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Housing Market Set to Feel Brexit Pinch in 2019

The UK housing market has been pushed to its weakest point since 2012 as the reality of Brexit sets in for both sellers and buyers.

In November, indicators for prices, and supply and demand all fell to lows not seen for 6 years, according to The Royal Institution of Chartered Surveyors (RICS).

Last month saw the lowest property price balance since 2012, which, dragged down by low demand stood at -11%, down from -10% in October.

It has been reported by nearly half of surveyors that sellers and buyers are holding off because of political uncertainty.

London and the south east – the regions in which property prices remain staunchly high- suffered the most severe price falls. This is in part due to the fact that the most expensive houses are exposed to costlier purchase taxes, but also suggests that the impact of Brexit on the financial services sector of the capital is in doubt.

House prices in the south west, east Midlands and the north east have remained broadly constant. The north west, Yorkshire and Humber, Scotland, West Midlands and Northern Ireland saw price rises.

The net balance of people looking for a new home fell again another 6% from October, leaving the balance at -21%, which is the lowest since September 2017.

Many surveyors and agents said that the market’s seasonal slowdown had begun before is usual. Mark Duckworth, of Martin & Mortimer in Ely, said: “The Brexit effect is best described as a cold and wet blanket which is depressing appetite for property.”

RICS said that the number of new properties listed for sale fell for the fifth month to a net balance of -24%. In the face of the fastest rate of decline for over two years, estate agents only have 42.1 homes for sale on average.

The number of agreed sales also fell, dropping 5% to a -15% net balance. This was reflected in almost all UK regions.

Simon Rubinsohn, Rics’ chief economist, said: “It is evident … that the ongoing uncertainties surrounding how the Brexit process plays out is taking its toll on the housing market. I can’t recall a previous survey when a single issue has been highlighted by quite so many contributors.

“Caution is visible among both buyers and vendors and where deals are being done they are taking longer to get over the line. The forward-looking indicators reflect the suspicion that the political machinations are unlikely to be resolved anytime soon.”

He also suggested that the weakening market could even trigger a slowdown in property construction: “The bigger risk is that this now spills over into development plans, making it even harder to secure the uplift in the building pipeline to address the housing crisis.”

Halifax, Britain’s biggest mortgage lender also found that house prices are grew at an annual rate of 0.3% in November, the slowest rate since December 2012, echoing concerns for the property market in 2019.

Source: Money Expert

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More good news on house prices – there’s no sign of them picking up soon

Let’s turn away from the fun of Brexit for the time being.

Let’s look at something far more important.

Let’s have an update on how the UK housing market is doing.

You could make our housing system worse, but you’d have to try hard

British house prices are far from being the world’s most important asset class. But the statistics tell me, that in the eyes of our readers and most of the British public, a spike in the ten-year US Treasury yield, a plunge in the price of oil, or a slide in the Chinese yuan, are as nothing compared to a blip in the fortunes of the most coveted asset in the UK.

And frankly, no wonder. Most of us have ploughed most of our present wealth into said asset, and many of us continue to plough massive chunks of our monthly income into it as well.

It’s hard for it not to loom large in our minds when, on top of all the emotionality of a home, you have a huge, floating-rate (or temporarily fixed-rate) debt attached to it. In many ways, those of us with mortgages are just sitting on epic spread bets.

The prize at the end of the road, is that you get to keep your house. Yes, it might have risen in value, but that’s beside the point. If you live in a house, you’ll need to buy another one. So the cost of that will have risen too.

And the government will then take a hefty chunk in the form of stamp duty – or to use a more accurate term, the “moving tax”. Once you’ve paid this moving tax, downsizing may no longer look like a viable method of “unlocking the value” in your home.

On the other hand, the risk you take is that it all goes pear-shaped and you either lose the roof over your head, or you end up desperate to move but you can’t, because you’re in negative equity (your mortgage is worth more than the equity in the house).

Wow. It’s pretty stressful when you look at it like that. You’d think we’ve have come up with a better system by now.

