House prices in England and Wales fell for the fifth month in succession, but some cities bucked the trend with Leicester recording the fastest growth, according to new data.
Overall, average house prices slipped 0.2 per cent in July to £302,251, figures compiled by Your Move show. Despite the fall, the average price is still up 1.6 per cent on a year ago and all regions of England and Wales have recorded “modest” growth on an annual basis.
Slow activity has held prices down with an estimated 75,000 fewer activities in July compared to June; 2 per cent down on June and 6 per cent lower than the seasonal trend. Transactions in the first seven months of 2018 are estimated to be 4 per cent below the same period in 2017.
The West Midlands recorded the fastest annual growth at 3.3 per cent while the South East and East of England were the slowest at 0.5 per cent.
What effect the Bank of England base rate rise at the start of August will have on the market remains to be seen, Your Move said.
The average price of a property In London now stands at £625,529 at the end of June with prices falling in almost two thirds (21 out of 33) of the city’s boroughs on an annual basis.
The biggest drops on an annual basis have been seen in the City of London, down 19.4 per cent (albeit on a small number of transactions), Hammersmith and Fulham, and Southwark, both down 11.7 per cent. In both Westminster and Hammersmith and Fulham, sales of new builds in previous months or years can explain much of the swing in prices.
Overall, the most expensive borough remains Kensington and Chelsea, where prices are down 1.9 per cent on an annual basis to £1,765,033, while the cheapest borough is still Barking and Dagenham, with an average price of 308,547, up 1.8 per cent annually.
New research by Hamptons International proposes that the private rented sector will continue to grow despite recent policy changes.
Demand for rented property will be a key driver of the sector’s performance, due to long-term demographic changes and a consistent decline in homeownership levels as house price increases outpace income growth.
As a result, the estate agency forecasts that 20.5% of households will be renting in Great Britain by 2022, up from 19.4% in 2018, and that there will be six million households renting privately by 2025.
The research goes on to explore the different ways in which properties can appear on the market. For example, it estimates that around 80,000 homeowners decided to let their home out as they struggled to sell.
However, Hamptons predicts that the build-to-rent sector will become a larger part of the market, as it found the development pipeline will deliver more than 100,000 units, with more expected to come in the future.
Cash owners outnumber those buying with a mortgage, the research also highlights, noting that cash buyers have increased for 23 out of the last 25 years.
In 2017 alone, 65% of investors purchased using cash, equating to billion in property.
“The mass of cash in the market alongside increasing institutional interest is acting as an insulation to changes in policy. Creating a firm foundation on which the sector can continue to grow, particularly as the demand for rented homes will continue to rise,” the research concludes.
Households outside London spend an average of just over half their income on renting…
Households renting in London are putting a significant percentage of their income towards rent compared to the rest of the country, according to new data from Landbay.
Annual rental growth in the UK, excluding London, rose to 1.21% in March, bringing the average monthly rent to outside the capital.
In London, the average monthly cost of renting is more than double the national average, at 2100
However, the average disposable income for a worker in the capital is per 2455 month. As a result, 89% of their take-home pay is used on renting.
Outside the capital, rental payments amount to just over half (52%) of the average disposable income, which is per 1760 month.
In England, renters in the North East have the lowest percentage (41%) of their incomes going towards rent, followed by Yorkshire & the Humber (43%), the North West (44%) and the East Midlands (44%).
“Rents have continued to rise over the last five years, increasing by 9% across the UK since March 2013 and by 7% in London,” notes John Goodall, CEO and founder of Landbay.
“Not a day goes by when there isn’t more news about the supply-demand mismatch in the UK housing sector and until this is resolved, tenants will continue to rely on the private rented sector to support them.
“With the right property and the right location, there are attractive yields to be had, and consistent rental demand will drive returns in the long-term,” Goodall concludes.
Strong demand for city-centre living, a huge student population and urban regeneration make Manchester one of the best-performing property markets in Britain
Manchester, benefitting from the recent £1bn investment as part of the Government’s Northern Powerhouse initiative, is showing itself to be a vibrant, forward-thinking metropolis with the most attractive city centre investment market in Britain, according to JLL.
The property specialist company rates Manchester as its No 1 prospect for residential price growth over the next five years, with the annual average growth of 4.2pc compared with 2.4pc across the UK. Rents are expected to increase by around 3.5pc per annum between now and 2020.
Pivotal to the recent success of Manchester is a revival in demand for city-centre living
House prices grew by 10pc in 2017, with the average two-bedroom flat now costing £250,000 (an increase of 8.7pc over 2017), and rental prices rose by 3pc, according to JLL’s latest research.
