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UK asking prices down 1.1% in December, lowest seasonal dip since 2006
The UK residential property market has experienced its lowest property price dip for the end of the year since 2006, according to the latest index figures. Traditionally prices fall off in the run up to the festive season but the data from Rightmove shows that asking prices fell 1.1% in December and it is forecasting price growth of 6% for 2016. It says that increasingly stretched affordability and extra stamp duty on the buy to let sector will be outweighed by stark imbalance between supply and demand. Indeed, buyer enquiries to agents since the beginning of October this year are up 37% but the number of properties coming to market was down 5% compared to the same period in 2014. Looking ahead demand is expected to increase further in more affordable cities such as Leeds, Edinburgh, Cardiff and Manchester as highly skilled workers may choose to leave London for buoyant city regions. The lower than expected fall in prices mean that the annual increase is almost £20,000 or 7.4%, taking the average asking price to £289,452. ‘Whilst a fall is the norm at this time of year, this is December’s best post financial crash performance, signalling another round of price rises in 2016. Despite the shortage of suitable stock in many parts of the market, demand for housing is on the up,’ said Miles Shipside, Rightmove director and housing market analyst. ‘Although the average price of property coming to market is already up by a hefty 7.4% compared to a year ago, Rightmove forecasts that prices will reach and breach new records next year,’ he added. He explained that whilst initiatives are in place to encourage developers to build more new homes to supplement the supply of existing ones coming to market, the lead times are long and developers face capacity constraints. ‘In the meantime strong demand is being further fuelled by the additional momentum and aspiration for home-ownership that schemes such as Help to Buy create. We therefore predict that the average asking price will be another £17,000 higher by the end of 2016,’ said shipside. An analysis of Rightmove data by Dr Alasdair Rae, of the University of Sheffield, suggests that there could be an exodus of highly skilled workers leaving London for more affordable yet vibrant cities such as Leeds, Edinburgh, Cardiff and Manchester. But this ripple effect won't reach all towns and cities and continued stagnation or price falls are likely in less sought after areas in the north and west of the country, especially if buy to let investor activity tails off. Rae suggests that as choosier buyers demand easier access to amenities to satisfy convenience and lifestyle demands, expect to see increased price divergence between the more buoyant large urban markets and smaller urban areas that can’t offer the same range of facilities. ‘2016 may be the year when many young urban professionals finally give up on the London market and consider long term career moves… Continue reading
Scottish govt announces extra tax on second homes, following rest of UK
Private rented sector landlords in Scotland and second home owners face an extra 3% stamp duty tax from next year which will bring them into line with changes in England and Wales. It was only a matter of time before the change came about after the UK Chancellor George Osborne announced the additional tax for England and Wales in his recent Autumn Statement. Scottish Finance Minister John Swinney said that he would bring forward legislation on the new second home charge soon so that it could be in force by April 2016. ‘I am conscious of the issue of second homes. We need to ensure that the opportunities for first time buyers to enter the market in Scotland are as strong as they possibly can be and we need to make certain that tax changes elsewhere in the UK do not make it harder for people to get on the property ladder,’ he explained. It means that an extra 3% rate will apply to the purchase of additional properties, such as buy to let and second homes from 01 April 2016 and be levied on the total price of the property for all sales above £40,000 on top of the current LBTT rates. The Scottish Government has forecast that it will raise overall LBTT receipts in 2016/2017 by between £17 million and £29 million, rising to a possible £66 million by 2020/2021. Overall the Government expects LBTT will raise £295 million in 2016/2017. John Blackwood, chief executive of the Scottish Association of Landlords, said that landlords will be disappointed and frustrated by the decision which will effectively ‘punish’ those who choose to invest in the private rented sector (PRS) Scotland. ‘The supplementary tax on the purchase of second homes will have a huge impact on the buy to let market and exacerbate an already serious shortage of properties in many areas. We firmly believe that the biggest losers from today's statement will be tenants who will now find it even harder to get the accommodation they want at a price they can afford,’ he added. Oliver Knight, a senior analyst in Knight Frank’s residential research department, said that sales will be brought forward as landlords and others seek to minimise their property tax burden. He added that buy to let property investors will also be able to continue offsetting all stamp duty against capital gains tax when they sell their property. Bob Cherry, partner at property consultants CKD Galbraith, also believes that there will be a flurry of activity before the end of March 2016. ‘This new levy will have implications for current landlords looking to sell as well as act as yet another deterrent to would be landlords thinking about the market as an investment opportunity,’ he said. ‘This measure, like the LBTT rises introduced earlier this year, is also a wealth tax on owners as buyers of buy to lets will seek to pass on the extra purchase costs by reducing… Continue reading
CML figures shows dip in UK mortgage lending in November
Gross mortgage lending in the UK reached £19.9 billion in November, some 9% lower than October’s lending total of £21.9 billion, the latest data shows. But the figures from the Council of Mortgage Lenders also show that lending was still 23% higher than the £16.1 billion lent in November last year. CML economist Mohammad Jamei pointed out that lending is set to finish the year stronger than it started, with the pace of lending recovering over the summer months. ‘As we’ve said for the best part of 2015, lending continues to be supported by strong fundamentals, which are low inflation, strong wage growth, an improving labour market and competitive mortgage deals,’ he said. ‘Reflecting this recovery, we estimate lending this year to reach £214 billion, up from our earlier estimate of £209 billion. Looking ahead, upside potential appears limited as a result of affordability pressures and new supply challenges which will continue to weigh on activity,’ he added. Peter Rollings, chief executive of Marsh & Parsons, believes that a seasonal slowdown at the end of the year is to be expected although the strengthening economy and favourable lending conditions means that sales haven’t tailed off like they did last year. ‘The recent measures announced by the Government to build new homes and offer help to those looking to take their first step on the property ladder are welcome gestures, but it will be some time before this intervention is evident in the various monthly indices,’ he explained. ‘The powers that be also need to be careful of artificially stimulating the market at the bottom end while continuing to penalise those in the upper reaches,’ he added. Adrian Gill, director of Reeds Rains and Your Move estate agents, believes that mortgage lending has been good over the past year, with loan values showing a huge annual margin in November. ‘When we consider that many of these loans will have been agreed before the added impact of the Chancellor’s Autumn Statement housing announcements, it bodes well for early performance in 2016,’ he said. He pointed out that demand is high, remortgaging activity continues to pick up and first time buyers are benefitting from competitive mortgage rates while the buy to let market has been the most dynamic recently. ‘With a new stamp duty levy for second homes coming into play next April, there will only be a further rush to secure buy to let investment before the cost of completing a purchase rises,’ he said. But he also pointed out that this will pit landlords against first time buyers even more. ‘As the deadline creeps closer, we may see another trend emerge in the spring as canny buy to let investors seize the opportunity to sell up and profit from the triple whammy of impending tax changes, low supply of homes, and high demand. Demand is accelerating, and there will be jostling for a decreased number of properties available on the market. So it will… Continue reading