Particularly as it also means that the health of the banks – who provide our all-important financial plumbing – is  leveraged to the health of the labour market, and therefore to economic growth. Which in turn is dependent on credit growth, and therefore on the health of the banks.

It’s one giant positive feedback loop. That sounds like a good thing, but it’s not. A negative feedback loop is one where you do something stupid, you get a slap on the wrist (negative feedback), and you stop doing it. That system tends towards equilibrium – stability.

A positive feedback loop is where you do something stupid and you get a pat on the back (positive feedback). So you keep doing it. Until one day you do something so catastrophically stupid that rather than a pat on the back or a slap on the wrist, you get a punch in the mouth. That system tends towards wild swings – or “boom and bust”, as it’s more commonly known.

I’m sure you could design a worse system if you tried (and make no mistake, this stuff is hard – if it was easy, it wouldn’t be a problem in the first place, and people who think it’s easy and wade in with their brilliant ideas usually make things worse).

The trouble is, any significant change will create losers, and a lot of them at that. So change is likely to be slow when it happens, and it will involve incremental shifts that target the politically vulnerable – such as buy-to-let landlords, for example.

The slowdown in UK house prices is not all down to Brexit

Anyway, rant over for now. What’s actually happening to prices?

According to the latest figures from Nationwide, house prices rose at an annual rate of 1.9% in November. That’s a fall in “real” (inflation-adjusted) terms, regardless of whether you gauge that by CPI, RPI, RPIX or wage inflation.

And the Royal Institution of Chartered Surveyors (Rics) isn’t feeling too cheerful either. More of their members are reporting falling prices than at any point since September 2012.

They are pinning the blame on Brexit. At this point, there’s probably something to that. To be clear, I don’t think that Brexit will have the sort of effect on house prices that should persuade the average individual to delay or accelerate a long-term decision like buying a house.

That’s not because of my political views on Brexit; it’s more because this is going to be a lengthy process one way or another (even a “hard Brexit” would involve a lot of back and forth after the initial deadline). So trying to time your sale or purchase (unless your job is likely to be directly affected by Brexit) is somewhat futile.

But if people settle on the idea of “let’s not put the house on the market until after March”, then that will obviously have an effect on the market. You can’t buy if there isn’t much out there for sale.

So there’s a bit of Brexit in there. And it’s a wonderful excuse for property commentators to settle on.

But this sense of pessimism is not new. And it’s not limited to the UK. Various overpriced parts of Australia and Canada are both seeing what I suspect is the start of a prolonged house price crash. Neither of them are attempting to leave the European Union.

The real problems with global house prices – politics and interest rates

The real issue is that both politicians and central bankers have woken up to two things. One is that “the people” are fed up of feeling unable to buy property anywhere near where they work. Two is that the 2008 financial crisis was caused by banking exposure to residential property.

On the first point, it means that politicians make various rules that make it harder for certain buyers – second home owners, landlords, and rich foreigners. On the second point, central banks might not all be raising interest rates, but they are making it harder for banks to lend against residential property. Mortgage lending is getting stricter.

On top of that, you have the fact that global capital no longer likes the idea of tying itself up in assets that are illiquid and physically impossible to shift from one country to another. And on top of that, you’ve got the fact that interest rates – the key driver of the price of a yield-focused asset like housing – are slowly but steadily grinding higher.

Will Britain avoid an actual house price crash? My gut still says “yes”, at least for now. One big risk is that nothing bad happens with Brexit (we get some variation of Theresa May’s deal, say, and we set the course for several more years of hardcore Remainer–Brexiteer sniping, but no real change).

That’s when the Bank of England might have to start paying attention to rising wages and think about hiking interest rates. Yet with most people on fixed-rate mortgages, it would probably take a while even for this shift to make itself felt.

So the “golden scenario” – whereby prices fall a bit but wages rise a good bit faster, and so you get a correction in “real” terms rather than nominal ones – still looks very possible.

Maybe then we can look at a better way to do things. But I wouldn’t bet on it.

Source: Money Week

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Decline in new UK commercial property construction work within private sector

The results of the EU referendum have been detrimental to the commercial property sector with the number of constructions continually decreasing, according to an analysis of the figures by Savoy Stewart.

