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Average property price estimates reveal an intriguing picture

In the world of surveying, common questions abound and are always being asked. ‘What is going to happen to UK house prices?’ tends to be the most common and the most general, and the answer is always, ‘We just don’t know’.

The future is not yet written and a valuation is always taken at a moment in time, and is always likely to be different at each moment.

However, what we do have as a business is a clear view on what has happened and a raft of data to give us an idea of the direction of travel that we have seen, and by viewing this, you’re likely to gain further info to form an opinion on where the market might be going next.

To that end, we recently collated average house price data for all the regions we have been active in over the last 14 months. From October 2020, for all English regions plus Scotland, Wales and Northern Ireland, we can track the average property value based on the estimate sent to us by the lender concerned when they instruct us.

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The product used is our standard mortgage valuation and all lenders/firms/surveyors are included in our data. That final point is worth emphasising – it is our data and is unique to us, but it by no means covers every single transaction that has taken place during that time and should therefore be treated in that context.

It may however outline where house prices have come from, where they most recently arrived at, when they might have peaked (if they have done), although again this does not mean we can suddenly predict what might happen in the future.

To start with, let’s look at the average estimated price for the UK as a whole – back in October 2020, according to our data, this was just over £305,000, however by December 2021 this had increased to just over £337,500, representing a 10.5% increase.

I suspect there are few shocks to be had in reading this. Most of the house price indices – and we are certainly not a sector short of these – will have reported along similar lines during the period, with average increases being in the region of 8-10% for the average UK property.

Of course, this is a notional property in and of itself, and the UK is incredibly regionalised in terms of what happens to prices. Our data, as mentioned, is broken down into 11 regions, and over the same time period (October 2020-December 2021) it may surprise you to learn that the region with the highest inflation is Greater London.

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It has gone from an average price of just shy of £590,000 to £718,000, representing close to a 22% increase. In much of the other house price data I have seen, certainly central London prices appear not to have increased by anywhere near the same levels as other regions; in fact it tends to be quite lower. However, this is a greater London region which might go some way to showing why it’s a heftier increase.

Conversely, it is the North East which currently sits bottom of our inflationary table, up only 0.8% over the period from just over £232,000 to £234,000.

Again, this appears to go against the grain slightly in terms of regions deemed to have seen bigger inflationary rises. From what I have seen, the larger increases appear to have been in regions such as Wales, the North, Scotland, etc.

Our data shows double-digit house price inflation in Wales (15.14%), the North West (12.84%), Scotland (11.39%), and Northern Ireland (10.96%), while the East Midlands (9.14%) and East of England (8.91%) are not too far behind either.

The rest of our regions are made up of the South East (7.16%), the South West (5.9%), and the West Midlands (2.05%).

Again, these figures might be surprising to some, but at the top end of the scale, they certainly seem to be in keeping with many other indices and the ‘mood music’ around what prices are doing.

Interestingly, during the time period, only one region – Scotland – had its peak average price in the last month covered, December 2021. All others had ‘peaked’ prior to that – one region in September 2021, seven in October 2021, and three others in November 2021.

That seems interesting in itself, given the stamp duty holiday finished in England at the end of September 2021 and yet prices continued to peak after that.

Admittedly, they have now come off that peak and may continue to do so. It’s therefore entirely plausible that house prices might plateau during the rest of the year, or merely inch up again following that slight drop-off.

What we can say is that the UK continues to suffer from a shortage of property supply, coupled with strengthening demand which looks unlikely to peter out. Lenders want to lend, many people want to move/buy, and they outstrip the current property numbers available.

This basic law of economics tends to see prices, at the very least, trending slightly upwards. It will be interesting to see if this is how the market does play out through the year ahead and we will certainly review the data we collect to track its progress.

By Simon Jackson

Source: Mortgage Introducer

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ONS: UK house prices rose by 10.2% in the year

UK average house prices rose by 10.2% in the year to March 2021, the highest annual growth rate seen since August 2007, according to the ONS House Price Index.

