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Marketing July 17, 2018 No Comments

Glut of property hits UK housing market in July – Rightmove

Britain’s housing market saw a glut of new property offered for sale this month, keeping a lid on prices at a time when sales typically suffer from a seasonal lull, property website Rightmove said on Monday.

Real estate agents now have the highest amount of stock since September 2015, Rightmove said.

“While an increase in seller numbers is a welcome sign of more liquidity in a generally stock-starved market, it has unfortunately come at a quieter time of year,” Rightmove director Miles Shipside said.

The number of homes advertised by Rightmove, Britain’s largest property website, is 8.6 percent higher than the same month a year ago, but the number of sales is virtually unchanged from a year earlier, down 0.2 percent.

Average asking prices for new sellers are down 0.1 percent since June, typical for the time of year, Rightmove added.

But in a sign that previous sellers had priced their property too high, a third of stock being advertised had seen at least one price reduction, the highest proportion for the time of year since 2011.

Other industry data has shown British house price growth has slowed sharply since the June 2016 Brexit vote, though with marked regional variation.

The slowdown is most marked in London and neighbouring areas, where demand has been hit by higher tax on expensive property and reduced demand from foreign investors. In other parts of Britain, prices are still rising moderately.

Rightmove said sellers in areas of over-supply would need to compete harder on price, presentation and promotion of their property in order to attract buyers.

Source: UK Reuters

Marketing July 17, 2018 No Comments

Inflation bounce set to help BoE hawks’ claims

Economists expect data this week to show a June jump in inflation, in a development which would boost the hawks on the Bank of England ahead of a crucial decision on interest rates next month.

Consumer price index (CPI) inflation will rise from 2.4 per cent in April and May to 2.6 per cent in June, according to consensus forecasts. The latest data will be published by the Office for National Statistics on Wednesday, providing the Bank with one of the last major pieces of economic data ahead of its 2 August monetary policy committee (MPC) meeting.

A rise in inflation would add to the case put forward by multiple Bank of England economists for an interest rate hike in the near term. Governor Mark Carney, chief economist Andy Haldane and others on the MPC have made remarks recently hinting that they may vote to raise rates.

The MPC hawks argue that rising wage pressures from a tight labour market justify withdrawing stimulus.

However, the view that domestic inflationary pressure is increasing is highly contentious among economists, with recent rises in oil prices – which feed through to petrol prices –further muddying the waters.

A decision to raise rates would take place against a backdrop of relatively weak economic growth, as well as the potential for disruption from the Brexit process and the looming possibility of a global trade war.

Analysis by EY Item Club to be published today will predict GDP growth for the current year of only 1.4 per cent, the weakest since 2012, thanks to higher inflation, lower consumer spending, and a moderation in growth in the Eurozone economy.

Mark Gregory, EY’s chief economist, said: “Businesses should be prepared for a low growth economy over the next three years. Regardless of the outcome of the Brexit negotiations, the resulting adjustment is likely to act as a drag on the economy.”

Source: City A.M.

Marketing July 17, 2018 No Comments

Lenders in the UK think 10 year mortgage deals are set to become popular

10 year mortgage deals look set to become more popular among home movers and those remortgaging in the UK as two major lender announced new long term products.

The lenders, Lloyds Bank and the Halifax, believe that borrowers are looking for more certainty going forward and are looking beyond the typical two year products and increasingly beyond five years.

The new mortgage deals from Lloyds have with and without fee options. They come with a 0.20% discount for Club Lloyds customers, plus an additional 0.20% discount for these customers available until 19 August 2018.

Examples of the 10 year fixed rates include remortgages at 2.42% with 60% LTV and £995 fee, including 0.40% discount and 2.64% with 75% LTV and £995 fee including 0.40% discount.

For home movers the Lloyds products include a 2.64% deal with 60% LTV and £995 fee, including 0.40% discount and 2.84% at 75% LTV and £995 fee, including 0.40% discount.

‘We’re seeing customers looking for longer periods of certainty when it comes to mortgage payments. Our new 10 year fixed mortgages will help provide remortgage customers and home movers with greater certainty with budgeting over the longer term,’ said Andrew Mason, Lloyds Bank mortgage products director.

