TSI
Lack of supply and cheap mortgages continue to fuel price growth in the UK
Property prices continue to rise in most regions in the UK with growth driven by stock scarcity and cheap mortgages, according to the latest asking price index. Prices in Greater London and Wales dipped 0.4% and in the North East they were unchanged while the East of England led growth with a rise of 1.6% month on month coming on top of a 2% rise the previous month. With prices rising in all mainland UK regions, except Wales and Greater London, overall the mix adjusted average asking price is up a further 0.4% in June, the home.co.uk index shows. At the same time supply has fallen 7% year on year since last month. Only two regions showed small year on year rises, up 2% in Greater London and just 1% in the South East. But according to Doug Shephard, the firm’s director, the main indicators show that the property market is in the best shape it has been since the financial crisis. ‘The slowdown in London may be regarded as a return to a more sustainable market following the frenetic activity observed during 2013/2015,’ he said. ‘Moreover, several regional markets that were left behind in the wake of the Greater London surge are now showing significant activity and price growth. Lack of supply remains a fundamental driver in the current market and the total stock of property for sale continues to be historically very low,’ he explained. He pointed out that the acute supply shortage in the East of England has driven prices ever skyward, up 13.9% since June 2015, and this region is now outpacing London and the South East by a considerable margin in terms of home price appreciation. ‘We anticipate that prices will soon surge in the East and West Midlands in a similar fashion over the next 12 months as the supply of homes for sale has dropped by 13% and 14% respectively year on year,’ Shephard said. He believes that a slower London property market has prompted more modest asking prices. In fact, the mix-adjusted average dipped this month in response to rising marketing times and modest rises in supply and affordability look set to constrain prices going forward. Shephard also pointed out that due to improvements in mean marketing times, the Welsh property market is now the second slowest region, ahead of the North East. ‘Should this trend continue, we may well see prices there rise by more than the mere 1.2% registered over the last year,’ he added. Overall, the current mix-adjusted average asking price for England and Wales is now 6.8% higher than it was in June 2015 and Shephard predicts that this upward trend will continue at least into 2017. A breakdown of the figures shows that in Scotland the average asking price is now £179,131, up 1.1% month on month and up 6.7% year on year, while in Wales it is £184,858, a month on month fall of 0.4% but a year on… Continue reading
Tax change boosts home sales in Scotland
Property tax change had boosted Scottish home sales with a rise in transactions of 11% year on year but prices are down 7.8% compared to 12 months ago, the latest index shows. The index report from estate agents Your Move suggests that prices are down due to a lack of higher value homes on the market with the average house price now £170,667. Prices have increased in Edinburgh and Clackmannanshire but have fallen in the majority of areas throughout Scotland. The index also shows that month on month prices are unchanged despite the new 3% surcharge on additional home sales. ‘After a year of the Land and Buildings Transaction Tax (LBTT), it’s now possible to see its impact across the Scottish housing market. By cutting the cost of purchasing cheaper homes, LBTT has led to an 11% increase in sales over the last year,’ said Christine Campbell, Your Move managing director in Scotland. She pointed out that with 104,344 home sales in the last 12 months, the market has outdone the previous year’s 93,601 sales. ‘These figures confirm that lower purchase taxes for property can significantly boost activity in the housing market, while also making it more affordable for first time buyers to get a foot on the ladder,’ Campbell explained. Indeed, she believes that the Scottish Government should consider lifting the LBTT bands higher, if they want to build on the foundations of this policy, in order to support Scotland’s fragile property and construction sector. She also pointed out that the drop in property values was caused by a spike in high value home sales last year, before the LBTT was introduced, but today’s market hasn’t regained those losses yet. ‘The facts show that since the introduction of LBTT, growth in house prices has been subdued. The average property value in Scotland has only grown 1.74% in the last six months, compared to 3.19% for England and Wales over the same period,’ Campbell explained. ‘The tax has particularly hit homes at the top of the market, as these properties have become more expensive to buy after the introduction of LBTT. So while there has been an upswing in sales, it has come at a cost for some,’ she added. And she said that while sales in March were almost double those in February, sales in April are 66% down on the previous month. However, home sales for the first four months of the year are still well ahead on the same point in 2015, with 4,751 additional property purchases so far in 2016. However, when you look at the local picture, the negative effects of the new surcharge are more obvious, as average house prices have dropped in 20 of Scotland’s 32 local authority areas from the previous month. Moray has felt the worst of the tax hike in April, with property values in the area declining by 4.6% month on month. Edinburgh has seen house prices rise by… Continue reading
Fewer arrears for tenants in UK as jobs market improves
Fewer tenants in the UK are falling into serious rent arrears thanks to the improving employment market and landlords are benefitting from healthier tenant finances, according to the latest lettings agents report. In absolute terms, just 86,200 tenants across the UK are more than two months behind in their rent in the first quarter of 2016 compared to 89,300 in the previous quarter, a fall of 4%. The data from the report from Your Move and Reeds Rains also shows that just 1% face serious arrears and for landlords there are the fewest buy to let mortgage arrears since 2007. Since 2008, there have been on average 92,600 tenants in serious arrears in the first quarter of each year meaning that the first quarter of 2016 is also substantially lower than the long term average. ‘Fewer tenants in serious arrears reflect the health of the jobs market. With an extra 44,000 jobs created in the first quarter of this year, thousands of tenants have been able to get their finances back on track and pay down late rent,’ said Adrian Gill, director of estate agents Your Move and Reeds Rains. He explained that serious rent arrears peaked in the third quarter of 2012 when 124,800 households owed more than two months’ rent and when unemployment in the UK stood at 7.9%. Since then a boom in employment has been responsible for lifting many of the most precarious tenant households out of serious rent arrears and onto a more sustainable course. The direction of travel looks very positive. ‘A reduced risk of serious rent arrears will be welcome news for existing landlords, facing so many artificial challenges posed by government meddling. But no one should be complacent as managing a property is never simple. Some landlords are being held back from buying property by the Stamp Duty Surcharge. If this stems the flow of new homes into the rental market, then shortages in some areas could push up rents and hitting affordability,’ Gill pointed out. The number of tenants more than two months behind with rent has fallen by 16% since the eve of the financial crisis and recession in the second quarter of 2008 from 102,900 to today’s total of 86,200. This is despite the expansion, over exactly the same period. At the start of this period, there were 3.6 million households living in the UK private rented sector. Now, after just eight years, this has grown by 62% to reach a total of 5.8 million households as of the first quarter of 2016. ‘The massive growth in the number of homes available to rent, driven by both deliberate landlords and accidental landlords coming into the market, has ensured that rents have not outpaced the ability of tenants to pay. The affordability of renting and the number of tenants falling behind on rent also needs to be seen within the context of… Continue reading
