Uk
UK first time buyer home market resilient in first months of 2016
First time buyers in the UK are resilient despite a month on month dip in property sales to this group, according to the latest first time buyer tracker index. It shows that people buying their first home increased by 6.6% year on year but month on month fell by 1.4% between January and February 2016. The data from Your Move and Reeds Rains also shows that total monthly volume of first time buyer transactions was 21,100 in February but on a seasonally adjusted basis it is considerably higher at 25,900. According to Adrian Gill, director of estate agents Your Move and Reeds Rains, February is a traditionally quiet period for the first time buyer market but the figures demonstrate the strong, steady underlying growth that comes with growing first time buyer confidence. ‘This optimism may begin to reveal itself more clearly in March, when an Easter uplift may sweep away any residual doubts among some first timers. While the more general mismatch between buyers and sellers will continue to exert upwards pressure on prices, a combination of pluck and poise from first time buyers will ensure that this does little to impact the overall trend of growing demand at this end of the market,’ he explained. The figures also show that the costs of buying and owning a first home have remained broadly stable in February, with lower borrowing costs balancing larger prices and deposits. Average mortgage rates for first time buyers have improved, down 0.56% on a 12 month basis and by a much slighter 0.03% between January and February 2016. February’s average mortgage rate also represents the lowest mortgage rate for first time buyers in over five years. Similarly, the average LTV ratio remains high, meaning first time buyers have been able to borrow more against the value of the home they wish to purchase. February’s average loan to LTVs recorded in 2014/2015 and represents only a 0.1% fall on February 2015. While first time buyer property prices have risen significantly on an annual basis, mortgage lending levels have kept pace. In February, the average purchase price for a first time buyer home stood at £168,539, an increase of £21,320 or 14.5%, on February 2015’s average of £147,219. However, over the same 12 month period, the average size of a first time mortgage grew from £121,534 to £139,088, an increase of 14.4%. Larger deposit costs represent the other side to this balance of affordability, the report points out. In February the average deposit put down by a first time buyer stood at £29,451, an increase of 14.7% or £3,766, on an annual basis. The report suggests that this uptick has been a factor in the growing proportion of first time buyer income which is consumed by deposit costs. In November 2015, a deposit ate up 67.4% of an average first time buyer’s annual income, whereas in February of this year the average deposit consumed, on average 74.9% of their income. However,… Continue reading
Experts warn that new UK additional home property tax will result in rent rises
Rent prices in the UK will rise as a result of the new stamp duty rate being introduced on 01 April for additional properties as it will hit landlords of buy to let properties, it is claimed. The extra tax, which affects anyone buying an additional home, is seen as a huge burden for the UK’s private rental sector as a time when there is increased demand for rented homes. ‘We’re about to see supply nose dive, demand rocket and rent prices go through the roof. The introduction of the new stamp duty charges is set to push the private rental sector into a state of despair,’ said David Cox, managing director of the Association of Residential Letting Agents (ARLA). ‘Back in November, when the Chancellor announced an increase in stamp duty tax on buy to let properties we called this a huge kick in the teeth for the private rented sector. The news that larger investors will also have to pay the tax comes is an even bigger blow,’ he pointed out. The Chancellor had originally said that professional landlords who normally own more than 15 properties, would be exempt, but announced in his Budget a few weeks ago that they would not. ‘We are very likely to see the new tax discouraging landlords from investing in buy to let properties, which will of course mean supply falls. In order for landlords to be able to afford to own a buy to let property, tenants will begin to see the additional costs passed onto them, which means they could see less money spent on maintaining their property, and also an increase in rent costs,’ Cox pointed out. He also explained that a recent announcement over tougher rules for buy to let mortgages will not help the sector. ‘Whilst we recognise the need to look at the important issue of affordability, the proposed measures are far too tough and are yet another assault on the rental market,’ added Cox. ‘Something urgently needs to be done to make the prospect of being a buy to let landlord appealing again, or the vicious cycle of supply and demand is only going to get worse and worse,’ he concluded. Online property marketplace LendInvest has carried out research on the impact of the stamp duty change for those buying additional properties which shows that landlords in London and the South East will need longest to repay the higher tax while Darlington, Halifax and Doncaster are among the worst affected. Landlords in Inner London and Harrow will need the equivalent of 20 months’ rent or more to repay higher stamp duty and landlords in 13% of the country will pay it for the first time as there is no zero rating for additional homes as there is for first homes at £125,000. Towns like Sunderland, Blackburn, Wigan and Oldham could be particularly badly impacted as rental yields are comparatively good but average house prices are below £125,000 meaning stamp duty… Continue reading
House prices in UK cities up 11% year on year, latest index shows
House prices in cities across the UK increased by 11% year on year in February, taking the average value to £234,900, according to the latest index. This was up from 8.1% a year ago and the highest rate of growth for almost 18 months, the Hometrack UK cities house price index shows. The report says that there has been a notable and unseasonal acceleration in house price growth in the last three months across most large regional cities thanks, in part, to a temporary increase in demand from those looking to beat the stamp duty increase for second homes from April onwards. It also explains that increased demand from existing home owners in cities where the economic recovery has been less pronounced is an important underlying theme given that the majority of housing sales 80%, continue be driven by home owners. Some 16 of the 20 cities covered by the index have registered an increase in the annual rate of house price growth increase in the last year. Some regional cities are recording their highest growth rates for over a decade as the recovery in house prices gains momentum. Four cities have seen the rate of growth slow with the greatest slowdown in Aberdeen and a loss of momentum in Belfast where a modest recovery appears to have stalled with house prices still 45% down on their 2007 levels. The data also shows that in Portsmouth and Leeds house prices are rising much faster than earnings at between 8% and 9% per annum and Portsmouth, Nottingham and Birmingham are recording the highest rates of annual house price growth for over 10 years while Leeds and Glasgow have the highest growth rates for over eight years. All these cities have seen a continued pick up in house price growth since 2013 on economic growth, an improving employment outlook, earnings growth and low mortgage rates, the report adds. However, there are no consistent patterns as to the types of property driving higher growth in these five cities. In Portsmouth detached homes are rising at twice the rate of the city which is the same trend, with a lesser degree of magnitude, in Nottingham. In Birmingham the highest growth rate is being recorded for flats at 11.3% against 7% for the city while in Leeds terraced houses with growth of 11% are recording the highest growth compared to the city at 7.8%. The four high growth cities of London, Bristol, Oxford and Cambridge continue to record double digit rates of house price inflation but there are signs that the rate of growth is starting to slow. All these cities recorded a small drop in the headline rate of growth over February as affordability and sentiment factors impact pricing levels A closer analysis of the 46 local authorities that cover the London City area shows the average growth rate in the last quarter is approaching half the rate recorded, on average, over the last 12 months. The report suggests that… Continue reading
