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Average house prices reach record highs

Industry experts and company heads have reacted to the latest record-busting house price figures released Wednesday by the Office for National Statistics (ONS), showing that average prices in the UK reached an all-time high of £275,000 in the month of December.

The ONS House Price Index shows that there was a £27,000 increase and a 10.8% rise compared to a year ago.

House prices also rose across all four nations. Data from the ONS revealed that average house prices reported the greatest increase over the year in Wales to £205,000 (13.0%), followed by Scotland (£180,000, up by 11.2%).

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In England and Northern Ireland property values increased at the same rate (10.7%), albeit at a different price level. In England to £293,000 and in Northern Ireland to £159,000.

By contrast, London continued to be the region with the lowest annual growth at 5.5%, although it also boasted the highest average house prices in England.

In response to the figures, Paul Stockwell, chief commercial officer at Gatehouse Bank, said the housing market was “beginning to look out of place” with the wider economy as prices soared again (inflation in the UK rose to a 30-year high of 5.4% in December, edging up to 5.5% in January).

Stockwell said: “Persistent strong demand to move home, coupled with low supply, meant house prices soared again at the end of last year, but the housing market is beginning to look out of place with what is happening in the wider economy.

“Buyers continue to bid up the price of homes despite the cost-of-living squeeze, and there remains a strong pipeline of future borrowing, with mortgage approval rates recorded by the Bank of England last December still surpassing pre-pandemic norms.

“It’s a sign that buyers have a lot of faith in the resilience of the property market, and believe housing continues to offer a great deal of financial security, even at a time of wider economic uncertainty.”

Charlie Blagbrough, policy manager at the Building Societies Association (BSA), said demand could flatten as prospective buyers waited for inflation to peak in the coming months, adding that first-time buyers might be able to get on the housing ladder if prices reacted the same way.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

He said: “There are many factors at play in the housing market with continued demand for homes and the constrained supply tending to drive prices up.

“If reports of an increase in valuation leads does generate more supply, prices are likely to flatten, which would be welcome for many, particularly first-time buyers. Although mortgage rates remain low by historic standards, the general increase in the cost of living may see the number of housing transactions flatten as potential buyers choose to wait to see if the Bank of England prediction of inflation peaking in April (at 7.25%) is correct.

“While Help to Buy is continuing to wind-down over 2022, we are seeing private sector schemes such as Deposit Unlock gain traction. Government’s flagship First Homes scheme, which will provide a discount of at least 30% of market value, is starting to scale up and will provide another route into home ownership for first time buyers.”

Clare Beardmore, head of broker and propositions at Legal & General Mortgage Club, said she was not surprised that demand for property had continued to run high, despite “the usual slight slowdown in activity around Christmas”.

She said: “The past two years have dramatically changed what people want from their homes, and these new-found preferences are still supporting high levels of transaction activity. Of course, price growth remains underpinned by a chronic lack of supply, creating a fiercely competitive market for house-hunters.

“These themes are likely to continue to dominate the market in 2022. While tax rises and rising inflation have begun to squeeze households’ spending power, the market has shown over the last few years that it can remain resilient, even in the face of unexpected headwinds.

“Although some lenders are starting to shift mortgage rates upwards, pricing remains competitive, and many borrowers would benefit from speaking to an adviser to weigh up their options. Doing so could help them secure a deal that is well-aligned with their circumstances and safeguards their finances.”

Colin Bell, the co-founder and COO of mortgage lender Perenna, said that while the latest figures were good news for existing homebuyers, it was bad for first-time buyers and home movers, and urged the sector to rethink how it could support these two groups “to ensure homeownership remains a viable goal for all, rather than a few”.

He said: “First-time buyers or home movers are already battling record inflation and rising interest rates in their bid to step on to the property ladder or move home.

“Offering more high loan-to-income and low deposit mortgages will go some way to help these underserved borrowers. And allowing people to move home and trade up will release properties for first time buyers as well.

“Periods of high inflation remind us of the value in the peace of mind offered by long-term fixed repayments – as such, I think 2022 will be a watershed year for homeowners locking into long-term deals.”

By contrast, Conor Murphy, CEO and founder of Smartr365 and Capricorn Financial Consultancy, said house price appreciation was “not a cause for concern”.

He said: “House prices edging on the higher side is not a cause for concern – in fact, this is good news for existing homeowners and the broader market, as it is a reliable sign that demand is robust. Alongside high buyer interest, the market is buoyed by modest interest rates and strong mortgage availability.

“With demand both strong and stable, the market should focus on driving efficiency gains so that its growth is not limited by day-to-day road blockers. Letting tech take the heavy lifting in terms of admin is key to helping as many borrowers as possible get their foot on, or continue climbing, the property ladder.”

Chris Hutchinson, CEO of fintech company, Canopy, expressed more concern, saying that inflationary pressures would “continue to weigh heavy on individuals” as the cost of living took an increasing toll on households.

“While homeownership may have felt out of reach before, it could now feel a million miles away as many feel stuck in a cycle of renting spending a large chunk of their salary each month on rent.

