, rising as home values escalate and harder to achieve as more money goes to landlords and less goes to savings,’ she explained.

‘Using a smaller down payment is an option, but often comes with the added cost of mortgage insurance. Knowing this, it’s no wonder that many current renters are waiting longer to buy a home and are turning to alternate sources, including friends and family, to help them scrape together a down payment,’ she added.

The research report also shows that in 34 of the largest 35 metros, rental affordability is worse than the historical average. Pittsburgh is the only housing market where residents pay less than the historical average for rent, about 25% of income while historically renters in Pittsburgh spent 27%.

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Mortgage lending to first time buyers in the UK increased by volume month on month and on an annual basis in September, the latest data from the Council of Mortgage Lenders shows.

However, in contrast, lending to people moving home saw a dip in September compared to August, but grew by volume and by value compared to a year ago while home owner remortgage activity rebounded after a dip in August to increased levels in September both compared to a month ago and the same time last year.

The buy to let sector continues to grow and saw year on year increases by volume and by value in both buy to let house purchase and buy to let remortgage sectors.

The CML data also shows that first time buyers increased in number of loans advanced and amount borrowed both in comparison to quarter two and the third quarter last year and home mover lending saw a similar trend to first time buyers but the percentage increases by volume and by value were higher.

Home owner remortgage activity saw an increase compared to the second quarter of the year, but a more substantial increase compared to the third quarter 2014 while buy to let saw large quarter on quarter and year on year increases by number of loans and amount borrowed.

Paul Smee, director general of the CML, pointed out that the mortgage market had a slow start to the year. ‘This quarter shows it is now firmly on an upward trajectory. With competitive rates and high levels of product choice currently available, alongside generally improving economic conditions, we expect this to continue as we head into the New Year,’ he explained.

‘Buy to let continues its growth this period, but at 18% of new lending in September remains the fourth largest lending type behind first time buyers, home movers and remortgage. There were five times as many house purchase loans to home-owners as buy to let landlords in September, and the growth in buy to let lending largely continues to reflect its more belated recovery from recession,’ he added.

According to Rishi Passi, chief executive officer of Oblix Capital, on the one hand Help to Buy has driven up borrowing by first time buyers both in volume and value and on the other, there is little sign that impending buy to let tax restrictions are dissuading landlords from expanding their portfolios.

‘Meanwhile cheap money is allowing lenders to offer historically attractive rates to the market and as a consequence lenders are enjoying their best spell since 2008, enticing first time buyers and developers alike to move and borrow,’ he said.

Also with any periods of unoccupancy there is always the need to insure adequately Dan Towner of PropertytoInsure.co.uk advised.

Rob Weaver, director of investments at property crowdfunding platform Property Partner, the growth in buy to let lending underlines the continued confidence UK investors have in this asset class. ‘As an asset class buy to let is also benefiting from the growing concern about the state of the global economy. It is seen as safe,’ he added.

Myles Williams, chief executive at Fast Property Finance, said that buy to let is the stand out trend in the current mortgage market. ‘Buy to let has come into its own in recent years and is being driven by people’s understanding that house price levels and supply problems are creating a significant investment opportunity. The relaxation of the pension rules and economic turbulence around the world have also resulted in greater demand for buy to let,’ he pointed out.

‘Buy to let is an …

The UK’s country house market has seen a marked recovery in the £2 million plus sector in the third quarter of 2015 compared to the previous two quarters, according to the latest research.

The analysis report from Strutt & Parker also shows that sales levels are now not far off where they were in the fourth quarter of 2014, suggesting that the market uncertainty from the general election has perhaps filtered out.
 
Strutt & Parker’s UK outlook for the remainder of 2015 looks positive and it predicts that there will be sufficient growth in the final quarter of the year to hit the forecast of 5.0% for 2015.

Growth over the next few years is also forecast as positive with 5% per annum anticipated. There are, however, uncertainties for the UK market and the upcoming European Union referendum and potential interest rate rises adds further pressures. Despite this, sensibly priced and good quality properties, both regionally and in prime central London, will continue to do well, the firm believes.
 
‘There remains some uncertainty over the near term outlook for the national housing market. The gradual strengthening in growth within the UK economy is still being met by some caution against risk and interest rates are expected to begin rising early to mid 2016,’ said Stephanie McMahon, head of research at Strutt & Parker.

‘Once rates do begin to rise they may have a dampening effect on the national housing market, most specifically in the mainstream markets where the majority of purchases are dependent upon mortgages,’ she explained.

‘However, two factors should cushion this impact. First, interest rate rises are likely to be gradual, estimated to reach circa 2% to 2.5% over the next five years. Secondly, the majority, 75% to 80%, f recent mortgages have been at fixed rates. Both of these factors should mean that any adjustments in purchasers’ behaviour should also be gradual,’ she added.

Her colleague, James Mackenzie, head of the country house department at Strutt & Parker, also agrees that the prime country house market is showing signs of improvement with a lack of high value property on the market and growth in demand over the quarter.

‘However, buyers are incredibly price sensitive as the cost of stamp duty is still a major hurdle. We are hopeful for a normalised autumn and winter,’ he added.

Guy Robinson, head of regional residential agency at Strutt & Parker, pointed out that activity in the summer and early autumn months has shown encouraging signs of an improving market.

‘Last quarter, there was strong demand from buyers which has translated into agreed sales. The number of new instructions has remained static, consistent with the previous period,’ he said.

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