Tag Archives: london
Average home price in London set to reach £1 million by 2020
If the current annual rate of price growth in London continues, the average price of a home would be £1 million by the end of 2020, new research has found. The prediction is made as the price of property coming to market in London has rebounded from its holiday season lull to jump by 2.2% or £13,177, according to online property portal Rightmove. Indeed, the average price of a newly marketed home in the capital is at a new all-time high of £620,003, up by 0.8% or £4,888 on the previous record set in July of this year. ‘This month’s 2.2% rise more than reverses the seasonal slowdown over the last two months when the average price of property coming to market fell by 0.6%,’ said Miles Shipside, Rightmove director and housing market analyst. ‘It’s a volatile time of year for average prices however, as potential sellers of higher priced properties tend to refrain from coming to market in the holiday period, but then get on with their home moving plans again in September partly influenced by children going back to school. The back to normal service has resulted in new seller asking prices reaching another milestone, with a new record high,’ he explained. The annual rate of increase is now up to 9.5% as London’s long term supply/demand imbalance and international allure result in underlying upwards price pressure, enabling the capital’s property market to maintain its upward trajectory through temporary upheavals such as the recent election. Rightmove calculates that if the current annual rate of price growth was maintained for the next five years the average price tag of a London home would be £1 million by the end of 2020. ‘The average price tag on a newly-marketed property is £53,923 higher in September this year than last and if this trend were to continue it would hit £1 million in just over five years. While we are not suggesting that this level of growth can or will be maintained, this extrapolation illustrates the desperate need for more building and more affordable housing in and around the capital,’ Shipside added. Lee James Pendleton, director of James Pendleton Estate Agents, confirmed that the summer has been good for London property. The firm has experienced a huge upturn in the market around Wandsworth, Lambeth and Hammersmith and Fulham. ‘While there have been less buyers overall, there are more quality buyers. One example of a place that’s booming is Nine Elms in Battersea, where studios that had been selling for £450,000 are now selling for over £600,000. These new developments have had a ripple effect on Wandsworth in general, with prices up around 15% in some places,’ he pointed out. Continue reading
UK landlords now have choice of almost 1,000 buy to let mortgage products
The number of available buy to let mortgage products has leapt in Q3, according to the latest Complex Buy to Let Index from specialist brokers Mortgages for Business. Landlords in the UK now have the widest choice of mortgage options on record, almost 1,000 in the third quarter of 2015, a rise of 11% since the previous quarter. On an annual basis this represents an increase of 35% in buy to let mortgage products, according to the latest index from specialist brokers Mortgages for Business. The report also shows that standard ‘vanilla’ buy to let properties already offer the lowest gross yield to landlords, but this has now dropped 0.8% in the space of three months, to the psychologically important level of 5%. On an annual basis, yields on vanilla properties have fallen further by 0.9% since the third quarter of 2014. Similarly, between the second and third quarters of 2015, the yield on a multi-unit freehold blocks (MUFBs) fell from 7.1% to 6.1%. Compared to a year ago, when the average MUFB yield was 8.6%, yields for such properties have seen a 2.5% fall. However, at 6.1%, the absolute level remains considerably higher than for ‘vanilla’ properties. Houses in multiple occupation (or HMOs) have seen yields perform comparably well. Between the second and third quarters HMO yields fell by only 0.1% to 9%. As well as more modest yields overall, this means the spread between the lowest yielding property type (vanilla) and the highest yielding (HMOs) has widened to 4%. ‘The number of new mortgages coming onto the market has rocketed in recent months. There is huge interest in mortgages suitable for limited companies as landlords take advice from their accountants,’ said David Whittaker managing director of Mortgages for Business. ‘Meanwhile, as rents fail to keep pace with racing property prices, yields are continuing to plateau. Returns on vanilla buy to let have now fallen to the 5% mark. Landlords with reasonable borrowing costs and a strong portfolio of these sorts of properties will still be making a solid income from such investments but this changes the case for those considering new purchases. With average yields on HMOs still nearer 10%, more complex property types are likely to attract a growing portion of new investment,’ he explained. The research also shows that remortgaging has outperformed new purchase loans for the fourth quarter running. In the third quarter some 66% of new vanilla buy to let loans were for remortgaging, compared to 34% for new property purchases, a 4% increase in favour of remortgaging since the previous quarter. Similarly, for MUFB properties, remortgaging made up 89% of new mortgages in the third quarter of 2015, compared to 82% remortgaging in the second quarter and just 67% in the third quarter of 2014. In the second quarter new purchases made up just one in 10 mortgages for homes in multiple occupation, some 10%, however, the third quarter has seen the proportion revert to… Continue reading
Underlying trend shows house price quarterly slowdown in UK
UK house prices in the third quarter of 2015 were 8.6% higher than in the same three months a year earlier and up 2% quarter on quarter, according to the latest residential index. However, the quarterly rate of growth fell from August’s 3%, to its lowest since May and the annual figure was lower than the 9% recorded in August, the date from leading lender The Halifax shows. The index report says that the movements are in line with the average so far this year and points out that monthly data can be volatile and the quarter on quarter change is a more reliable indicator of the underlying trend. Separate research shows that there has been a 60% increase in the average price of a flat over the past 10 years, significantly higher than the 38% rise for all residential properties. Detached homes with growth of 21% and bungalows at 28% have recorded the smallest rises over the last decade. ‘Housing demand has been strengthening recently, underpinned by economic growth, rising real earnings and very low mortgage rates,’ said Martin Ellis, Halifax housing economist. ‘Increasing demand is combining with very low supply to drive robust underlying house price growth. There is little reason to expect any fundamental shift in the key market drivers over the coming months,’ he added. Continue reading
