House Price Index

This month sees the number of sales agreed at this time of year up 7% on the same month a year ago, and it is the highest seen in May for ten years with the exception of a slightly better figure in 2014. However, there is a fall in the price of property coming to market of 0.4% (-£1,172), the first price fall at this time of year since 2009, and the first monthly fall this year. As a consequence, the annual rate of price increase has slowed to 1.8%, the lowest since April 2013.

Miles Shipside, Rightmove director and housing market analyst comments: “It now seems certain that we will have continuing political uncertainty, which the housing market traditionally dislikes, and with the first fall in June prices for eight years there is no doubt that the lack of stability is a factor. The price of property coming to the market had increased in June in every year since 2009, so buyer confidence has clearly been affected by inflation outstripping their pay packets and current political events. However, demand is still high and markets in some parts of the country seem to be getting used to coping with instability and are still strong. The high levels of sales being agreed show that the underlying fundamentals are largely unchanged with high first-time buyer demand which drives movement higher up the ladder, all aided by the cheap cost of borrowing.”

Markets performing at different speeds and levels depending upon geography and sector 
The national average figures conceal large differences between different local markets and property sectors, which appear to be reacting in widely variant reactions to the country’s overall air of uncertainty.

The typical first-time buyer sector with two bedrooms and fewer is now the fastest growing sector, and has seen newly-listed prices surge by 3.5% month-on-month and 5.5% year-on-year.

Shipside observes: “Those at the traditional starter level are brushing aside uncertainty, with demand being fuelled by the ongoing desire for home-ownership, government assistance, and mortgage repayments often being cheaper than rent for a similar property. Increasing prices in this sector have not been enough to shake off the wish to own your first home, whilst in contrast sectors higher up the ladder with a larger proportion of discretionary movers have seen the greatest recent price wobbles.”

The number of sales agreed compared to a year ago is up markedly more in the northern regions than in the South. All regions are up on the post-stamp-duty lull period of May 2016, with a national uplift of 7%, but the northern average of 11% far outstrips the southern average of 3%. This follows through to property prices with the London (-2.4%) and South East (-0.9%) regions recording the largest monthly falls in the price of property coming to market. These London and South East figures account for a significant proportion of the total market and have dragged down the national figure which would be in positive territory without these two slower-performing regions.

Shipside adds: “The swingometer may be leaning towards a buyers’ market in some parts of the country, having been given another tilt in that direction by political uncertainty, but demand for housing and lack of buyer choice are maintaining a sellers’ market in others. London and its commuter belt are proving to be a drag on the national figures, but are currently counter-balanced by continuing momentum in other parts of the country. Markets traditionally slow in the second half of the year, and with a slowing in the pace of asking price rises and the forthcoming months of political and economic confusion, the usual slower market in the second half of the year seems to be one of the few certainties in 2017. Having said that, the historic under-supply of the right property at the right price and ongoing strong housing demand are evidenced by buyer enquiries to agents picking up to a degree after the surprise election result. They were 3% higher on the Monday after the election than the Monday before, showing that people are getting on with addressing their housing needs.”

Agent’s View
Kevin Shaw, national sales director at estate agency Leaders, comments: “May was a bumper month for Leaders in terms of sales, despite the general election. Since the 8th June, even with the continuing political uncertainty, it’s very much business as usual for the property market. Whilst some people may be adopting a wait and see approach, many more are wanting – or needing – to press on with their property transactions. We have, however, started to see a slight hardening of attitude from buyers so sellers need to have realistic expectations and be prepared to be flexible in negotiations.”

Is the continued slowdown in house price growth 'a blip' or due to uncertainty over this month's General Election, asks the Nationwide Building Society.

What’s the latest?

House prices fell for the third month in a row during May, marking the worst quarter for the property market since 2009.

 

Homes in the UK saw 0.2% sliced off their value during the month, leaving the average property costing £208,711, according to Nationwide Building Society.

 

The annual rate at which prices are growing also eased to 2.1%, the weakest level for nearly four years, as the housing market continued to lose momentum.

 

The latest price slide comes after property values fell by 0.4% in April and 0.3% in March.

 

But Nationwide stressed it continued to expect house prices to end 2017 around 2% higher than they started the year.

Why is this happening?

The slowdown in the property market may have been caused by uncertainty due to this month’s General Election.

 

But Nationwide pointed out that previous elections had not had much impact on buying and selling decisions.

 

Instead, it suggested the trend may be indicative of a wider slowdown in the household sector as people feel the pinch from higher inflation.

 

It could also reflect growing affordability pressures after house prices have increased significantly faster than average earnings in recent quarters.

 

Robert Gardner, Nationwide’s chief economist, said: “It is too early to conclude whether the slowdown in house price growth is merely a blip, a reflection of the impact of the squeeze on household budgets, or is due to mounting affordability pressures in key areas of the country.”

 

There has been a shortage of stock for some time, as reported recently by Zoopla

Who does it affect?

While the fall in house prices might sound like good news for first-time buyers, it is likely to exacerbate the current stalemate.

 

The property market has been dogged by a shortage of stock for some time, with the number of homes on estate agents’ books remaining close to record lows.

 

This lack of choice is prompting existing homeowners to sit on their hands and delay trading up the housing ladder, which in turn leads to fewer properties being put up for sale.

 

The shortage of homes on the market has created a significant mismatch between supply and demand, which has then forced house prices higher.

Sounds interesting. What’s the background?

Today’s data is the latest in a raft of figures pointing to a slowdown in the housing market.

 

The Council of Mortgage Lenders said mortgage advances dropped by 11% in April, while the number of homes changing hands fell by 22% in the same month, according to HM Revenue & Customs.