With figures from the Office of National Statistics (ONS) showing a monthly decline in the number of new UK commercial construction work undertaken by the private sector since December 2017, the property firm analysed the number of commercial properties available to let in 20 of the biggest cities in the UK.

As expected, the city with the highest number of commercial properties to let was England’s capital city London, which had 6,137 properties in November 2018 available for businesses to rent.  However, figures from estate advisory organisation Colliers claims that 90 percent of London office availability is constituted by second-hand product, while new/refurbished availability is down by over a third in the past year.

Scotland’s capital city Edinburgh had the second lowest number of commercial properties on the market to let (133). And although Edinburgh’s figures seem to be less intriguing than anticipated, it seems Scottish commercial real estate has experienced a bounce back, with a total return of 1.7 percent in the third quarter of 2018; a 1.4 percent rebound in the second quarter.

The figures, which were extracted from property website Zoopla for the month of November 2018 also showed that The cities with the highest number of commercial properties to let in November 2018 on Zoopla were: London (6,137), Derby (822), Birmingham (724), Manchester (501) and Leeds (481).

The cities with the lowest number of commercial properties to let in November 2018 were: Preston (153), Coventry (145), Belfast (145), Edinburgh (133) and Newport (128).

Source: Work & Place

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Rents in the regions grow faster than UK average

Rents in the UK’s regional hubs are growing significantly faster than both London and the UK average, as workers continue to relocate from London, buy-to-let lender Landbay has found.

Rents rose by 0.03% in November 2018 which, although the lowest monthly rise since the start of the study, feeds into growth of 0.97% in the year; 0.04% higher than the same point in 2017. This is mostly down to London’s improved performance, recording growth of 0.58% this year.

John Goodall, chief executive and co-founder of Landbay said: “It’s hard to escape the fact that we’ve seen a slowdown in the property market due to Brexit uncertainty and recent tax and regulatory changes for landlords.

“In that context, these growth figures show just how resilient property continues to be as an asset class. As with all investments, it is prudent to have a diversified portfolio – backed up in the case of buy-to-let by London’s recent fall and revival alongside strong performances from cities including Leeds and Manchester.

“London’s green shoots paint a positive picture for landlords ahead of what will likely be testing economic times with Brexit and further interest rate rises expected.”

The average monthly UK rent currently sits at £1,212, a rise of £10 since the start of the year. When London is removed, rents sit at £769, up from £761 since the beginning of 2018.

Rents are rising in 27 of the 33 London boroughs, a very different picture from this time in 2017 when rents were falling in 26 of the capital’s boroughs. While every region in the UK has seen rents rising, the speed of growth has not been consistent – with all areas other than London experiencing a slowdown.

The East Midlands (2.25%), Yorkshire & Humber (1.50%) and West Midlands (1.48%) have all experienced the most substantial growth in the past year and are expected to climb further as we head into 2019.

Growth in the North East peaked to its highest point in two years in November 2017 but since then growth has depreciated to 0.05% on an annual basis – it’s lowest growth rate since August 2013.

While London’s rental growth stands at 0.58% year-on-year, it is now cities like Leeds (2.54%), Birmingham (2.05%) and Manchester (1.91%) which are experiencing accelerated annual growth.

This could be attributed to internal migration as millennials leave the capital at the highest rate in almost a decade. Since the start of 2012 London has seen a net loss of nearly half a million residents as people vote with their feet amid the growing living and housing costs.

However, some will also be moving due to work commitments.

MediaCityUK now employs more than 3,000 people at its base in Salford, after welcoming 2,300 BBC employees back in 2010. Salford has seen rents rise by 2.62% year-on-year and 22.76% cumulatively since January 2012, more than double London’s pace (9%).

HSBC has announced it will move 1,000 jobs to Birmingham, whilst Leeds has seen jobs created by companies including Burberry.

Goodall added: “The truth is there is now a twin speed rental market as London’s rent growth is dwarfed by cities such as Leeds and Manchester.

