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Valuations activity up 9% in UK despite price growth slowing
Valuations activity in the UK housing market grew 9% year on year in 2014 despite a cooling in property price growth, according to the latest research from Connells Survey and Valuation. On a monthly basis, total valuations dropped 17%, however, this is slightly lower than the average decrease of 18% typically recorded from November to December for every year since 2010. ‘This latest increase in valuations activity does contrast with more rapid expansion recorded earlier in 2014. But a more balanced and sustainable pick up bodes well for 2015,’ said John Bagshaw, corporate services director of Connells Survey and Valuation. The firm’s data also shows that remortgaging is the strongest performing sector of the market. On a monthly basis, remortgaging valuations had one of the smallest falls of 7% and saw a robust 25% surge year on year to December 2014. According to Bagshaw thousands of households are taking advantage of the record low rates and this looks set to continue for the foreseeable future. He pointed out that just this week Barclays launched a new 10 year fixed rate at less than 3%. ‘At the same time, the relative strength in remortgaging activity in December can be partly explained by the fact it isn’t as heavily influenced by seasonal factors. While home movers and first time buyers may typically avoid a busy upheaval during the festive period, for remortgagers this period is not as disruptive,’ he said. ‘However, remortgaging has wind in its sales as we enter 2015. With the Bank rate set to remain at its historic low for some time, lenders will probably be able to offer even more competitive rates very soon,’ he added. First time buyer activity also saw significant annual growth. On an annual basis the number of valuations for first time buyers increased by 9%. This is despite the fact that valuations dropped by 16% compared to the previous month. By contrast, the buy to let sector of the market saw one of the biggest falls in activity both on a monthly and annual basis. Compared to November 2014, activity fell 33% while on an annual basis it was down 9%. ‘With an improving jobs market, greater mortgage affordability and consistent above-inflation wage growth it is clear that confidence is returning to first time buyers. Looking ahead, the recent changes to stamp duty and the ongoing Help to Buy Scheme should help this sector continue to perform well in 2015,’ said Bagshaw. He explained that after a slightly disappointing performance in October and November, first time buyer activity seems to have regained strength. ‘This sector of the property market was particularly affected by the spate of regulatory policies such as the loan to income caps. Coupled with rising house prices these lending restrictions have proven a hurdle for first time buyers,’ he added. But… Continue reading
Latest RICS market survey shows construction work up in the UK
Construction workloads in the UK rose in the final quarter of 2014, but the shortage of bricklayers reached a record high, according to the latest market survey from the Royal Institution of Chartered Surveyors. Some 52% of respondents reported that workloads in the commercial sector had grown in the fourth quarter of 2014, which is the fourth consecutive quarter where the reading for workloads has been above 50%. Private housing followed at a net balance of 45% and industrial at 40%, while overall UK construction workloads reached a 39% net balance. Looking at growth restraints, around 60% of respondents reported that either material shortages, skill shortages or financial constraints were impeding further sector growth, while the proportion of respondents reporting labour shortages across all of the main trades climbed to an all-time high of 48%. Despite these factors and anecdotal evidence that the upcoming election in May is creating industry uncertainty, confidence remains firm with 75% more respondents expecting workloads to increase and 55% more expecting employment to increase. Members’ anticipate growth in workloads of 3.4% in 2015 with jobs in the sector expected to rise by a further 3%. Elsewhere, the infrastructure sector continued to see what has been a much steadier pace of growth over the last 12 months and in the final quarter of 2014 some 23% more respondents reported a rise in workload activity. In Northern Ireland, the picture remains a little more downbeat compared to the rest of the UK. The survey report says that labour shortages have become increasingly onerous in every area of the sector since the industry began to recover in the middle of 2013, with bricklayers and quantity surveyors in particularly short supply. Now that workloads are rising and optimism is growing, the practical challenges are in providing the skilled labour the industry needs and in alleviating the financial constraints, which saw nine months of decreased lending in 2014. ‘The political challenges in the run-up to the election are around shoring up industry confidence to ensure the framework for effective planning and delivery of projects are in place to create long term growth that is spread across the UK. This will also enable the investment that the industry needs to raise productivity and encourage new training initiatives,’ said Alan Muse, director of built environment professional groups at RICS. Continue reading
Annual house price growth in England and Wales down to single digits
Annual house price growth in England and Wales fell back into single figures, as house prices paused in December, the latest index shows. Values in London and the South East are cooling but price growth across other regions remains steady, according to the LSL Property Services/Acadata index. Overall prices are up 9.6% year on year to an average of £278,997 but there was no change month on month. However, when London and the South East is excluded from the figures then the monthly rise was 0.4%. The index data also shows that growth accelerated at top end of the market in 2014, but price rises slowed at the bottom of this sector. But total home sales across 2014 were up 18% year on year as stamp duty reforms boosted activity in December. ‘There was a brief interlude in the tempo of house price growth in December, with values pausing for breath after a chorus of uninterrupted monthly climbs since May 2013. On a monthly basis, property price inflation peaked last January, and has gently petered out over the course of the past year,’ said Adrian Gill, director of Reeds Rains and Your Move estate agents. ‘This has pruned annual house price growth back to single digit territory again, recording a steadier 9.6% rise in average property values in England and Wales in the year ending December, down from 10.6% recorded in November,’ he added. He pointed out that there has been an about turn in the South East of the country, and London in particular. ‘Property values in the capital and surrounding areas are beginning to concede ground after significant advancement over the last year. Average house prices dropped in a third of all London boroughs in the month to November, with Southwark experiencing the sharpest fall in average values of 3.1%,’ said Gill. He also pointed out that monthly house price growth has continued if the exceptional London and South East regions are excluded from the calculations. Similarly, annual price rises across England and Wales are stable when these regions are omitted, as home values across the rest of the country stand firm and continue forward on their calmer trajectory. ‘But it’s not just geography that disrupts the march of house price growth across England and Wales. It is the most expensive properties that are showing the strongest gains in value, while the rate of price growth is slowing among cheaper homes,’ he explained. ‘Properties worth over £250,000 have seen average annual growth of 10.7%. But those valued below £153,000 have typically witnessed a year on year price increase of just 2.9%. As the two paths of growth diverge, this is widening the gap between the different rungs of the housing ladder,’ he said. He explained that 2014 was the year of the first time buyer, with the second Help to Buy scheme offering further assistance to aspiring home owners throughout the country, and ensured that many potential buyers could still navigate around the… Continue reading