“It is therefore more important than ever that the Government and the housing industry work together to encourage positive financial habits from the moment people begin renting. The increasing cost of living is bringing more challenges to the table for potential homeowners in an already fiercely competitive market. Building a stronger credit score and financial resilience will be vital to ensure an edge over the competition.”

By Richard Torne

Source: Mortgage Introducer

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e.surv: Average house prices up 4.1%

Average house prices increased by 4.1% across England and Wales in the year to October 2021, according to e.surv Chartered Surveyors’ House Price Index.

On a monthly basis, average property prices rose by 1.4% between September and October 2021.

Overall, e.surv found that the average price of a house in England and Wales was £335,325 at the end of October.

Wales had the highest rate of annual price growth at 10.8%, while at the other end of the scale, Greater London is the sole area with growth rates below 3.0%.

The North East reported 3.3% of annual price growth, with the South East and the East of England both seeing a 3.8% increase.

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The South West, and Yorkshire and the Humber have similar rates at 4.5% and 4.9% respectively, with the East and West Midlands at 5.8% and 5.7% apiece.

Finally, the North West retains its title as having the highest rate of growth of all the English regions at 6.9%.

Richard Sexton, director at e.surv, said: “The complexity of the UK residential property market is evident in the varying regional performance.

It aptly illustrates why talk of national average house prices can be unhelpful at a micro-level. While Wales continues its strong performance annually, regional annual house price performance in England has revealed that the north-west, and within it specifically Blackpool at a staggering 16.9%, has comfortably out-performed the rest of the country.

“This means that for five of the last eight months the North West has been at the top of our regional league table in terms of having the highest rates of annual house price growth and it continues to have the highest rate of growth of the nine regions in England.

“The factors that have spurred the growth seen in Blackpool also affect other areas in the region. Warrington and Merseyside had the second- and third-highest growth in the North West over the year.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

“All property types in these areas saw an increase in values over the year, but especially the prices of semi-detached homes which were up by £25,000 and £16,000 respectively.

“At a macro-level, the decision this month to hold interest rates will support buyers considering a home-move imminently and with a voting margin of five-two to hold, there is speculation that it is unlikely we will see any rise before the first quarter of 2022.

“The Bank of England is clear that it expects inflationary pressures to lessen – National Insurance tax rises due in April next year may already be having a desired effect.

“The Office for Budget Responsibility is now forecasting low but positive rates in 2022 and into 2023, with a steady increase in subsequent years which means borrowers should feel confident about buying – particularly with continued government support for 95% loan-to-value (LTV) lending which will support prices.”

By Jake Carter

Source: Mortgage Introducer

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Average house price in Scotland has increased by 92 per cent

The average house price in Scotland has increased by 92 per cent since the start of house price data from Registers of Scotland (RoS) in 2003-04.

The latest statistics from Registers of Scotland’s Property Market Report 2020-21 show that the average price of a residential property in Scotland in 2020-21 was £194,100, up by 6.7 per cent on 2019-20 and up by 25 per cent when compared with the pre-financial crash average price of £154,813 in 2007-08.

The volume of residential property sales decreased by 6.5 per cent from 102,053 sales 2019-20 to 95,428 sales in 2020-21 and, although volumes were 36 per cent higher than the low of 70,334 sales in 2011-12, the 2020-21 figure was the lowest volume when compared with the previous three financial years (2017-18, 2018-19 and 2019-20).

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The introduction of Covid-19 measures resulted in a substantial drop in sales being submitted to Registers of Scotland for registration in the first quarter of 2020-21, followed by some higher-than-average increases in the latter quarters of the year as lockdown measures were relaxed.

The sales volume remains 36 per cent below the pre-financial crisis level peak of 149,944 sales in 2006-07.

The value of residential property sales in the financial year 2020-21 was £18.5 billion, a decrease of 0.2 per cent when compared with 2019-20.

This marked the first year there was a decrease when compared with the previous year since 2011-12. The residential sales market value increased every year from 2012-13 to 2019-20, but remains 19 per cent below the pre-financial crisis level peak in 2007-08 (£22.9bn).

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

The report also looks at the non-residential market. The total market value of non-residential sales in 2020-21 was £2.8bn. Commercial sales accounted for 71 per cent of this total, with the remainder from sales of forestry, agriculture and land.

The non-residential market was also impacted by Covid-19 measures. In particular, there was an adverse impact on the market value of the commercial sales market, with market values in 2020-21 being lower in every month than the market values in 2019-20, except for March 2020-21.

Accountable officer Janet Egdell said: “The combined market value of the residential and non-residential markets in 2020-21 was £21.3bn (Residential £18.5bn and non-residential £2.8bn), 4.9 per cent lower than the previous year 2019-20. The combined market value remains 30 per cent lower than the peak of the market in 2007-08 (£30.4bn), but 24 per cent higher than 2003-04 (17.2bn).”

Source: Scottish Legal

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Average house prices up 8.7% in England and Wales

Average house prices increased by 8.7% across England and Wales in the year to January 2021, according to e.surv Chartered Surveyors’ House Price Index.