“This is being fuelled by the capital’s millennial exodus as countless young professionals realise there is more to life than London. This same message carries weight with landlords, who are increasingly seeing the value of investing in these regional hubs.

“In many ways it could be argued that the ‘Northern Powerhouse’ is beginning to take effect amid stretched affordability and a harsher tax regime.”

Source: Mortgage Introducer

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Lethargic, but there’s life yet in the housing market

The national housing market is running out of puff. But there are still plenty of regional bright spots.

“Lethargy is replacing energy” in the property market. These were the cheery words of a former chairman of the Royal Institution of Chartered Surveyors (Rics) in reaction to Halifax’s latest house-price index. In the three months to November, house prices were 0.3% higher than in the same three months a year earlier, with the average cost of a home now £224,578. This is down from the 1.5% annual growth recorded in October, and the lowest rate of growth since December 2012.

But while this isn’t exactly a ringing endorsement of the state of the UK housing market, it’s important to look beyond the inevitably gloomy headlines. In the 12 months to September, the parts of the UK that saw the biggest drops in house prices were both in London – in Kensington & Chelsea and Westminster, with annual drops of 9.9% and 6.3% respectively.

The areas with the strongest growth were the Forest of Dean and Burnley. In both places, house prices rose by approximately 10.5%, according to figures from estate agent Savills. They were followed closely by Stirling, with a 10% increase.

London leads the decline

With house-price growth at its lowest rate in six years, the overall market as a whole is certainly sluggish. In cities and major towns across Britain, properties are taking longer to sell, sitting on the market for 102 days, which is six days longer than in 2017, according to the Centre for Economics and Business Research.

Moreover, the average number of sales per surveyor has fallen fallen to 14.1 across a three-month period, the lowest it has been since 2009, says Savills, drawing on data from Rics. However, it’s useful to acknowledge the extent to which the wider market can be brought down by price falls in the southeast, which has been overvalued for a long time.

Of the 20 cities monitored by the Hometrack UK Cities House Price index, prices fell year-on-year by 0.4% in London and 1.1% in Cambridge. Yet prices were up 7.7% in Leicester, 7.4% in Edinburgh, and around 6% in Manchester, Birmingham, Nottingham and Liverpool.

Leave Brexit out of this

There’s also been a lot of discussion of the idea that the UK market is struggling because people looking to buy are biding their time on Brexit. Yet there’s actually “little evidence that Brexit uncertainty has led to pent-up demand in the housing market”, says consultancy Capital Economics. If it has dampened transactions, the effect has been “minor”. Since the referendum, housing transactions have averaged 100,000 per month. That’s down only a little, relative to the average of 102,000 seen over 2014 and 2015.

There is obviously a case for suggesting transactions might have gone up if we hadn’t voted to leave the EU, acknowledges Capital Economics. But “a multitude of non-Brexit related factors have been weighing on activity in recent years”.

These include higher stamp duty for second homes, lower mortgage interest tax relief, and rising interest rates driving up the cost of borrowing. “So even if a Brexit deal is struck, we see little prospect of a rise in housing transactions next year.” Now is not the ideal time to sell your London home. And the stagnant number of transactions is hardly encouraging for estate agents and surveyors. But for most of the UK, the housing market is actually holding up reasonably well.

Source: Money Week

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Scottish Government urged to build on housebuilding momentum

As the level of housing completions continues to head in the right direction, the country’s home building industry has urged the Scottish Government to build on this positive news to enable it to deliver more of the homes Scotland’s growing population needs.

Official statistics released yesterday found there were 18,182 new build homes completed across all sectors over the year ending June 2018, an increase of 4%, or 695 homes, on the previous year.

The rise included increases in housing association completions (25% or 618 homes) and local authority completions (25% or 306 homes), whilst private-led completions fell by 229 homes (2%). The total number of social sector completions (housing association and local authority starts combined) increased by 924 homes (25%).

There were 19,903 all sector new build starts in the 12 months to end June 2018, a figure which is 1,121 homes (6%) higher than the number of completions in the same period, but which is a decrease of 1,231 homes (6%) on the 20,534 starts in the previous year. Private-led starts fell by 1,593 homes (11%) and housing association approvals decreased by 215 homes (4%), whilst local authority starts increased by 577 homes (48%). The total number of social sector starts (housing association and local authority starts combined) increased by 362 homes (6%).