 

But research by Zoopla found that consumers remained upbeat about the property market’s prospects with nine out of 10 people expecting house prices to rise in the coming six months.

 

Nationwide said given the current uncertainty about the UK’s future, housing market trends would depend crucially on developments in the wider economy.

 

But it added that while it expected activity and house price growth to slow in the coming months, in line with an easing in household spending, the subdued level of house building and the shortage of homes for sale were likely to provide support for property prices.

Moving to be near a good school?

Have you been using Rightmove’s School Checker to look for a new home near a good school? We all know it’s important to do research before choosing the ‘right’ school, and there’s much more to it than Ofsted ratings…

What should be your main contributing factors when deciding whether a primary school is right for your child?

• Ofsted reports
• Department for Education Performance Tables
• School’s website
• Their local offer for Special Educational Needs
• Additional activities i.e. breakfast club and after school clubs

What should you be looking for when you visit the school?

• Visit a range of schools so you can compare them
• Look at the classrooms and corridors – what are the displays like?
• What are the interactions like within the classroom? Between children or between the children and their teachers?

How can you improve your chances of getting into a school?

• Know the admissions criteria from school to school
• Know the order in which the criteria are set by the Local Admissions Authority

Find out more information Rightmove’s School Checker here.

What damp issues to look for before buying a house

Regional Trends

House Prices in Bury St. Edmunds, Suffolk

The majority of sales in Bury St. Edmunds during the last year were terraced properties, selling for an average price of £260,724. Detached properties sold for an average of £385,379, with semi-detached properties fetching £269,849.
Bury St. Edmunds, with an overall average price of £276,208, was similar in terms of sold prices to nearby Ixworth (£284,593), but was cheaper than Great Barton (£423,439) and Thurston (£322,288).
Overall sold prices in Bury St. Edmunds over the last year were 4% up on the previous year and 18% up on the 2014 level of £234,351.

Surveyors expect residential property prices and rents in Ireland to increase in 2017

National property prices in Ireland are set to rise by an average of 7% in 2017 while rents are expected to increase by between 8% and 10%, according to the latest outlook review report from surveyors.


The report from the Society of Chartered Surveyors Ireland (SCSI) predicts that the biggest prices rises are likely to be outside of Dublin with the Leinster region named as the location likely to be the hottest in 2017.


The price of three bed semi-detached houses, the most popular house type in the country, is predicted to rise by an average of 9.4% nationally with the greatest increases across all housing unit types likely to be 11% for one and two bed apartments.


The survey predicts that residential rents will rise on average by between 8 to 10% outside of the rent control areas of the four local authority areas of the Dublin Region and Cork City Council area.


Annual rent increases are capped at 4% in these designated zones. The Government is reported to be planning to extend these zones to 20 more towns.


A lack of supply, public policy and projected economic growth may continue to inflate house prices, according to Ronan O’Hara, chair of the SCSI’s residential agency group, but he warned that the latter could not be taken for granted given the uncertainty caused by the UK’s decision to leave the European Union.


Indeed, 78% of surveyors outside Dublin believe Brexit will have a negative impact on Ireland’s economic growth and 50% in Dublin also doing so while 36% of surveyors across the country believe that Brexit has already had a negative impact on property activity market levels.


O’Hara believes that the figure show that there is uncertainty for the coming year. ‘The drop in Sterling has reduced the buying power of people looking to move here,’ he said.


However, he pointed out that the changes which the Central Bank made to its lending rules and the introduction of the Help to buy scheme are likely to contribute to an increase in activity in the short to medium term.


Some 80% of surveyors said that Help to will lead to price increases in the coming year. ‘While this is good news for vendors, struggling first time buyers will be disheartened. While rising prices will probably encourage more builders to start building houses it really is up to Government to tackle some of the underlying issues, including high construction costs, and to make housing more affordable,’ said O’Hara.


The report anticipates continued and strong rental price growth over the coming 12 months across all regions, fuelled by a sustained demand combined with a continuing housing shortage particularly in and around the regional cities.


Overall the greatest increases are forecast for both two and three bed apartments and townhouses at over 10%. The survey took place before the new restriction on rent increases were announced so while increases of over 11.5% were predicted for two and three bed units in Dublin, these will clearly not be happening now.


O’Hara said that while the proposals to extend the designated pressure zones to 20 more towns might be well intentioned they were also short sighted and in the survey the introduction of permanent rent control measures was ranked as the highest negative measure that will impact upon the supply in the rental market.


‘If this goes ahead it will discourage landlord investment in the rental market. Similarly anyone involved in buy to let properties will exit the market and it’s likely a lot of owner occupiers will purchase them. That might be good news for them but not for those renting as rents will continue to rise. The Government may be putting out one fire, but they are simply starting another,’ he added.


According to the report the estimated figure for new builds at the end of 2016 will be 14,800 which falls significantly short of the 20,000 to 30,000 required. O’Hara said that while demand for housing is greatest in Dublin the fact that commencements outside the capital are running three times higher is a concern.


‘This is a huge issue for first time buyers hoping to get on the property ladder. But given the concerns raised by our members over Brexit, it is also a huge issue for the country as a whole,’ O’Hara explained.


He added that the SCSI is urging the Government to cut the Vat rate on new houses. ‘It has worked for the hospitality sector, it would also work for the construction and property market,’ he said.

Remortgages drive growth in UK home lending market

Gross mortgage lending in the UK held steady in October but is being driven more by remortgages than new buyers due to a lack of supply in the current housing market.

