House Price Index Reaffirms North-South Divide

Property asking prices went up by 1.1% (+ ) this month, the largest October increase since the 1.4% rise in 2014. Eight out of 10 regions saw this increase, except for Yorkshire & Humber and East Midlands.

 

According to the latest house price index by Rightmove, the 104,000 new-to-market sellers may struggle to achieve a sale before Christmas as buyers are being cautious.

While the overall number of properties appearing on the market in England and Wales went up last month by 3.1%, compared with the same period in 2016, the number of sales agreed was down 5.9%.

However, the north is outperforming the south, with a fall of only 3.0% of sales, compared to the south’s 7.9%.

This is due in part to the increasing difficulty sellers of five-bedroom homes or four-bedroom detached properties are having, especially in London, where it takes an average of 86 days to find a buyer.

By comparison, sellers of three or four-bedroom homes, excluding four-bedroom detached properties, are typically sold in an average of 60 days. This suggests that second-steppers – typically couples and young families that are already on the property ladder and looking to move up – are the target audience for sellers that want to secure a sale before Christmas.

Rightmove’s director and housing market analyst, Miles Shipside, suggests sellers may want to price their properties competitively to achieve a sale:

“With buyers becoming more Scrooge-like with their cash, sellers who have undercut the average 1.1% rise in asking prices may stand a better chance of finding a buyer before Christmas”.

He goes on to say that “with buyers’ average wage rises often falling behind retail price inflation, and with a rise in interest rates being more heavily trailed by the Bank of England, sellers in these most popular sectors should still be wary of over-pricing.”

New Property Divide as Price Per Square Metre Soars in London

One square metre of space in a London residential property now costs on average, say official figures.

Research conducted by the Office for National Statistics (ONS) has revealed that London remains the most expensive area in the UK to purchase property – with 19 of the top 20 costliest areas in England and Wales all standing within the city.

Selling for per square metre, the London borough of Kensington and Chelsea was the priciest location featured in the ONS data, followed by the City of London and the City of Westminster, where prices reached and respectively.

Encompassing the popular commuter towns of Weybridge and Esher, Elmbridge in Surrey was the only location outside of London to feature in the top 20.

Standing significantly higher than the average price per square metre across England and Wales – – the ONS said that the data pointed towards ‘a clear north-south divide, both in levels but also in growth terms.’

The report found that the cost of space in London increased by 98% between 2004 and 2016, while the East and the South East of England both rose by 55%.

However, over the same period, the increase in the North East was just 19% and 35% in the North West.

Offering a cost per square metre of just the borough of Blaenau Gwent in Wales was the cheapest location to buy property, according to the ONS.

Barnsley, in Yorkshire, offered the second-best value for money, with a price per sqm of followed by the Welsh town of Merthyr Tydfil at

Brexit Failing to Impact Home Mover Decisions

People move homes mostly due to personal circumstances, says research

The majority of UK home movers say that the UK’s impending exit from the European Union has had no bearing on their decision to move home.

 

Research conducted by the Mortgage Advice Bureau revealed that 71% of property owners have not considered Brexit an important factor when planning the purchase of their next home.

 

Instead, home movers indicated that it was their personal circumstances that were behind their decision to move house, with 65% indicating that a change in lifestyle such as having a family or starting a new job was the main reason.

 

The group least likely to be affected by the impact of Brexit were those aged 25-34, said the survey. Amongst this demographic, 38% cited that the growing size of their families was the reason that they would be changing property.

 

Brian Murphy, Head of Lending at the Mortgage Advice Bureau, said: ‘This report should be regarded as a reality check and a reminder of the fact that, for most, a home move is driven primarily by personal circumstances rather than economics or politics.’

 

Murphy continued: ‘The poll gives us valuable insight into consumer sentiment and would indicate that homeowners who are motivated to move are not being swayed by the political negotiations, with consumer confidence in property seemingly still high.

Change in Stamp Duty Taxation Pushes up Rental Prices

Majority of regions in England and Wales reported an increase in rents in the year to July

 

Average rents in England & Wales rose by 3.1% year-on-year in July, to reach an average of a month, according to the latest buy-to-let index by the letting agent, Your Move.

Nine out of ten regions across the two nations reported an increase in rents, with the strongest growth being found in Wales after rents surged by 4.3% in the year to July to an average of a month.

The region was followed by the South East, the East of England and the North West, where rents rose by 3.6%, 3.3% and 3.1% respectively.

The only region to report a fall in rents was the South West, where rental rates declined by 2.2% year-on-year, to a value of per month.

According to the index, the increase in rents could be due to the change in stamp duty taxation for investors, which has contributed to fewer rental properties entering the market.

Even though rents have seen an annual upswing across England and Wales, landlords in nine of the regions reported unchanged rental returns compared with June.

