TSI
Buy to let mortgage lending still the star in the UK housing market
Mortgage lending to first time buyers in the UK increased by volume month on month and on an annual basis in September, the latest data from the Council of Mortgage Lenders shows. However, in contrast, lending to people moving home saw a dip in September compared to August, but grew by volume and by value compared to a year ago while home owner remortgage activity rebounded after a dip in August to increased levels in September both compared to a month ago and the same time last year. The buy to let sector continues to grow and saw year on year increases by volume and by value in both buy to let house purchase and buy to let remortgage sectors. The CML data also shows that first time buyers increased in number of loans advanced and amount borrowed both in comparison to quarter two and the third quarter last year and home mover lending saw a similar trend to first time buyers but the percentage increases by volume and by value were higher. Home owner remortgage activity saw an increase compared to the second quarter of the year, but a more substantial increase compared to the third quarter 2014 while buy to let saw large quarter on quarter and year on year increases by number of loans and amount borrowed. Paul Smee, director general of the CML, pointed out that the mortgage market had a slow start to the year. ‘This quarter shows it is now firmly on an upward trajectory. With competitive rates and high levels of product choice currently available, alongside generally improving economic conditions, we expect this to continue as we head into the New Year,’ he explained. ‘Buy to let continues its growth this period, but at 18% of new lending in September remains the fourth largest lending type behind first time buyers, home movers and remortgage. There were five times as many house purchase loans to home-owners as buy to let landlords in September, and the growth in buy to let lending largely continues to reflect its more belated recovery from recession,’ he added. According to Rishi Passi, chief executive officer of Oblix Capital, on the one hand Help to Buy has driven up borrowing by first time buyers both in volume and value and on the other, there is little sign that impending buy to let tax restrictions are dissuading landlords from expanding their portfolios. ‘Meanwhile cheap money is allowing lenders to offer historically attractive rates to the market and as a consequence lenders are enjoying their best spell since 2008, enticing first time buyers and developers alike to move and borrow,’ he said. Rob Weaver, director of investments at property crowdfunding platform Property Partner, the growth in buy to let lending underlines the continued confidence UK investors have in this asset class. ‘As an asset class buy to let is also… Continue reading
Country house market in UK above £2 million seeing recovery
The UK’s country house market has seen a marked recovery in the £2 million plus sector in the third quarter of 2015 compared to the previous two quarters, according to the latest research. The analysis report from Strutt & Parker also shows that sales levels are now not far off where they were in the fourth quarter of 2014, suggesting that the market uncertainty from the general election has perhaps filtered out. Strutt & Parker’s UK outlook for the remainder of 2015 looks positive and it predicts that there will be sufficient growth in the final quarter of the year to hit the forecast of 5.0% for 2015. Growth over the next few years is also forecast as positive with 5% per annum anticipated. There are, however, uncertainties for the UK market and the upcoming European Union referendum and potential interest rate rises adds further pressures. Despite this, sensibly priced and good quality properties, both regionally and in prime central London, will continue to do well, the firm believes. ‘There remains some uncertainty over the near term outlook for the national housing market. The gradual strengthening in growth within the UK economy is still being met by some caution against risk and interest rates are expected to begin rising early to mid 2016,’ said Stephanie McMahon, head of research at Strutt & Parker. ‘Once rates do begin to rise they may have a dampening effect on the national housing market, most specifically in the mainstream markets where the majority of purchases are dependent upon mortgages,’ she explained. ‘However, two factors should cushion this impact. First, interest rate rises are likely to be gradual, estimated to reach circa 2% to 2.5% over the next five years. Secondly, the majority, 75% to 80%, f recent mortgages have been at fixed rates. Both of these factors should mean that any adjustments in purchasers’ behaviour should also be gradual,’ she added. Her colleague, James Mackenzie, head of the country house department at Strutt & Parker, also agrees that the prime country house market is showing signs of improvement with a lack of high value property on the market and growth in demand over the quarter. ‘However, buyers are incredibly price sensitive as the cost of stamp duty is still a major hurdle. We are hopeful for a normalised autumn and winter,’ he added. Guy Robinson, head of regional residential agency at Strutt & Parker, pointed out that activity in the summer and early autumn months has shown encouraging signs of an improving market. ‘Last quarter, there was strong demand from buyers which has translated into agreed sales. The number of new instructions has remained static, consistent with the previous period,’ he said. Continue reading
House prices in England and Wales see fastest annual growth for six months
The annual rate of house price growth across England and Wales increased to 5.2% in October, the fastest increase for six months, according to the latest property index. Average property prices increased 0.9% or £2,500 last month, equal to £80 a day, to £288,421 and it is the tenth record high recorded this year, the data from the Your Move Reed Rains index shows. The price growth is once again being driven by London, as values in the city increased £24,636 in the last year, the index also shows. Excluding London and the South East of England takes the annual price growth to 3.9%. As far as sales are concerned it was the strongest October since 2007, with the north seeing biggest sales boost due to better levels of supply on the market. But sales of homes worth over £1.5 million were down 35% year on year with this sector still being affected by the Stamp Duty change from almost a year ago. East Anglia saw the strongest year on year rise of any region, with growth of 6.2%, taking the average price for a property in the area to £241,284, Richard Sexton, director of e.surv chartered surveyors pointed out. He also pointed out that in London house prices are recovering from the more subdued growth seen during the second half of 2014. Annually, there has been a 4.4% price increase in the capital, with property values rising by an average of £24,636. However, most of the recent price increases have emanated from the lower rungs of the market with Harrow, Newham and Barking and Dagenham showing the strongest annual growth. ‘These rapid rises are currently outweighing the decline at the top of the market, carrying average values higher. While many commentators are forecasting significant house price growth in London and the UK in the coming years, these need to be viewed in historical context and we’re unlikely to see a return to the unsustainable rises of the past decade,’ said Sexton. ‘Most current predictions are still a slowdown from the past five years of growth, and overall since September 2005 average prices across the country have soared 43.5%, while average property values in London have more than doubled, jumping 104%,’ he added. He also explained that properties worth over £1.5 million have been hit with a stamp duty increase, currently set at 12% of the portion of the property’s value above £1.5 million, up from 5% previously. ‘As a result, sales of homes worth more than £1.5 million have fallen by 35% in the third quarter compared to a year ago. This tax has really put the shackles on the prime market in the capital, as three quarters of these sales since January 2014 took place in London,’ said Sexton. ‘The implications can be seen in the 12.6% annual drop in prices in Kensington and Chelsea, while prices in the City of Westminster have also fallen, 5.5%… Continue reading
