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House purchases rather than remortgages driving UK home lending market
The mortgage market in the UK remains driven primarily by lending for house purchase, rather than remortgage, according to the latest data from the Council of Mortgage Lenders. There were 30,200 first time buyer loans in July, up 3% from June and 25% up on July 2013. By value, there was £4.6 billion of lending to first time buyers in July, some 10% up on June and 39% higher than July last year. Lending to home movers also grew. In July, the number of loans advanced to movers was 37,500, 15% up on the previous month and 19% on July last year. By value, lending to movers totalled £7.2 billion, 20% up on June and 31% up on July last year. Remortgage lending remains muted compared with both first-time buyer and home mover lending. The number of remortgages in July was 4% up on June but 15% down on July last year. The value of these loans at £3.9 billion was up 3% on the previous month and down 5% on July last year. Buy to let lending grew 9% over the month to £2.4 billion in July, and an increase of 26% from £1.9 billion in July last year. House purchase lending to home buyers increased month on month in July totalling 67,700 loans, up 10% compared to June and the value of these loans totalled £11.8 billion, a rise of 15% on June. Compared to July 2013, the number of loans increased by 21% and the value of lending by 33%. The typical loan size for first time buyers continued to rise to £127,500 in July, up from £123,750 in June and the highest average loan size for a first time buyer on record. The typical gross income of a first time buyer household also grew to £38,900 in July compared to £37,095 in June. First time buyers' in July paid 19.6% of gross income towards covering capital and interest payments, up from 19.3% in June, but still significantly less than the recent peak of 24.8% in December 2007. Home movers typically borrowed 3.03 times their gross income in July, compared to 3.08 in June. The typical loan size for home movers was £156,000 in July, up from £153,800 in June. The typical gross household income of a home mover was £54,400 in July compared to £52,000 in June. ‘The market has shown steady growth in house purchase and buy to let over the past few months with general improvements in economic factors across the UK allowing for more people to enter the property market,’ said Paul Smee, director general of the CML. ‘There have been many factors over the past year that could have caused disruption but the market has remained resilient and lenders have shown themselves adaptable to all this change. The CML will continue working towards making sure future initiatives affecting the market, such as the European Mortgage Credit Directive, are introduced with equally minimal disturbance to borrowers and lenders,’ he added. Continue reading
Activity in prime central London property market stable, says latest monthly report
Activity across all prime price ranges in central London are stable although sales at the top end of the market are down, according to the latest estate agent research. Overall transactions between £2 million to £5 million have increased by 11.7% this year but sales above £5 million are down by 5.5%, the latest sales and lettings report from W.A. Ellis shows. But the sector’s lettings market is buoyant with a 14% increase in tenancies starting in August compared to the same period last year. ‘If we compare the current year's activity from January to August with the same period in 2007, within our area of expertise of Chelsea, Knightsbridge, Mayfair, Belgravia and Kensington, we see a 35% diminution in activity,’ said Richard Barber, partner at the prime central London estate agency. However, he pointed out that when the inflation that the capital has enjoyed over the last four years, some 18.5% in the last year alone according to Land Registry data, a more interesting picture emerges. Property transactions between £2 million and £5 million have increased by 17.5% and those in excess of £5,000,000 have increased by 72% on 2007. ‘Whilst the media are reporting more bearish sentiments across the market and reduced levels of new buyer registration, we should not necessarily predict that the bubble is about to burst,’ said Barber. ‘Activity across all price ranges is very stable, and our research suggests that between January and August 2013 there were 1,288 transactions, and in the same period in 2014, 1,242, a reduction of only 3.5%,’ he explained. ‘Whilst the Damoclean sword of mansion tax continues to hover over the market, the figures suggest that it has not as yet impacted. Indeed, sales between £2 million and £5 million have increased by 11.7% this year. However, sales of properties over £5 million have diminished by 5.5%. ‘The reduction in activity over £5 million is perhaps indicative that the foreign investor may tolerate a tax of £15,000 per annum, based on the current ATED charges, but not the more punitive £35,000 charge per annum currently applied to properties held in company names with values in excess of £5 million,’ he added. But he pointed out that there is always a healthy appetite for the right product, and if vendors' expectations are realistic, there is no reason why we should not enjoy a normal market. Lucy Morton, senior partner and head of lettings at W.A.Ellis, said that the firm has been surprised by the level of activity over what is usually a very quiet month, with a 14% increase in tenancies starting compared to the same period last year. ‘The seasonal student market is in full swing, with students focusing on finding accommodation for the upcoming year and demand exceeding supply,’ she explained. Overseas tenants are even agreeing tenancies without seeing the property. Clients living in California were talked through the property over the phone and using Face-Time on an iPad, and went on to complete, as did two students from Norway… Continue reading
Almost half of UK property owners have homes too big for their needs, research sugg
Across the UK, 47% of privately owned households are Tumbleweeders who occupy homes that are too large for their needs, according to new research. In its Housing Futures report, national estate agent Strutt & Parker defines a Tumbleweeder as those who have two or more bedrooms than required for the number of people living in their home and a couple is defined as needing one bedroom. The research shows that under-occupation becomes greater in the peripheral areas of the UK. The five most under-occupied areas in the UK are Rutland in the East Midlands where 63% of residents are Tumbleweeders, Eilean Siar in Scotland at 60%, Monmouthshire in Wales at 59%, The Cotswolds also at 59% and the Orkney Islands in Scotland at 58%. On the whole cities have lower under-occupation. The five least under-occupied areas in the UK are all in central London except Glasgow City where only 19% of residents are Tumbleweeders. City of London is the lowest at 13%, followed by Tower Hamlets at 17%, Westminster at 24% and Hackney at 25%. ‘Lack of supply is often cited as the biggest issue facing the housing industry in the UK. However, these figures clearly show that under-occupation is an equally huge issue,’ said Stephanie McMahon, head of research at Strutt & Parker. ‘The challenge for the industry is to provide suitable solutions to individuals' housing needs. In particular, we need to build more homes that our older generations are prepared to downsize into. As a nation of low supply and high demand, we would rather have all homes occupied efficiently where possible,’ she explained. ‘In reality, Tumbleweeders have the potential to be one of the greatest limiters of supply and, while being discussed in the social housing arena, their impact upon the wider housing market is not currently being addressed,’ she added. But she also pointed out that there are very valid reasons for being a Tumbleweeder, such as those who work in a city and spend weekends in another location may have homes for both. Likewise, empty nesters who have not downsized since their children left home, or indeed families who in the past have had ageing parents living with them may find they now have a house much larger than they really need. Tumbleweeders could also be those with part time families which are increasingly common in the modern age, for example parents whose children only stay with them at the weekends. According to research by Grainger, 41% of households will be occupied by one person by 2033, and three quarters will have no dependent children. Due to our ageing population, 3.8 million older people already live alone in the UK and 70% of these are women. Continue reading
