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UK house prices increase almost five time more in areas with low unemployment
Houses prices in the UK have increased by an average of almost £90,000 in the past decade in areas with lowest unemployment rate, the latest research data shows. This is almost five times more than in those area with high unemployment and the 10 areas with largest drop in unemployment saw house prices increase by 76%, according to the research report from Lloyds Bank. It means that the gap in house prices between areas with the highest and lowest levels of unemployment has widened significantly over the past 10 years. Average house prices in the 20 local authorities with the lowest rate of unemployment have risen by £89,446 since 2006, nearly five times the rise for those with highest unemployment, which increased by just £18,657 over the same period. The average house price for those high unemployment areas is £139,520 which is £102,655 or 42% below the national average price of £242,175. By contrast, areas with the lowest unemployment rates have an average price of £352,224 to £110,049, some 45% higher than the national average. ‘Employment boosts consumer confidence, helps put more cash into customers’ pockets and makes it easier to secure a mortgage, all of which drives increased housing activity,’ said Lloyds Bank mortgage products director Andrew Mason. ‘Unfortunately, in areas where more people find themselves out of work, house prices can stall as people are financially less able to progress up the property ladder, reducing demand. There are, however, other factors which affect house prices such as lower mortgage rates, improved affordability and low housing supply which will have contributed to rising prices in the past decade,’ he added. The 10 areas which have seen the largest falls in unemployment since 2006 recorded an average price increase of £200,155 or 76% to £464,373. Nine of these local authorities are in London, with Haringey, Hackney, Southwark and Waltham Forest seeing average home values almost doubling in the past decade. Over the same period these 10 areas recorded an average decline in unemployment claimants of 2.4% from 4.7% to 2.3%, four times the national decline of 0.6% from 2.5% to 1.9%.This is in marked contrast to the 10 areas with the poorest unemployment performance where unemployment claimants increased by an average of 0.5% since 2006, with average house prices growing by only £24,587 or 18%. Seven of these 10 areas are in the North West. In the UK as a whole over the past 10 years, average house prices grew by 34% or £61,575, whilst the average unemployment rate was 3%. Excluding London, the average price growth for Great Britain fell to £47,920 or 29%. The Lloyds Bank report also reveals that: The 10 areas with the lowest unemployment rates show an average house price rise of £107,000 or 36% since 2006. The four areas with the lowest average unemployment rate of 1% over the decade, Hart, West Oxfordshire, Mole Valley and North Dorset, recorded house price gains of between 33% and 44%… Continue reading
First time buyers increased in the UK in March and paid less for their home
The number of first time buyers in the UK increased in March to a total of 32,500, the highest figure since June 2014, according to the latest tracker report. Overall first time buyer volumes grew by 47.7% on a monthly basis and as well as cheaper prices the burden of deposit costs and mortgage payments dipped, the data from the Your Move and Reeds Rains report shows. This means that, between February and March, the total flow of buyers managing to step foot on the ladder for the first time grew by 10,500 and on an annual basis, the total number of first time buyers in March grew by 34.9% compared to March 2015. Adrian Gill, director of estate agents Your Move and Reeds Rains, pointed out that while much was made of March being the month of the buy to let landlord and the second home buyer due to the April deadline for additional stamp duty, the surge was not at the expense of the bottom rungs of the ladder. He believes that a continuation of the broadly positive economic climate has likely been a factor spurring would-be first time buyers. ‘However, what’s really getting those numbers up is the fact that the range of support options available to first time buyers is at last beginning to be recognised and utilised,’ he said. ‘The Help to Buy scheme is assisting those with limited capital recognise their dreams, while the Government’s offer of cut price homes for first time buyers is easing supply in a part of the market that typically struggles to match roaring demand with constrained supply,’ he added. The data also shows that March has seen a lightening of home ownership costs and the charges associated with it. The average purchase price paid by first time buyers in March stood at £166,559, down 1.2% in absolute terms compared with February which previously marked the highest average price on record. But on an annual basis, the average purchase value of a first time buyer property rose by 9.2%. Deposit and monthly mortgage payment costs also declined. First time buyer deposits averaged £28,233 in March, down 4.1% compared with the previous month. In addition, the proportion of an average first time buyer’s monthly income that is consumed by deposit costs fell 3.1% between February and March from 74.9% to 71.8%. Meanwhile, over the same period, monthly mortgage payments accounted for a steadily decreasing amount of average first time buyer income, falling from 20.4% of monthly income in February to 20.3% as of March. Besides the falling costs of home ownership, lending conditions for firs time buyers have remained favourable. The average loan to value (LTV) ratio reached 83% in March, marking a 0.5% uptick on the previous month, meaning first time buyers will be able to borrow more against the value of the home they wish to purchase. The average first time buyer mortgage rate continues to fall, dropping from 3.14% in February to… Continue reading
UK housing market slows after buy let rush in March, latest index shows
UK house prices increased by 0.2% in April but annual house price growth has slowed to 4.9%, down from 5.7% the month before, the latest index figures show. This takes the average price of a home to £202,436 with the slowing of activity not a surprise due to increased market growth in March due to stamp duty changes, according to the index report from the Nationwide. Robert Gardner, Nationwide's chief economist, said that the slowdown returns the annual pace of house price growth to the fairly narrow range between 3% and 5% that had been prevailing since the summer of 2015. ‘It may be that the surge in house purchase activity resulting from the increase in stamp duty on second homes provided a temporary boost to prices in March. However, it is possible that the recent pattern of strong employment growth, rising real earnings, low borrowing costs and constrained supply will tilt the demand/supply balance in favour of sellers and exert upward pressure on price growth once again in the quarters ahead,’ he explained. He pointed out that there were 165,400 transactions in March, an all-time high, some 11% higher than the previous peak of 149,000 recorded in January 2007 and estimates from the Council of Mortgage Lenders suggests that mortgage lending also rose sharply, to almost £26 billion in March, up 43% from the £18 billion recorded in February. ‘If confirmed by Bank of England data later this week, this would suggest a strong outcome, up nearly 60% year on year and also well above recent highs of £22 billion per month recorded in early 2015, though still well below the all-time high of £34.9 billion recorded in June 2007,’ Gardner said. ‘The increase in mortgage lending is likely to have been driven by a sharp increase in buy to let investors bringing forward their purchases before the stamp duty changes took effect. Buy to let has accounted for an unusually high share of lending in recent months, at around 19% of lending in the three months to February, but the strength of activity suggests its share could surpass 25% in March,’ he explained. ‘Viewing the transactions and mortgage lending data together suggests that, while buy to let lending is likely to have risen strongly in March, a large proportion of the boost to house purchase activity came from cash buyers,’ he added. Gardner also pointed out that cash purchasers have become a more significant part of the market since the financial crisis, accounting for around 35% of all transactions since 2008 compared with around 25% in 2006/20007. ‘Cash investors would have also been better placed to buy properties in the relatively short period of time between the stamp duty announcement at the November Autumn Statement and the implementation on 01 April,’ he added. But a continued limited supply of properties could mean that the market could still be lively in the coming months, according to Michelle Grant, investment director of Grant… Continue reading