Wales was the only region to report a change in rental yields, after seeing a slight month-on-month decline from an average of 4.8% to 4.7%.

Landlords in the North East and the North West continued to experience the strongest average yields, standing at 5.2% and 5% respectively in July.

Commenting on the report, Your Move’s director, Richard Waind, said:

‘We are now starting to see the real impact of the government’s Stamp Duty revision, plus the additional tax changes which have hit landlords hard. The outcome has been a decline in the number of rental properties on the market and this has had the effect of pushing up prices for tenants.’

Cities across the North See Greatest Price Rises in July

Fastest growing UK property markets include Birmingham, Manchester and Nottingham

With house price inflation running at 5.3% in Hometrack’s latest index, the trajectory of property prices is said to have accelerated further in July – due to sharp increases in regional cities and an uptick in growth rate seen in London.

The fastest growing city in July was Birmingham with a year-on-year rise of 8.0%, followed by Manchester, where values rose 7.1%, and Nottingham at 6.0%.

According to Hometrack, these markets have seen the consistent rise due to their attractive affordability, high demand and lack of homes.

Comparatively, July’s data signals an end to the slowdown seen in London over the last 18 months, with property values in the city increasing by 2.8% over the month.

On a monthly basis, the greatest upward change stood at 1.9% and was seen in the same cities where prices rose the fastest annually – Birmingham, Manchester & Nottingham.

These were followed by Leeds and Edinburgh, both achieving a month-on-month increase of 1.7%.

Assessing future outlooks, Hometrack expects a ‘clear divide between the prospects for house price growth in regional cities, where affordability levels are attractive, and the prospects for house price growth in London and other high-value cities in southern England.’

The Midlands Leads UK House Price Growth in August

Counties in the UK’s central region are seeing significant annual growth, says Rightmove

 

Asking prices across the Midlands witnessed the largest increase in the UK this month, according to the latest house price index from property listings website, Rightmove.

Leading annual growth across the regions, the East Midlands was home to a 6.8% annual increase in property asking prices, with the average value now standing at

Sellers in the West Midlands and the North West also drove an increase in asking prices, with the two regions posting annual growth of 5.8% and 4.7% respectively.

All regions in the UK reported an annual increase in August, with the smallest growth being found in the North East (1.0%) and Greater London (1.6%).

The anticipated seasonal slowdown in the UK housing market also created a distinct split in monthly performance across the regions, said Rightmove, with the central belt of the UK commanding the highest levels of property price growth.

Led by an increase of 1.1% in Wales, four out of ten UK regions reported growth in asking prices compared to July 2017, with the North West, the West Midlands and the East Midlands seeing property asking prices rise by 0.9%, 0.8% and 0.4% respectively.

 

The East of England maintained its performance from last month, with no change in asking price within the region. However, half of UK regions were home to a fall in prices this month, with the capital continuing to struggle.

Greater London saw asking prices decline by 1.9%, whilst there were also monthly downturns in the South East (-1.7%) and the South West (-1.3%). Asking prices also fell by 0.8% in both the North East and Yorkshire & Humber, as the traditional summer lull in housing market activity took effect in August.

Commenting on the distinct trend found in their latest figures, Rightmove director, Miles Shipside, said:

‘High demand and limited supply are still driving momentum, especially in the counties in the middle of the country. Here, year-on-year rises at over twice the national average are widespread, in contrast to southern and northern counties where none have approached these heady heights.’

UK Households More Optimistic about House Price Increases

Britons in southern regions experienced the greatest rises in July.

Confidence towards the property market rose further over the month, as households in ten out of 11 regions indicated that their home had increased in value, according to the latest House Price Sentiment Index (HPSI) compiled by property consultancy Knight Frank.

With anything above the 50-mark indicating a rise in property costs, July’s index generated an HPSI reading of 54.1 – an improvement on the 53.3 figure reported the previous month.

Those living in the UK’s southern areas perceived the largest increases, with both London and the East of England registering an HPSI reading of 57.7, followed by the South East and the South West at 56.9 and 55.1 respectively.

In terms of the future outlook for house prices, households across all regions expect property values to continue rising over the next 12 months, with the index signalling an uptick from 61.3 in June to 62 in July.

Whilst Britons in the capital remain the most hopeful of future price rises, those living in the South West and Scotland also reported significant surges in optimism from June, as data shows a growth of 8.8 and 8.3 index points in these locations.

Commenting on the index, Oliver Knight, an associate in Knight Frank’s residential research team, said:

‘Rising sentiment in July suggest that any uncertainty surrounding the recent General Election result, and the start of Brexit negotiations in June which could have weighed on pricing, has been offset by a lack of supply of housing for sale and the low interest rate, low mortgage rate environment which continues to underpin pricing across much of the UK’

Last week, the latest house price index by Halifax revealed that property price growth regained strength in July, after seeing the highest monthly increase to date in 2017.

