Tag Archives: guides
UK house prices up 0.3% but annual growth slows
UK house prices increased by 0.3% in August but annual growth has softened to 3.2% from 3.5%, according to the latest residential property index. The data from lender the Nationwide shows that the average price is now £195,279 and chief economist Robert Gardner said that the fall in the annual rate of growth is due to prices having increased at a particularly strong rate in August 2014. Nevertheless, the annual rate of price growth was the weakest since June 2013. ‘This month’s data provides further evidence that annual house price growth may be stabilising close to the pace of earnings growth, which has historically been around 4%,’ explained Gardner. ‘However, survey evidence cautions that this trend may not be maintained unless construction activity accelerates. Surveyors reported the lowest ever number of properties on their books in July whilst new buyer enquiries picked up,’ he added. He pointed out that UK house prices have proved remarkably resilient in recent years, certainly compared with many other developed economies. For example, UK house prices didn’t fall as far during the financial crisis, and even where they declined by a similar magnitude, UK prices generally recovered their pre-crisis levels more quickly. Indeed, UK house prices are currently around 5% above their pre-crisis levels, while prices are still well below their pre-crisis peaks in Ireland, down 38%, Spain down 36% and the Netherlands down 18%. ‘Clearly house price trends are determined by a wide range of factors, but labour market developments are amongst the most important. The strength of the UK labour market in recent years is a key reason why house prices have recovered more quickly,’ said Gardner. ‘There is a strong correlation between employment and house price growth since the financial crisis across the major developed economies. House prices remain further below their pre-crisis peaks in countries where employment is also well below pre-crisis levels,’ he explained. ‘Supply side developments also play an important role in explaining the divergence in house price performance. The UK experienced a much smaller increase in building activity in the run up to the financial crisis. As a result, there was much less of an overhang of unsold properties to be worked off in recent years,’ he added. ‘However, with UK house building running well below the expected rate of household formation in recent years and with demand for homes rising, a significant increase in construction activity is required if affordability is not to become stretched in the years ahead,’ he concluded. According to Alex Gosling, chief executive officer of online estate agents House Simple, any hope that sellers were finally returning to the market seems to have been a vain one for the time being. ‘A boost to new stock levels in June suggested that we were finally starting to see some movement from sellers, but that momentum seems to have been short lived. The General Election, which the market hoped would provide a catalyst for sellers, is long gone and… Continue reading
UK mortgage activity improved in second quarter of 2015, CML data shows
The London property market saw increased mortgage lending in the second quarter of 2015 but levels were still down compared to the same quarter last year. The latest quarterly data from the Council of Mortgage Lenders shows that home owner house purchase activity in Greater London came out of the traditional seasonal dip to show growth in the second quarter by volume and value. First time buyer activity saw similar trends with an increase in levels on the first quarter of the year, but this sector was also down on the same quarter last year. Unlike house purchase activity, remortgage lending had quarter on quarter and year on year growth in both volume and value. ‘As in the UK overall, the London market came out of the usual seasonal dip in the first few months of the year and saw increased activity but volumes are still on the same period last year,’ said Paul Smee, director general of the CML. ‘Remortgage activity has shown quarterly and year on year growth after a period of stagnation. Borrowers appear to be taking advantage of competitive mortgage rates, ahead of a potential future interest rate rise,’ he added. In Wales house purchase activity saw large quarter on quarter increases compared to the first quarter of the year, but a slight decline in volume of loans compared to the second quarter in 2014. First time buyers increased significantly from the first quarter, but decreased in amount borrowed and number of loans compared to the second quarter of 2014. Home movers went up in volume and value quarter on quarter, and while number of loans remained unchanged year on year the amount borrowed by home movers increased. The data also shows that remortgage activity increased compared to the first quarter and on the same quarter last year. ‘House purchase activity appears to have woken up in Wales after traditionally slower levels in the winter months,’ said Julie-Ann Haines, CML chair for Wales. ‘The uptick in remortgage is, in particular, striking as levels had remained relatively identical over the previous four quarters. With the current low rates of interest unlikely to continue, it seems that borrowers are now taking advantage of competitive mortgage rates before a rise,’ she added. Continue reading
Rents in Scotland show no rise, latest index shows
Residential rents in Scotland have begun to plateau as growth cools off in urban centres but are still at an all-time record high of £549 per month. In July there was no change in the average rent and there has been a down turn in annual growth, according to the latest buy to let index from lettings agent network Your Move. Scottish rents are now 2.8% higher than a year ago, however this slowed from 3.1% in the year to June, after a prolonged period of accelerating rent rises in the first half of the year. ‘We reached a tipping point in July. Rents in Scotland have been building to a crescendo so far in 2015, and rent rises have been quickening their step. But now we’ve reached a mid-point in the year, the rental market has clearly paused for breath,’ said Brian Moran, lettings director at Your Move Scotland. ‘Tenants will be relieved for now, but only time will tell whether we’ve reached a fork in the road for the private rented sector, or whether rent growth will start to ramp up again as autumn approaches, and the age old disparity between available homes and those looking to rent rears its head again,’ he pointed out. He explained that the record rents are not necessarily found in areas where they would expect to be. ‘With the severe squeeze on housing in the cities, households are casting their nets much more widely for places to live, which is driving somewhat of a renaissance in the more affordable areas of Scotland. And rental prices are holding up a mirror to this nationwide demand for homes,’ said Moran. A regional breakdown of the figures show that rents are higher than a year ago across the country while they are at an all-time high in the East, the Highlands and Islands and the South of Scotland. The average monthly rent in the Highlands and Islands has increased at the fastest rate over the past year, up 5.4% since July 2014 to reach a record £568 per month. Compared to a year ago, the East of Scotland has witnessed a 3.8% rise, bringing the average monthly rent to a historic peak of £531. Rents in the South, while still the cheapest location in Scotland to rent, now stand at £513 per month on average, after a 2.7% rise year on year. But rent growth in Scotland’s foremost urban centres appears to be on a cooler trajectory. In Edinburgh and the Lothians the typical monthly rent is now 1.8% higher than in July 2015, while Glasgow and Clyde has witnessed a 1.7% yearly climb in rental prices. Average rents in both these regions are below past peaks. On a monthly basis, rents have increased across four of the five regions of Scotland, one fewer than last month. The only region to experience a fall in rents during July was Glasgow and Clyde, where average rents dropped 1.5% during the… Continue reading