It reached an estimated £20.6 billion, according to the latest figures from the Council of Mortgage Lenders and closely matches September’s gross lending total of £20.5 billion, but is 5% lower than October last year when it was £21.8 billion.

‘Housing market sentiment is holding up well, with demand still strong. This has led to a pickup in approvals, as expected. The more pressing issue is on the supply side, where the lack of private sellers continues to be an obstacle for would-be borrowers,’ said CML senior economist Mohammad Jamei.

‘For this reason, we expect lending in the months ahead to be driven more by remortgaging activity and less by house purchases. Remortgaging will be helped by competitively priced mortgage deals, which are encouraging borrowers to refinance,’ he added.

According to Ishaan Malhi, chief executive officer of Trussle, the figures conceal two very different stories in the mortgage market. ‘On the one hand, new purchases are seeing a slight fall as first time buyers continue to face challenges saving for a mortgage deposit. This is having a long term impact on home ownership,’ he said.

‘On the other, we’re witnessing a surge in remortgaging, up 17% in the last 12 months, as existing home owners take advantage of record low rates to secure better deals,’ he added.

John Goodall, chief executive officer of peer to peer platform Landbay, also believes that the push is coming from home owners changing to lower interest products. ‘Many existing homeowners are choosing to take advantage of low interest rates to refinance their mortgage. However, this growth in lending volumes belies a much more mixed picture across the sectors. Buy to let lending levels remain around 24% down on this time last year, as April’s 3% stamp duty hike caused an initial wave of transactions, but left in its wake a much more subdued market,’ he pointed out.

‘The fundamentals of the buy to let market are still pointing toward long term sustainable growth, but landlords have had a white knuckle ride over the last 12 months, and we hope to see them given some relief at next week’s Autumn Statement,’ he added.

The lack of homes for sale is also highlighted by comments from John Eastgate, sales and marketing director at OneSavings Bank. ‘Mortgage activity is in good health, reflecting growing consumer confidence after the European Union referendum and impressive resilience in a quite exceptional year. Borrowers are benefitting from record low interest rates, with remortgage activity buoyant, although purchases are constrained by lack of homes for sale,’ he said.

‘However, with the Government set to fall short of the 200,000 new homes it had committed to providing annually, the UK’s chronic housing shortage, and resultant rising house prices, are set to remain a major barrier towards lending growth. Tax changes on buy to let will only make matters worse. The mortgage market needs to be supported by house building of all tenures which is the only long term solution that can prevent further deepening of the housing crisis,’ he added.

Henry Woodcock, principal mortgage consultant at IRESS, believes that the mortgage market remains vibrant. ‘Low interest rates, a levelling of house prices and continued consumer confidence have all combined to maintain market momentum,’ he said.

‘It’ll be interesting to see if the Chancellor has any good news for the mortgage and housing markets in the Autumn Statement. It’s expected he will confirm earlier announcements of funds towards new homes to be built by small firms, but many would like to see further investment into rental properties,’ he added.

UK property prices still rising, up 1.4% in October, despite Brexit uncertainty

Residential property prices in the UK continued to grow in October, up 1.4% and are now 5.2% up year on year, taking the average cost of a home to £217,411, the latest lender index data shows.

On a quarterly basis they were up just 0.1% but experts point out that this reflects a slowdown caused by the political uncertainty around the referendum in June on the UK’s membership of the European Union.

There was concern that the vote to leave the EU might be catastrophic for the housing market and the annual rate is down from a peak of 10% in March but Halifax Housing economist Martin Ellis pointed out that a slowdown was not unexpected and there are factors other than Brexit.

‘Annual house price growth has nearly halved from a peak of 10.0% in March this year, but remains robust at 5.2%,’ he said, but added that the slowdown appears to have been largely due to mounting affordability pressures, which have increasingly constrained housing demand.

He also pointed out that activity levels, like house price growth, have softened compared with a year ago. ‘Home sales, however, appear to have stabilised in recent months following the distortions earlier in the year due to the changes to stamp duty in April,’ he explained.

‘Whilst house price growth may ease further in the coming months, very low mortgage rates and a shortage of properties available for sale should help support price levels,’ he added.

Mark Posniak, managing director of Octopus Property, believes that the market is proving to be more resilient than anticipated. ‘In a politically and economically uncertain time, both at home and overseas, the resilience of the UK property market will certainly be tested. Demand may well be down amid such uncertainty, but as the latest mortgage approvals statistics reveal, it’s by no means out,’ he said.

‘The low cost of borrowing, weak supply levels and a robust jobs market are preventing prices from falling more sharply. Confidence is likely to play an increasingly prominent role in the short to medium term,’ he pointed out.

‘As inflation rises, people will feel less well-off and will become more cautious, and this could result in subdued transaction levels. Brexit related uncertainty remains the key narrative for the UK housing market at present, and last week’s high court ruling on Article 50 could see that uncertainty prolonged for longer than anticipated,’ he added.

Randeesh Sandhu, chief executive officer of Urban Exposure, also thinks the court ruling could have an effect as continued uncertainty about the Brexit process could hit confidence but at the same time there is still more demand than supply.

‘We still view the overall UK housing market picture as positive in light of enduring supply and demand fundamentals and no sign that the government will halt its long-term support of the sector. There are a number of issues that must be remedied on the supply side if the UK is to meet the government’s building targets, so in parallel we see opportunities for continued growth as and when these opportunities are unlocked,’ he concluded.

UK housing market expected to be strong and active throughout Brexit process

The path towards Brexit will dictate what happens in the UK housing market over the next few years but it is expected to remain reasonably strong and active, according to a new analysis.

