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UK residential property market saw strong start to the year, report confirms
The UK property market started 2016 at breakneck speed with even stronger and more buoyant activity than the positive sentiment seen during the final quarter of 2015, according to a new report. The number of active buyers entering the residential property market reached new heights, partly driven by the continuation of positive economic trends, such as low interest rates, says the analysis from Connells Group. This has tempted those on the fence to make their first move onto the property ladder sooner rather than later, according to David Livesey, group chief executive. But he pointed out that with the current level of available stock at historic lows, the additional demand from these new buyers combined with increased buy to let activity from investors looking to extend their portfolios before the higher stamp duty changes came into effect on 01 April, many of these first time buyers faced restricted choice and additional competition as they sought to find their ideal property. However he explained that the ratio of applicants to new instructions has evened out in the short term, while property price growth has not been as rapid as it has been in previous quarters, making climbing up or onto the housing ladder a less daunting feat for many. ‘This slight cooling has by no means turned into a chill, with property remaining a valuable asset that will continue to increase in value for the foreseeable future. Supply side initiatives, driven by the Government’s attempts to stimulate housebuilding in particular, may need further support if they are to have any meaningful impact on the level of available stock in the short term,’ said Livesey. The report shows that landlords and tenants have also enjoyed a positive and productive start to the year. It says that activity from renters has grown at a healthy pace, as this group often uses the start of the New Year as an opportunity to move into new accommodation. Despite the fresh demand from new applicants entering the lettings market in the first quarter of the year, the ratio of registered applicants to new instructions is by no means as high as it was during the first quarter of 2015 and average agreed rents have broadly stabilised across England, in the short term at least, the report points out. Livesey said that an increased supply of rental stock is easing pressure on the sector, as buy to let landlords purchase less expensive properties, some of these new build. ‘This may not be what the Government had in mind when it aided the construction of such properties, but it has given tenants respite nonetheless. In addition, tenants are also driving harder bargains, securing longer leases at a cheaper monthly rate meaning they need to return to the market less often, which is also attractive to landlords,’ he explained. ‘The mortgage market has also sprung back to life this quarter, largely propelled by high activity levels in the residential and… Continue reading
Capital city home values in Australia up 3.3% in first four months of 2016
Home values in Australian capital cities continued to rise in the first four months of 2016, up 3.3% compared to the same period in 2015, the latest index shows. In April, the pace of capital gains rebounded from the relatively flat numbers recorded in March, with dwelling values increasing by an average of 1.7%, according to the Corelogic April home value index. Across the country, housing market trends remain mixed, however, and CoreLogic research director Tim Lawless noted that the improvement in the rate of capital gains has been ‘broad based’ during 2016 with every capital city except Perth recording a lift in dwelling values over the calendar year to date. ‘The results show value growth moved at a faster pace compared with the final three months of 2015 when capital city dwelling values slid 1.4% lower off the back of weaker market conditions in Sydney and Melbourne,’ he explained. ‘While we’ve seen capital gains moderate substantially after peaking last year in Sydney and Melbourne, dwelling values continue to trend higher, just not as fast,’ he added. The data shows that the annual rate of growth in Sydney peaked at 18.4% in July last year and has since moderated back to slightly less than half the peak rate of growth, at 8.9% over the most recent 12 month period. Melbourne’s housing market continues to show a level of resilience to a slowing trend, however the annual growth rate has fallen from a recent peak of 14.2% to the current annual growth rate of 10.1% but Melbourne was the only capital city to see double digit growth over the past year. Perth and Darwin remain as the only two capital city markets to experience a decline in home values over the past 12 months, with Perth values down 2.1% and Darwin values 3.7% lower. ‘With recent month on month increases in home values in these two cities, the declining trend rate is now levelling. This may be an early sign that these markets are beginning to find their cyclical trough after more than a year of annual declines,’ said Lawless. Over the current growth cycle, which commenced broadly in June 2012, capital city dwelling values have moved 34.4% higher, led by a 52.7% rise in Sydney home values and a 37.1% lift in Melbourne values. Lawless pointed out that this highlights the two tiered nature of Australia’s housing market at present. Brisbane experienced the third highest rate of dwelling value growth over the growth cycle to date and dwelling values in the city are now up 18% and Lawless explained that Australia’s regional markets also exhibited a lift in house values over the year to date. He added that while house values across the non-capital city markets have generally underperformed compared with the capital city regions, regional house values moved 2.4% higher over the first quarter of the year. Continue reading
Mortgage payments for UK first time buyers have fallen sharply
First time buyers in the UK with small deposits are making savings of more than £790 a year, when comparing monthly mortgage payments to the same time last year, new research suggests. This is in part due to competitive interest rates now available as monthly mortgage costs for first time buyers have fallen sharply, according to the latest Genworth Moneyfacts LTV tracker report. The average house price for a first time buyer is £154,559 and for those with a 10% deposit, lower mortgage interest rates mean they can save £67 a month compared to what they would have paid if they’d taken out the same loan a year ago. This adds up to savings of £800 over the course of a year. For those with 5% deposits, the monthly payment on a 95% LTV mortgage for an average first time buyer home was £66 per month lower in March 2016 compared to 2015, equating to annual savings of £792. The report explains that part of the reason for the attractive rates is increased competition as the number of mortgage products at high LTVs has risen in recent months. The number of mortgages available for those with a 5% deposit jumped sharply from 195 in March 2015 to 267 in March 2016. As a result, rates for 95% LTV mortgages reached a record low of 3.92% in March 2016, 0.80 bps lower than a year before. Rates for 90% LTV loans are also much cheaper, having fallen 0.92 bps to 2.82%. However, the total amount of high LTV lending has stagnated even while overall lending has increased revealing that while lenders may be competing for the best customers in the high LTV bracket, they are more focused on increasing lending to customers with larger deposits. Despite a climate which is ripe for high LTV lending and a rising numbers of available mortgages, lending to those with a 5% deposit, which saw a notable boost following the introduction of the Help to Buy Mortgage Guarantee (HTB2) Scheme, has subsequently flat lined. Lending to those with 5% deposits received a much needed boost following the introduction of HTB2, with the proportion of lending at this level climbing from 1.7% in the fourth quarter of 2013 to 3.1% in the first quarter of 2014. It reached a high of 4.2% of total mortgage lending in the second quarter of 2014 but stagnated at around 3% in 2015. The stagnation in lending to those with small deposits is particularly concerning given that the Help to Buy Mortgage Guarantee scheme is due to end after this year. With nothing scheduled to replace the scheme, the fear is that lending to this part of the market could continue to fall. ‘Competitive rates available for those with just 5% or 10% deposits mean they are able… Continue reading