Nicola Barclay, chief executive of trade body Homes for Scotland, said: “It’s great to see ongoing growth in the overall number of homes being built, but just under seven hundred extra homes over the last year is not going to solve our housing crisis. In order to return to the levels of a decade ago, we would need to see ten times this number on an annual basis.

“Scotland’s housing market remains amongst the most affordable places to live in the UK, and huge social and economic opportunities exist for the Scottish Government to attract further housing investment from both within Scotland and elsewhere – if it can create and maintain the favourable conditions this requires.

“Ways in which this can be achieved include ensuring the Planning Bill currently going through the Scottish Parliament meets the original objective of delivering more homes; encouraging more entrants into the industry; supporting those SMEs who want to develop more homes; preserving a regulatory environment that promotes investment and ensuring policies like Help to Buy are continued until such times that the mortgage market fully supports First Time Buyers.

“Ultimately, it needs joined-up thinking across portfolios, therefore we look forward to seeing how (this week’s) Budget supports sustainable housing growth so builders can contribute even more to Scotland’s social wellbeing and economic success.”

Housing minister Kevin Stewart welcomed the figures which also revealed a 21% rise in the number of affordable homes delivered in Scotland during the last year.

A total of 8,767 affordable homes were delivered for the year to September 2018, an increase on the 7,271 completions in the previous year.

As a result, the total number of affordable homes provided since 2007 has reached 80,104.

The figures also showed there were 5,340 social rented homes delivered, an increase of 864 homes, or 19%, on the previous year.

Kevin Stewart MSP said: “Making sure everyone has a safe, warm and affordable home is central to our drive for a fairer and more prosperous Scotland.

“That is why I am proud that this government has now delivered more than 80,000 affordable homes since 2007. This is a significant achievement – boosting the supply of affordable homes in communities right across the country.

“During the course of this Parliament we are investing more than £3 billion to deliver our target of at least 50,000 affordable, high-quality homes, including 35,000 homes for social rent.

“While we know this is an ambitious target, we have shown we can deliver on housing and we will continue to do so.”

However Graeme Brown, director of Shelter Scotland, said the figures prove the Scottish Government has a long way to go to meet its 2021 housing target.

He said: “The programme to develop 35,000 new homes for social rent by 2021 is one of the most important projects on the Scottish Government’s agenda.

“The latest figures show that with half the time gone only 11,825 social homes have been completed to date. This leaves much of the target on the drawing board and means we will have to see an acceleration in building if the target is to be met.”

Graeme Brown added:  “The more homes programme is a promise to Scotland that must not be broken. It represents the biggest investment in social housing since the 1970s and a chance to begin to restore the foundations of our housing safety net which has been badly damaged by decades of underinvestment.”

Source: Scottish Construction Now

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Brexit worries push UK house price gauge to six-year low – RICS

A measure of British house prices hit a six-year low in November as the approach of Brexit put off buyers and sellers, a survey of property valuers showed on Thursday.

The Royal Institution of Chartered Surveyors (RICS) said its house price balance sank to -11 in November from -10 in October, its lowest since September 2012, before Britain’s economy began to shake off the after-effects of the global financial crisis.

Price falls were most acute in London and the south east of England where property prices are highest, exposing them higher purchase taxes on expensive homes as well as worries about the impact of Brexit on the capital’s financial services sector.

Economists taking part in a Reuters poll had predicted the balance to remain at -10.

“It is evident … that the ongoing uncertainties surrounding how the Brexit process plays out is taking its toll on the housing market,” Simon Rubinsohn, RICS’ chief economist, said.

“Indeed, I can’t recall a previous survey when a single issue has been highlighted by quite so many contributors.”

Rubinsohn said the survey showed the political upheaval around Brexit was not expected to be resolved soon.

“The bigger risk is that this now spills over into development plans making it even harder to secure the uplift in the building pipeline to address the housing crisis,” he said.

