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UK property prices down slightly between June and July, says latest index
Residential property prices in the UK fell slightly by 0.6% between June and July and annual house price growth has slowed to 7.9%, according to the latest monthly index from the Halifax. It shows the fragility of the housing market recovery as different lenders show prices rising and falling, but only by marginal amounts so there is some stability in the housing market. Just a few days the Nationwide reported in its monthly index data that prices increased by 0.4% in July and annual property price growth edged up to 3.5%. Meanwhile one set of data said that prime property prices in central London are still falling and another showed a slight rise. Both the Halifax and the Nationwide show that the average home price is now nudging £200,000. Today’s data from the Halifax put it at £198,883. The Halifax index also shows that sales increased by 5% between May and June. Confidence in the outlook for house price growth remains substantially higher than at the beginning of 2015, according to Stephen Noakes, managing director of retail customer products at the Halifax. He believes that the market is robust, pointing out that house prices in the three months to July were 2.4% higher than in the previous quarter. However, this measure of the underlying rate of house price growth has eased and annual house price growth also declined, to 7.9% from 9.6% in June and is at its lowest since December 2014. ‘The underlying pace of house price growth remains robust notwithstanding the easing in July. Continuing economic recovery, earnings growth in excess of consumer price inflation and very low mortgage rates all underpin housing demand,’ said Noakes. ‘Supply is highly restricted with the stock of homes available for sale falling further to new record lows. This combination of well supported demand and tight supply is likely to ensure that house price growth remains relatively strong in the near term,’ he added. He also pointed out that the Halifax housing market confidence tracker shows that confidence in the outlook for house price growth hit its highest level in four years following the general election in May, but dropped back in June. Price Optimism (HPO) hit +68 in May 2015, and although it slipped back slightly in June to +64, it remains substantially higher than at the beginning of 2015 when it was +52. Jonathan Samuels, chief executive of Dragonfly Property Finance, pointed out that despite the fall in prices during July, house prices overall are still rising. ‘The dominant narrative within the UK property market continues to be weak supply and strong demand,’ he said. He explained that demand is strong because of mortgage rates being at record lows, more people in work, low inflation and a generally positive economic outlook, however, the increasing likelihood of an interest rate rise in the not too distant future has the potential to recalibrate demand and the market as a whole. ‘After so many years of 0.5% rates, even a… Continue reading
Small developers could be hindered by UK court ruling on affordable homes
The UK courts have delivered a blow to small residential developers, potentially making schemes of up to 10 homes economically unviable, according to legal experts. The decision, which concerns the exemption small residential developers have previously had from contributions towards affordable housing, will particularly affect urban residential development and small rural sites, according to law firm Coffin Mew. The exemption was introduced by the government to encourage residential developers to bring forward smaller housing schemes and to redevelop compact urban and rural spaces to help meet the chronic housing shortage. However, two local authorities, Reading and West Berkshire, have successfully challenged this exemption, arguing that it would have a negative effect on affordable housing numbers. ‘This decision is a major blow for smaller residential developers looking to bring forward schemes in urban environments,’ said Nick Leavey, partner and head of commercial property at law firm Coffin Mew. ‘The economic viability of small schemes is often on a knife edge, and this decision is likely to pull the rug from underneath those difficult to develop sites. It is also likely to have a negative effect on land values for future deals, exacerbating the housing crisis in the South East further. Nobody wins from this decision,’ he added. Meanwhile, real estate industry in the UK has seen an 11% growth in jobs due to the recovery in the property market. Jobsite Indeed research found that opportunities for trainee estate agents, quantity surveyors and property managers are among the top five. London, Manchester and Birmingham top the list for vacancies. Also, the number of people actively looking for careers in this industry has increased 10% since 2014, which the firm says suggests that job seekers are starting to realise the potential within this market. ‘The return of positive conditions in the UK housing market for both buyers and sellers, suggest it’s prime time for job seekers in this sector to take advantage of such opportunities,’ said Gerard Murnaghan, Indeed’s vice president for the EMEA region. Continue reading
Central London prime property market set to be subdued into the autumn
Subdued activity levels in the prime central London property market are likely to continue until the autumn as buyers and sellers digest recent tax changes, a new analysis suggests. Annual growth was flat at 2%, down from 7.9% in July 2014, according to the latest prime central London sales index from real estate firm Knight Frank. Furthermore, while total sales volumes in England and Wales fell 11%, the number of £2 million plus deals in London was down by 25% in the first quarter of 2015. A breakdown of the figures for price growth in the year to July 2015 shows the biggest rise was seen in the City and Fringe with growth of 6.6%, followed by Islington at 5.8%, Mayfair at 3.6%, Southbank at 3.4% and Marylebone at 3.2%. South Kensington saw prices rise by 1.9%, St Johns Wood saw growth of 1.5%, Hyde Park 1.2% and Belgravia 1%. Price growth fell by 3.8% in Notting Hill, was down by 1.2% in both Knightsbridge and Chelsea and down 1.8% in Kensington. ‘In the period between the general election and the summer holiday, buyers in London have taken stock of new market conditions and appear less inclined to rush into making decisions,’ said Tom Bill, head of London residential research at Knight Frank. ‘A succession of tax changes has contributed towards low single digit annual growth, meaning buyers and sellers are more prepared to sit on the side lines until later this year, unafraid of missing out on the imminent return of stronger growth,’ he explained. ‘More discretionary buyers are waiting to see how readily recent policy changes will be absorbed. While there seems to be some short-term hesitation around recent alterations to non-dom legislation, it is December’s rise in stamp duty which appears to have had the single biggest dampening effect on demand as buyers digest the reforms,’ he pointed out. ‘Despite the strong underlying economy, the number of tax changes, which have a particularly strong impact on London, means the market is undergoing a period of readjustment,’ he added. The report explains that last December’s rise in stamp duty for properties worth more than £1.1 million appears to have contributed to more subdued activity. Indeed, London accounted for 13% of transactions across England and Wales in the first quarter of this year, but contributed 46.9% of stamp duty revenue, up from 43.4% in the same period in 2014 under the old stamp duty system. Meanwhile, properties worth in excess of £1 million in London accounted for 1% of deals in England and Wales but the revenue contribution increased to 25.8% from 19.8% last year. Overall stamp duty in England and Wales is down in the first quarter, as the government predicted, though it expects house price inflation to help make up any short fall in coming years. Continue reading
