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Severe shortage of properties for sale pushing up asking price, says latest index
The supply of property coming onto the market in England and Wales has fallen by 8% year on year and as a result prices are set to keep rising. The latest index shows that in the East England asking prices have already risen 2.1% this year as supply is overwhelmed by demand while overall the average asking price for England and Wales is up 0.7% month on month. The date from Home.co.uk also shows that asking prices have increased in all regions except the North West and North East during the last month. And year on year asking prices are up 8.1% overall. In the East of England the supply divide is the most acute and in this region asking prices are up 12.2% year on year, meaning it has overtaken both Greater London and the South East which saw annual rises of 12% and 10.3%. The index report says that across England and Wales, prices remain on a strong rising trend and this looks set to continue as interest rates are currently on hold until at least 2017. It also points out that the total stock of property for sale remains very low, and scarcity will continue to be one of the key drivers of the 2016 property market in the UK. The second key driver is ultra-low interest rates. The number of properties entering the market is down 8% compared to a year ago. The hardest hit is the West Midlands where 17% less new stock arrived on estate agents' books this January compared to January 2015. The East of England is also in the midst of a property drought and 14% less stock was registered on agent portfolios last month. Looking to the North and Wales, the picture is very different. Only small drops in numbers of properties entering the marketplace have been observed in the North East, North West, Wales and Yorkshire. Supply in these regions remains relatively buoyant and, consequently, prices show little if any upward progress. ‘With interest rates on hold at super low levels for the foreseeable future, we are likely to witness price growth continuing to ripple out from London across the rest of the country. Lack of supply will be the key driver and, as buy to let investment continues to soak up many of the available properties, so supply will continue to dwindle,’ said Doug Shephard, Home.co.uk director. ‘The London market is now maturing and is slower and with more moderate price rises. Investment capital is now making its presence felt further afield in the East and South East where prices are leaping ahead and supply of stock for sale is crashing,’ he explained. ‘We may expect the same or a similar market dynamic to become manifest in the West Midlands, the South West and the East Midlands towards the end of the year, together with significant price growth,’ he added. ‘What is clear is that this property boom is not going away while borrowing… Continue reading
Home ownership still out of reach for many in UK due to buying costs
Home ownership in UK is still out of reach for many would be buyers as new research shows that the average first time buyers will have paid over £52,000 in rent. Indeed, a first time buyer purchasing their first house this year will have spent £52,900 on rent by the time they get on the first rung of the ladder, and future first time buyer can expect to spend 22%. The data compiled by the Centre for Economics and Business Research (Cebr) for the Association of Residential Letting Agents (ARLA) also shows that the average first time buyer in England in 2016 will have spent 16.4% of their total lifetime earnings on rent for all the years they were a tenant. Those buying a property for the first time this year in the North East will have spent £31,300 on rent, the lowest amount in England. Whereas in London, the average amount spent is more than double that, at £68,300. The South East is the only region other than London where the total lifetime rent spent is above the English average with the total rent expenditure equating to £55,900. Last year alone on average people in the UK spent 22% of their wages on rent, increasing to 30% in London. Those living in the East enjoyed the most affordable rents due to relatively high earnings in the region, yet rent still accounted for 18.9% of their disposable income. People that move out of their family home at the age of 18, will typically rent for 13 years before buying their first property. The report found those leaving home and starting to rent this year, will spend an average of £64,400 before they are able to buy their first property, some 22% more than current first time buyers getting on the housing ladder this year will be spending. Those leaving home and starting to live independently in London will continue to be worse off, as they will spend an average of £91,500 on rent before they can buy their first home, some £23,100 more than those buying in the capital this year. ‘The rising cost of rent in this country is a huge issue, and is preventing tenants from being able to save to buy a home. Our Cost of Renting report reveals that tenants are already spending a significant proportion of their income on rent, and therefore struggling to save any money,’ said David Cox, ARLA managing director. ‘However, as house price affordability worsens and interest rates start rising, more pressure will be put on renting with weekly rent likely to rise, so home ownership will remain out of reach for many,’ he pointed out. ‘Rents are becoming alarmingly unaffordable due to the lack of available housing; the North-South divide we’re currently seeing in the UK is a clear illustration of this. The London rental market is… Continue reading
Buy to let investors pushing up property prices in UK ahead of tax change
The UK residential property market saw a modest rise in new instructions in January but despite higher supply there is still considerable demand due to buy to let investors seeking to avoid Aprils stamp duty change. The latest residential market survey from the Royal Institution of Chartered Surveyors also says that this means that the near term pressure on prices is intensifying despite a higher level of supply. Feedback to the survey continues to suggest that the recent increase in demand is due to a rush of buy to let investors looking to buy before the 3% stamp duty surcharge comes into effect in April. Some 74% of respondents expect there will be an increase in buy to let purchase as supply picked up across UK, most notably in London where the increase has been significant with a net balance of +58% more noting an increase. Elsewhere, sales instructions across the UK were much flatter. New buyer enquiries rose for the tenth successive month in January, with the pace of growth in enquiries accelerating for a second consecutive report. As activity in the housing market gathers pace overall, agreed sales have risen over the month at the fastest pace since April 2014. The picture across the UK is mixed but most areas have seen a rise in sales since the start of the year and further increases are expected. Supply has also gathered pace in the past two months but stock remains low with 46 properties per branch from 44.5, which is still 21% down compared to a year ago. Even with an improvement in supply, the rush to acquire buy to let property is pushing prices up, with 49% more surveyors reporting prices to have risen in January. Looking ahead, house prices are projected to rise further over the next 12 months, with 72% more contributors expecting prices to increase rather than fall. In the lettings market, tenant demand increased once more, with all areas of the UK seeing a rise in interest from prospective tenants during the three months to January and at the same time, landlord instructions were broadly flat. This extends an uninterrupted run in which supply has failed to keep pace with demand stretching back to 2009. As a result, expectations point to continued rental growth in all parts of the UK both at 12 month and five year time horizons, the report says. ‘How the tax changes planned for the buy to let sector over the next few years plays out remains to be seen, but there are concerns raised in the survey that existing landlords will look to either gradually scale back on their portfolios or exit the market altogether as the more penal regime begins to bite,’ said Simon Rubinsohn, RICS chief economist. ‘Against this backdrop, it is perhaps not surprising that our key indicators point to further rent, as well as house price increases. Steve Bolton, founder of Platinum Property Partners, pointed out that those investors… Continue reading
