Tag Archives: housing
UK property prices expected to rise 9% this year and 5% in 2015
Property prices across the UK are set to finish 2014 up by 9% and rise another 5% in 2015, according to the latest outlook report. Real estate firm Strutt & Parker expects good growth despite prices cooling and the looming general election next year in a report compiles with its retained economic advisors Volterra. But the outlook for the prime central London market is more subdued with Strutt & Parker predicting growth of 3% in 2014, and a further 2% in 2015. These forecasts are a stark contrast to 2010 and 2011 when prime central London prices surged by over 13% year on year. The firm believes that whilst improved economic foundations would certainly suggest that prices will continue to rise over the next few years, the biggest perceived uncertainty surrounding the property markets over the remainder of 2014 and 2015 will continue to be the looming election. ‘Agents are reporting a continued slowdown in some areas as buyers and sellers nervously await news on the upcoming general election and the potential for a mansion tax. This is beginning to feed through into transaction levels. As is often the case in uncertain times, it may also be that transaction levels will decrease in the run up to May 2015, but values could hold up better than expected,’ said Stephanie McMahon, head of research at Strutt & Parker. ‘Above and beyond the general election there are a number of other potential headwinds slowing the property market, including talk of interest rate changes and the Mortgage Market Review (MMR) and the slowdown it is causing,’ she explained. She pointed out that it is important to remember that the property market is all about supply and demand. ‘On the supply side, the government is continuing to boost house building across the country, and recent output figures from the construction sector reflect this. House prices tend to rise when stock is low and with more houses being built, particularly in the lower end of the housing market, this could also have an effect on UK house prices over the next few months,’ said McMahon. ‘The main driver for price market price growth in recent years has indeed been the consistent shortage of good quality housing stock in highly sought after prime locations. Any future increase of supply to the market in central London would therefore put downward pressure on prime central London house prices and we have taken this into consideration in our London predictions,’ she added. ‘In short, we expect that price growth during the remainder of 2014, and even more so in 2015, will be sensitive to prevailing political press and expectations,’ she concluded. Continue reading
UK mortgage activity has reached a plateau, latest data suggests
Lending for homes in the UK has reached a plateau with concerns about interest rate rises affecting activity, according to the latest figures. The Council of Mortgage Lenders estimates that gross mortgage lending reached £17.8 billion in September, some 1% lower than August but 10% higher than September last year when it was £16.2 billion. Gross mortgage lending for the third quarter of this year was therefore an estimated £55.5 billion, an 8% increase from the second quarter of this year, and a 13% increase on the third quarter of 2013 when it was £49.2 billion. ‘Uncertainty over when we will see the first increase in UK base rates is exacerbated by weaker growth prospects in several major economies, including the Eurozone,’ said CML chief economist Bob Pannell. ‘Recent indicators and policy actions corroborate our view of a gentle easing in market conditions. There is growing evidence that mortgage lending activity, and the housing market, are sitting on a plateau,’ he added. Meanwhile, the latest figures from the Bank of England show that mortgage approvals by all UK resident mortgage lenders for house purchase picked up in June, before easing back slightly in August. The average monthly net lending flow by UK resident mortgage lenders was £2.3 billion in the three months to August, broadly unchanged compared to the previous three months. The data also shows that total gross secured lending in the three months to August increased compared to the previous period. The Bank report says that in recent discussions, most of the major UK lenders reported that operational issues associated with the implementation of the Mortgage Market Review had pushed down on approvals over the summer, but had now largely dissipated. It amounts to a natural ebb and flow, according to Peter Rollings, chief executive officer of Marsh & Parsons. ‘After a strong surge at the start of the year, house price growth is easing to more natural levels, and as a result, overall mortgage lending dipped in the month to September. But the stream of lending has not dried up, and the mortgage market has negotiated the new criteria of the Mortgage Market Review around the introduction of tighter affordability checks and more rigorous regulation in the spring,’ he said. ‘Confidence is still buoyant, kept afloat by the growing pool of available properties on the market and some outstanding mortgage products coming to the market since the indication from the Bank of England that interest rates would stay lower for longer,’ he explained. ‘Trading conditions are considerably less turbulent than they were a few months ago, and buyers and sellers alike are enjoying the less frenetic pace, increased choice and the calmer pace of competition, and this is already leading to a more active fourth quarter of the year. The only obstacles that could disrupt the course of the recovery are additional interventions in the mortgage market or premature withdrawal of schemes like Help to Buy, which could sink first-time buyer aspirations and stall progress… Continue reading
UK mortgage lenders braced for further interventions despite market growth cooling
Mortgage lenders and brokers expect further interventions by the Bank of England’s Financial Policy Committee (FPC) despite market growth cooling, according to new research. According to the latest survey by the Intermediary Mortgage Lenders Association (IMLA) some 55% of intermediary mortgage lenders and 40% of brokers are expecting further intervention. The findings come as the first FPC recommendations; the interest rate stress test against a 3% base rate increase for borrowers, and a 15% cap for lenders on the volume of new loans above 4.5 times loan to income (LTI ), take effect across the mortgage market this month. IMLA’s research reveals lenders and brokers are in agreement that the 3% stress test will have the biggest impact of the two measures. Some 54% of brokers and 26% of lenders believe this will have a high impact, compared with just 34% of brokers and 11% of lenders who feel the same about the cap on high LTI loans. Following the implementation of the Mortgage Market Review (MMR) in April and the FPC recommendations in its Financial Stability Report in June, IMLA’s research found that industry optimism over the mortgage market recovery has cooled. Just 44% of lenders and 41% of brokers feel market conditions were improving in the third quarter of 2014, down from 100% of lenders and 90% of brokers in the first quarter of 2014. Just 3% of brokers felt conditions were worsening in Q1, but 45% took this view in the third quarter and the proportion that felt lending volumes were growing faster than expected dropped from 87% to 31% among lenders from the first to the third quarters and from 60% to 45% among brokers. Concerns remained over the housing market with the latest findings showing 31% of lenders and 38% of brokers believing house price growth was unsustainable, up from 13% and 25% in the first quarter. However, subsequent data from national house price indices show that the monthly growth of house prices has since slowed. ‘These findings show the industry is well aware that its recovery will be closely monitored in the interests of maintaining economic and financial stability. The announcement that the FPC is considering loan to value (LTV) limits shows it remains vigilant,’ said Peter Williams, executive director for the IMLA. ‘But recent changes, including MMR, have already had a calming effect on activity and the full effects are still to emerge. IMLA’s research has clearly shown that some would-be borrowers are not passing initial broker checks which have been tightened to fully reflect the lender assessments that follow,’ he explained. ‘While caution is needed for the good of consumers and the economy, this applies to regulation as well as lending. Market interventions have been reasonable to date, but an immediate push for further regulation would be excessive, especially when house price growth appears to be slowing,’ he added. Using credit policies to compensate for weak supply in the housing market can have a major impact on who can… Continue reading