This is up from the 9.2% increase seen in the year to February 2021.

Average house prices rose by the greatest margin in Wales, up 11% to £185,000, followed by a 10.6% uplift in Scotland to £167,000.

England noted a 10.2% increase to £275,000 and average UK house prices rose by 6% to £149,000 in Northern Ireland.

London continues to be the region with the lowest annual growth (3.7%) for the fourth consecutive month.

Miles Robinson, head of mortgages at Trussle, said: “We’re continuing to see house prices grow month-on-month, suggesting that the market remains buoyant and demand is high as a result of the stamp duty holiday.

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“With this in mind, it’s important for buyers in the home buying process to be aware that the increased demand has caused inflated prices.

“First-time buyers are now paying up to £73,000 more than last year to get on to the property ladder.

“This has also caused delays in completion times and it now takes up to 171 days to purchase a property in the UK.”

Cloe Atkinson, managing director of Mortgage Engine, added: “A year ago, activity in the property market remained almost entirely suspended as the UK continued to endure its first lockdown.

“In contrast, 2021 has so far proved a stellar year for house price growth. The busy start to this year reflects the success of various government measures to stimulate demand in the market, as well as the hard work carried out by the property industry to overcome the challenges of the pandemic and adapt to new ways of doing business.

“The mortgage industry has adopted new technology at an unprecedented rate, increasing efficiency and unlocking new ways of working.

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“As the UK cautiously moves to relax its pandemic restrictions, its vital that the property sector doesn’t leave behind the spirit of innovation that’s carried it through the last year.

“Now is the time for the industry to increase its investment in tech and continue to evolve to meet the challenges of the post-pandemic period.”

Martin Stewart, director of London Money, added: “Even though the mania around the stamp duty holiday has waned, we are entrenched in a market with too many buyers chasing too few properties.

“We have witnessed a lot more chains falling down recently, maybe because buyers have offered on multiple properties in order to secure something, anything.

“We have also detected a significant stretching of the truth from prospective buyers whose stories about being “a cash buyer” or “chain-free” collapse quicker than a Jenga tower.”

By Jake Carter

Source: Mortgage Introducer

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Average Price of Property Coming to Market Jumps 2.1%

The national average price of property coming to market has hit a new all-time high of £327,797, following a 2.1%, or +£6,733, monthly increase.145,000 properties were newly marketed this month, with the number of sales agreed up by 55% on the same period two years ago, reducing the stock of properties that are available to buy to the lowest proportion ever recorded

Barrows and Forrester managing director James Forrester, said: “A record-breaking month on many fronts with asking prices increasing at an incredible rate, as a heightened level of demand pushes property values ever higher. This price growth is also being driven by a lack of available stock, particularly second stepper suitable two and three-bed homes. In fact, you’d have an easier time finding a straight-talking politician than you would a decent three up, three down in current market conditions.”

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Benhham and Reeves director of Marc von Grundherr, said: “The top end of the market is driving current performance with the strongest rates of house price growth and, unlike the regular market, this train is unlikely to come off the tracks when the stamp duty holiday expires. While a considerable cash saving in stamp duty tax is nice, it’s not the driving force behind prime property purchases and so we’re not seeing the mad scramble to complete that is causing havoc in lower price tiers. It’s very much a case of the hare and the tortoise in this respect and while the general market is sure to run low on steam come the end of the year, the high-end market is likely to keep moving forward at a strong and consistent pace. We’re seeing this in London more than anywhere at present, having lagged behind and, in fact, suffered to the greatest extent over the last year, the market is now starting to turn and at a pace that will ensure a cleaner bill of health come September and beyond.”

Yes Homebuyers founder and managing director Matthew Cooper said: “Please don’t be fooled by claims that homes are ‘selling’ at their fastest ever rate. This couldn’t be further from the truth and while sellers are securing a buyer at an incredibly quick pace, the time it’s taking to actually complete is significantly longer than it has previously. As a result, sales that should be done and dusted are stagnating for months on end and many are falling through as a result. You have to question if a platform with the visibility of Rightmove should be fuelling the current market hysteria and the resulting logjam by spurting fluffy statements around record-breaking market sentiment.”