With the Halifax, which is part of the Lloyds Banking Group, the new fixes are available at 60% LTV and 75% LTV for loans between £25,000 and £1 million, including options with and without fees.

Home mover rates start at 2.44% at 60% LTV with a £995 fee and 2.59% with 75% LTV and £995 fee, while for remortgage customers the rates begin at 2.69% with 60% LTV with a £995 fee and 2.89% with 75% LTV with a £995 fee.

‘Many home owners are looking for certainty with their mortgage payments over the longer term to give more peace of mind when it comes to their monthly outgoings,’ said Andy Bickers, mortgages director at Halifax.

‘We are always coming up with new ways to meet the needs of mortgage customers and bolstering our existing range of two and five year fixed rate products with these new, competitively priced 10 year fixes,’ he explained.

He pointed out that customers can also benefit from £500 to spend on Halifax’s new Mortgage gift site if they apply for a qualifying mortgage by 12 August. Following the completion of their mortgage, customers will be given login details to access the site and choose from a range of 40,000 items, including household appliances, garden furniture and family days out.

Source: Property Wire

Marketing July 16, 2018 No Comments

House Price Growth at Lowest Level Since 2013

House prices in the UK have increased at the slowest rate for five years according to Halifax, the largest lender in the country.

Prices increased a slight 1.8% in the past 12 months, which was the same as the pace of growth seen in the year to February. Russell Galley, Managing Director at Halifax, said that weaker activity levels and house price growth appeared contrary to the continuing growth of the job market:

“This is in contrast to the continuing strength of the UK jobs market with job creation still strong and pressure on household finances easing as real income growth edges up.”

Looking forward, he added “we continue to see very positive factors of continuing low mortgage rates, great affordability levels and a robust labour market”

UK home sales grew by 1% to 99,590 in May, following a three-month slump in which prices were 4.8% below the same months in 2017. The Halifax report suggested that this figure reflected the reduction in mortgage approvals in the past year.

The average UK home now costs £225,654, following a quarterly decline of 0.7%.

The number of mortgages approved for house purchases, which is a key indicator of completed house sales, was at 64,526 in May according to Bank of England industry-wide figures.

The monthly report for Royal Institution of Chartered Surveyors’ (RICS) concluded that housing activity remains steady.

New buyer enquires have been falling, and whilst the pace of this has slowed, the number dropped again. New instructions began to rise in May, ending a 26-month successive fall.

The report noted that the average stock of homes for sale on estate agents’ books is ‘close to historic lows’. However, the number stayed roughly constant.

The Nationwide house price report predicted that prices will rise by about 1% in 2018, down from 2.6% in 2017.

The wider market appears to be stalled by uncertainty over Brexit.

Jonathan Samuels, the chief executive of the property lender Octane Capital said “with Brexit on the horizon, households feeling the pinch and interest rate uncertainty lingering, a lot of prospective buyers are sitting tight.”

Robert Gardner, Nationwide’s chief economist, suggested in a Guardian article that Britain’s housing market was likely to remain sluggish for the rest of the year.

He said “there are few signs of an imminent change. Surveyors continue to report subdued levels of new buyer inquiries, while the supply of properties on the market remains more of a trickle than a torrent.

“Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low.”

Hansen Lu at Capital Economics estimates that prices in 2018 will rise by 1.5% across the UK, but fall by 3% in London.

London was the sole UK region where house prices fell annually in the second quarter. The capital continues to be the weakest spot for house price growth in Britain’s housing market.

Source: Money Expert

Marketing July 16, 2018 No Comments

Bank of England: base rate could stay under 2% for 30 years

The Bank of England (BoE) has admitted that current forecasts show its base rate could remain under 2% for the next 30 years.

Last year BoE governor Mark Carney suggested the Bank was keen to return the base rate to a more normal level with a series of steady rises.

However, after rejecting a previously expected increase in May, it appears forecasts for the much longer-term now suggest there will be little chance of a return to pre-crisis norms of around 5%.

Speaking at the Cumbria Chambers of Commerce, BoE deputy governor, financial stability, Sir Jon Cunliffe said base rate could in fact remain below 2% for decades.

