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UK property prices set to rise by 3% to 8% in 2016, even with a rate rise
Residential property prices in some locations in the UK could increase by as much as 8% in 2016 as the recovery that has taken hold in London ripples out across the country. But overall price growth is expected to be around 6% across the country during the year, according to the forecast from the Royal Institution of Chartered Surveyors. One location tipped to see strong growth is Cambridge because of its buoyant jobs market and good commuter links to London. However, the RICS report also suggests that the current shortages of supply in the market is set to continue and this will push up prices with this growth likely to outstrip any rises in household income. According to RICS surveyors the average number of properties for sale have fallen to a record low of 46 and 40% of chartered surveyors believe that it is this lack of stock which is the main reason sellers are not entering the market, leading to a vicious circle. After East Anglia, the strongest growth is expected to be in the South East and the West Midlands, where 7% rises are forecast. The lowest level of increase is forecast for the North East of England where prices are forecast to rise by a much lower 3%. Areas with the highest number of transactions are likely to be the North East, Wales, Scotland and Northern Ireland, where prices remain low relative to the rest of the UK. RICS chief economist, Simon Rubinsohn, explained that an interest rate rise of 0.25% has been taken into account when making the forecast but he does not expect there to be a big rise in mortgage rates. ‘Housing has clearly leapt up the government’s agenda, but despite the raft of initiatives announced over the past year the lags involved in development mean that prices, and for that matter rents, are likely to rise further over the next 12 months,’ said Rubinsohn. ‘Lack of stock will continue to be the principal driver of this trend but the likely persistence of cheap money will compound it for the time being. Critically our principal concern with the measures announced by the government is that they are overly focused on promoting home ownership at the expense of other tenures,’ he pointed out. ‘Discouraging buy to let could see private rents take even more of the strain if institutional investment doesn’t increase significantly, particularly given the likely reduced flows of social rent property going forward,’ he added. Continue reading
Lending to first time buyers with small deposits in UK falling
First time buyers in the UK are still finding themselves left out in the cold as lending to small deposit borrowers is falling as a proportion of all home lending, a new report shows. The Autumn Statement from the Chancellor of the Exchequer accompanied a house purchase jump in November with approvals up 1.3% to 70,511, according to the latest Mortgage Monitor from chartered surveyors e.surv. However, it explained that while the Autumn Statement focused on helping more people get on the housing ladder, first time buyers are yet to see the same benefits as other areas of the market. Despite the rise, lending to small deposit borrowers, that is buyers with a deposit worth 15% or less of their property’s total value, totalled just 11,493 in November, showing no improvement on 11,489 in October. Small deposit borrowers are falling as a proportion of overall house purchase lending, accounting for just 16.3% of approvals granted, down from 16.5% in October. The latest First Time Buyer Tracker report from Your Move and Reeds Rains reveals a similar picture. First time buyer sales dipped by 1.7% month on month from 28,600 in September 2015 to 28,100 in October 2015. ‘The Chancellor’s proposals coincided with a climb in November’s mortgage market. More prospective home buyers are find their applications successful as we near winter,’ said Richard Sexton, director of e.surv. ‘However, for first-time buyers it’s a different story. For those struggling to get their foot in the front door, promises of starter homes are of little consolation. Theoretically, first time buyers should be benefitting from measures such as the extended Help to Buy Scheme and the Help to Buy ISA which has finally come into force but home ownership still remains a distant dream to many,’ he explained. ‘Mortgages may be available, inflation low and wages rising but whether there are enough homes is another question. Supply must be addressed if aspirational home owners are to see a real difference and only time will tell if words can translate into real benefits for first time buyers,’ he added. November saw over 10,000 more mortgages approved to home buyers than a year ago, with 70,511 loans, jumping a fifth since 59,262 in November 2014. This was the highest year on year rise seen since March 2014, as the lending market went from strength to strength amid rising confidence. On an annual basis, this jump in overall home purchase lending has allowed an improvement in small-deposit lending. Home purchase lending to borrowers with smaller deposits grew 44% year on year from November 2014 to 8,000 approvals. However, the current total for small deposit loans, which stands at 11,493 this November, is crucially much smaller compared to the unsustainable pre-recession heights of November 2007, when 16,227 were granted. ‘When compared to last year, mortgage lending is in a much healthier place. Some 12 months ago, home buyers were still suffering from the impact of Mortgage Market Review changes,… Continue reading
Prime property values in London could see 3% growth in 2016
Prime property values in London are set to see modest 3% growth throughout 2016 but the fringes of the capital are expected to see much faster price rises of 5% or higher, a new forecast suggests. The market below £1.5 million is predicted o be the main driver of price growth in the coming year, as Stamp Duty continues to take the shine off the wealthiest segment of the London property market, according to the report from agents Marsh & Parson. Tooting and Queen’s Park are named in the report as the locations to watch in the coming year and agents are expecting an influx of buyers in January as the new year markets gets up to speed quickly. As a result, the popularity of more affordable and emerging locations is boosting activity and prices in these areas above levels seen elsewhere across the capital, the report explains. It points out that with direct transport links into Bank on the Northern line, and a leafy common on the doorstep, buyer demand has quickly spread from Balham to neighbouring Tooting. And in the North West, Queen’s Park is providing a credible ‘next step’ for those priced out of North Kensington and Little Venice, and is well serviced by the underground and over ground rail connections directly into Euston. With a top rate of Stamp Duty of 12% now in place, the highest tiers of the London property market have been severely tempered in recent months as buyers struggle to absorb the additional transaction levy. The report also shows that total prime London property sales dropped between the second half of 2014 and the first six months of 2015 and it is sales above £937,000, the threshold at which the higher Stamp Duty charges apply, which have seen the sharpest fall of all. In 2015, some 59% of London property sales have been for homes below the £937,000 marker, while purchases above this price threshold account for 41%, as the top of the market slows. In 2016 sellers will have to adjust their price expectations to make their properties more competitive and attractive. But properties that are priced realistically will still sell well, and quickly. At the start of this year, London homes for sale were typically achieving 95% of their asking prices, but this has climbed throughout the year to stand at 97% as of November 2015. ‘The Chancellor’s Stamp Duty changes have certainly dulled the London housing market of late, and whilst 2016 will see a return to growth it will be rather lacklustre. There now exists a fundamental unevenness between sellers who want to sell their properties at the prices they were at six months ago and buyers, who are seeking recompense for the increased Stamp Duty levelled at them,’ said Peter Rollings, chief executive officer of Marsh & Parsons. ‘It’s already started but it’s going to take a while… Continue reading
