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Underlying rate of house price growth in UK peaks
There are signs that the underlying rate of house price growth has peaked in UK cities despite many having average prices below levels recorded in 2007. Some 13 of the 20 cities tracked by the latest Hometrack Cities Index have registered a slower rate of growth in the third quarter of the year but annual growth is 8.4%, up from 6.6% in May. However, this year on year rate of house price growth masks more volatility in the underlying rate of growth, the report points out. The three month rate of growth expressed on an annualised basis appears to have plateaued. The firm says that this is in part due to seasonal factors, as well as mortgage approvals increasing over June and July and then falling by almost 20% in August. Overall city level house price growth is still running ahead of earnings and the UK as a whole. Average house prices are below the levels recorded eight years ago in nine cities with Belfast still 46% lower than in 2007 followed by Liverpool where prices are still 14% lower over the same period. The outlook for housing demand remains positive against the backdrop of lower mortgage rates and rising consumer confidence however the latest mortgage data raises questions over whether the rate of growth since the May 2015 election can be sustained. The report suggests that demand is expected to moderate in the final quarter of 2015, with a modest slowdown in the pace of house price growth likely in the run up to the year end. ‘It is important not to read too much into one month’s headline results but there are signs that the pace of city level house price growth is likely to continue slowing. There has been a surge of demand since the election in May but weaker mortgage approvals and evidence from survey data suggests less frenetic demand in the final quarter of the year,’ said Richard Donnell, director of research at Hometrack. ‘Putting the relative performance of UK cities into wider perspective shows a wide variation in performance from city to city emphasising that there is no single UK housing market, for example, house prices in Belfast prices still remain almost half the level seen in 2007 while those in London are 43% higher,’ he explained. ‘The variation in growth reflects the strength of underlying demand for housing and the health of the local economy with the index throwing light on these localised trends at a granular level,’ he added. Continue reading
Mortgage lending in UK up after summer dip
Gross mortgage lending in the UK reached £20 billion in September, up 2% from the previous month and up 12% year on year, the latest figures show. It is the fourth month in a row that there has been a sharp improvement in year on year lending, says the report from the Council of Mortgage Lenders. Gross lending in the third quarter of 2015 was therefore an estimated £61.4 billion some 18% higher than the £52.2 billion advanced in the second quarter, and an increase of 12% on the third quarter in 2014, when lending totalled £55 billion. ‘Mortgage lending is currently enjoying its best spell since 2008. As we expected, the second half of 2015 has seen a pickup in activity in the housing market after a slow start to the year,’ said CML economist Mohammad Jamei. ‘Low inflation, strong wage growth, falling unemployment and competitive mortgage deals are all helping to support housing demand. We expect to see further modest growth towards the end of the year, although affordability pressures are likely to limit gains for home movers and first time buyers,’ he added. According to Henry Woodcock, principal mortgage consultant at IRESS, buoyant house purchase lending, paired with a buy to let mortgage market at its strongest level for two years has sustained momentum. ‘On top of this, the number of mortgage products available is at an all-time high, providing consumers with far more choice and a healthy remortgage market are all combining to create a real buzz,’ he said. ‘With speculation around an interest rate rise dying down and unlikely to happen until the first half of 2016, consumers should benefit. Historically attractive rates will be available for longer, continuing to support buyer demand,’ he added. John Eastgate, sales and marketing director of OneSavings Bank, also believes that it is the buoyancy in the market supported by persistently low mortgage rates that is boosting lending. ‘The recent global economic uncertainty has caused central bankers to hit the pause button on possible rate rises, with many speculating that the UK may not see rates increasing before late 2016. House prices also grew at their slowest rate for two years last month, and if this trend continues, should ease affordability issues for buyers,’ he explained. Continue reading
UK property sales up over 5% year on year
The number of UK residential property sales increased by 0.8% between August and September 2015, according to the latest figures published by HMRC. The September seasonally adjusted figure is 5.4% higher compared with the same month last year while the number of non-adjusted transactions was around the same level as in August. Overall the provisional seasonally adjusted UK property transaction count for September 2015 was 106,030 residential and 10,300 non-residential transactions. Meanwhile, the latest Land Registry data shows there were 1,513,920 applications in the month of September, topped by the South East with 349,215. Some 373,424 were applications were in respect of registered land (dealings) 680,982 were applications to obtain an official copy of a register or title plan, 210,635 were searches and 88,229 were transactions for value. Peter Rollings, chief executive officer of Marsh & Parsons, believes that there was a real step change in the gears of housing market activity over the summer. ‘Since June property sales have been ticking along nicely, with this month on month rise the latest cause for optimism. There’s now clear blue water between sales levels now and a year ago and we’re seeing real eagerness from buyers,’ he explained. ‘Already, many buyers and sellers will be using the countdown to Christmas as their deadline to move home and complete transactions, meaning activity often picks up the pace in autumn,’ he added. But he pointed out that London is a city of two halves at the moment. ‘At the top end, buyers are more cautious, and are taking their time to get used to steeper Stamp Duty on million pound plus property sales,’ he explained. ‘But at the mid and lower range of the market where domestic buyers tend to dominate there remain high levels of demand facing up to restricted housing stock. Here we’re seeing good activity when property is priced correctly, and longer chains than ever as sales activity stacks up,’ he added. Continue reading