Levelling off under 2%

Explaining why the Bank had been reluctant to aggressively increase base rate, he noted there were good economic arguments for taking a more proactive approach to lifting base rates, including that monetary policymakers will have insufficient ammunition to stimulate demand in future downturns.

He said: “One cannot help acknowledging this concern. If, as seems likely, we are and will continue to be in a lower natural interest rate environment, policy rates will not approach levels seen before the financial crisis. The average level of bank rate was around 5% for the 20 years preceding the crisis.

“The current yield curve sees bank rate rising slowly over three years and levelling off at under 2% for the next 30 years.

“The average policy loosening cycle in the UK was around 2% over the pre-crisis period. If that remained the case, we would clearly have less room for manoeuvre in the face of a sharp downturn, particularly if that happened in the near future.”

Brexit creating business uncertainty

Sir Jon also acknowledged that Brexit was already affecting the UK economy and the result of uncertainty was now playing a far greater role.

First the depreciation of sterling following the referendum generated inflation which squeezed real incomes and led to the drop in consumption and activity in the UK at the end of 2016.

In contrast, this also generated export growth that has helped to support the economy.

“More recently, there are signs that Brexit uncertainty is holding back investment,” he said.

“These impacts are incorporated into the MPC’s assessment of policy and forecast of the economy.

“But it is much harder – and in my view it would be mistaken – to set policy in anticipation of any particular Brexit outcome,” he added.

Source: Your Money

Marketing July 16, 2018 No Comments

Investing in properties for retirement is no longer sustainable

Nearly one million private landlords face a pension black hole after new laws and regulations mean the income from their properties won’t sustain them in retirement, MakeUrMove has found.

Some 43% of private landlords invested in a property to provide for themselves in their retirement, with many actively encouraged to do so as a safe, secure retirement option.

However three quarters of those landlords said they will consider selling their properties if they start to make too small a margin, or fall into the red due to additional costs.

Alexandra Morris, managing director of MakeUrMove, said: “Smaller, casual landlords have been impacted by rising costs of managing their properties, with 38 percent citing the high cost of repairs as one of their biggest concerns.

“The problem impacts landlords with a buy-to-let mortgage the most severely, as these additional overheads, combined with recent changes to the private rental sector, mean smaller landlords hoping for a steady income in retirement are now worrying that their properties won’t even cover their own costs.”

A surge in supply of properties on the housing market could mean these landlords struggle to sell, leaving them unable to cash in their pension investment or being forced to sell for less than anticipated.

The problem disproportionally affects older landlords, who have little time to make changes before they need to rely on their properties for a retirement income, with those over 55 most concerned about making too small a profit on their properties.

Investing in property as a pension plan is more prolific in the over 35’s, with 47% of this age group admitting to doing so, compared to just 24% of their younger counterparts.

Eileen Cooper, a landlord with two properties, has felt the impact of changes first hand. As a self-employed, part-time landlord, Cooper was relying on the rental properties to provide an income later in life.

She said: “We planned to buy another property once the mortgages on our current rental properties are paid off, however we have now decided against this due to the new laws and regulations brought in by the government, along with the ongoing changes to the tax system, which make it much less viable as a long-term investment.

“Due to changes in laws and regulation, the time required to manage the properties isn’t worth it.”

Source: Mortgage Introducer

Marketing July 16, 2018 No Comments

What’s going to happen to property prices in 2018 and 2019?

Annual UK house price growth is projected to slow to around 3% in 2018 and is likely to remain around this level until 2025, according to new analysis from PwC.

The average UK house price is estimated to rise from £221,000 in 2017 to around £285,000 by 2025 according to PwC’s projections. Price growth at this pace means the ratio of house prices to earnings is likely to remain broadly stable, but still at high levels by historical standards.

In London, however, the average house price could drop by nearly 2% in 2018 compared to last year and house price inflation could continue to be negative in 2019.

Richard Snook, senior economist at PwC, commented:

“UK house price growth remained resilient in 2017 despite a weakening economic backdrop, but has shown signs of moderating during the first half of 2018, particularly in London. Affordability in the capital has been stretched due to three factors: a high deposit saving hurdle, increased economic uncertainty relating to Brexit acting as a drag on international investment, and reduced numbers of housing transactions due to stamp duty changes.