On a monthly basis, average house prices rose by 1.2% between between December 2020 and January 2021.

Overall, the average price of a house in England and Wales was £330,958 at the end of January.

Richard Sexton, director at e.surv, said: “2020 proved an exceptional year in almost every way and many of the changes it ushered in won’t be easily swept aside.

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“Indeed, our data shows that the remarkable growth in property prices we saw in the second half of last year has continued into 2021.

“Rapid growth in the South West, East Midlands and the North West means that average property prices have started the year up close to 9% on January 2020.

“There are, as always, a number of factors at play, but we may well have moved beyond the release of the demand that was pent-up at the start of 2020 and into a new phase for the market.

“For many, the pandemic has proved very financially trying, but this hasn’t been universal. For some households, where people have kept their jobs and transitioned totally to home-working, the pandemic has provided an opportunity to cut spending and build their savings.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

“For these consumers in a more fortunate financial position, the combination of low mortgage rates and the stamp duty holiday have made entering (or often re-entering) the property market an attractive prospect.

“Many buyers have made the decision to make a move in the last year and the popularity of larger properties with more outdoor space has increased greatly, as buyers have reevaluated their current living situation.

“That activity in the property market has been able to continue at all over the last year, is due in a large part to the industry’s willingness to embrace technology and work innovatively.

“From remote valuations to virtual house viewings, the industry has shown that it is able to adapt and change to meet extraordinary circumstances – a positive sign for the future.”

By Jake Carter

Source: Mortgage Introducer

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Average house prices up 1.3% in the year to September

Average house prices increased by 1.3% in the 12 months to September, the ONS UK House Price Index has found.

House prices rose saw a monthly increase of 0.2% between August and September, with the average house price reaching £234,000 in September.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “More subdued numbers come as no surprise, given the political uncertainty which continues to rage, and values are holding up remarkably well considering.

“London is still seeing the lowest annual growth in prices as the capital falls more into line with the rest of the country.

“While this is welcome for those trying to buy in the capital, let’s not get carried away as it is still difficult to afford property in London and the South East.

“Lenders are doing their bit, keen to lend and offering ever-cheaper fixed rates but finding the necessary deposit is often the issue, which is why the Bank of Mum and Dad remains so prevalent.”

At a regional level the North West had the highest annual house price growth, with prices increasing by 2.8% in the year to September.

The lowest annual growth was in the capital, where prices fell by 0.4% in the 12 months to September.

Andrew Montlake, managing director of Coreco, said: “The Brexit ball and chain continues to weigh on the property market, but it hasn’t dragged it to the bottom as many predicted.

“London, once again, is at the bottom of the annual price table as it pays for its obscene growth earlier in the current decade.

“Extremely low borrowing costs and cheaper prices continue to drive sales while a strong jobs market and ever-falling inflation are giving people confidence amid the chaos.

“All eyes for now are on the December General Election.

“When we all wake up, somewhat ominously on Friday 13 December, we will know a lot more about the likely direction of the property market in 2020 and beyond.”

Tomer Aboody, director of property lender MT Finance, added: “People have had enough of elections and uncertainty – they want a resolution to government and Brexit which will enable confidence to return to the market.

“London is always going to see the biggest movement in house prices whether it is a decline or increase because it has the highest value properties.

“But what is noticeable in London is that people are looking to buy, it’s just the lack of supply.

“Not enough people are selling because of the uncertainty; people are wondering whether they would be selling at the right time or getting the right price, which accounts for the lower sales volumes.

“Until we have some clarity on the political front, nothing will happen, particularly in London.

“People are not going to spend an average of £500,000 or thereabouts in London until they know what is going to happen with the upcoming election.”

House price growth in Wales increased by 2.6% between September 2018 to September 2019, with property prices in Scotland also seeing a rise of 2.4% year-on-year.

The average house price in England increased by 1% in September 2019 compared to figures seen the year previously.

Northern Ireland house prices increased by 4% in the 12 months to September and remains the cheapest UK country to purchase a property, with the average house price at £140,000.

Gemma Harle, managing director of Quilter Financial Planning’s mortgage network, added: “It is no surprise that both house buyers and sellers are choosing to wait to survey the landscape post-Brexit rather than take a gamble in the current uncertain climate.

“However, what’s particularly concerning is that you typically would see an uptick in prices at the end of summer thanks to lots of people choosing to move before the schools go back and the dark nights draw in, but this year the rebound seems to be somewhat muted.

“Similarly, while the annual price increase across the UK stands at around 1.3% this is below the current rate of inflation meaning in real terms house prices have dropped.

“Regardless of political stance, it is hard to not take notice of the changes in the market due to the political turmoil currently gripping the nation.

“House prices rise and fall in cyclical fashion and we are due a correction from a historical standpoint.

“It may be that Brexit is the trigger that sees house prices drop and enter into a downturn. Whether this downturn materialises is something we will likely have a clearer view on in in the next few months.”

By Michael Lloyd

Source: Mortgage Introducer