There may be some turbulence along the way with article 50 to be enacted by march 2017 and the country set to leave in 2019, but the latest forecast from real estate firm JLL says that there will still be moderate growth with the residential market picking up again from 2020 onwards.

‘Demand will be undermined in the short term by uncertainty and a more subdued economy while supply issues will exacerbate, lending support to prices. The perennial issue for the housing industry remains supply and we are pleased that there seems to be fresh impetus in this regard,’ it says.

‘The big question, however, is whether policy initiatives target short term supply improvements, or look beyond the immediate horizon to create lasting, long term solutions,’ it adds.

JLL forecasts growth of 0.5% across the UK in 2017 and 1% in 2018 followed by 2% in 2019, then 4% in 2020 and 5% in 2021 but there is regional variations. Scotland is expected to be flat in 2017 then see 1% growth in 2018, 2% in 2019, 3% in 2020 and 4.5% in 2021. Wales is expected to do less well but catch up by 2020 with a forecast of prices falling by 1% in 2017, up 0.5% in 2018, up by 1% in 2019, by 3% in 2020 and then 4% in 2021.

Greater London is predicted to do well with growth of 1% in 2017, some 2% in 2018, then 3% in 2019, 5% in 2020 and 7% in 2021 but the prime central London market will not see as much growth with the JLL prediction showing prices likely to be flat in 2017 then 1% in 2018, 3% in 2019, 5.5% in 2020 then a slight reduction to 5% in 2021.

According to Neil Chegwidden, head of JLL residential research the real key to the outlook for the property market is the widespread positive attitude adopted within the UK. ‘Much will depend on the trade agreements negotiated, but with greater certainty the economic outlook should brighten along with consumer and business confidence as we head into 2019,’ he said.

‘We expect the UK housing market to be more subdued over the next two to three years. However, it will remain reasonably active with little chance of meaningful price corrections. Assuming Brexit negotiations are not too detrimental, we could see a rebound in London housing markets in 2020, before the rest of the country follows,’ he explained.

One concern on the horizon is that house builder activity could pull back from current rates of construction. ‘Although levels of new housing delivery were still woefully low prior to the referendum at least the direction of travel was positive and encouraging. This will now fall back again. We are predicting England starts to drop to 134,000 units next year,’ Chegwidden explained.

‘In London, we expect the house building slowdown to be more marked. Not only is London’s economy more vulnerable to Brexit but the housing market is also more reliant on investors, both domestic and international, and is hence more susceptible to buyer confidence,’ he pointed out.

But he also explained that the short term London supply prognosis implies that prices should bounce back when confidence returns. ‘The work stream of new supply should then pick up, albeit slowly.

While central and local government policies will be pro-development, we question whether they will really be able to outweigh the more cautious approach adopted by house builders in response to weaker market forces. Most worryingly, both the UK’s and London’s housing shortages will be even more acute by this point,’ he added.

The report also points out that the forthcoming five year UK economic outlook is particularly uncertain and much depends on the nature and detail of the EU exit. JLL’s base economic forecast assumes a hard Brexit with access to the single market sacrificed in favour of immigration controls.

‘Despite this, the economic prognosis is not too detrimental for the UK. There is clearly downside risk to this quite benign outlook, if trade agreements and financial sector passporting rights are not favourable. However, this base assumption also implies that there is significant upside potential too, so the economy could prove more robust next year and could also expand faster thereafter,’ it concludes.

Historic low rates encouraging more UK home owners to remortgage

Two thirds of remortgagors in the UK plan to remortgage again in the next four years, spurred on by record low rates, new research has found.

Some 46% change their mortgage product to suit circumstances, two year fixed rates are falling in popularity while five year fixes grow as rates fall and borrowers seek stability.

The research from conveyancing panel management specialists LMS also shows that choice of lender is driven by rates available with 11 out of 20 picking a lender for this reason and only one in 20 doing so due to customer service.

Overall, in September some 85% of remortgagors were able to lower their mortgage rate at a time when the interest base rate is at an historic low of 0.25%.

Home owners can reap the rewards of rising house prices and competitive rates by remortgaging, something many appear to be aware of, the research suggests. Indeed, 64% of people who remortgaged in September believe they will do so again within the next four years.

However, 62% of remortgagors in September only remortgaged when they did because they had come to the end of their current deal. The report says this suggests complacency or lack of awareness among some home owners who could switch to make monthly savings earlier than they realise, something that may prove invaluable for many households who face higher costs for essentials as a result of rising inflation.

Following the Bank of England’s move to reduce the base interest rate from 0.5% to 0.25%, the majority of remortgagors do not expect any further changes to interest rates in the immediate future and 69% expect interest rates to remain the same for the next year.

Perhaps surprisingly, given fairly widespread commentary to the contrary, 14% believe interest rates will increase in the next year while 9% believe they will be lowered again within the next year.

‘Record low mortgage rates after the cut to the base interest rate make this a great time to remortgage. Mortgage interest rates were already falling but this cut may have been the catalyst to encourage more people to remortgage and August had the highest number of remortgages for seven years, after the base rate was cut,’ said Andy Knee, chief executive of LMS.

The LMS survey also examined customer preference relating to product choice and found that in September 46% of remortgagors changed the type of their mortgage product to suit their current financial situation and expectations. In the process two year fixed products declined in popularity among remortgagors while repayment and the popularity of five year fixes have risen.

Of those who changed their mortgage product, some 38% had a two year fixed mortgage for their previous term, a figure that decreased to 26% who opted for this type of product in their new mortgage.