UK House Price Growth Rises to new 2017 Peak in July

Property values increased despite seeing a fourth successive quarterly fall.

The average value of a property in the UK rose by 0.4% last month – the largest monthly increase to date in 2017.

With the average home now worth according to the house price index published by mortgage lender Halifax, the increase partially offsets the 0.9% decline in house prices seen in June, where the average price fell to

However, while property prices rose on a monthly basis, July also marked the fourth successive month of quarterly decline in house price values for the first time since November 2012.

Property values in the past three months (May to July) fell by 0.2% on the values seen between February and April, maintaining the pace of quarterly decline seen in the market since April this year, where prices fell by 0.2% over the quarter.

Annually, house price growth continues to slow, with the year-on-year increase in July standing at just 2.1% – down from the 8.4% seen in the same month last year and falling half a percentage point from the 2.6% seen in June 2017.

Commenting on the market’s movement in July, Russell Galley, Managing Director of Halifax Community Bank, said:

‘House prices continue to remain broadly flat, as they have since the start of the year. Prices in the three months to July were marginally lower than in the preceding three months, while the annual rate of growth has edged down from 5.7% in January to 2.1% in July; the lowest rate since April 2013.

‘However, a continued low mortgage rate environment, combined with an ongoing shortage of properties for sale, should continue to support house prices over the coming months.’

Elsewhere in the market, housing supply continued to struggle, said Halifax, as new home instructions fell for the 16th consecutive month and average stock levels experienced another slight decline to push them to a new record low.

Housing Stock Hits 40-Year Low

The UK’s housing shortage is being exacerbated by an absence of houses being listed on the UK property market, according to the latest index from the Royal Institution of Chartered Surveyors (RICS).

 

Average stock levels for estate agents fell to just 42.53 houses per branch in June – the lowest level recorded since January 1978.

 

Down from the 43.1 seen in May and less than half of the peak 90.95 seen in May 2008, those surveyed emphasised that the current political climate in the UK, and the country’s relationship with Europe, remain at the forefront of sellers’ minds.

 

Despite causing an initial downturn in stock availability last year, the effect of Brexit has started to subside according to RICS’ data, with 27% of those surveyed indicating that the two-year negotiation period was the main issue for sellers.

 

However, the UK’s parliamentary wrangle following last month’s General Election was seen as a leading factor in the falling number of houses available, with 44% of respondents stating that this was the main reason for homeowners electing not to sell at this time.

 

RICS’ chief economist, Simon Rubinsohn, emphasised that the UK’s ongoing political uncertainty was going to continue to have an influence over both stock and transaction levels as the market moves forward.

 

‘Transaction levels … are flat-lining,’ said Rubinsohn. ‘[They] may continue to do so for a while, particularly given the ongoing challenge presented by the low level of stock on the market.’

 

The UK’s continuing shortage of stock is helping lower priced areas of the country with house price growth, said Rics, with a new geographical divide in rising property values now emerging.

 

Whilst the South has traditionally led the UK’s increases, the market is currently seeing the South begin to plateau, as the North continues to rise.

 

‘The latest results demonstrate the danger, however tempting, of talking about a single housing market across the country. RICS indicators, particularly regarding the price trend, are pointing towards an increasingly divergent picture,’ said Rubinsohn.

UK Property Favoured by Investors Amid Political Uncertainty

Traditional asset classes, such as UK real estate, continue to be seen as ‘safe havens’ for investment.

 

Commissioned by peer-to-peer group Kuflink, a survey of over 1,100 investors across the UK shows that more than a third of respondents, or 34%, believed Brexit to have had an impact on their investment strategies.

Britain’s decision to exit the European Union appears to have particularly impacted millennials, or those aged between 18 and 34, and London-based buyers, with this figure increasing to 61% and 71% respectively.

The survey, which assessed investor sentiment towards property and alternative finance in the current political and economic landscape, also revealed that 30% of investors are favouring the property market due to its perceived strength – the equivalent of nearly 9 million people.

However, figures indicate that the majority of investors have also adopted a degree of caution, as 38% of respondents cited to be waiting until after the results of the UK’s snap General Election on June 8 to take new investment opportunities.

Commenting on the results, Kuflink’s CEO, Tarlochan Garcha said:

“The EU referendum has set in motion a number of political and economic shifts that are inevitably impacting the way the UK’s investors think and act. Today research has underlined the faith people place in property as an investment vehicle.

“With a huge number of investors gravitating towards this safe haven asset amidst the uncertainty caused by Brexit and the approaching General Election. There is undeniable investment value in retrospective data and historical evidence to support the strength of any investment class.

“For this reason, I have great faith in the resilience and strength of the UK property market and take confidence in the fact that UK investors agree.

Earlier this week, newly released data by Rightmove showed that asking prices in May saw a significant monthly increase, due to rising demand.