“However, London house price growth should pick up again from 2020. We project the average price of a London home in 2022 to be £509,000, compared to £141,000 in the North East. This means the large affordability gap between the capital and other UK regions is set to remain.”

Projected UK and regional house price growth and house price values (£000’s)

	Average house price growth			Average house price values (£’000s in cash terms)
Region	2018	2019	2020-2022 (average)	2017	2022
East of England	4.0%	4.5%	3.4%	283	340
East Midlands	4.4%	3.7%	3.4%	180	216
South West	4.3%	3.7%	3.6%	245	295
West Midlands	4.8%	4.3%	3.6%	185	225
South East	2.3%	3.1%	3.3%	318	369
North West	3.2%	2.7%	3.5%	155	182
London	-1.7%	-0.2%	2.6%	480	509
Wales	3.0%	2.1%	3.4%	150	175
Scotland	4.8%	3.4%	3.6%	143	172
Yorkshire & the Humber	3.5%	2.7%	3.4%	155	182
Northern Ireland	3.4%	3.9%	4.0%	128	154
North East	1.2%	0.7%	3.1%	127	141
UK	2.9%	2.8%	3.4%	221	259

Source: ONS, PwC analysis

Increased stamp duty for higher valued properties has been one of the factors dampening London house price growth recently. Rob Walker, head of real estate tax at PwC, commented:

“While, in theory, 95% of buyers are winners from the removal of the previous slab system, the increase in stamp duty for homes above this threshold appears to have contributed to an overall slowdown in the property market. High stamp duty rates are dissuading people from upsizing and downsizing which is affecting both ends of the market. Government should look at other options to kick start the housing market.”

Past rises in UK house prices have been driven by a number of factors, but one of these has been a lack of new housing supply. PwC’s new analysis at the local authority level across England suggests a clear link between a lack of new housing supply, relative to population growth, and local house price growth since 2011. This has been particularly marked in London, PwC estimates around 110,000 more homes would need to have been built between 2011 and 2016 to keep up with population growth.

Looking ahead, if the government can achieve its target of building 300,000 new homes a year in England by the mid-2020s, then this should exceed the increase in housing demand from projected population growth and therefore start to make up the backlog from past under-supply. But PwC’s local analysis suggests that many of these homes need to be built where demand is highest in London and the South East and the East of England to prevent a further worsening of affordability in those regions.

Source: London Loves Business

Marketing July 16, 2018 No Comments

Family Tenants Favoured By Buy To Let Investors

Family tenants are the most favoured renter type by buy to let investors, according to recent research by the National Landlords Association (NLA).

It was revealed that properties rented to family tenants take up the least amount of property management time in comparison to homes let to other types of tenants.

The findings came from over 1000 responses to the NLA’s latest quarterly landlord research panel. The panel asked landlords to estimate how much time they spent on property management. This includes dealing with tenant queries and property maintenance requests, along with general business administration.

It was suggested in the study that landlords who let their properties to family tenants and young couples spend just one full working day a week, equating to eight hours, on property management. In contrast, landlords who let to those on benefits, migrant workers or landlords who have executive lets can expect to spend up to 12 hours per week.

Romans’ lettings managing director, Richard O’Neill, said: ‘Renting a home is a practical, flexible and beneficial option for thousands of families across the country. It offers a simple route for parents looking to live within a school’s catchment area or close to a support network of family and friends. Landlords should aim to appeal to this growing market by offering the type of homes families are demanding. Our evidence shows families are typically reliable, stable and long-term tenants – qualities that should make them highly desirable to landlords.’

However, this does not mean that the other groups of tenants who are more vulnerable should be discounted. In contrast, landlords simply need to prepare themselves for a heterogeneous tenant population with different groups requiring different needs.

O’Neil highlighted the following factors every landlord should consider if they still wish to let to families. The main consideration for families is location, with proximity to a good school a necessity along with access to local amenities such as parks or playgrounds. Secondly, landlords should think about the type of home a family would wish to rent, with factors such as parking and a garden important. Finally, flexibility should be prioritised, as to create a ‘family home’ tenants might wish to decorate the property and keep pets. Landlords should be open to this to attract families.

Source: Residential Landlord

Marketing July 16, 2018 No Comments

First-time buyers and home movers get pre-summer lending boost

The mortgage market experienced a pre-summer boost in May as lending to first-time buyers and home movers increased, figures suggest.

