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UK property prices fall in April and could soften further ahead of EU vote
Property prices in the UK fell by 0.8% in April and annual house price growth eased to 9.2%, taking the average price to £212,321, the latest index data shows. The figures from lender, the Halifax, also show that house prices in the three months from February to April were 1.5% higher than the preceding three months. Martin Ellis, Halifax housing economist, pointed out that both the quarterly and annual price rates are at their lowest since November 2015. ‘Current market conditions remain very tight as the severe imbalance between supply and demand persists. This situation, combined with low interest rates and rising employment and real earnings, should continue to push house prices up over the coming months,’ he said. ‘Weakening sentiment regarding house price prospects and a dip in consumer confidence, however, suggest that annual house price growth may ease,’ he added. The 0.8% between March and April, combined with February’s 1.5% fall has offset March’s 2.2% gain. But according to Ellis monthly house price changes can be volatile and he pointed out that the quarter on quarter change is a more reliable indicator of the underlying trend. Confidence in the UK housing market is at its lowest level in over a year, according to the latest quarterly Halifax Housing Market Confidence Tracker. The latest fall continues the downward trend since a high point in May 2015, and comes as consumers feel increasingly uncertain about the wider economy. Nonetheless, a clear majority of 65% still believe that average UK property prices will be higher rather than lower 12 months from now, double the 32% found when the Tracker was launched five years ago in April 2011. Jonathan Hopper, managing director of the buying agents Garrington Property Finders, believes that double digit annual price rises are unlikely to return any time soon but the cooling of the market may mark an opportunity for buyers, as some sellers are being forced to reassess their overly ambitious asking prices. ‘For the first time in more than a year, we’re seeing many mid-range properties in the most desirable locations selling for below asking price, hinting that the power dynamic is shifting from a seller’s to a buyer’s market,’ he said. ‘But with demand still strong and supply still chronically low, the net effect is likely to be a gradual return to more normal rates of price growth rather than a serious slowdown. With the Halifax also finding that levels of confidence in the housing market have fallen to their lowest level in more than a year, sellers must think urgently about pricing competitively,’ he added. On top of the slightly cooling of the market there is also uncertainty over the referendum on the future of the UK on the European Union on 23 June. Mark Posniak, managing director at Dragonfly Property Finance, thinks prices are likely to edge down further. ‘People are starting to understand the magnitude of the Brexit vote and that will lead many to… Continue reading
Smaller prime properties in London commuter belt set to see strongest rental growth
Smaller properties in prime markets in the commuter belt around London continue to see the strongest rental growth in the first quarter of 2016, according to a new research report. There is such strong demand for smaller properties because tenants are faced with the issue of raising the deposit for their first mortgage,’ says the report from real estate firm Savills. It points out that landlords have been hit with a number of measures introduced by the current government in an attempt to limit future investment in the residential sector and Savills expects that these measures to limit the amount of stock which comes onto the rental market, underpinning the growth in rents for existing investors. Rental values of prime property in the commuter zone increased by an average of 1.4% over the year to March 2016 to bring five year rental growth up to 7.6%, reflecting the continuation of modest but consistent rental growth in the period since the middle of June 2012. The figures from the report show that the average rent for one or two bedroom homes is up 2.5% year on year, for three bedrooms it is up 2.8%, for four bedroom up 1.6%, or five bedrooms up 0.9% and for six bedrooms or more up 0.5%. This brings growth over five years to 12.3% for one or two bedroom prime properties, 12.3% for three bedrooms, 9% for four bedrooms, 5.5% for five bedrooms and 4% for six bedrooms or more. The report suggests that the strength in demand for one and two bedroom accommodation reflects the age profile of the tenants in this sector with one third of tenants being in their 20s and a further 35% in their 30s and their personal and financial circumstances. ‘Such tenants face well documented issues in raising the deposit for their first mortgage but are also increasingly attracted by the flexibility of renting given an increasing propensity to move jobs in the first half of their working life,’ said Lucian Cook, director of Savills residential research. ‘With such tenants renting for longer life stages, this has fed into more demand for small family accommodation for tenants in their thirties and early forties,’ he added. He pointed out that markets for these smaller properties are generally serviced by landlords with a strong investment motive for the purchase and ownership of their rental property. By contrast, Landlords of larger prime rental properties are more likely to be letting out a dwelling which has previously been their main residence. ‘Our research shows that 39% of Landlords of properties of five bedrooms or more are letting their property out because either they are relocating for employment purposes or are unable to sell their main home. Landlords of such properties have only seen rents rise by a net figure of 4% over the past five years, and a meagre 0.5% in the past 12 months,’ Cook explained. He also pointed out that going forward, all landlords will have… Continue reading
Housing market activity in the UK striding forward, latest research suggests
A surge in remortgaging has driven the UK housing market to make great strides forward on a long term basis, according to new research. This has mitigated the historic steadying that occurs in the month of April and the total number of valuations carried out increased 24% year on year, the figures from Connells Survey & Valuation show. The firm points out that this counteracts the 22% short term downturn that occurred in the market as a whole between March and April. Every year since 2013, April has seen a decline in valuation volumes on a monthly basis. For example, between March and April 2015, overall valuation activity declined by 32%, some 10% greater than the fall experienced over the same period in 2016. According to John Bagshaw, the firm’s corporate services director the property market is experiencing some vibrant long term growth regardless of any short term indicators. ‘The monthly downturn the valuation sector has experienced overall is a reflection of an historic trend which sees housing activity typically sink somewhat after a New Year surge,’ he said. ‘However, this year’s dip has not been as protracted as that of previous years’, a sign the property market is becoming robust enough to endure these cyclical market forces. The longer term picture is even more positive. As house prices continue to rise and interest rates remain at record lows, ever more people will be drawn to the property ladder,’ he added. The monthly report also shows that activity in the remortgaging and first time buyer sectors has been the key driver of annual growth in April’s valuation market. The remortgaging sector saw the strongest annual uplift of 50% between April 2015 and April 2016, while valuations carried out for first time buyers grew by 46% on a yearly basis. However, remortgaging valuation volumes in April also contracted by a quarter on a monthly basis. Similarly, valuations carried out for first time buyers fell by 15% month on month. But Bagshaw pointed out that while the remortgage and first time buyer sectors have still been somewhat affected by the seasonal slowdown, this has been more than counterbalanced by their performances over a 12 months basis. ‘Remortgagors continue to take courage from the rock bottom interest rate, a rate which has spurred many home owners to either switch mortgages for a cheaper rate or release the capital on their home,’ he said. ‘Equally, the political and economic momentum seems to be firmly with first time buyers. They are currently basking in a range of government assistance packages, including a recently extended Help to Buy scheme, as well as enjoying a confident lending market as evidenced by new Barclays 0% deposit mortgage,’ he explained. ‘The sum total of these schemes has transformed a once cautious sector into one of the most vibrant in the property market and there are few signs of that changing… Continue reading