In contrast, just 8% of remortgagors had a five year fixed mortgage before remortgaging, but this number has since climbed to 22% as average rates for this type of product have fallen and they became more attractive to customers.

However, five year fixes remain more expensive than two year fixes, supporting anecdotal evidence that, in the current environment of political and economic uncertainty, people are looking for longer term security even if this involves slightly higher costs in the short term.

Just 13% of remortgagors who changed their mortgage had a repayment product, a figure that has risen to 19% for those who have one since remortgaging. Variable mortgages, on the other hand, fell from 18% who had this in their previous term to 17% who have that product now.

The survey also found that saving money is by far the most important factor when choosing a lender and 55% of remortgagors said the main reason they chose their lender was because it offered the cheapest mortgage deals or best interest rates. This is more than twice as many as the second most popular option for 22% who opted for a lender based on a recommendation from their broker or adviser.

Only 8% said a lender’s reputation was the most important factor when choosing a product, while just 5% said customer service was the most decisive factor.

Knee explained that while two year fixed products remain the most attractive to remortgagors, the growth in popularity of five year term fixed mortgages is interesting and suggests that home owners are either keen to take advantage of competitive rates and lower costs with short term fixes or are more cautious, prioritising greater stability in a period of uncertainty by fixing for longer.

‘As the terms of Brexit remain unclear and its impact on prices and costs are not fully realised, it will be interesting to see whether more people start erring on the side of caution or wait for more information,’ he concluded.

 

Brexit doom and gloom for UK housing market failing to materialise

People in the UK are still positive about the housing market despite the decision by the country to leave the European Union, although they seem to agree with many experts that price growth will be more moderate.

This is full of good news. It means that property is still regarded as a good investment and people still want to buy, as shown by two new pieces of research that came out last week. The UK is still a nation where people aspire to own a home and what is particularly interesting tis that those who might struggle with affordability are willing to look at alternatives such as shared owner ship.

The first pointer is the latest sentiment survey which shows that there has been a significant uptick in house price sentiment since the vote to leave the EU. The Knight Frank HIS Market index was over 50 for a third month in row since its low point in July, just after the referendum.

It was slightly lower than in September and significantly below its peak of 63.2 recorded in May 2014, but as the index report points out households are still positive about the market although expecting more modest growth in property prices over the next 12 months than they were in September,.

It comes at a time when house prices in many areas are continuing upward, although price growth in London has slowed. The Hometrack cities house price index showed that 11 cities are seeing higher growth than at the start of the year and nine slowing.

And research from the Council of Mortgage Lenders shows that the majority of British people still want to own a home and they aspire to having their own property not purely for financial reasons. It found 72% of adults want to be home owners in two years’ time and 80% hope to own in 10 years’ time.

It is interesting that the research gave us some interesting insights into how people perceive home ownership and how to help young people get onto the housing ladder. It found that partial home ownership through shared ownership or shared equity is regarded as a good idea by around half of all those who took part in the survey, around five times the proportion who see it as a bad idea.

Indeed, more people see part ownership as a stepping stone to full ownership than as a permanent tenure in its own right and in addition, a majority of people regardless of their own circumstances feel that it is harder than it has ever been for young people to buy their own home. If those who believe it is very difficult are included, the proportion rises to 85%.

Overall 75% believe action is necessary to help first time buyers. Predominantly, people see the Government as having a responsibility, but mortgage lenders, house builders and local authorities are also widely regarded as having a role.

It is certainly a good time to be getting a mortgage and the usual monthly figures from the CML showed that home lending market has not been deflated by Brexit with gross mortgage lending reaching £20.5 billion in September, the highest September lending figure recorded by the Council of Mortgage Lenders since 2007.

The CML is predicting a modest rise in approvals, though at levels lower than seen earlier this year, as the lack of properties on the market for sale and affordability constraints continue to bear down on borrowers. The report depicts a mortgage market undeterred by the EU referendum result and very much open for business.

Indeed, the 11% increase in lending between the second and third quarters shows that borrowers weren’t put off by the downside of Brexit being hailed in the headlines. That we can have such positivity in the housing market at a time of potential economic turmoil does suggests that the pre-Brexit fears ought now to be put to bed.

As a part of Theresa May’s shake up of the Conservative cabinet, new housing minister Gavin Barwell has announced that the government will be switching its focus from the Housing Sector to the Private Rental Sector (PRS) as he believes the PRS will be “vital” as more and more people choose to rent.

Mr Barwell believes that investing in building more rental properties will alleviate the strain on the currently overloaded housing market.
The change in housing policy comes after Barwell stated that the amount of properties needed to meet the current demand will “never be achieved” without first investing heavily in PRS.

As a part of the renewed focus on the private rental sector, Barwell has announced the intention to insure there will be a wider variety of properties to suit the needs of every renter.

Speaking at a recent property conference, Barwell said “We need to make sure we have a good, thriving private rented sector. Recent growth in the bespoke rental market has been impressive, but this progress must be expanded,”

He added: “A growing number of families and young professionals are choosing the PRS… many will rent for some years before they buy.
“I’m very clear that our ambitions will never be achieved without significant boost in institutional investment to the PRS, to ensure more choice and quality for people living in rented accommodation.”

James Murray, London’s Deputy Mayor for Housing, has supported the government’s decision to focus on PRS whilst also defending his own 50% affordable housing target.

He said: “If we’re going to increase supply and have affordable [housing] within that, you need to use every route of delivery, and if build-to-rent can deliver at scale and speed, then we should support that.”

Asking prices up across all of UK but sellers are too optimistic, index suggests

Residential asking prices in the UK increased by 0.7% since September, led by the East of England, but sellers could be being too optimistic with their pricing, says the latest index report.

