Investment
Average property prices in UK cities now six times annual earnings
Average house prices in cities in the UK have reached their highest since 2008 and are more than six times annual earnings, new research shows. The affordable cities review report from Lloyds Bank shows that the average UK city house price has risen by 8% from £196,229 in 2015 to its highest ever level of £211,880 in 2016. This has resulted in average affordability in the nation’s cities worsening in the last 12 months from 6.2 to 6.6 times gross average annual earnings, the third successive annual decline in affordability. The latest figures from Lloyds Bank also reveal a significant North/South divide, with 17 of the 20 least affordable cities located in southern England and only Lichfield, Leicester and York appearing in the top 20 outside of the South. Winchester has recorded the biggest gains over the past decade, whilst London, not surprisingly, has seen the largest growth during the economic recovery of the last five years. By contrast, all of the 20 most affordable cities for home buyers are outside of southern England. Affordability in UK cities is, on average, now at its worst level since the average house price to earnings rose to 7.2 at the height of the last housing market boom in 2008. ‘House price rises in the past three years have risen more steeply than average wage growth, making it more expensive to buy a home in the majority of UK cities. This has also widened the North/South divide, as house prices in the South have generally seen stronger growth than in the North,’ said Andrew Mason, Lloyds Bank mortgage products director. Oxford is the UK's least affordable city with the average house price 10.68 the gross average earnings in the city. At an average price of £364,429, houses in Oxford are more expensive compared with average earnings in the city than in any other UK city. This is partly due to Oxford’s attractiveness to commuters working in London. Winchester at 10.54, London at 10.06, Cambridge at 9.9 and Bath at 9.77 make up the top five least affordable cities. The London average figure disguises considerable variations across the capital with central boroughs being significantly less affordable than the Greater London average. Lichfield at 7.53 and York at 7.5 are the least affordable cities outside southern England. Londonderry in Northern Ireland is now both the UK’s most affordable and least expensive city. The average property price in the Northern Ireland city of £113,302 is 3.8 times the gross average annual earnings. Elsewhere in Northern Ireland Belfast at 4.42 and Lisburn at 4.64 are the fourth and sixth most affordable cities respectively, due primarily to the relatively low house prices in the country. Northern English and Scottish cities make up the remainder of the top 10 most affordable cities with Bradford at 4.31, Hereford at 4.55, Durham at 4.73, Lancaster at 4.89, Carlisle at 5.03, Glasgow at 5.07 and Stirling at 4.11. Winchester has recorded the biggest price rise of any UK… Continue reading
Analysis of housing data shows Dublin residential market had a see-saw 2015
Last year is generally regarded as having been one of growth for the residential property market in Ireland but a new analysis shows how Dublin experienced a slowdown towards the end of 2015. Overall sales increased by 10% compared to 2014 but a closer examination of the detailed monthly data from real estate firm Savills reveals a very different picture. Year on year growth in housing transactions fell continuously throughout 2015, slipping from a positive 75% in January to an outright decline of 18% in December. The report explains that this reflects two major policy changes which impacted on demand. Firstly, generous Capital Gains Tax (CGT) incentives for investors were removed on 31 December 2014. As this deadline approached investors rushed to complete deals, causing transactions to spike in late 2014 and early 2015 as some deals carried into the New Year. After that, however, investor numbers retreated to a more normalised level. The second important policy change was the introduction of new mortgage lending restrictions by the Central Bank. Following a preliminary announcement in October 2014 buyers rushed to secure old style loan approvals in late 2014 and the opening weeks of 2015. These were deployed in the first half of 2015, boosting sales. ‘However the true impact of the macro-prudential rules began to emerge in the second half of 2015 as some people were priced out by restrictions on how much they could borrow. Indeed, these dynamics can be seen in the regional pattern of transactions growth,’ the report says. Because investors were more focused on Dublin, this market saw the biggest uplift from the impending CGT deadline in late 2014 and early 2015. Subsequently, however, Dublin suffered the largest slowdown in sales as the frontloading of investment deals left a vacuum in 2015. ‘Similarly, because absolute price levels are higher in Dublin, the Central Bank rules are more binding in this location. This caused transactions to slow more sharply in Dublin than elsewhere when the rules impacted later in the year,’ the report adds. The analysis report also shows that the rate of house price growth in Dublin slowed quite dramatically during 2015 from 21.6% in January to just 2.6% by the end of the year. It says that part of this was due to base effects as the average Dublin property is now €87,000 more expensive than at the low point of the market in the fourth quarter of 2012. ‘Therefore the same absolute price increase is now gradually leading to a smaller and smaller percentage change,’ it explains. But part of the slowdown is also attributable to removal of the CGT incentive. ‘As investors had been more focused on Dublin than elsewhere, withdrawal of this tax break created a bigger vacuum in the capital,’ the report points out. But the most important factor has been the Central Bank mortgage rules. The average property in Dublin costs around 54% more than that outside the capital. ‘Without a… Continue reading
Flats cost more in the UK than semi-detached properties, new research shows
On average home buyers in the UK are paying almost £20,000 more for flats than semi-detached properties, new research has found. This could be one reason why first time buyers are bypassing flats in favour of semi-detached homes, according to a study by leading lender the Halifax. It shows that the average price of a flat in the UK has risen by £86,474 since property prices were at their lowest in late 2008 from £150,749 to £237,223 at the end of 2015. The 57% increase in the average price of a flat is significantly higher than the 37% rise for all residential properties over the same period. Additionally, it means that buyers are on average now paying almost £20,000 more for a flat than for a semi-detached home. Detached homes recorded the smallest rise at 20% over the past seven years, while terraced and semi-detached houses saw price rises of 38% and 34% respectively since 2008. The research report explains that a considerable proportion of the national rise in flat values since 2008 is due to the rapid increase in flat prices in London with growth of 62% Flats represent a much higher share of the property market in London than elsewhere with 50% of sales in the capital being flats compared with a UK average of 17%. However, if London performance is excluded, then price growth is greatest for terraced homes at 31%, closely followed by semi-detached houses at 29% and flats at 26%. Detached home properties remain the worst performer with 19% growth on this basis. Prices have increased by around 20% across all property types since 2013 with the exception of detached properties, which have seen a much lower rise of 8%. ‘The high prices being paid for London flats have had a significant impact on the national picture when it comes to property type winners and losers. This is the result of more flats being sold in the capital and at the higher end of the market. Such is their popularity that flats continued to outperform other property types in the capital last year, with an annual price growth of 17% by the end of 2015,’ said Martin Ellis, housing economist at the The research also shows that at 30% terraced homes are the most popular followed by semi-detached at 29% as was the case in 2008. But there have been some changes in market composition over the past seven years, with an increase in the share of semi-detached homes from 25% to 29%, whilst the proportion accounted for by flats has fallen from 22% to 17%. This shift from flats to semis has been particularly marked for first time buyers. Semi-detached homes have risen in popularity, accounting for 29% of purchases in 2015 compared with 23% in 2008. However, flat sales for first time buyers have fallen from 32% of all property sales to 23% over the same period. ‘Semi-detached and terraced homes have remained the most popular… Continue reading