The survey showed the stock of homes on the market was close to its lowest level on record and there was no sign of a pick-up in new listings.

Sales expectations for the next three months fell by the most since the June 2016 Brexit referendum and the amount of time it took to complete sales was the longest since records began in early 2017.

But price expectations were stable over a 12-month horizon.

RICS measures the difference between the proportion of surveyors who see falls in prices compared with rises.

Direct measures of house prices, such as those published by mortgage lenders Halifax and Nationwide, have shown the weakest growth in around five years.

Source: UK Reuters

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Buy-to-let sector still offers opportunities

It is easy to forget that behind the scenes of the supposed landlord exodus, one in five UK households still rents privately and there are still attractive opportunities in the buy-to-let and build-to-rent sectors.

This truth is not lost on the slew of property investment platforms out there, which continue to grow, many of which are technically peer-to-peer firms or intermediaries rather than asset managers.

You might even say there has been an air of over-confidence, as an explosion in P2P property investment has sparked a flurry of interest from institutional investors.

However, lack of a track record coupled with lingering suspicions surrounding the wildly different range of approaches taken by such firms, has held the sector back.

It is not hard to see why — it is all about risk. At one end of the spectrum, some offer seemingly attractive returns riskier development projects without any concern for their performance.

At the other, you have asset managers with a vested interest in performance.

In every new fintech industry, harsh lessons are learned. Some models fall by the wayside and it is normally those that cut corners. Property investment platforms have not experienced a day of judgement like this yet.

Sky-high default rates sparked a wave of platform collapses in China this year and the Financial Times revealed in November that £112m of the £180m in Lendy’s loan book was at least one day overdue in October. Warning signs the day of reckoning may be closing in?

Natural selection is coming in 2019 and the defaulters will identify the fittest so advisers do not have to.

We just have to get the bloodletting out of the way first.

Source: FT Adviser

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Real estate reviewed

Right at the beginning of this year, we predicted that the UK housing market would be shackled by political and economic uncertainty.

Looking back, the uncertainty we have been dealing with has been greater than we ever expected.

Amid all the Brexit brokering and backstabbing, we have seen the number of buyer enquiries with estate agents fall in 20 months out of the past 22, according to the Royal Institute of Chartered Surveyors survey. Many buyers have simply been sitting on their hands, choosing to hold back on buying a home until the outlook is clearer.

Potential sellers have bunkered down too, with many choosing to extend or renovate in favour of taking on the potential risk of moving to a different property.

It is no wonder then that transaction levels are 8 per cent lower now than in the year before the referendum vote.

Buyer numbers hit hard

First-time buyers buck this trend: their numbers have grown 11 per cent since June 2016, boosted by support from Help to Buy and the bank of mum and dad. But cash transactions have fallen 12 per cent, as these more discretionary buyers sit and wait for greater certainty.

Mortgaged home mover activity has also fallen; mortgage lending regulation has made trading up the ladder much harder.

Buy-to-let investors have been worst hit – their numbers have halved since before the referendum, reflecting a tougher tax regime and stricter lending rules.

With transaction activity slowing, it is perhaps surprising that house prices have continued to grow: 1.9 per cent in the year to November, according to Nationwide. However, if one compares that growth with inflation – 2.2 per cent over the same period – the picture becomes clearer. House prices at a national level look to be marking time.

Regional variations

But the story varies across the country. In Yorkshire and Humberside, for instance, values grew by 5.8 per cent in the year to September. There, mortgage loan to income ratios sit at 3.2 and the average deposit is relatively modest, at £27,000.

Contrast this with London, where affordability is stretched to its absolute limit after registering price growth in excess of 70 per cent over the past 10 years. With an average deposit of £118,000 and loan to income ratios already at 4.0, it is no wonder prices were stagnant in the capital this year.

It is a similar story in the south of England, with price growth rippling out further to the Midlands and North.

The next few months will likely see some of the lowest housing transaction levels since the credit crunch as Brexit angst reaches a crescendo.

The market will have to rely on its three constant friends: death, debt, and divorce.

