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Housing sales in UK set to jump by a fifth by 2020,
The number of property transactions in the UK could rise by over a fifth in five years to reach almost 1.5 million in 2020, according to new research. This will happen if first time buyers are given greater access to high loan to value lending, says the study commissioned by mover conveyancing services My Home Move. The increase in annual property transaction figures from the 1.23 million recorded in 2015 to the projected 1.49 million in 2020, a rise of 21.1%, is based on an econometric forecast of property transaction volumes. This includes a 6.6% rise in property sales in 2016, compared to 2015. The independent research uses a forecast model that draws on the historic relationship between property transactions and three variables that have had the greatest impact on property turnover: average mortgage rates, unemployment figures and the average first time buyer percentage deposit. The forecast of transaction levels is based on the OBR prediction for unemployment which is expected to fall slightly to 5.0% this year before rising slightly to 5.3% by 2020 and the OBR prediction for Bank Rate which is expected to rise gradually from early 2018 to reach 1.0% by the end of 2020. As part of the research, the average percentage deposit for first time buyers has been independently forecasted. This has been modelled to fall from the current 17.1% to 10% by late 2019 as more high LTV mortgage products come onto the market helping to make homeownership more affordable. As property transactions provide one of the most important measures of the overall health of the UK’s housing market, the research highlights a positive future for the market as transactions are set to advance strongly. ‘Although house prices have improved since the economic crash, property transaction levels, which are a key indicator of market health, are yet to return to their peak of 2007,’ said Doug Crawford, chief executive officer of My Home Move. ‘This report highlights the critical importance of unlocking access to high loan to value mortgage products for first time buyers, if we are to see transaction volumes grow and the health of the market remain,’ he explained. ‘The forecast shows that the number of home purchases could see a dramatic improvement if access to home ownership for first time buyers is nurtured. In particular, we need more lending to those with smaller deposits so that average deposit sizes for first time buyers fall to 10%,’ he pointed out. ‘However, reaching this would require a coordinated effort from across the industry sooner rather than later from house builders to ensure the supply is there, from lenders to provide the high loan to value lending that first time buyers depend on, and from those of us who support first time buyers with their purchase to ensure that buying a home is as easy as it can be,’ he added. ‘It couldn’t be clearer how important first time buyers are in… Continue reading
Capital city rents edging lower in Australia
Rents in capital cities in Australia increased slightly by 0.1% in April, but overall rental rates edged lower and have now fallen by 0.2% over the past 12 months. This takes the average rental rate to $490 a week for houses and $467 a week for units across combined capital cities, according to the data from the latest CoreLogic monthly rental review report. Five of the eight capital cities saw a modest rise in rents over the past 12 months, including Sydney up 1.4%, Melbourne up 1.7%, Adelaide up 0.5%, Hobart up 1.1% and Canberra up 2.5%. Perth with a fall of 8.9% and Darwin with a decline of 12.6% both experienced large drops in rent rates and have collectively pulled the combined capital average lower while in Brisbane rents dropped by 0.6%. ‘We anticipate that the weakness in the rental market will persist over the year and rents will continue to fall over the coming months. The annual change in rental rates continues to be at its slowest pace since before 1996,’ said Research analyst Cameron Kusher. ‘At the same time last year, rental rates increased by 1.7% which indicates a sharp slowdown in rental growth over the past year,’ he pointed out, adding that factors contributing to a slowing in rental growth include falling real wages, excess rental supply in certain areas and lower rates of population growth, all of which have impacted on demand for rental accommodation. ‘With dwelling approvals at recent record highs and construction activity set to peak over the next 24 months, accompanied by many new properties still to settle, we anticipate that the weak rental market conditions will persist with rental growth continuing to slow and, or, fall in most capital cities,’ Kusher explained. He also pointed out that based on current market conditions, landlords won’t be in a position to lift rental rates and may actually need to reduce rents in order to keep their tenants. ‘We see renters as holding a stronger negotiation position and where they now have the potential to upgrade into higher grades of accommodation for a similar, or lower rents,’ Kusher said. Canberra is the only capital city where the annual rental change is currently stronger than it was a year ago. Kusher said this highlights the weakness in rental market conditions is being felt across all other capital city markets. With rental rates increasing in some cities in April, rates in Sydney, Adelaide and Hobart are at record highs. In all remaining cities, rental rates are now below their highs with the declines recorded respectively down 0.1% in Melbourne, 0.8% in Brisbane, 13.7% in Perth, 17.3% in Darwin and 5.4% in Canberra. The results show that as rental changes outpace home value changes, gross rental yields have trended lower and have hit record lows of 3.3% for houses and 4.2% for units. ‘In our two largest capital cities, we’ve seen rental yields move to record lows of 3.1% for houses and… Continue reading
Planning reform Bill welcomed by UK building industry
Planning in the UK is to be reformed with local communities getting more power and control to shape where new homes will be built under the new Neighbourhood Planning and Infrastructure Bill. Announced in the annual Queen’s speech, which sets out what will happen in Parliament, the Bill also includes measures to reform and speed up the planning process by minimising delays caused by pre-commencement planning conditions. It has been widely welcomed by the industry. The British Property Federation said that strengthening neighbourhood planning is likely to be extremely effective for ensuring that development is brought about in a way that is supported by local communities and meets their needs. ‘The planning system is often cited as one of the main barriers to development, and pre-commencement planning conditions are an extra burden placed on developers which ultimately slows down the whole process,’ said Melanie Leech, BPF chief executive. However she said that it will depend on the detail yet to come, particularly how it is going to be enforced and how already stretched local authorities will cope. ‘Conditions for development should be agreed as part of the pre-application process, and we would hope that the planning process is not made over-complicated to compensate,’ she added. The compulsory purchase order (CPO) process is set to become clearer, fairer and faster for all those involved and the Bill will see the establishment of and independent National Infrastructure Commission on a statutory basis. On a more controversial points it includes the privatisation of Land Registry. Some believe this will support the delivery of a modern, digitally based land registration service that will benefit the Land Registry’s customers, such as people buying or selling their home. The Government is still consulting on the privatisation of the Land Registry, but its inclusion in the Bill implies that it is going ahead. Leech pointed out that the privatisation of the Land Registry could hold important consequences for the commercial property industry, as security of title is critical to the real estate market. ‘It is hugely important that any changes to the way that the Land Registry is run do not affect this security so that investors can be confident that they own their assets and that if for whatever reason there has been an error in registering their title then they will receive adequate compensation,’ she said. However, the Conveyancing Association (CA), the leading trade body for the conveyancing industry, is against the privatisation. It believes the move would not be in the best interests of clients, the conveyancing profession or the Land Registry itself, based on a number of reasons including its experience of previous privatisations. The Government has argued that privatisation would maximise capital return while maintaining high levels of quality and service, and reducing the burden of control but the CA suggests that such ambitions would not require privatisation. Instead it argues for a potential increase in fees, plus a reversal of the recent halving of… Continue reading