Pivotal to Manchester’s success is a revival in demand for city-centre living – a trend that was at its height before the 2008 recession, which collapsed along with house prices due to sheer oversupply.
In 2000 there were 10,000 people living in the heart of the city. Now there are nearly 70,000, many of them students or young professionals with a desire to live close to where they work and play.
“City living has gained strong momentum in Manchester over the past three years and, together with an active student market, has pushed demand in both the sales and lettings markets noticeably higher,” says Neil Chegwidden, of JLL residential research.
“And with housing supply in the city centre severely constrained, prices and rents have soared.”
For investors with an eye on Manchester, its student population of more than 85,000, spread among four universities, plays a crucial role.
The city has the highest retention rate of students after London, with 50pc choosing to stay after they graduate. Six in 10 Manchester-born students who go to university elsewhere also return to their home town after graduation.
Nick Whitten, JLL’s director of UK research, says: “You can see the reasons. They already know they enjoy living there and there are plentiful employment opportunities and affordable housing.
“More new businesses are coming to the city than anywhere else in the UK, outside London. Many of them are first-time investors in the city, which is a reflection of Manchester’s growing profile.”
Manchester: a market snapshot
Average house price growth in Manchester over next five years
Average cost of a two-bedroom flat in Manchester
How much the government has invested in the Northern Powerhouse initiative
Number of people now living in Manchester city centre
The young demographic is also a driving force in the number of rental properties in Manchester – which constitute two-thirds of the city centre’s housing stock. A fast-emerging trend is a build-to-rent market, which accounts for a large proportion of the 30 new residential developments currently being built.
“Professionally managed blocks of rental apartments with leisure facilities and concierge services are forcing private landlords to up their game, which is a positive thing.
“Shortly, we could see landlords offering similar white-label services such as local discounts and access to a network of handymen to stay competitive,” says Mr Whitten.
JLL identifies nine Manchester “sub-markets” that offer potential to investors, including the centrally located Northern Quarter, Piccadilly and Castlefields, with its urban canalside living. St John’s Deansgate has become a prime market, with sales there last year regularly exceeding £500 per square foot.
Across the River Irwell, suburban Salford is prominent on the radar of the millennial market seeking a lower-priced, higher-quality alternative to city-centre living.
Salford is also a key focus for buy-to-let investors, with Salford Quays now the UK’s second-biggest media hub, home to 80 media organisations.
“It has the benefits of being well connected to the city centre but better value in property terms. There are 7,500 homes in some phase of development in the Salford City Fringe, and Salford Quays attracts a professional audience, which makes it a good place to invest,” says Mr Whitten.
He thinks that another area to watch is Ancoats and New Islington, whose regeneration is largely funded by the owners of Manchester City Football Club.
As the momentum and investment continue in creating the Northern Powerhouse, Manchester is arguably the poster city and the greatest beneficiary so far, with a new arts centre, two new research institutes and improved transport infrastructure.
It has also seen the highest rate of job creation in the country, with the number of new jobs growing by 84pc between 1999 and 2015.
The Housing Secretary Sajid Javid has revealed a new government investment fund to help boost housing construction in Greater Manchester, Oxfordshire and the West of England.
Almost million is being put towards building more homes, as well as delivering local infrastructure projects like schools, roads and hospitals.
The fund is similar to the £ 120m grant to build 215,000 new homes in the West Midlands, announced by the Chancellor in the Spring Statement.
Of this, Greater Manchester is set to receive m to accelerate economic growth in the Northern Powerhouse and support the construction target of 227,200 new homes in the region by 2035.
An interim package of 120m will be given to the West of England, which covers Bristol, Bath, and parts of Gloucestershire and Somerset, to nearly double the number of new homes built each year from 4,000 to 7,500.
Oxfordshire will receive the rest of the funding, some m, which will support the construction of an additional 100,000 new homes by 2031, as well as the building of vital bridges, roundabouts and roads.
Meanwhile, the government announced that shortlisting has finished on bids for the bn Housing Infrastructure Fund, with 44 bids for high-impact infrastructure projects successfully progressing to the next assessment stage.
“This government is determined to build the homes this country needs,” Sajid Javid said of the fund. “That’s why we’re working with ambitious areas across England and backing them with investment and support.
“We’re also investing in local infrastructures like schools, roads and hospitals so that we can help unlock even more new homes in the areas where they’re needed most.