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UK property prices increase more than earnings in London and South East
Over the past two years average house prices have increased by more than the average employee’s net earnings in almost one in five local authority districts across the UK, according to new research. The vast majority of these areas are in London, the South East, and East, representing 68 of the 73, the data from lender the Halifax shows, and eight London boroughs appeared in the top 10. The largest difference was in Hammersmith and Fulham, where house prices increased by an average of £199,930 over the last two years, exceeding average take home earnings in the area by £143,232. Cotswold was the best performer outside London, the South East and East with house price gains exceeding earnings by £31,222. The Leicestershire areas of Melton and Harborough also saw average house prices increase by more than earnings in 2013 and 2014 with price gains in excess of earnings by £9,358 and £6,938 respectively. The research also shows that over the past five years some 23 local areas in the UK have seen average house prices increase by more than total average pay. In Islington, average property prices have increased by £258,498, surpassing average take-home pay during the period by £123,041. Again, the top six performers are all in London, but outside the capital, Elmbridge in Surrey has seen the biggest rise in prices in relation to total earnings in the past five years at £51,854. All 23 areas are in London and the South East. House prices nationally increased by 9% in 2014, the biggest annual rise since 2007. Average prices rose particularly sharply in London at 16% and the South East at 11%, and as a result, average prices increased by more than total take home pay in one quarter of districts. The majority of these areas are in London and the south of England. Most of the best performers outside the south are in the West Midlands including Malvern Hills, Wychavon and South Staffordshire. While, over the past decade, house prices have increased by more than total pay in just two areas across the UK; Hackney and Hammersmith and Fulham, all in London. ‘The housing market recovery over the past couple of years has resulted in some substantial prices rises in some areas of the country, particularly in London and the South East. This has resulted in homes increasing in value by more than total take home earnings for the average home owner in some areas of the country,’ said Martin Ellis, housing economist at the Halifax. ‘This is good news for some home owners. At the same time, it is challenging news for those looking to buy their first home in such areas, with prices being pushed out of range for many young people,’ he added. Continue reading
Over a quarter of prospective UK buyers not confident about mortgage applications
Some 28% of prospective buyers in the UK aren't confident their mortgage application will be approved first time and it is even lower among first time buyers, new research has found. Although 27% plan to seek professional advice, 32% have not yet taken any steps to raise their chances of mortgage approval, according to a new mortgage approval confidence index from Unbiased, an online financial advisor. Out of a possible 10 points, confidence among prospective homebuyers sits at 5.7, however, the research reveals that both confidence and success can be greatly improved through taking professional mortgage advice from an independent financial adviser, with 81% of advised applications being approved first time. The research suggests that 32% of UK adults are currently planning to buy a property, but 28% of those who plan to fund their purchase with a mortgage are not confident their first application will be approved. This figure rises to 38% among first time buyers. Many lenders have recently cut their mortgage rates, which is encouraging for prospective buyers, but the research shows these people are pessimistic about their chances of securing a loan, yet are doing very little to address this. The most common steps taken to improve the chances of mortgage success are checking credit rating (28%) and making a detailed analysis of all outgoings (25%), but 32% of prospective mortgage applicants say they have taken no action at all in this area. Although only 19% of prospective mortgage applicants say they have already consulted a professional financial adviser for help with their mortgage application, a further 27% say they plan to do so. Although first time buyers are less likely than other homebuyers to seek professional mortgage advice, many apparently come to appreciate the benefits of having help with their application. Mortgage advisers say people moving home make up 37% of their client base, compared to just 26% who are first time buyers. Overall, one in five potential buyers who seek advice from a professional mortgage adviser, do so after having had their initial non-advised application rejected. Men rank higher on the mortgage confidence index than women at six compared to 5.3, with 66% of men stating they are confident compared to 50% of women. Men are also more likely to have taken action to improve their situation, as 73% have already taken some steps compared to just 60% of women. Only 21% of women who plan to buy a property with a mortgage say they intend to reduce their spending to increase their chances of having their application approved, 40% have not done anything at all so far, and 33% say they don't plan to take any steps to improve their chances of success. ‘I's great that so many people are looking to get on the property ladder, and the recent spate of good deals from mortgage providers means this figure is likely to rise even higher. Having a concrete goal in mind such as… Continue reading
Huge boost to first time buyers in UK with new deposit savings plan
Thousands of would be home buyers in the UK will be able to fulfil their dream of owning a property after the government announced a new savings plan to help them get a deposit. Chancellor George Osborne is introducing a new Help to Buy ISA which will allow them to save up to £200 a month towards their first home whereby the government will add a £50 bonus for every £200 saved up to a maximum of £3,000 per person. In his Budget Day speech he pointed out that the government has already helped tens of thousands of people to buy a home with Help to Buy, which allows people to purchase a home with just a 5% deposit. Effectively a tax cut for first time buyers, it will be introduced in the autumn and this, coupled with the news that inflation rates will remain low, is good news for those struggling to afford to get onto the housing ladder. It will provide a significant boost to the ability of a first time buyer to save speedily and effectively, according to Mark Hayward, managing director of the National Association of Estate Agents (NAEA). ‘This is exactly what is needed to engage the first time buyer market, particularly as we have seen the current criteria under the Mortgage Market Reform constraining aspirations to buy a home,’ he said. He pointed out that it especially benefits couples who are buying for the first time as both are eligible to open a Help to Buy ISA and it is also timely, considering house price inflation out paces wage inflation, so this additional boost to first time buyers savings pots will help them at least keep apace rather than fall behind the inflationary curve. The move has been widely welcomed by the property industry at a time when first time buyers overcoming the constraints of saving for a deposit has been one of the biggest barriers to home ownership. First time buyers are needed to keep the housing ladder moving. Lucian Cook, Savills UK head of residential research, also explained that limiting the ISA to a £12,000 savings plan with a £3,000 government contribution should prevent a surge in house prices. ‘It is more likely to help get buyers over the deposit hurdle in the lower value, lower growth markets of the Midlands and the North than say London and the South East, where significant constraints remain,’ he said. ‘ It is also likely to be welcomed by parents and grandparents by making first time buyers less dependent on the bank of Mum and Dad and more inclined to contribute some top up savings when children come looking for assistance to get on the housing ladder. However, those first time buyers who are keen to lock into low interest rates and who have access to parental support are unlikely to commit to what is effectively a five year savings plan,’ he added. According to Adrian… Continue reading
