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UK residential property market activity strong as valuations rise
Last month saw the strongest activity on record for property valuations in any month since 2007, up 36% on a monthly basis and annual growth of 42%, new data shows. After a 36% increase in activity on a monthly basis, the total number of valuations carried out in March 2015 has grown by 42% compared to March 2014. First time buyer activity increased by 33% in March compared with the previous month and was up 40% from the same month last year, according to the latest research from Connells Survey and Valuation. Activity on behalf of those further up the property ladder also saw rapid growth, but at a slower pace than for first time buyers. Valuations on behalf of established home movers picked up by 32% on a monthly basis and by 23% over the last 12 months. ‘New announcements like the Help to Buy ISA have combined with existing government schemes to boost interest from first time buyers. In the short term this is mainly about sentiment, but extra support has been consistently focused at this end of the market for years now, with a longer term impact too,’ said John Bagshaw, corporate services director of Connells Survey & Valuation. The data also shows that remortgaging in March has outperformed the overall housing market, posting 54% growth on an annual basis, following a 33% month on month rise and Bagshaw pointed out that record low interest rates are likely to stay for several more months. ‘Many households with a mortgage that seemed extremely competitive just a few years ago could find it in their interests to refinance, even to the security of a fixed rate. Such a recalibration of the mortgage market is working alongside a resurgent property purchase market to stoke demand for valuations,’ he explained. ‘Of course a little further ahead, there is still the prospect of interest rate rises. In fact deflation caused by a volatile oil price could make a turning point for interest rates more dramatic as and when this occurs. So there is no space for complacency although that isn’t stopping people looking for the best deals,’ he added. With by far the strongest monthly increase, buy to let activity in March was 54% stronger than in February. This takes the number of valuations carried out on behalf of buy to let landlords to levels 64% ahead of March 2014. The firm believes that landlords are responding to a pick-up in demand from tenants and a noticeable improvement in rental yields in some hotspots. It’s also possible this is another artefact of a booming jobs market, as people move to take up jobs. ‘Landlords are generally low LTV borrowers who tend to have reliable finances away from their property investments, so for lenders they offer a sound investment in a similar way to many… Continue reading
Economists forecast property price growth of just 1.5% in UK, fall in London
UK house prices will grow only by 1.5% in 2015 but they are set to fall by 3.6% in London before growing again but slowly over the next five years, according to economists. The report from the Centre for Economics and Business Research (Cebr) is an upward revision from its previous report in January when it forecast a fall of 0.6% in prices this year. It said that the impact of December’s stamp duty changes has been felt sooner than expected, with some buyers putting cash saved towards a deposit but while expectations have been revised up it is a more subdued outlook for London. The property market in the capital continues to show signs of cooling. Average house prices in London are expected to decline by 3.6% over 2015 but the report also points out that they increased by 17.4% in 2104. Cebr continues to expect London house prices to underperform the rest of the UK this year, following years of over performance. It points out that the strength of sterling against the euro, fears of a mansion tax and hefty new stamp duty rates on high value properties have all hit housing demand from overseas buyers. In 2015, for the first time since 2009, house price growth will be stronger outside the capital than in London itself. Leading indicators such as fewer new buyer enquiries and properties taking longer to sell already point to falling prices in the capital. Outside of the capital, the decline in overseas interest in UK property will be much less strongly felt. At the same time, most home buyers have benefited from December’s stamp duty changes as well as an improving labour market which has boosted consumer spending power. The YouGov/Cebr Household Economic Activity Tracker (HEAT) shows that consumer expectations for property price growth across the UK have been picking up in recent months after declining in October, something that is feeding through into rising consumer confidence in the run-up to the general election. ‘Outside of London, the outlook for house prices this year has improved after a few months when the market appeared to be coming off the boil. December’s stamp duty changes, as well as rising household incomes, are lifting prices in many parts of the UK,’ said Nina Skero, Cebr economist and main author of the report. ‘In London, however, we expect prices to decline by 3.6%, driven by a significant weakening at the prime end of the market. A potential mansion tax, reduced overseas interest and hefty new stamp duty rates have hit demand for high value property,’ he added. Continue reading
Housing lending falls overall in Australia but up slightly for new homes
The number of loans to owner occupiers, excluding refinancing, declined modestly in February in Australia, according to the latest figures from the Australian Bureau of Statistics. However, the number of loans to those purchasing and building new homes increased by 2% which the Housing Industry Association, the voice of the residential building industry, said is encouraging. ‘This is a relatively positive result against a backdrop where lending to households purchasing existing homes eased back modestly,’ said Geordan Murray, HIA economist. Overall the number of loans to owner occupiers buying established homes, excluding refinancing, fell by 0.9% in February to a level 4.9% weaker compared with the same time a year ago. ‘Lending figures indicate that the investor market eased by around 3.4% during February, but remained around 9.9% higher than the same period a year ago. The majority of the growth in investor lending has been to those purchasing existing homes. In February over 90% of lending to investors went into the existing home market,’ explained Murray. He pointed out that lending activity in the first home buyer market remained quite weak. The number of loans to first home buyers in the three months to February 2015 was around 8.2% lower than the corresponding period a year earlier,’ he added. A breakdown of the figures shows that the total number of owner occupier loans for new housing in February 2015 compared with February 2014 shows that only Victoria and Tasmania recorded growth at 3.2% and 71.7% respectively. Elsewhere, there were declines with a fall of 0.4% in New South Wales, Queensland down 1.7%, South Australia down 17.4% and Western Australia down 12.8%. Continue reading