Looking further ahead, the outlook is mixed. On the one hand, the outcome of Brexit negotiations will provide some much needed certainty to an apprehensive market, whatever that outcome is.

On the other hand, interest rates are likely to rise from today’s historic lows, putting more pressure on affordability.

On balance between these two drivers, we expect to see a bounce in value growth in 2020, but only a limited one.

That bounce will be most pronounced in those areas retaining some affordability wriggle room.

The north-west and Yorkshire & Humber look particularly well placed to benefit. London, on the other hand, will remain constrained regardless of any Brexit outcome, simply because affordability there is so stretched, meaning five-year house price growth in the capital and its commuter belt will be in single digit territory.

The balance of improving sentiment and tightening affordability means we are unlikely to see any sharp resurgence in transaction activity.

We predict that transaction levels in five years’ time will be roughly the same as they are now, albeit with even less activity from buy-to-let investors as tax relief on their mortgage interest payments recedes further.

This will put upwards pressure on rents, particularly in supply-constrained London, where average rents are expected to rise faster than incomes.

In a market where home ownership looks set to remain out of reach for many aspiring owners, we need policies that secure institutional investment in the build-to-rent sector, to provide quality rental homes, greater security of tenure and to help rebalance supply and demand.

Source: FT Adviser

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October remortgage levels reach ten year high

The remortgage market has reached its highest level in a decade bolstered by competitive rates, according to the latest UK Finance figures.

In its mortgage trends update out today (December 12), the trade body reported 50,500 homeowner remortgages completed in October, representing an increase of 23.2 percentage points on the previous year.

At a value of £9.2bn this was 22.7 percentage points higher than in October last year.

The first-time buyer market also saw reasonable growth in October, increasing by 8.2 percentage points on the same month a year earlier to reach 32,900 deals.

UK Finance found the average first-time buyer in the month was aged 30 with a gross household income of £42,000.

Jackie Bennett, director of mortgages at UK Finance, said the figures showed homeowners were taking advantage of a competitive market and locking into attractive deals.

She added: “This also reflects the large number of fixed rate mortgages coming to an end, which is expected to continue into 2019.

“There has been relatively strong growth in the number of first-time buyers, with schemes such as Help to Buy providing vital support to those getting a foot on the housing ladder.”

The government’s Help to Buy scheme was extended in the Autumn Budget, now due to end in 2023.

In keeping with recent trends, the buy-to-let purchase market continued to soften in October with 6,100 new buy-to-let home purchase mortgages completed in the month – 9 percentage points fewer than in the same month a year earlier.

As a value, this was £0.8bn of new buy-to-let purchase lending in the month, 20 percentage points down year-on-year.

However, the buy-to-let remortgage market increased to 15,700 completions – some 5.4 percentage points higher than the same month a year earlier, at a value of £2.5bn.

Jonathan Harris, director of mortgage broker Anderson Harris, said borrowers were continuing to take advantage of cheap rates, fuelled by continuing uncertainty around Brexit and the economy.

He said: “With the number of new purchases remaining subdued, lenders are focusing on where the business is and offering competitive deals to those coming off fixed-rate mortgages – this trend is set to continue into 2019.”

Mr Harris said landlords were also remortgaging as they made their property portfolios work harder and squeezed out every bit of profit they could.

He added: “First-time buyers are taking advantage of the lack of competition from landlords for smaller properties, such as one-bedroom flats, and we expect this to continue into next year.”

Jeremy Leaf, north London estate agent and former RICS residential chairman, said whilst the figures were a little historic, they did reflect what has been seen on the high-street.

He said: “Buyers and sellers are trying to find an accommodation on price, with affordability just as important as Brexit when it comes to decision making.

“First-time buyers, in particular, are taking advantage of reduced competition from buy-to-let investors still compromised by recent tax and regulation changes.”

Mr Leaf added: “Political shenanigans seem to be more of a preoccupation among buyers in the southeast than elsewhere.

“It remains to be seen how the turmoil of the past month or so plays out in the market but the signs are so far that early new year activity will continue in a relatively subdued manner, much as it has over the past few months.”

Source: FT Adviser