Month on month asking prices increased by 0.7% in England, by 0.3% in Scotland and by 0.2% in Wales and are 4.4%, 5.3% and 1.3% higher year on year respectively.

The data from Home.co.uk also shows that supply is up by 11% year on year but much higher in the South and East of the country with a rise of 19% in London, 23% in the South East and 30% in the East of England.

A breakdown of the figures show that the biggest month on month rise was the East of England at 1.1% and taking the average property price to £342,915, some 11.5% higher than a year ago.

The next highest monthly rise was 1% in the South East and the East Midlands to an average of £394,837 and £211,328 with an annual rise of 4.2% and 5.5% respectively. Greater London saw prices rise by 0.8% month on month and 1.5% year on year to £538,775, followed by the South West, up 0.7% and 5% to £309,168.

Elsewhere the month on month growth was more muted with asking prices up 0.5% and 6.5% in the West Midlands to an average of £225,664, by 0.1% in the North West month on month and 4.2% year on year to £186,746, by 0.2% and 3% in Yorkshire and Humber to £181,459, and by 0.2% and 1.1% in the North East to £155,577.

The report points out that a key warning sign showing the fragility of the current market is that price cutting of properties whilst on the market has risen to a three year high across the UK and the firm is predicting price falls to come.

‘Supply is increasing rapidly in the East, South East and London. What’s more, the pricing of these new instructions is looking rather optimistic,’ said Doug Shephard, director at Home.co.uk.

He explained that London was the first to show an uptick in properties entering the market and the total stock for sale in the region has risen by around 24% which means that over supply is a danger and in the neighbouring regions, which would trigger a rapid downward spiral in prices.

‘Foreign investment was the saviour of the London market following the onset of the financial crisis, but Euro or dollar based investors will not be tempted back until sterling stabilises and that may take some considerable time,’ he pointed out.

Shephard believes there are also concerns about currency fluctuations and whether the Bank of England will have to intervene and raise interest rates to support the Pound which he thinks would be disastrous for the highly leveraged UK property market.

UK sees first time buyer mortgages rise as buy to let slows

Home owners in the UK borrowed £12.2 billion for house purchases in August, up 14% month on month and 11% year on year, according to the latest data.

They took out 66,000 loans, up 13% on July and 9% on August 2015, the figures from the Council of Mortgage Lenders (CML) show as house purchase activity bounced back with a particular resilience from first time buyers but buy to let loans are down.

Indeed, the data shows that at £5.1 billion, first time buyers borrowed 13% more than in July and 24% more than August last year. This equated to 31,800 loans, up 12% month on month and 19% year on year.

Home movers borrowed £7.1 billion, up 15% on July and 3% compared to a year ago. This represented 34,200 loans, up 14% month on month and 2% on August 2015.

But remortgage activity fell 2% month on month to £5.9 billion but is still up by 41% compared to a year ago. This came to 34,900 loans, up 4% month on month and 40% compared to a year ago.

In the buy to let market landlords borrowed £3 billion, unchanged month on month but down 12% year on year. This came to 19,400 loans in total, up 4% compared to July but down 13% compared to August 2015.

‘House purchase activity bounced back from a dip in July, reflecting resilience in first time buyer activity. Mortgage rates remain at or close to historic lows, and the re-pricing of mortgages following August’s base rate cut should help to underpin a continuing, strong appetite for home-ownership over the coming months,’ said Paul Smee, CML director general.

‘Buy to let by contrast continues to operate at lower levels five months after the stamp duty change on second properties. This appears to be a long term trend, and with lenders potentially tightening affordability checks ahead of the tax changes in April 2017, activity on the buy to let house purchase side may well remain at current levels,’ he added.

Steve Bolton, founder of Platinum Property Partners, also believes that buy to let lending will continue to fall. ‘The stamp duty surcharge is just one in a series of recent changes implemented by the Government designed to penalise landlords and derail the buy to let market,’ he said.

‘Section 24 (the Tenant Tax) will restrict landlords’ ability to deduct mortgage interest costs as a business expense and as a result force many to exit the market or increase rents, when many haven’t done so for years, as their growing tax bill will wipe out any profits. Wealthy, institutional landlords who can purchase properties without the need for mortgage finance will not be affected, creating an unfair playing field and leaving smaller landlord’s financial plans in ruins,’ he explained.

‘The Government’s belief that buy to let tax changes will help residential buyers is hopelessly misguided. Tenants will undoubtedly be hit with higher rents as landlords struggle to stay afloat, making it even harder for them to save for a deposit. We have already seen evidence of this in Ireland, where a similar tax change resulted in a 50% increase in rents over a three year period,’ he pointed out.

‘Although our legal battle to reverse this legislation has now run its course, we are continuing to fight this legislation through lobbying, and will continue to do so until this ludicrous legislation is abolished or the retrospective nature of the tax changes is removed. As the judge said himself, the so called tenant tax raises serious questions socially, politically and economically,’ he added.

However, David Whittaker, managing director of Mortgages for Business, pointed out that there are still good opportunities for landlords looking to expand their portfolios. ‘We may even see lending for buy to let purchases pick back up before the end of the year, as savvy landlords borrowing personally seek to take advantage of existing income cover ratios ahead of the introduction of the PRA’s stricter underwriting rules which come in effect on January 01,’ he said.

‘What we do know for sure is that buy to let purchases by landlords using limited companies is fast becoming the norm ahead of changes to tax relief and the new PRA guidelines will only push more investors down this route,’ he added.

