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UK property prices down slightly between June and July, says latest index
Residential property prices in the UK fell slightly by 0.6% between June and July and annual house price growth has slowed to 7.9%, according to the latest monthly index from the Halifax. It shows the fragility of the housing market recovery as different lenders show prices rising and falling, but only by marginal amounts so there is some stability in the housing market. Just a few days the Nationwide reported in its monthly index data that prices increased by 0.4% in July and annual property price growth edged up to 3.5%. Meanwhile one set of data said that prime property prices in central London are still falling and another showed a slight rise. Both the Halifax and the Nationwide show that the average home price is now nudging £200,000. Today’s data from the Halifax put it at £198,883. The Halifax index also shows that sales increased by 5% between May and June. Confidence in the outlook for house price growth remains substantially higher than at the beginning of 2015, according to Stephen Noakes, managing director of retail customer products at the Halifax. He believes that the market is robust, pointing out that house prices in the three months to July were 2.4% higher than in the previous quarter. However, this measure of the underlying rate of house price growth has eased and annual house price growth also declined, to 7.9% from 9.6% in June and is at its lowest since December 2014. ‘The underlying pace of house price growth remains robust notwithstanding the easing in July. Continuing economic recovery, earnings growth in excess of consumer price inflation and very low mortgage rates all underpin housing demand,’ said Noakes. ‘Supply is highly restricted with the stock of homes available for sale falling further to new record lows. This combination of well supported demand and tight supply is likely to ensure that house price growth remains relatively strong in the near term,’ he added. He also pointed out that the Halifax housing market confidence tracker shows that confidence in the outlook for house price growth hit its highest level in four years following the general election in May, but dropped back in June. Price Optimism (HPO) hit +68 in May 2015, and although it slipped back slightly in June to +64, it remains substantially higher than at the beginning of 2015 when it was +52. Jonathan Samuels, chief executive of Dragonfly Property Finance, pointed out that despite the fall in prices during July, house prices overall are still rising. ‘The dominant narrative within the UK property market continues to be weak supply and strong demand,’ he said. He explained that demand is strong because of mortgage rates being at record lows, more people in work, low inflation and a generally positive economic outlook, however, the increasing likelihood of an interest rate rise in the not too distant future has the potential to recalibrate demand and the market as a whole. ‘After so many years of 0.5% rates, even a… Continue reading
Small developers could be hindered by UK court ruling on affordable homes
The UK courts have delivered a blow to small residential developers, potentially making schemes of up to 10 homes economically unviable, according to legal experts. The decision, which concerns the exemption small residential developers have previously had from contributions towards affordable housing, will particularly affect urban residential development and small rural sites, according to law firm Coffin Mew. The exemption was introduced by the government to encourage residential developers to bring forward smaller housing schemes and to redevelop compact urban and rural spaces to help meet the chronic housing shortage. However, two local authorities, Reading and West Berkshire, have successfully challenged this exemption, arguing that it would have a negative effect on affordable housing numbers. ‘This decision is a major blow for smaller residential developers looking to bring forward schemes in urban environments,’ said Nick Leavey, partner and head of commercial property at law firm Coffin Mew. ‘The economic viability of small schemes is often on a knife edge, and this decision is likely to pull the rug from underneath those difficult to develop sites. It is also likely to have a negative effect on land values for future deals, exacerbating the housing crisis in the South East further. Nobody wins from this decision,’ he added. Meanwhile, real estate industry in the UK has seen an 11% growth in jobs due to the recovery in the property market. Jobsite Indeed research found that opportunities for trainee estate agents, quantity surveyors and property managers are among the top five. London, Manchester and Birmingham top the list for vacancies. Also, the number of people actively looking for careers in this industry has increased 10% since 2014, which the firm says suggests that job seekers are starting to realise the potential within this market. ‘The return of positive conditions in the UK housing market for both buyers and sellers, suggest it’s prime time for job seekers in this sector to take advantage of such opportunities,’ said Gerard Murnaghan, Indeed’s vice president for the EMEA region. Continue reading
New home permissions reach record in NZ but not enough to meet housing shortfall
Planning permission for new homes in New Zealand in the first half of 2015 was higher than any previous year, new data shows, but not enough to match current shortfall. Between January and June 2015 some12,057 new dwellings, worth almost $4 billion, were consented, according to the figures from Statistics New Zealand. The new building consent figures show the total floor area for the new homes was 221 hectares, enough to cover an area twice the size of Wellington Airport. In the month of June some 2,042 new dwellings were consented nationally, up 2% compared with June 2014. However, in seasonally adjusted terms, the number was down 4.1% from May 2015. Numbers in Auckland increased by 18% but in Canterbury consents decreased by 13%. ‘New dwelling consents growth this month was led by Auckland, which offset the fall in Canterbury,’ said business indicators manager Clara Eatherley. The data also shows that the total value of consents for all buildings in June 2015 was $1.3 billion, comprising $832 million for residential buildings and $454 million for non-residential buildings. However the number of new homes being built in Auckland continues to fall well short of what is required to meet the region's population growth. It is estimated that 13,000 new homes a year are needed in Auckland just to keep pace with current population growth, which is an average of 1,083 consents a month. That means that current consents were just under two thirds of what is required and the supply of new homes will need to increase by around 50% from current levels before demand and supply start to get back into any sort of equilibrium. A new report suggests that Auckland's housing shortage might not peak for another three years and could last for more than a decade. According to the Auckland Council's Housing Project Office (HPO) the shortfall could rise rapidly to 25,000 homes in 2018, compared to current levels of roughly 15,000. The HPO looked at the rate of population change, the number of dwellings required, and the likely rate of consenting to estimate how many homes would need to be built between over the next 15 years. Officials said consent numbers were continuing to increase and it was not unrealistic to assume Auckland could get to 12,000 dwelling consents a year by 2021 and if 90% of consented dwellings were built, Auckland's shortfall could be eliminated by 2027. Recently the Productivity Commission put the current shortfall at 32,000 homes and said 13,000 homes would be needed each year to accommodate new growth. Continue reading
