Annual house price growth in the UK has stagnated, latest lender index shows

Annual house price growth in the UK has stagnated this month with a rise of just 0.1% to an average of £211,966, according to the latest lender index.

This follows a subdued December when price growth slowed to 0.5% and in January prices were up by 0.3% compared with the previous month, the figures from the Nationwide show.

Robert Gardner, Nationwide’s chief economist, pointed out that indicators of housing market activity, such as the number of sales and the number of mortgages approved for house purchase, have remained broadly stable in recent months.

But he warned that forward looking indicators have suggested some softening was likely. ‘In particular, measures of consumer confidence weakened in December and surveyors reported a further fall in new buyer enquiries towards the end of 2018,’ he explained.

‘While the number of properties coming onto the market also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of demand and supply in favour of buyers in recent months,’ said Gardner.

He also pointed out that uncertainty is exerting a drag on the market. ‘It is likely that the recent slowdown is attributable to the impact of the uncertain economic outlook on buyer sentiment, given that it has occurred against a backdrop of solid employment growth, stronger wage growth and continued low borrowing costs,’ he added.

Looking ahead, near term prospects will be heavily dependent on how quickly the uncertainty lifts, but ultimately the outlook for the housing market and house prices will be determined by the performance of the wider economy, especially the labour market, according to Gardner.

‘The economic outlook remains unusually uncertain. However, if the economy continues to grow at a modest pace, with the unemployment rate and borrowing costs remaining close to current levels, we would expect UK house prices to rise at a low single digit pace in 2019,’ he concluded.

 


North-South house price divide to narrow over the next five years

House prices in London have risen by 72% over the last 10 years, leaving little wriggle room to rise further, Savills says.

The North-South house price divide could narrow over the next five years, a report predicts – with property values rising at a faster rate in northern England, Wales and Scotland than those across London.

According to estate agents Savills, house prices across Britain are expected to increase by 14.8% from 2019 to 2023. That would add about £32,000 to the average house, valuing it at £248,000 by the end of 2023.

While house prices in London are expected to rise by 4.5% between 2019 and 2023, the rest of the country could see double-digit growth. House prices in the North West are expected to rise 21.6%, Wales will see a 19.3% increase and Scotland will see 18.2% growth.

Savills believes stricter mortgage lending rules introduced following the financial crisis will limit house price increases – but new mortgage affordability rules will also help to protect the housing market from prices nosediving.

Lucian Cook, Savills head of residential research, said: “Brexit angst is a major factor for market sentiment right now, particularly in London, but it’s the legacy of the global financial crisis – mortgage regulation in particular – combined with gradually rising interest rates that will really shape the market over the longer term.

“That legacy will limit house price growth, but it should also protect the market from a correction.”

London, which has been seen as the engine of the housing market recovery, has seen house prices soar by 72% over the past 10 years – well ahead of any other region.

This leaves less wriggle room for house prices there to keep pushing upwards as people stretch their mortgage borrowing.

The report said that, outside London, key regional economies including Manchester and Birmingham which attract both local buyers and investors have the capacity to outperform their surrounding regions.

Here are Savills’ forecasts for house price growth between 2019 and 2023. Based on figures from Nationwide Building Society’s house price index, Savills has also calculated what the average house price could be by the end of 2023 if its projections for house price growth are correct:

:: North East, 17.6%, £147,100

:: Yorkshire and Humberside, 20.5%, £193,117

:: North West, 21.6%, £197,717

:: East Midlands, 19.3%, £222,392

:: West Midlands, 19.3%, £227,394

:: South East, 9.3% (within the South East, house prices in the outer areas including Brighton and Hove, Milton Keynes and Aylesbury could reach £305,885; and those in the outer London area which includes Reading, Slough, St Albans, Windsor and Maidenhead could reach £398,190)

