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Brexit vote creating lethargy in prime central London property market
There are signs of lethargy in the prime property market in central London ahead of the vote on the future of the UK in the European Union, according to a new research report. But beyond the distraction of the EU referendum there are signs that demand is strengthening, according to the research from international real estate firm Knight Frank. Overall annual growth in the prime central London property market slowed to 0.1% in May, the lowest since October 2009 and the Brexit effect means demand is subdued even where asking prices have fallen 10% or more. On top of this the number of active buyers to available properties has halved over the last year and Tom Bill, head of London residential research at Knight Frank, described it as a price sensitive market. ‘Demand remains relatively subdued but in a change from recent months, the primary cause in May was the Brexit vote rather than new rates of stamp duty. Indeed, there are overlapping layers of uncertainty affecting supply and demand that are difficult to differentiate but which produce a cumulative impact,’ Bill explained. ‘There has been a discernible Brexit effect on the UK economy as decisions are delayed and the London property market is no exception. Buyers and sellers are postponing decisions because of the prospect of entering unchartered economic and political territory,’ he said. ‘The market has become price-sensitive due to higher levels of stamp duty, but an indication of the Brexit effect is that demand in May has remained subdued even for properties where asking prices have fallen by 10% or more,’ he pointed out. He also pointed out that demand was already more restrained as a result of the impact of two stamp duty increases in the space of 18 months and the ratio of active buyers per available property in prime central London has fallen to 4.8 from 10 over the last year. However, despite the looming referendum, there are signs underlying demand is strengthening, according to Bill as buyers drop asking prices to reflect higher transaction costs. The number of transactions between January and the middle of May was flat this year compared to 2015. Meanwhile, viewings increased 31% between January and April versus last year, suggesting a degree of pent-up demand. Overall, prices have grown 2.4% over the last two years and it has been three and a half years since annual growth was last above 10% in October 2012. A breakdown of the figures show that in the 12 months to May 2016 prices have increased 7.4% in Islington, by 6.3% in the City, by 1.9% in Mayfair, by 1,7% in Kensington, by 1.3% in Tower Bridge and by 0.3% in Riverside. Prices remained unchanged in St John’s Wood and Marylebone but fell by 7.5% in Knightsbridge, by 4.8% in Hyde Park, by 4.6% in South Kensington, by 3.5% in Chelsea, by 1.7% in Kensington, by 1.5% in Notting Hill, and by 0.2% in Belgravia. The report also points out… Continue reading
New mortgage deals create opportunity for next time movers in UK
Recent changes by lenders to raise the maximum age limits for mortgage applications are a sign of a changing culture in the UK. Changes in policies have been announced by leading lenders including the Halifax and Nationwide who have raised the age limit for mortgages to 80 and 85 respectively. Linden Homes is advising people to take this as an opportunity to step up the ladder. ‘These new mortgages offering people the chance to lend later in life are ideal for those people in their 40s and 50s who are considering a property move, but may’ve been restricted previously by the length of term they could borrow money for,’ said Tom Nicholson, the firm’s divisional managing director. ‘This is another move by the lenders to drive the market and reflects the changing habits of people renting for longer and moving up into larger homes, later in life. The new mortgage policies work the same as any other monthly mortgage repayment agreement. Providing those applying have an existing pension in place which will cover the cost of the monthly repayments, a mortgage agreement will be drawn up against the usual rigorous criteria for eligibility,’ he explained. According to Adam Champion, business development director at the New Homes Mortgage Helpline this new type of mortgage product is a sign of the times. ‘People need to see these new mortgage opportunities as a type of financial planning tool and they have their place in the market,’ he said. ‘First time buyers are getting older which over time pushes back the ages of those making the second, third or final move. These new mortgages available open up the market for those looking to make their next move as they approach retirement age for instance,’ he added. Champion stressed that these products are a positive advance for the housing market to help people make choices as they get older and shouldn’t be confused with old endowment style mortgages. ‘They work just the same as any other monthly repayment mortgage, with the debt being repaid over the term. These products give people the chance to make individual choices and find a financial product that works for them and their own situation. I am sure this will really create a great opportunity for those people looking to upgrade their property to consider the new options that now are available to them,’ he pointed out. Nicholson believes, however, that people looking to make the next house move may be missing out on securing their dream home to meet their family’s needs if they aren’t aware of what is on offer. ‘People in their 40s, 50s or 60s considering a house move will consult their bank to see how much they can borrow and may be told they aren’t in a position to get that larger home they want. What they may not have considered, is speaking with house builders offering new build homes, where potential can be… Continue reading
UK house prices crept up in May but annual growth slowed, says latest index
House prices in the UK edged up 0.2% in May but annual growth slowed to 4.7% to an average of £204,368, according to the latest index to be published. The annual pace of house price growth remains in the fairly narrow range between 3% and 5% that has been prevailing for much of the past 12 months, according to the date from the Nationwide, one of the leading home lenders in the UK. ‘In the near term, it’s going to be difficult to gauge the underlying strength of activity in the housing market due to the volatility generated by the stamp duty changes which took effect from 01 April,’ said Robert Gardner, Nationwide’s chief economist. ‘Indeed, the number of residential property transactions surged to an all-time high in March, some 11% higher than the pre-crisis peak as buyers of second homes sought to avoid the additional tax liabilities,’ he pointed out. ‘While cash purchases accounted for a significant proportion of the increase in activity it is not possible to determine whether or not these were purchased by landlords. Mortgage data suggests that, while buy to let purchases were a major driver of the increase, the purchase of second homes also accounted for a substantial proportion,’ he explained. The report also shows that the number of home mover mortgages, which is where second home purchases with a mortgage would show up, increased sharply in March. Gardner said that house purchase activity is likely to fall in the months ahead given the number of purchasers that brought forward transactions. ‘The recovery thereafter may also be fairly gradual, especially in the buy to let sector, where other policy changes, such as the reduction in tax relief for landlords from 2017, are likely to exert an ongoing drag,’ he added. But he also pointed out that healthy labour market conditions and low borrowing costs are expected to underpin a steady increase in housing market activity once stamp duty related volatility has passed, providing the economic recovery remains on track. ‘However, it is possible that the recent pattern of strong employment growth, rising real earnings, low borrowing costs and constrained supply will tilt the demand/supply balance in favour of sellers and exert upward pressure on price growth once again in the quarters ahead,’ he said. He added that according to the Royal Institution of Chartered Surveyors (RICS), the number of properties on estate agents’ books was already close to all-time lows on data extending back to the late 1970s. According to Matt Andrews, managing director of Bluestone Mortgages, consumer confidence is still rising, so with more people looking to secure lending it is important to see some innovation come into the sector to help more people get onto the housing ladder. ‘In order to help those who currently struggle to gain access to lending, such as people who have experienced a genuine blip on their credit scores, or who only have limited trading histories, we need to offer a more… Continue reading
