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Property prices dip in England and Wales after mad March buy to let rush
Property prices in England and Wales fell by 0.5% in March, taking the average price of a house to £189,901, the latest land registry figures show. This takes annual house price growth to 6.7% but prices vary according to location with London and the East of England the only two regions with month on month growth. In London property prices increased by 0.2% month on month and by 13.9% year on year, taking the average price to £534,785. In the East of England price were also up 0.2% month on month, taking annual growth to 10.7% and average value to £220,989. Everywhere else in England and Wales prices fell month on month with the steepest fall of 2.6% in Yorkshire and Humber, followed by a fall of 2% in the West Midlands. Prices fell by 1.2% in the North East, by 0.9% in Wales and the South West, by 0.4% in the South East, by 0.3% in the East Midlands and by 0.1% in the North West. Year on year prices were up everywhere apart from the North East where annual growth was down by 0.7% to £97,581. Prices were up 10.3% in the South East, by 5.8% in the South West, by 5.7% in the East Midlands, by 5.3% in the North West, by 3.5% in Wales, by 3.1% in the West Midlands, and 1.6% in Yorkshire and Humber. Experts point out that the fall in prices should not be a surprise after a mad rush in March as buy to let landlords and second home buyers sought to beat the introduction of a 3% stamp duty surcharge on additional homes that came into force on 01 April. David Brown, chief executive officer of Marsh & Parsons, believes that there is still a lot of energy in the first time buyer market for other owner occupiers unaffected by the stamp duty chance. ‘This should step up to fill any momentary fall back in investor demand, and keep prices on course. In London, there are 14 buyers competing for every available property on the market, which will keep the wheels of growth moving,’ he added. According to Andy Knee, chief executive of LMS, the monthly dip will cause hopeful home buyers to breathe a sigh of relief that house prices have not stretched further out of reach. ‘But year on year, a 6.7% rise across England and Wales is cause for concern. In London particularly, where house prices rose 13.9% annually to exceed an average value of £534,000, homeownership is fast become possible for only the very wealthy,’ he said. ‘Despite government intervention to aid first time buyers, such as Help to Buy, Starter Homes and the Lifetime ISA, these schemes fall short of making property more affordable for millions,’ he pointed out and added that uncertainty over the referendum in June on the future of the UK in the European Union could have an effect. But he does not think… Continue reading
UK landlords set to invest less ahead of tax changes
Private sector residential landlords in the UK are strengthening their credit profiles as they shift investment away from new acquisitions and towards the upgrading of existing portfolios, a new report suggests. Following announcements from the government last year that tax relief on rental income would be reduced, and stamp duty increased on buy to let purchases there has been a fall in buying intentions in the first quarter of 2016. The latest Private Rented Sector Trends report from Paragon Mortgages shows that just 9% of respondents intend to purchase a property over the next three months, down from 14% in the previous quarter. The report explains that this reduction coincides with rising levels of awareness about the implications of the tax relief changes. More than three quarters, 76%, of respondents said they now understand what the changes to tax relief will mean for them, up from 62% in the fourth quarter of 2015. Alongside scaling back on short term investment plans, landlords are also improving their credit profiles. Average levels of gearing, the value of an investment portfolio less existing outstanding mortgages, are down from 38% in the fourth quarter of 2015 to 36% in the first quarter of 2016. The research report also show that some 67% of landlords surveyed have borrowings of less than half the value of their investment property portfolios. Affordability levels are also improving with landlords spending, on average, 28% of their rental income on mortgage repayments, while 51% spend less than a quarter of their rental income on mortgage repayments. Returns are also very stable with the average net rental yield remaining at 4.7% for the third consecutive quarter. The latest data also indicates that landlords are considering upgrading existing portfolios. Asked whether, as a consequence of reduced tax relief on rental income, landlords would reduce maintenance of their properties, just 12% said they would, down from 25% in the fourth quarter of 2015. On the question of whether landlords would make fewer improvements to their properties, just 14% said they would make fewer improvements, a figure more than halved since the previous quarter when it stood at 31%. ‘The PRS is facing the prospect of a great deal of change as a result of the significant shift we have seen in fiscal and regulatory policy,’ said John Heron, director of mortgages at Paragon. ‘Some landlords are responding to this uncertainty by planning fewer new purchases and investing in their existing portfolios. At the same time credit profiles are very robust and improving, a picture that is somewhat at odds with the picture being painted in some quarters,’ he explained. ‘If landlords materially reduce investment, those that have to rely on the PRS for a home could be hit quite hard. It may well become even more difficult and expensive to rent a home with no obvious commensurate benefit to home owners,’ he added. Continue reading
Sales up strongly in Scotland but prices down 8.4% year on year
Residential property sales in Scotland increased by 18.2% in the first quarter of 2016 compared to the same period a year ago, the latest official data shows. The figures from the Registers of Scotland also show that prices are down by 8.4% compared to the previous year, bringing the average price to £159,198. A total of 19,802 properties changed hands between January and March, the highest volume of sales for these months since 2007/2008 and the total value of sales across Scotland increased by 8.3% compared to the previous year to just over £3.15 billion. ‘We've seen a sustained increase in the volume of sales throughout the 2015/2016 financial year,’ said Registers of Scotland director of commercial services, Kenny Crawford. ‘This time last year, we saw a spike in house prices, with an increase in the number of high value property sales. By comparison, this year has seen an increase in the volume of lower value properties being sold, which may account for this year's lower average price. Future sales statistics will determine whether this is a one-off decrease, or whether this is a trend that will continue,’ he added. The city of Edinburgh was the largest market, with sales of over £554.6 million for the quarter, up 3.3 while Midlothian recorded the highest increase in value, with sales of over £63 million, an increase of 56.5% compared with the same quarter last year. Aberdeen City showed the largest decrease in market value, down 22.7% to £162.7 million. The highest percentage rise in the volume of sales was in Midlothian, with an annual increase of 48% and Edinburgh recorded the highest volume with growth of 22.4% compared to the same quarter the previous year. The largest percentage fall in volume of sales was in East Renfrewshire, down 14.5%. East Renfrewshire also recorded the highest average property price at £222,303 but this was down 7.9% on last year. The largest percentage rise was seen in North Lanarkshire, where the average property price rose 6.6% to £116,738. The highest percentage fall was recorded in East Lothian, with an average price of £207,276, a fall of 16.5% on last year. All property types showed an increase in sales volumes, with flats showing the biggest increase at 24.2%. They also all showed a decrease in average price this quarter, with detached properties showing the biggest decrease, down 11.6% to £236,249. Semi-detached, terraced, and flatted properties showed price decreases of 8.5%, 10.5% and 7.4% respectively. According to Michelle Grant, investment director at Grant Property, the increase in volume sales reflects what the firm is seeing on the ground. ‘Our buyers are experiencing high levels of competition when trying to secure prime city centre properties on behalf of investors,’ she said. ‘In Glasgow we are bidding against on average eight people for each property and in Edinburgh it can be as high as 20. We have also recently seen properties selling for as much as 15% over… Continue reading