‘There are mixed signals surrounding buy to let, according to Adam Tyler, chief executive officer of the National Association of Commercial Finance Brokers (NACFB), who thinks there are signs of a slight recovery in demand.

‘A thousand more buy to let loans in August than July is not a huge number, especially when you consider that the majority were remortgages, but at the same time it shows landlords and property investors are beginning to regroup,’ he said.

‘You sense, and this is definitely the feeling we get from our own brokers around the UK, that property investors have started to adjust to the new stamp duty regime. Without doubt, many landlords have started to withdraw from the sector, but at the same time others are seeing this exodus as an opportunity,’ he explained.

‘Getting a buy to let loan may now be harder, but if your house is in order the rates available are exceptionally low. Landlords also sense that it is a buyer’s market and so are able to negotiate hard on price, thus mitigating the impact of the extra 3% stamp duty,’ he added.

‘Only this week the Office for National Statistics revealed that people in the UK see property as the asset class that will deliver the best returns over time. We can only see this attitude continuing, despite the stamp duty changes introduced earlier this year,’ he concluded.

3 Costly Defects to Look For When Viewing Properties

It’s a disappointing fact that approximately 80% of buyers don’t commission a survey before making a commitment to purchase.

Article written by Justin Burns BSc MRICS of Peter Barry Surveyors.

As a Chartered Surveyor I would obviously advocate the benefits of having a detailed survey prepared but I accept that with some properties it’s more necessary than with others; the problem is that most buyers don’t know which. I therefore thought it would be useful to come up with a list of 3 defects that are relatively easy to identify but potentially costly to repair.

1.       Roof coverings

If you have a pair of binoculars in the house, take them with you when viewing properties; that’s how surveyors do it! Missing tiles or slates will be easy to spot but general unevenness is also a sign of trouble ahead.

You’ll often learn more from inside the roof space so don’t be shy about asking to go in to the loft. If there’s sarking felt present then you can assume that the tiles or slates have been renewed in the last 40 years or so and should have plenty of life left in it yet. If that felt is breathable (smoother in appearance and thinner) then the roof covering is probably less than 20 years old.

Flat roofs can often be seen from the upper windows. Felt is the most common covering and has a lifespan of around 15 years or 25 if it is the modern ‘high performance’ type. Any bitumen type repair, creasing or tearing to the edges will indicate that the covering should be replaced. Pooling of water or a build-up of moss are signs that the surface is not draining properly and more expensive reconstruction work may be necessary.

2.       Chimneys

The first thing to check is whether they are plumb. Chimneys can start to lean as the bricks to the side that gets the brunt of the weather become frost damaged and expand. Stand in line with the stack and sight it though, a very slight lean is not a cause for concern but anything more than about 5% and you’re looking at re-building in the medium term.

Get your binoculars out again and take a close look at the brickwork. Has the pointing eroded or the bricks spalled? Spalling is the term used when the outer face of a brick comes away after suffering frost damage and is difficult to repair; patching up, even with colour matched mortar, will look terrible so you are looking at chopping out and replacing individual bricks.

The cost of doing any work at roof level is significantly increased due to the difficulty of access

3.       Dampness

Surveyors will test with a damp meter but there are signs that you can look for during a viewing.

All properties built since Victorian times will have a damp-proof course present to resist dampness rising from the ground. DPCs in older properties will normally consist of a bed of slate and can fracture and fail over time but the cause normally lies elsewhere.

High external paving levels are a common culprit. The surface of any paving that abuts an external wall should be at least 6 inches below the DPC to prevent rainwater penetrating through. Often we’ll see DPCs that are bridged, either by very high external paving, or the later application of render to the outside face of the wall. Both will allow dampness to pass around the DPC.

The most common cause of dampness is defective rainwater goods. A leaking gutter that is left unchecked can saturate a wall within a short period of time and if that wall belongs to an older style property and is solid the internal surface will also be wet.

Dampness often leads to other defects, such as deterioration to adjacent timbers, so the problem may be more widespread than is immediately apparent.

If you find any of the defects outlined above you will want to make allowance for the necessary remedial works when negotiating.

An RICS Homebuyer Report will flag up all such defects and could be a useful tool when re-negotiating the price. Most surveyors will also be happy to provide costings as part of a more detailed building survey. The alternative method is to arrange estimates from suitable qualified tradespeople.

 

Bychoice ask where next for the housing market?

One month since the historic Brexit vote, Jason Hydes, Branch Manager of Bychoice takes a look at how the local market is shaping up.

The market in Bury St Edmunds continues to remain buoyant with many new houses coming to the market and no shortage of buyers registering their interest in them.

One of the significant benefits is that Interest rates are expected to remain below 2% for the next 18 months, and with 10 year fixed deals available at under 3%, there is a ‘once in a lifetime’ opportunity for homeowners to secure exceptional deals, reducing inherent risk. Upsizing is also more attractive, especially if prices are expected to nudge upwards at faster rates than mortgage interest. If you’re a first-time buyer or looking to upsize, this could be the perfect time, contact Bychoice on 01284 769598 to find out how this market could be ideal for you. 

Marcus Whewell, CEO of The Guild of Professional Estate agents, comments, ‘The market (outside of London) actually looks steady and predictable. Prices are holding up, properties are selling (on average) for at least 99% of the asking price and withdrawals are no higher than pre-referendum. Mortgage rates continue to be the most competitive in history.’

