UK Land Values Increased by £400 Billion in 2017

Official figures from the Office for National Statistics (ONS) have revealed that rising land values contributed significantly to the overall net worth of the UK in 2017.

Last year, the UK’s net worth was estimated at

trillion, rising by billion between 2016 and 2017, which calculates at an average of per person.

This represents a growth of 5.1%, and whilst well below the 9.2% recorded between 2015 and 2016 it remains in line with the long-term average of 5.2% growth between 2009 and 2017.

Non-financial assets were the key driving force behind the rise in the UK’s net worth, with the largest contribution coming from a bn increase in land values since 2016.

Land in the household sector rose in value by bn since 2016 to tn in 2017, representing 76% of the total value of UK land compared with 61% in 1995.

The ONS notes that the value of land in the UK accounted for a higher proportion (51%) of its net worth in 2016 than any other G7 country; more than France’s (41%) and almost double Germany’s (26%).

Rising demand from housebuilders has led to strong annual growth in greenfield land values in the Midlands, as values across the UK increased by 0.8% in Q2 2018 according to Savills.

Scotland and Midlands Lead Greenfield Land Values Growth

Strong demand from housebuilders driving up cost of land and house prices in the Midlands

An increase in the supply of permissioned land has lead to supressed levels of land value growth, according to the quarterly UK residential development land index by Savills.

Greenfield land values grew by 0.8% in Q2 2018 across the UK, bringing annual growth to 2.7%. The strongest quarterly increases recorded were 2.0% in Scotland, 1.5% in the East (includes East Midlands and East of England), and 1.3% in the West (includes West Midlands and South West).

On an annual basis, greenfield land values were up 4.4% in the West and 4.8% in Scotland, with the index noting that the strong growth in land values in the Midlands has been driven by rising demand from housebuilders.

The reason for the muted growth in land values across the UK, however, is due to a sharp rise in granted planning permissions.

In 2017, over 391,000 new homes had planning permission granted, a 21% increase from 2016.

According to the index, demand for land is also being driven by housing associations competing with housebuilders for land as a result of Section 106 requirements.

Strong house price growth is linked to the rise in land values, with Savills reporting that annually prices in the East and West Midlands are up 5.8% and 6.2% respectively, compared to a 3.9% average across England & Wales.

“Land values are currently underpinned by increased demand and a clear political will to maintain high levels of housing delivery, while rising consents and build costs will temper growth potential,” said Savills research analyst Lucy Greenwood.

“The key to boosting housing delivery will lie in unlocking land in locations linked to the strongest housing markets and to those with the most pressing housing need.”

House prices in England and Wales fall for fifth month in a row, new data shows

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.

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East Midlands is Most Confident Region for House Price Growth

Consumer confidence in the housing market has increased by its largest rate since 2016, according to the latest Housing Market Sentiment Survey by Zoopla.

Over eight in ten homeowners (84%) predict house prices in their area will grow by 6.9% over the next six months.

This is a marked increase on the previous survey held in November 2017, when a price increase of 4.9% was forecast by 70% of consumers.

The East Midlands remains the most confident region, with 93% expecting prices to rise compared to 79% in November’s survey, closely followed by the East of England (90%).

Although North Eastern homeowners have the least optimism, market confidence has nearly trebled in the region from 22% in November to 63%. In London, 76% of consumers are anticipating prices in the capital to grow.

However, in terms of the rate at which prices are predicted to rise, homeowners in the West Midlands are the most optimistic, predicting property prices in the region will grow by 10.6% in the next six months.

Zoopla believes that the rise in confidence is a result of wider activity in the housing market, due to a seasonal increase in momentum.

Build-To-Rent Development Pipeline Exceeds 100,000

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.

One Third of Millennials Will Continue to Rent in Their Retirement

The number of families with children living in rented property tripled between 2003-2016…

The Resolution Foundation has proposed a series of reforms aimed at protecting tenants and landlords in the private rented sector.

According to the think-tank’s research, half of all millennials – people born between 1980 and 1996 – will be living in rented property up to their 40s, whilst a third are likely to be renting beyond retirement.

Furthermore, four out of ten millennials aged 30 are already renting, double the rate of the previous generation and four times that of baby boomers, whilst the number of families with children lived in the private rented sector has grown substantially, from 0.6m in 2003 to 1.8m in 2016.

Although they acknowledge the policies the government has introduced to make housing more accessible for first time buyers, the Resolution Foundation argues that more needs to be done to provide greater security for those that rely on renting.

This includes short-term measures such as proposals for indeterminate tenancies, which are essentially open-ended leases. Such tenancies are already in use in parts of Europe, including Scotland.

A new tribunal system could also be created, in order to resolve disputes in a timely and cost-effective manner.

Lindsay Judge, a senior analyst at the Resolution Foundation, notes that support needs to be available across all areas of the housing market: “While there have been some steps recently to support housebuilding and first-time buyers, up to a third of millennial still face the prospect of renting from cradle to grave.

“If we want to tackle Britain’s ‘here and now’ housing crisis we have to improve conditions for the millions of families living in private rented accommodation.”

Extent of North-South Renting Affordability Gap Revealed

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.

 

Midlands Cities Among Top 10 Buy-To-Let Property Postcodes

London commuter belt towns fall down the rankings as Northampton, Leicester and Birmingham surge

Three of the top five locations for buy-to-let property investments are in the Midlands, according to new research.

Northampton, Birmingham and Leicester were all cited as top postcodes for buy-to-let, with strong rental growth of 2.38%, 3.91% and 4.35% respectively, according to independent mortgage lender LendInvest.

Whilst the Midlands regions have been steadily rising up the rankings, the report highlights the South West region as an up-and-coming market, as strong rental growth and healthy market activity has boosted the profile of cities like Bristol, Swindow, Truro and Gloucester.

Conversely, London and the South East continue to underperform, as declining rents deters further investment in these regional markets.

Historically strong performing commuter towns like Dartford, Romford and St Albans have recent begun to slide down the LendInvest buy-to-let rankings, in some cases by as many as 58 places.

However, the report notes that demand for housing will continue to support future growth: “Political changes are increasingly underpinning this uncertainty in the market, however the need for housing around the UK prevails.

“As such, we can expect the rental market to grow, with investors prioritising yields and rental price growth as valuable metrics to consider when purchasing a property.”

Over the last 10 years, rents have grown by 16% nationally, according to figures from Rightmove.

 

Government Announces £400m Housebuilding Investment Fund

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.