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England and Wales house prices showing strongest annual growth since 2005
House prices in England and Wales increased by 0.8% in November with values climbing across all regions taking the average price to £280,733. The LSL Property Services/Acadata index also shows that annual growth accelerated to 11.3% but it points out that strong growth is buoyed by London and the South East. Excluding them takes the annual growth to 5.7%. But it does mean that the average house price has now exceeded £280,000 for the first time and annual growth is the strongest it has been for almost a decade. However, completed house sales have been squeezed by slow supply. ‘Annual house price growth across England and Wales has more than doubled over the last 12 months, accelerating from 5.4% in November 2013, to 11.3% during the past year,’ said David Newnes, director of Reeds Rains and Your Move estate agents. ‘These figures are spurred on by London and the South East, where the housing recovery has been fast tracked. When these regions are removed from the calculations, a calmer 5.7% annual rise in house prices materialises, the largest divergence on record,’ he explained. ‘After a temporary hiatus at the highest tiers of the property market, growth has rallied again in the capital with values in prime spots such as Kensington and Chelsea, and Hammersmith and Fulham surging 5.3% over the course of the month, hitting new price records along the way,’ he added. He also pointed out that overall, average house prices in London are now 1.9% higher than September, rebounding back from a more moderate 0.8% increase the previous month, and driving annual price rises to 19.7% in the year to October 2014. However, after a solid advance in activity throughout 2014 to date, completed house sales withdrew last month, from a particularly busy October. House sale completions in November also dipped below the level witnessed a year previously. ‘This doesn’t undermine the strength and stability of the growth in activity experienced over the year as a whole in some locations. For instance, completions have jumped 58% in Slough in the last year, propelling an 18.5% increase in average house prices in the area over this time,’ said Newnes. He also explained that the changes to Stamp Duty should also allow activity to build further at the bottom rungs of the ladder, facilitating hefty savings. ‘This should help erode the upfront barriers of purchasing a home for the significant majority of buyers and sellers may feel the benefit of weightier demand, as well as being able to price their homes more realistically, without having to tactically negotiate threshold barriers,’ Newnes said. ‘Meanwhile, the impact on the top end of the market isn’t as black and white as it may seem at first glance with properties ranging between £1 million and £1,125,000 liable for less stamp duty than before although above that there are no winners,’ he added. ‘In the year to September 2014, some 69% of completed house sales on properties worth £1,125,000 or more were in London, and a… Continue reading
Latest CML figures show lending to first time buyers still rising
Lending to UK first time buyers increased by 12% in October compared to the previous month and is now 14% up on the same month in 2013, according to the latest figures from the Council of Mortgage Lenders. By value, there was £4.4 billion advanced to first time buyers in October, 10% up on September and 22% higher than October last year, the CML data also shows. But first time buyer affordability changed fractionally, with first time buyers typically borrowing 3.39 times their gross income, compared to 3.4 in September. The typical loan size for first time buyers fell slightly month on month to £125,800 in October, down from £126,000 in September. First time buyers in October paid 19.5% of gross income towards covering capital and interest payments, little changed from 19.6% in September but still significantly less than the recent peak of 24.8% in December 2007. Lending to home movers also strengthened month on month. In October, the number of loans advanced to movers was 35,000, a 10% rise on the previous month and up 4% on October last year. By value, lending to movers totalled £6.5 billion, 8% up on September and up 10% on October last year. Remortgage lending activity saw a decline month on month in October, with the number of remortgage loans totalling 26,600. This was 6% down on September and 11% down on October last year. The value of these loans at £4.1 billion was down 7% on the previous month and down 5% on October last year. There were 19,600 buy to let loans in October, representing lending of £2.7 billion. This continued the growth seen last month with loan volumes and the value of these loans up 8% on September. Compared to October 2013, the number of loans increased 22% and the value of these loans went up 29%. ‘This has been a year of change for our industry, but the market has shown remarkable stability with house purchase and buy to let lending showing steady, consistent growth throughout 2014 compared to 2013,’ said Paul Smee, director general of the CML. ‘There have been fluctuations month to month but overall the market appears to be showing a positive direction of travel going into the New Year. Stamp duty reform was long overdue and it is welcome that the tax has been changed. It will now be interesting to see how the market reacts. The new structure should be less of a barrier to mobility for those looking to get on the housing ladder or movers looking to switch homes,’ he added. According to David Newnes, director of Your Move and Reeds Rains estate agents, while first time buyers have been forging ahead in the market this year, more recently lending to new buyers is starting to wane. ‘Mortgage market measures introduced in April have trimmed back lending since, coupled with the ongoing debate about when interest rates might rise and the LTI cap this has discouraged… Continue reading
UK housing minister announces £3.5 billion for new rental homes across the country
The UK’s housing minister has signed a new agreement to unlock £3.5 billion in funding to build new homes specifically for renting across the country. Brandon Lewis said that the deal with PRS Operations Limited, a subsidiary of Venn Partners LLP, is important to the government’s wider efforts to create a bigger, better private rented sector. The government’s private rented sector housing guarantee scheme enables landlords of new rented homes to use a government guarantee to secure long term financing. Lewis explained that this investment will increase the supply of purpose built, professionally managed private rental homes giving tenants more choice of better quality homes. Initially, up to £3.5 billion in government backed loans will be made available to landlords looking to invest at least £10 million for new homes available for private rent with the option to increase this to £6.5 billion in future. Venn Partners has created PRS Operations Ltd, a new organisation that will secure institutional investment in building homes specifically for private rent. This new organisation will work to arrange up to £3.5 billion of funding and then offer a series of smaller loans to eligible landlords looking to move into this expanding market. ‘House building is an important part of the government’s long term economic plan. The deal with Venn Partners to provide the guarantees scheme is part of a package of investment measures to help generate growth in the rented sector, while ensuring value for money for the tax payer,’ said Lewis. Other measures include a £3.5 billion affordable housing guarantees scheme, which has already helped provide over £1 billion in investment to provide over 9,000 new affordable homes, on some of the cheapest terms in the sector’s history The £1 billion Build to Rent Fund, which is on track to provide up to 10,000 newly built homes specifically for private rent across the country and the Private Rented Sector Taskforce, which has identified aspirations to invest over £10 billion of equity in the private rented sector. ‘We’ve pulled out all the stops to get the country building since 2010, including by creating a bigger better private rented sector. This is an exciting and important move that will help strengthen the private rented sector so that it meets the needs of tenants well into the future,’ Lewis explained. According to Danny Alexander, Chief Secretary to the Treasury, unlocking £3.5 billion of funding for the private rented sector will ensure that the government delivers the homes that people across the country need. ‘Housing starts are now at a six year high thanks to this government’s focus on building more homes. Investment in housing is essential for the future of an economy. That’s why for the first time in a generation, this government plans to directly commission homes, as well increasing investment in affordable housing to ensure the delivery of 275,000 affordable homes over the next five years. These guarantees will help to deliver more homes in communities across Britain,’ he added. Attracting significant institutional investment to the… Continue reading
