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Quarterly prime country house price growth slows
Concerns over the introduction of a mansion tax, an impending interest rate rise and tighter mortgage lending in the UK has meant that quarterly price growth in the country house market slowed to its lowest level in almost two years. Between June and September prime property values increased by just 0.3% in the third quarter of 2014 while annual growth also slowed, to 4.7%, according to the latest data from Knight Frank. Despite these concerns, there hasn’t been a noticeable impact on sales volumes and the total number of exchanges completed so far this year was 8.4% higher than the corresponding period last year. The rising number of exchanges suggests that underlying demand has remained strong, says the report. However, there are signs that this momentum is easing. While the number of property viewings was fairly steady during the three months to the end of September compared to the same period last year, the number of prospective buyers registering their interest in buying a prime country home fell by 9%. The report points out that anecdotal evidence would suggest that concerns surrounding the possible introduction of a mansion tax on properties worth more than £2 million after next May’s general election are becoming more widespread among both prospective buyers and vendors. ‘Any further property tax would come on top of the large contribution purchasers of high value property already make in the form of stamp duty. Data for the 2013/2014 tax year shows that across England and Wales over £1 billion of stamp duty revenue, of the total £6.4 billion annual tax take, was collected from the £2 million plus price bracket alone,’ says the report. Price growth over the last quarter was strongest in the South West, at 1%, followed by Yorkshire and the Humber. On an annual basis, prime homes in these areas have risen by 7.7% and 5.1% respectively. ‘Prime town and city markets across the UK have benefited from rising demand from those relocating from London and downsizers and price changes in urban locations have reflected this. Growth of 1.3% was seen in the three months to the end of September, while annual growth totalled 8.9%,’ the report adds. Continue reading
Lending for homes falls in the UK, latest CML data shows
Home buying lending in the UK has started to decline amid concerns that mortgage regulation is having an impact on the market. The latest figures from the Council of Mortgage Lenders show that lending fell in August compared to July, the first month on month drop in house purchase lending volume since February this year. Lending fell across all sectors. First time buyer lending fell by 4% compared with July but it still 9% up on August 2013. Lending to home movers declined by 3% but is up 7% on August last year. Remortgage lending fell 4% month on month and is 11% down on the same month last year. Buy to let lending fell 13% but increased 11% compared to August last year. Total gross lending in August was £18.1 billion, some 8% lower than July when it was £19.7 billion, but 10% higher than August last year when it was £16.4 billion, according to the Bank of England. ‘The lending climate had a glass half full, glass half empty feel about it in August. On the one hand it saw a decline in all lending types month on month, which would suggest a levelling off of the market, with remortgaging remaining flat. Yet, on the other hand, we saw the highest August house purchase lending levels since 2007,’ said Paul Smee, director general of the CML. He pointed out that recent Bank of England Credit Conditions Survey expects an upward trend in remortgaging in the final months of the year and overall, these figures give no support to any fears of a developing bubble in housing. ‘This has been a year of major change, and the market has shown significant resilience and responsiveness to the changing environment, improving the availability of lending without compromising financial stability, as the Bank of England's assessment last week highlighted,’ he added. According to David Newnes, director of Your Move and Reeds Rains, the change is due to shifted lending conditions. ‘Securing mortgage finance is not a conundrum restricted to first time buyers, but is a considerable hurdle for landlords too. Demand for rented accommodation is climbing, and there’s little sign of this stopping,’ he said. ‘Secure house prices and spirited tenant demand are encouraging budding buy to let investors and existing landlords to add to the number of available homes to let. Balancing the asymmetry between supply and demand depends on the growing number of buy to let investors being able to acquire affordable mortgages, in order to broaden the pool of rental accommodation on offer and keep rent rises at sustainable levels,’ he explained. ‘The government and Bank of England need to ensure that any further regulatory changes do not lift lending out of reach for good applicants, and destroy growth at the same time. The benefits of more investment will be felt in tenants’ back pockets at the end of the month, as the strain of rent rises eases further,’ he added. Continue reading
UK home owner confidence dips as mortgage concerns rise
Home owners in the UK are less confident about further house price growth in the next six months and many are concerned about getting a mortgage, new research shows. The housing market sentiment survey from Zoopla reveals that confidence has now fallen a 15 month low and it also found that 39% of respondents believe it is harder to get a mortgage than it was three months ago. Overall the survey found that the proportion of home owners expecting property prices in their area to increase over the next six months has fallen from 92% three months ago to 88%, the lowest level since July 2013. Home owners in the East of England are the most bullish about continued house price rises, with 91% expecting property values to increase over the next six months. The South West has seen the most significant drop in confidence over the past three months, with the proportion of home owners anticipating further price gains falling from 95% three months ago to 85% today. Following the implementation of stricter affordability criteria for borrowing, 39% of those homeowners surveyed stated that they thought it was more difficult to get a mortgage now than it was three months ago. ‘The property market signals are somewhat harder to decipher at the moment than they were a few months ago,’ said Lawrence Hall of Zoopla. ‘With the lengthier funding approval process following the Mortgage Market Review and fewer homeowners predicting that house prices will continue to rise in the short term, the coming months will be crucial to determine if the housing market recovery has stalled or simply paused for breath,’ he added. Continue reading