Data from banking trade body UK Finance shows that the number of approvals for first-time buyer mortgages increased 8.1% annually to 32,200, while home mover loans increased 4.4% to 31,100 over the same period.

Remortgaging continued to see a climb, up 7.1% annually in May to 36,000.

There was still little respite for landlords, though, with approvals for buy-to-let mortgages down 9.8% annually to 5,500.

Jackie Bennett, director of mortgages at UK Finance, said: “The mortgage market is seeing a pre-summer boost, driven by a rise in the number of first-time buyers and strong remortgaging activity. It is also particularly encouraging to see an increase in home movers, after a period of relative sluggishness in this important segment of the market.

“However, affordability remains a challenge for some prospective buyers and this is reflected by a gradual increase in loan to income multiples.

“Meanwhile purchases in the buy-to-let market continue to be constrained by recent regulatory and tax changes, the full impact of which have yet to be fully felt.”

John Phillips, group operations director at Just Mortgages and Spicerhaart, described the data as “the most encouraging for some time”.

He said: “We are starting to see a glimpse of some of the strong first-time buyer activity of 2017, and even more encouragingly, an uplift in home mover activity. This section of the market has been really slow of late, with affordability and a lack of houses making it tough for second and third steppers to make their next move.

“However, while these figures are encouraging, it could be more to do with a pre-summer boost than a real step change. Because overall, more needs to be done to help home movers.”

Source: Property Industry Eye

Marketing July 13, 2018 No Comments

London house prices to fall until 2020, says PwC

London house prices are set to drop as much as two per cent this year according to a report which suggests fresh evidence of a slump in the capital’s property market.

Analysis from Big Four firm PwC predicts a fall in London house prices that could persist into 2019, despite an expected rise in every other region of the UK.

Tom Bill, head of London residential research at Knight Frank, told City A.M.: “London is now underperforming after years when London would outperform the rest of the uk. That situation has now reversed.”

Bill added: “The overall picture is one of low interest rates, low levels of unemployment and relatively lack of supply which are all putting upward pressure on prices. But a lack of supply also leads to affordability constraints, which is one reason why London is underperforming compared with the rest of the UK.”

While the accountancy giant estimates the average house in the UK will have jumped from £221,000 last year to roughly £285,000 by 2025, a bump in the capital is not set for at least another year and a half.

Richard Snook, senior economist at PwC, said: “Affordability in the capital has been stretched due to three factors: a high deposit saving hurdle, increased economic uncertainty relating to Brexit acting as a drag on international investment, and reduced numbers of housing transactions due to stamp duty changes.”

Responding to the figures out today, a spokesperson for the Ministry of Housing, Communities and Local Government said: “217,000 new homes were built in England last year, this is up 15% on the previous year and the highest increase in 9 years.

“We have set out an ambitious programme to boost housing supply – including planning reform and targeted investment to help us deliver an additional 300,000 properties a year by the mid-2020s.”

Rob Walker, head of real estate tax at PwC, argued that higher stamp duty rates “are dissuading people from upsizing and downsizing which is affecting both ends of the market.”

The news comes one day after the closely watched Royal Institution of Chartered Surveyors (RICS) monthly survey reported a 16th consecutive month of falling house sales in London which suggested that the capital’s “subdued picture in the market will persist”.

PwC argues that the rise in prices is being fueled by a lack of housing supply, and more than 100,000 homes would have needed to have been built between 2011 and 2016 to keep up with the UK’s drastic population growth.

Source: City A.M.

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News

Glut of property hits UK housing market in July – Rightmove

Inflation bounce set to help BoE hawks’ claims

Lenders in the UK think 10 year mortgage deals are set to become popular

House Price Growth at Lowest Level Since 2013

House prices in the UK have increased at the slowest rate for five years according to Halifax, the largest lender in the country.

Bank of England: base rate could stay under 2% for 30 years

Investing in properties for retirement is no longer sustainable

What’s going to happen to property prices in 2018 and 2019?

Family Tenants Favoured By Buy To Let Investors

First-time buyers and home movers get pre-summer lending boost

London house prices to fall until 2020, says PwC