London is a slightly different story, as Marcus Whewell, CEO of The Guild of Professional Estate Agents, explains: ‘Brexit essentially acted as a catalyst to the inevitable correction to the overheated prices present in the Spring. Offers, prices achieved and completions all adversely affected at least in the short term. The London market has always fluctuated more than the rest of the UK as overseas and speculative investments help drive activity. However, recent sterling growth should help restore some confidence, as should the early political appointments and the conciliatory tone being adopted from Downing Street.’

Marcus comments, ‘Looking at the bigger picture, there are strong reasons to believe the residential market will remain healthy for the next few years’.

Supply and demand remains high; the UK population is expected to continue growing by up to 50,000 per annum and to meet demand this the UK needs at least 200,000 new homes every year. Currently less than half of this number are being built. This is only amplified by the changes in trends and demographics such as more single-person households.

If you are interested in selling your home contact Bychoice on 01284 769598.

95% mortgages soar five-fold under the help to buy scheme

The number of 95% mortgages available has soared five-fold since the Help to Buy scheme was launched at the end of last year. The number of products has jumped from just 56 in October 2013 to 271 today, according to Moneyfacts.

If you’re a first-time buyer, a 95% mortgage is likely to appeal to you as it means you only need a 5% deposit. But 95% mortgages come with risks, and lenders usually have stricter rules about who they’ll offer one to.

Lenders are now competing for business in this area, regardless of whether they are taking part in Help to Buy or not. This in turn has led to greater choice, so more products are now available at lower rates.

In the past, some mortgage lenders offered 100% mortgages but to be accepted nowadays, you need at least a 5% deposit. This is great news for first-time buyers, as there is now more mortgage choice for them and they are no longer forced to save huge deposits to get on to the property ladder!

Being able to put down a larger deposit will give you access to more competitive mortgage deals however remember if house prices rise while you’re saving, you could end up back at square one.

HSBC launches Britain's first fixed-rate mortgage below 1%

Fixed rate mortgages have dipped below 1% for the first time ever as the home loan war intensifies.

As competition among lenders hots up and the cost of borrowing for banks and building societies falls to new lows, HSBC is offering a two-year fixed rate deal at a record low of just 0.99%!

The latest dip is likely to have been driven further by the nations vote to leave the EU as investors seek a haven for their cash.
David Hollingworth, of mortgage brokers London and Country, described the rate as “absolutely ridiculously low … It sets a new benchmark for two-year fixed rates.” He also said that the fee was “big, but not the biggest.”

However, it will come as no surprise that the record-breaking deal is not available to everyone. In fact, people who want to take advantage of the low rate will have to fork out a 35% deposit as well as pay a £1,499 fee. It is also only available to those borrowing no more than £500,000.
A customer borrowing £150,000 from HSBC on the new 0.99% rate over 25 years will be charged a monthly payment of £565, bringing the total cost of the mortgage over the two-year deal period to £15,050 including the product fee.

Up until now, the cheapest fixed rate was a 1.05% two-year deal from Post Office Money back in August 2015, which was available only to borrowers with a 40% deposit and charged a whopping £1,995 fee.
And for those with a smaller deposit?
Halifax and Nationwide Building Society cut their rates for buyers with smaller deposits. Halifax now offers a two-year fixed rate at 80% LTV at 3.44% with a fee of £1,499 and its five-year fix at 90% LTV is at 3.99% with a £999 fee.

Nationwide meanwhile launched a two-year and a three-year fixed rate deal at 95 per cent LTV with the two-year deal starting at 3.89 per cent and the three-year starting at 4.39 per cent, both with a £999 fee. These are both available to existing homeowners as well as first-time buyers.

How has Brexit affected the property market?

As the property market expert in your area, I've been asked how Brexit is affecting the housing market, particularly at valuations. As a local estate agent I feel that this is a great opportunity to share what I know.  

I thought you might find it useful to see some very short-term figures that I share with customers and potential customers. 

The House Price Index was released to the media this morning and gives a national picture of house prices and activity over the past few weeks.

For lettings, the quarterly Rental Trends Tracker released last week will help shed light on the immediate short-term effects of Brexit and also the recent stamp duty changes.

Here are some key facts that may help answer questions: 

SALES:

Housing market steady post referendum

•Price of property coming to market falls 0.9% (-£2,647) this month, within usual expectations for the run-up to the summer holiday season

•Buyer demand in the two weeks since the surprise referendum result is consistent with 2014 although down on 2015: Same period in 2015 benefitted substantially from post-election boost so enquiries this year are down 16% compared to that period

◦2014 was not distorted by the election so is a better basis for comparison, and buyer enquiries are at the same level as the like-for-like two weeks in 2014

•Most agents report market momentum continuing due to shortage of suitable property for sale, buyers fearful of missing out on scarce choice, and affordability and availability of low mortgage rates

•Sellers seem undeterred – compared to the same period last year, the two weeks pre-referendum saw the number of new properties coming to market down by 8%, and the two weeks post-referendum saw them up by 6%

LETTINGS:

Buy-to-let rush boosts rental supply with biggest increase in London 

•The rental market received a boost of 8% more new properties advertised to rent in Q2 compared to the same quarter in 2015, following the Q1 rush to buy property to let out before the stamp duty charges came in

•Majority of new properties were in London, up by 22% on the same period last year, resulting in a small drop in the region’s average asking price this quarter to just under £2,000 per month

•Despite the increase in supply, all other regions recorded a rise in average asking rents this quarter, with the East of England’s 5% annual change leading the way

•Rental enquiries up 2% in Q2 2016 compared to last year, and up 1% in the two weeks after the referendum compared to same two weeks in 2015, as the lettings market shows no immediate signs of Brexit impact.

I hope you’ll find this information useful. The next House Price Index will be released on 15th August, so please keep an eye out for it.