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Annual rate of UK property price growth down for third month in a row
UK house prices increased by 0.3% in October but the annual pace of growth has slowed to 9%, according to the latest index from the Nationwide Building Society. It is the third month in a row when annual growth had moderated and according to Robert Gardner, Nationwide’s chief economist, housing market activity levels have remained relatively weak in recent months. He pointed out that the number of mortgages approved for house purchase in September was almost 20% below the level prevailing at the start of the year and 27% below the long term average. Similarly, housing market turnover rates are well below long term averages. For example, the number of mortgage transactions is currently equal to around 4% of the housing stock, well below the long run average of 6%. ‘There is something of a disconnection between the slowdown in the housing market in recent months and broader economic indicators, which have remained relatively upbeat. While cooling in the London market is a part of the story, this is unlikely to be main explanation for the slowdown,’ he said, adding that in the third quarter of the year 10 of the 13 UK regions saw the pace of annual price growth slow and two regions saw quarterly price declines. This comes against a background where the labour market has continued to improve, with employment rising strongly and the unemployment rate falling sharply in recent months. Moreover, indicators of consumer sentiment remain elevated, where healthy rates of retail sales growth and new car registrations also suggest that households are feeling more confident. ‘Affordability does not appear overly stretched, at least at the UK level, with first time buyers continuing to represent an unusually high proportion of mortgage activity and with typical mortgage payments as a share of average income close to the long run average,’ Gardner explained. ‘Historically low mortgage rates have helped to mitigate against the fact that house prices have been outstripping income growth. Forward looking indicators, such as new buyer enquiries point to further softness in the near term,’ he said. ‘However, if the economy and the labour market remain in good shape and mortgage rates do not rise sharply, activity is likely to pick up in the quarters ahead,’ Gardner added. According to Graham Davidson, managing director of Sequre Property Investment, the moderation has been felt most acutely in London where the rate of growth is beginning to slow thanks largely to more stringent lending criteria. ‘Another factor is a slowing in demand as many begin to look at property outside the capital due to its extortionate prices. The region is, however, still leading the way in terms of growth and house price rises,’ he said. ‘There is certainly an element of seasonality behind this slow down, but we feel that this decrease in the rate of growth could signal the start of a slowing property market. The impact of the Mortgage Market Review (MMR) should not be underestimated. As Nationwide reports, the… Continue reading
UK estate agents report a better balance between buyers and homes for sale
A better balance between the number of homes for sale and the number of registered home buyers in the UK is emerging, according to the latest report from the National Association of Estate Agents. The October Housing Market survey found that member agents reported an average of 53 properties for sale per branch, some 15% higher than the monthly average for the rest of 2014. It is the highest number recorded on books since October 2013 and compares with an average of 51 properties was recorded per branch in September. While supply showed signs of an increase, the number of house hunters registered per NAEA member branch fell, from 406 in September to 380 in October, easing the balance between the number of available homes and demand. The survey data also shows that the average number of homes sold during the month remained static on September figures, at average of nine sales per NAEA member branch. The number of first time buyers recorded fell, down 6% in October compared to the previous month’s figures, to 24% of total sales from 30% of total sales in September. ‘There is a better balance emerging between the level of demand and supply, as the number of registered house hunters falls for October, while the average number of available properties registered per branch rises to accommodate those looking to buy,’ said NAEA managing director Mark Hayward. ‘However, both supply and demand is still seasonably low for October. The decrease in buyer demand and in particular the decline in first time buyers, along with a relatively static sales market, could be a direct result of the stricter lending criteria which came into play six months ago at the end of April this year, making it harder for house hunters to access mortgage finance. This has certainly been reported as one possibility by our NAEA member branches,’ he added. When asked if the new MMR rules had led to a direct decrease in the overall number of home buyers since it was introduced six months ago, some 79% of NAEA member branches agreed it had affected the current number of buyers. With the exception of September 2014, in which 406 home buyers were recorded on average per branch, the number of house hunters registered per member branch had shown a decrease on figures recorded in April 2014 when it was 392 home buyers in the month MMR was introduced. NAEA member branches also said they believed the MMR had particularly affected demand among first time buyers with 70% of member branches reporting the implementation of MMR had led to a decrease in the number of first time buyers since it came into force. ‘First time buyers will be especially more cautious about making a purchase due to the stricter lending criteria now in place, which makes it harder to secure finance,’ explained Hayward. ‘In addition, prospective… Continue reading
Buying a home in an English market town costs £25,000 more, new research shows
House prices in market towns in England are on average £24,766 or 12% higher than their county average, according to research from Lloyds Bank. Two out of three market towns in England have an average house price that is above their county average. Beaconsfield in South Buckinghamshire has the largest house price premium with homes trading at 156% or £501,648 above the county average. Wetherby has the next highest premium with prices 99% or £157,016 above the West Yorkshire average, followed by Bakewell in the Derbyshire Peaks at 88% or £147,224. Overall one in eight market towns in the survey have a house price premium of at least £100,000 and 10 of the most expensive market towns are in southern England. Beaconsfield is also the most expensive English market town with an average house price of £822,753. Petersfield in Hampshire at £402,216 and Cranbrook in Kent at £393,778 are the next most expensive market towns in England. Outside southern England, Bakewell is the most expensive market town with an average property value of £314,966. Three of the top five least expensive market towns are in County Durham. Ferryhill has an average house price of £85,763, followed by Crook at £106,591 and Stanhope at £128,114. The other towns include Immingham at £110,565 and Tickhill at £133,550. ‘Market towns are important hubs of social interaction and cohesion, as well as providers of employment and support for local business. Market towns are also, in most cases, very attractive places to live,’ said Andy Hulme, mortgages director at Lloyds Bank. ‘This is reflected in the majority of market towns having higher property prices than their surrounding counties, a premium that increased in the past decade,’ he explained. He pointed out that home buyers continue to be attracted to the high quality of life, architecture, history, setting and community spirit offered by market towns and are prepared to pay a premium to live there. The research also shows that the average house price in market towns across England has risen by £60,586 or 34% from £179,535 in 2004 to £240,121 in 2014. This is equivalent to an average rise of £505 per month over the past decade. Two market towns have seen house prices grow by more than 50% since 2004. The biggest increase in prices over the past decade was in Ferryhill where the average price rose by 76% from £48,743 to £85,763. Ferryhill is followed by Saffron Walden in Essex at 59%, Lewes on the south coast at 48%, then Beaconsfield, Midhurst in West Sussex, Berwick upon Tweed and Yately in Hampshire all 47%. Nine out of 10 market towns have seen prices rise since the bottom of the housing market in 2009. Contrary to the decade as whole, it has been market towns in the south that have performed best in the past few years. Beaconsfield in Buckinghamshire recorded the largest price growth in the past five years at 37%, followed by Saffron Walden at 36% and Yateley at 36%. The average… Continue reading
