Tag Archives: crisis
New research reveals the rapid growth of the private rented sector in the UK
Over two million homes have changed tenure in the last decade when taking into account all property sales between owner occupiers and landlords, according to new research. Some 1,550,000 properties have gone from being lived in by their owner to being lived in by a tenant, while 550,000 have moved the other way, from the private rented sector into owner occupation. This has resulted in an extra million homes being occupied by a tenant rather than a home owner, equivalent to the number of households in the North East of England, says the research from property group Countrywide plc. Homes transferring from owner occupation into the private rented sector accounted for half of the growth in the number of privately rented homes over the same period. Most of the remaining growth in the private rented sector has come from landlords buying new build homes. The research also found that some 700,000 new homes built since 2005 have found their way into the private rented sector. The remaining homes changing tenure have come from social housing and residential conversions. Despite this, homes are only around half as likely to change tenure as people. First time buyers end up buying 65% of the homes that leave the private rented sector, and last year 45,000 first time buyers bought their home from a landlord, the highest number since the market downturn in 2008. This equates to 15% of all those who got onto the housing ladder for the first time. With first time buyers and landlords tending to look for homes which are smaller and cheaper than average, they often find themselves in competition. As a result, both groups are disproportionately likely to sell homes to one another. The research explains that given the private rented sector is largest in London and the South East, this is where first time buyers are mostly likely to buy their home from a landlord. One in five new buyers in London, and one in six in the South East, bought a home which had previously been rented out. It is in these two regions where the difference between what new buyers paid when buying from a landlord and those that didn’t is greatest. Those buying from a landlord paid on average 8% less than those that didn’t. ‘The rapid growth of the private rented sector has to come from somewhere, while the tenure may change, the physical home remains,’ said Johnny Morris, director of research at Countrywide. ‘The sector has been growing since 2005 but the number of home owners has fallen in each of the last 10 years. This scale of shift in tenure shows that the current push from the government to increase the number of homeowners is unlikely to be enough to reverse the decline,’ he explained. ‘Although landlords and first time buyers might not appear natural bedfellows, because they tend to look for similar types of homes they do end up selling to each… Continue reading
First time buyers need average earnings of £50,000 to buy a home
First time buyers in the UK need to earn on average of £50,000 a year to get on the property ladder, new research reveals. However, in 51 out of 65 cities, the average salary is below the minimum required to buy a flat, according to the study from comparison website GoCompare. The most affordable place to buy in the UK is Blackburn where a salary of £14,000 a year could be enough to buy a flat but a minimum household income of £140,000 a year is needed to buy a flat in London. In the capital a minimum of £275,000 is needed to buy a detached house where the average price is at £869,415 yet the median average salary in the capital is just £30,338. So Blackburn is almost 10 times cheaper than London. The median average salary in the Lancashire town is £18,444, making it one of the few places in the UK that are affordable. After Blackburn, the cheapest places to buy property are Hull, Blackpool, Grimsby and Stoke-on-Trent where a salary of just £15,000 could be enough to purchase a flat. Outside of London it is Brighton, Edinburgh, Bristol and Oxford which are the most costly. Minimum salaries to get on the property ladder in these cities are £60,000, £60,000, £58,000 and £54,000 respectively. ‘Although owning a home may be achievable in places like Blackburn and Sunderland, in other parts of the country the rapid rise in property value and a growing urban population is pricing many of the British public out of home ownership,’ said Ben Wilson, home insurance expert at GoCompare. ‘London’s high prices are well documented, but it’s in other parts of the south of England that the gap between average salary and average house price is at its most alarming, with places like Brighton requiring a minimum household income of £180,000 to afford a detached house,’ he added. Continue reading
UK property price set to rise by an average 17% by end of 2020
House price growth across the UK’s mainstream markets has exceeded expectations in 2015 but there is still room for further increases providing interest rates do not rise too steeply, according to new research. The timing and pace of interest rate rises, coupled with patterns of economic growth at a regional level, will dictate the distribution and sustainability of any increases, says the report from international real estate adviser Savills. The firm forecasts that prices will rise by an average of 17% by the end of 2020, ranging from 21.6% in the South East to 12% in the North East, assuming that mortgage rates do not exceed 4.5%. Any combination of higher house price growth or high mortgage rates could leave affordability looking stretched. Much depends on the speed at which interest rates rise. If rates rise too quickly mainstream house price growth will be quickly curtailed. On the flipside, if rates remain low for too long, there is a risk that prices will rise too far, creating affordability issues further down the line when they do eventually rise,’ said Lucian Cook, head of Savills residential research. ‘That risk has been mitigated by recent mortgage regulation which, by stress testing affordability, caps the amount people can borrow relative to incomes. That is likely to cap price rises, particularly in London, where house price to household income ratios are highest, thanks to growth seen over the past 10 years,’ he added. London’s mainstream markets are expected to underperform its hinterland, with average growth of 15.3% forecast over the next five years, though this will range from 20% to just 10% depending on specific location and post downturn levels of house price growth. Lower value outer London boroughs have greater remaining capacity for house price growth than higher value parts of the capital, having grown in line with the South East and East of England rather than London itself over recent years. While Walthamstow and Lewisham are expected to show the strongest growth, outperforming the mainstream submarkets of boroughs such as Hammersmith and Fulham and Richmond. The strongest price rises are therefore expected in parts of the south and east of England, which offer value relative to the capital so should benefit as the ripple gains traction. Growth beyond will depend on the strength of regional wealth generation and the ability of cities such as Manchester and Birmingham to act as catalysts to reinvigorate their housing markets. At the same time, annual transaction levels, at just over 1.2 million this year, are expected to reach 1.3 million in 2020, far short of the pre-crunch norm of around 1.7 million, as deposit affordability continues to act as a brake on demand and the changes to the taxation of buy to let property restrict the ability of some landlords to expand their portfolios. Continue reading