:: East Anglia, 9.3%, £249,958

:: London, 4.5%, £489,628

:: South West, 12.6%, £276,359

:: Wales, 19.3%, £184,773

:: Scotland, 18.2%, £176,308


Budget was all about buyers with nothing for landlords or tenants

It was never going to be a Budget for landlords and many in the industry will be disappointed that nothing was done to boost the flagging private rented sector where demand continues to be more than the supply of homes to rent.
The overwhelming message from the announcements, or perhaps lack of them, is that the Government still sees the UK as a nation of home owners and does not acknowledge that the rented sector is vital to the housing market.
There was good news for first time buyers in terms of a reduction in stamp duty for those opting for shared ownership and an extension of the Help to Buy scheme to 2023 but with conditions.
There is little doubt that the private rented believes that the Chancellor Philip Hammond failed to address the concerns of landlords in his Budget and the lack of positive change could drive more to sell up.
Those working in the sector have pointed out that many buy to let landlords have sold up due to a restrictive tax regime introduced in the last couple of years, including the extra 3% stamp duty on additional homes.
They are also warning that while the announcement that lettings relief will be cut and the Capital Gains Tax exemption period reduced to the final nine months of ownership, could adversely affect some landlords.
From April 2020, lettings relief will only apply in circumstances where the owner of the property is in shared occupancy with the tenant, in other words it will be abolished for non-resident landlords, selling properties they had previously lived in while the final period exemption is also set to be reduced, from the current 18 months to nine months.
Although cutting lettings relief might see more properties coming up for sale, the rental market will be the loser at the end of the day but the biggest blow is perhaps the lack of recognition that there is a direct relationship between financially squeezed landlords, many of whom struggle to invest in their properties, and tenants struggling to find homes that are fit for purpose.
Whilst the Chancellor again outlined the Government’s desire to boost home ownership, he failed to address the needs of the millions of people who cannot or do not want to buy. Those who do rent and do want to buy still struggle to save for a deposit at a time when rents are rising.
Indeed, the latest figures from Rightmove show that average asking rents outside of London have reached over £800 per month for the first time, fuelled by fewer available rental properties for prospective tenants to choose from.
Rents increased by 0.8% in the third quarter of 2018, the biggest jump recorded at this time of year since 2015 and at the same time there are 8.7% fewer rental properties available compared to this time last year and in London the number of available rental properties is down by 19.4%, with agents finding tenants four days quicker for landlords’ properties than a year ago.
Rightmove says that the continuing trend of fewer landlords purchasing buy to let properties has led to record high rents and a lack of available rental properties this quarter, increasing competition among many prospective tenants looking for the right home.
While the exit of landlords from the private rented sector is a combination of factors you cannot help but think that the Budget did not just do nothing, it just ignored landlords and that will have an impact down the line.
Author Gary Lawson
Smart Invest UK
Please do not reproduced without my permission

New £1 billion fund announced for building new homes in England

The Government and Barclays have announced a £1 billion housing development fund to help deliver thousands of new homes across England.

Under the agreement loans ranging from £5 million to £100 million, which will be competitively priced, will be available for developers and house builders who are able to demonstrate the necessary experience and track record to undertake and complete their proposed project.

Funding is open to new clients as well as existing Barclays clients, and will put greater emphasis on diversifying the housing market, as at present almost two thirds of homes are built by just 10 companies.

A key priority of The Housing Delivery Fund is to support small and medium sized businesses to develop homes for rent or sale including social housing, retirement living and the private rented sector, whilst also supporting innovation in the model of delivery such as brownfield land and urban regeneration projects.

‘There is a vital need to build more good quality homes across the country. This £1 billion fund is about helping to do exactly that by showing firms in the business of house building that the right finance is available for projects that help meet this urgent need,’ said John McFarlane, Barclays’ chairman.

Housing Secretary James Brokenshire said that it will see Barclays in partnership with Homes England also help to see more design and innovation introduced to new home building.

‘It is a further important step by giving smaller builders access to the finance they need to get housing developments off the ground. This is a fantastic opportunity to not only get more homes built but also promote new and innovative approaches to construction and design that exist across the housing market,’ he added.

According to Sir E Lister, chairman of Homes England, the organisation will play a more active role in the housing market and do things differently to increase the pace, scale and quality of delivering new homes.

‘The Housing Delivery Fund demonstrates Barclays’ commitment to the residential sector and will provide a new funding stream for SME developers to help progress sites and deliver more affordable homes across England,’ he said.

Brokenshire added that it will move towards the target of 300,000 new homes being built a year by the mid-2020s and that with 217,000 homes built last year, England has seen the biggest increase in housing supply for almost a decade.


More Londoners Buying Property in the North and Midlands

The number of homeowners from London buying properties outside the capital has increased, according to new research from Hamptons International.

Just over 30,000 of Londoners looking to buy a new property left the capital in the first half of 2018, some 16% more than H1 2017 and an increase of 61% over the last decade.

The majority of homeowners moving, around 38%, moved to the South East, a modest 3% fewer than the first half of 2017, followed by 30% moving to the East of England.

However, the number of movers leaving London and buying property in the North and Midlands has more than tripled in the last decade, with over a fifth (21%) moving to these regions compared to just 6% ten years earlier.

First-time buyers are also buying outside of London, with around 31% buying their first home beyond the capital. Whilst this is nearly double the number recorded five years ago, it is a 2% decline on last year’s figures, due to savings from stamp duty relief and the Help-to-Buy scheme.

Although the vast majority of first-time buyers, some 85%, moved to East of England or South East, Hamptons notes this is 10% fewer than four years ago. On the other hand, more than one in ten (12%) buying their first property in the North or Midlands, four times the number recorded in 2010.

“With affordability stretched, more Londoners are moving out of the capital to find their new home,” said Aneisha Beveridge, research analyst at Hamptons International.

“More people are making a bigger move and buying a larger home sooner to avoid having to pay stamp duty on additional moves as they trade up. But for many, this means heading further North.”

Beveridge goes on to note that despite more first-time buyers staying in the capital, “raising a deposit remains a hurdle for many, which helps explain why increasing numbers of first time buyers who leave London are heading North.”