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UK house prices still rising but could be affected by Scot vote and 2015 election
House prices continues to rise across the UK in August but the vote in Scotland on independence is likely to have an effect along with next year’s general election. Both could act as a dampener on growth, according to latest UK residential market update report from Knight Frank. It also points out that there are some conflicting signals emanating from the market. ‘Economic confidence is up across the country and this, coupled with more positive employment data and ultra-low interest rates is providing a sound underpinning for increasing transactions and values in many parts of the country,’ said Gráinne Gilmore, head of UK residential research at Knight Frank. She pointed out that the government’s Help to Buy scheme is also gaining momentum, with nearly 40,000 homes now purchased under the scheme. Around 85% of Help to Buy Equity Loans, the part of the scheme that allows buyers to purchase a new home even if they don’t have a 25% deposit, were taken out by first time buyers, signalling that the scheme is easing the bottleneck of pent-up demand. Yet there are some signs of headwinds in the market. ‘From a regulatory point of view, the new mortgage rules may be acting as a partial dampener on activity. While mortgage approvals for new house purchases remained steady in July after the dip seen after the MMR rules were introduced in April, they have not re-bounded to the pre-April highs,’ said Gilmore. ‘The data suggests that the rules, coupled with the new lending limits applied by the Bank of England, could be acting as a slight temporary brake on the market, especially for higher loan to income mortgages,’ she added. The report also points out that the Royal Institution of Chartered Surveyors reported that new buyer demand fell in August following a sustained period of month on month growth. ‘This could be due to the summer holidays, but it comes amid increasingly vocal hints of an interest rate rise from the Bank of England Governor. While the markets now anticipate a rate rise early next year, two members of the Bank’s rate setting committee voted for a rate rise in August, the first time this has happened since rates hit a record low,’ said Gilmore. ‘There is also a period of increasing political uncertainty looming. All eyes are on the Scottish Referendum this week. The debate over the result has already had an impact on equity markets as well as currency markets. If there is a yes vote, it is likely to be the uncertainty in the market as Scotland thrashes out its economic and fiscal policies ahead of 2016 that affect the Scottish housing market, rather than the fact that Scotland becomes independent,’ she explained. Continue reading
UK house prices up 11.7% year on year and national index reaches new record
UK house prices increased by 11.7% in the year to July 2014, up from 10.2% in the year to June 2014, according to the latest figures from the Office of National Statistics. House price annual inflation was 12% in England, 7.4% in Wales, 7.6% in Scotland and 4.5% in Northern Ireland. The index report says that overall house prices are increasing strongly across the UK, with prices in London again showing the highest growth. Annual house price increases in England were driven by an annual increase in London of 19.1% and to a lesser extent increases in the South East at 12.2% and the East at 10.6%. Excluding London and the South East, UK house prices increased by 7.9% in the 12 months to July 2014 and on a seasonally adjusted basis, average house prices increased by 1.6% between June and July 2014. In July 2014, prices paid by first time buyers were 13.5% higher on average than in July 2013. For owner occupiers prices increased by 10.9% for the same period. The mix adjusted house price index reached a record level of 206.6, some 2.7% higher than June 2014 when it reached 201.2, and 11.4% higher than the pre financial crisis peak of 185.5 in January 2008. David Newnes, director of Reeds Rains and Your Move estate agents, pointed out that while what’s happening in London may be eye-catching, it is like looking through a kaleidoscope and skews any view of the current total housing landscape. ‘Peeling back the regional layers gives a much more informed view of the core reality of the current market. According to our own research, house price growth slowed across all regions except for London, the South East and East Anglia in July. While these three regions continue to set new house price highs, the rest of the country is nowhere near these levels of growth,’ he explained. ‘Most recently we’re seeing asking prices in the capital start to be reined in, which will apply the brakes on annual house price inflation as the market steadies. With evidence of London starting to cool off after strong growth earlier in the year, it is critical that the underlying momentum that has stimulated much needed increased volume in the rest of the market is allowed freedom to keep moving, whilst any price rises are kept steady and under control,’ said Newnes. ‘Further afield, it is critical that support mechanisms like Help to Buy aren’t dismantled. Compared to the nadir of 2008/2012, activity in the housing market has improved, but is not completely out of the woods yet, and still needs to recapture some of the vitality of its pre-recession health,’ he concluded. Peter Rollings, chief executive officer of Marsh & Parsons, believes that the market is returning to business as usual. 'UK house price growth is persevering with its upward climb, but the stride is steadying with prices rising an orderly 1.6% in the month to July 2014. However, London remains the snag in the… Continue reading
Asking price growth in UK slowing, latest index shows
UK asking prices increased by 0.2% in August, the eighth month in a row that they have moved upwards, the latest index shows. But asking price growth is slowing, especially in London and overall the average annual appreciation fell 0.3% to 9%, according to the data from Home.co.uk. But these headline figures mask some variation. London asking prices dipped under the weight of increased supply, ending a 20 month rally and average prices were unchanged in Scotland and the North West. Prices rose in all other English regions and Wales. Even within London there is considerable variation and overall the supply of property in the city is up 33% compared with August last year. Stratford tops the London property hotspot league, table with home prices leaping 45% over the last 12 months. Overall, the UK property market is cooling. The average asking price for a UK home has risen only 0.2% over the last month and 0.8% over the last three months. Correspondingly, London prices slipped 0.1% over the last month, yet have risen 9.8% over the last six months. The firm says that tightening mortgage credit in the wake of mortgage regulation, coupled with increased supply, has served to quench further growth in London home prices for the time being. ‘Home price inflation still persists outside of London but at an attenuated pace. Moreover, the surge in supply that has halted London price rises has not yet spread to adjacent regions,’ said Doug Shephard, director of Home.co.uk. The Asking Price Index also shows that certain regional property markets continue to be strong performers. East Anglia, the East Midlands, the South East and South West all show six month price rises of over 4%. Others, however, are showing much weaker price growth. Home prices in the North East are still falling behind inflation, rising only 1.2% over the last six months and by only 0.6% over the last year. Shephard also pointed out that across the UK, supply remains historically tight, showing a rise of only 3% on the already record low levels observed 12 months ago. Supply of properties entering the market fell the most in East Anglia, down 6% over the last 12 months. ‘Looking back further to 2007, we can see that it is actually the Greater London market that has contracted the most, by 65% over the last seven years, despite a recent surge in property entering the market,’ he explained. Of the regions, the East Anglia and South East property markets have contracted the most, down 63% and 62% respectively. Overall, the mainland UK property marketplace offers 55% less choice to buyers today than it did in 2007. Marketing times are beginning to rise across all regions and London, as is seasonally expected. However, further analysis across the regions reveals real improvement in every region compared to this month last year, although the relative pace of the regions remains highly diverse. Continue reading
