The B effect is still there in the background

Brexit uncertainty is continuing to be a constraint on the UK residential property market, according to the latest monthly survey from the Royal Institution of Chartered Surveyors, but not all indicators are agreeing with this.

RICS says that new instructions have fallen further to their lowest point since June 2016, and the lack of new houses coming on to the market is presenting buyers with limited choice and this is a key factor in dropping activity, with headline indicators on demand, supply and prices all still downbeat.

Delve a bit deeper and it also says that asking prices are now more realistic with 62% of survey participants reporting sales prices have been at least level with asking values. Because there is still no Brexit deal a change in momentum is not anticipated in the near term but further out expectations are at least slightly more positive.

So, while near term sales expectations remain negative, and expectations still point to a flat or declining sales trend across all parts of the UK in the coming three months, it is anticipated that sales will begin to pick up to some extent over the next 12 months.

In the lettings market, RICS says that tenant demand continues to climb slowly while landlord instructions continue to dwindle, extending a run of successive quarterly declines dating back to the middle of 2016. This is already the longest uninterrupted sequence of falling landlord instructions since the series started in 1998, and anecdotal evidence signals little chance of a turnaround.

Brexit may still be there but looking at other indicators it is in the background but perhaps not as dominant as it has been. For example, thousands of home owners listed their properties in the days after Brexit was delayed, according to the latest property supply index from Housesimple, with listings up 0.8% in April month on month.

Almost half, some 49% of major UK towns and cities analysed by the online estate agent saw a rise in new properties coming onto the market in April compared to March. It also says that activity has picked up noticeably since 12 April, and although we’ve seen a more subdued spring bounce than in previous years, under the circumstances, seller numbers are at healthy levels, particularly in the North.

Looking ahead, uncertainty is expected to persist until there is more clarity around the UK’s future relationship with the European Union, and naturally this will play on sellers and buyers’ minds.

The North still has a better performing market than London. Indeed, the latest figures from LonRes show that prices across the prime central London market were down 9.7% in the first quarter of 2019 compared to the same period last year with an average of £1,146 per square foot.

The firm’s analysis also shows that in the first three months of the year it was sellers rather than buyers who were more cautious about the impact of Brexit. Indeed, new instructions dropped by 27% across the three LonRes prime areas as a whole, but in prime central London new instructions fell by 39% compared to the same period a year ago.

But there are a lot of positives. What we don’t need in reality is a general election. The housing market has kept going through a turbulent political and economic period. I firmly believe there is light at the end of the tunnel, we just don’t know how long it is going to take to reach it.


What an interest rate rise means for you

A borrower with a mortgage of £100,000 will see an increase of £12 in their repayment, according to the Nationwide.

The UK's wealth disparity has been reveaeled
Image: People with a standard variable rate mortgage of £100,000 will pay £12 more a month

The Bank of England has raised interest rates to their highest level in almost a decade but what are the effects of an interest rate increase on day-to-day finances?

:: Who are the winners and losers?

It is a modest increase of 0.25 percentage points to 0.75%. Households can expect the cost of their loans and mortgages to go up as banks and lenders lift their interest rates.

Savers, who have had the most to complain about in the low-interest rate environment, may see a modest gain.

:: What will be the impact of my mortgage?

Skipton Building Society chief executive David Cutter told Sky News that most new mortgages are fixed for two- to five-years.

“The vast majority of new loans, 90% are on fixed rates. Back book (older mortgages) about 66% so there is going to be no immediate impact regarding affordability,” Mr Cutter said.

This is why interest rates have been raised by the Bank of England

This is why interest rates have been raised by the Bank of England

As the bank took its decision today, the mood could hardly have been more different from the crisis days in 2009

“On an average mortgage, if they do increase by a quarter of a percent, then I think your monthly payment will go up by £16 or about £190 a year.”

According to the Nationwide Building Society, anyone on a standard variable rate will see an increase of £12 on a mortgage of £100,000 and on a £200,000 mortgage, £25.

:: Why will savers benefit?

“The good news, of course, the rest of our membership, we have a million now, is the saving side because they have really suffered for ten years now. If rates do go up to 0.75% that will be highest since early 2009. So hopefully some relief is coming down the line as well,” Mr Cutter said.

Asked by business presenter Ian King whether the full rate increase would be passed on to savers, Mr Cutter responded: “Yeah, we’ll see what the reaction is in the market.”

While savers may be hoping for better returns, Bank of England statistics show that the average interest rate on UK current accounts increased by only 0.09% in the seven months since rates were increased by 0.25% last year.

:: Will this bring down prices at the shops?

While the Bank of England has raised interest rates partly to tackle inflation, this move will not be reflected in everyday prices for some time to come.

It took six months for the effects of the Brexit-hit pound to raise prices as imports became more expensive.

Retailers fear rate rises as higher mortgage and other bills for consumers mean they will have less money to spend.

The BoE predicted that inflation would be 0.1 percentage points higher this year and next at 2.5% and 2.2% respectively.


Value of UK property market falls £26.9bn as house prices stagnate

he value of Britain’s housing market has fallen by £26.9bn, or 0.33pc, since the start of the year, as growth in the North East and Wales has failed to counteract falling prices in many other regions across the country.

The nation’s homes decreased in value by an average of £927 each between Jan 1 and June 30 this year, and are now worth a collective £8.2 trillion, according to figures from property site Zoopla.

While the value of the housing market in the North East has risen by 3.31pc, and Wales’ by 1.4pc, poor-performing regions such as the South West, which endured a decline in value of 2.51pc, and Yorkshire and The Humber (-2.12pc), has dragged the overall market value down.

It marks a reversal of fortunes for the UK housing market, which registered an increase in value of 3.5pc in 2017, despite a slowdown in London and the South East.

Zoopla’s most recent data found that on a local level, the English town of Barrow-in-Furness in Cumbria was the top-performer in terms of house price growth, with prices rising 6.7pc in the past six months. Holt in Norfolk experienced second-best growth of 6.27pc, followed by Pontypool in Torfaen (6.06pc).

By comparison, Reigate in Surrey saw price growth in the first half of 2018 decline in value by 6.7pc. The second and third largest reductions were seen in Lydney in Gloucestershire, and Sturminster Newton in Dorset, which reduced in value by 6.69pc and 6.64pc, respectively.

Despite property prices in London falling at their fastest rate since February 2009, the capital’s homes collectively rose in value by an average of 0.75pc in the six months to June 30.

Zoopla’s Laurence Hall said it was “not surprising” to see a small drop in values since the start of the year.

“Uncertainty around Brexit is a very real factor in the market, however on the positive side, the drop is creating a potential opportunity for first time buyers to get a foot on the ladder in some regions across Britain,” he said.

Analysts have blamed Brexit for the slowdown in the UK’s property market since 2016. House prices have risen more slowly than before the EU referendum, which hit consumer confidence and spending as the pound’s fall pushed up inflation.

According to figures from Nationwide in April, house prices were growing by about 5pc a year around the time of the Brexit vote, but in 2018 growth has consistently hovered around 1pc.

A buoyant property market depends on the UK’s economic health, so if the pound weakens further, inflation surges, and interest rates are raised, the capacity for house price growth would be reduced.

Equally, if Brexit negotiations are successful, economic growth continues to remain positive, and confidence is boosted, house prices could increase faster than initially thought.

Source The Telegraph

https://www.telegraph.co.uk/property/house-prices/value-uk-property-market-falls-269bn-house-prices-stagnate/