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

Keller Williams UK CEO Ben Taylor said: “House prices have gone stratospheric and if you believe that what goes up, must come down, then surely we must be due a correction soon. That said, there have only ever been two periods in the last thirty years where house prices have fallen over any significant time and so there are smarter bets to be made. If anything, the new Government-subsidised low deposit mortgage, and interest rates that are set to fall still further, will probably cause this explosive market to continue crackling.”

Ascend Properties managing director Ged McPartlin, said: “At the rate the current market is moving, there will be no houses left to sell. It’s great to see the North is the engine room powering this immediate market performance with some astonishing 9% plus annual rates of growth in both the North West and Yorkshire. Yorkshire alone has enjoyed a 4.2% increase on a month-on-month basis which is usually a rate of growth reserved for annual performances and really highlights how quickly the market is moving at present. If this rate of growth were to continue, Yorkshire folk could expect to see the value of their home increase by £116,000 in a single year.”

BY PETE CARVILL

Source: Property Wire

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Rightmove: New record for average property price

The average price of property coming to market increased by 1.1% (£3,534) in September, to an all-time national record of £323,530, according to the Rightmove House Price Index.

This is 5.5% (£16,818) higher than a year ago, and shows the highest annual growth rate for over four years.

As a result of this trend, Rightmove has forecast that the annual rate of increase will rise further before the end of the year, peaking at around 7%; this is compared to Rightmove’s original forecast of 2% in December last year.

Despite market closure between late March and mid-May, 2% more sales have been agreed so far this year than in the same period in 2019.

September saw three new records for market activity: average time to sell hit 50 days, 12 days faster than the same period last year; for the first time, estate agents had more properties marked as sold than as available for sale; and the number of sales reported was 70% higher than the same period a year ago.

Rightmove also recorded a 49% increase in traffic in September, compared to the same period last year, which is the biggest year-on-year jump since 2006.

So far in October, the number of sales agreed is still 58% up on the same period last year.

The number of active buyers contacting estate agents has reached a high level, up by 66% in September compared to 12 months ago, and only marginally down on the peak of +67% seen in July.

Tim Bannister, director of property data at Rightmove, said: “Previous records are tumbling in this extraordinary market, and there are still some legs left in the upwards march of property prices.

“We predict that the annual rate of growth will peak by December at around 7% higher than a year ago.

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“Many buyers seem willing to pay record prices for properties that fit their changed post-lockdown needs, though agents are commenting that some owners’ price expectations are now getting too optimistic, and not all properties fit the must-have template that buyers are now seeking.

“Not only is the time left to sell and legally complete before the 31 March stamp duty deadline being eaten away by the calendar, but more time is also needed because the sheer volume of sales is making it take longer for sales that have been agreed to complete the process.

“Sellers and their agents should therefore be wary of being too optimistic on their initial asking price, as whilst activity levels continue to amaze there are some signs of momentum easing off from these unprecedented levels.”

Bannister added: “Prospective buyers are seeing properties selling fast and prices rising as they search for their next home, adding to momentum and spurring them on to act quickly.

“With the number of buyers contacting agents still up by two-thirds on a year ago, there is plenty of fuel left in the tank to drive further activity in the run-up to Christmas and into next year.

“There have also been government promises of additional low-deposit mortgage support for first-time buyers, which could prove to be timely as we run up to 31 March.

“It appears that the current momentum, assisted by the prospect of stamp duty savings, is helping to keep the housing market healthy.

“Estate agents have worked hard to give confidence to sellers and buyers alike that property viewings can be conducted safely, and early signs show that market activity still remains high in areas with stricter local lockdowns.”

By Jessica Bird

Source: Mortgage Introducer

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Scottish Building Society: Lack of supply leading to higher Scottish house price growth

House prices in Scotland are growing faster than the rest of the UK, however, Scottish Building Society chief Paul Denton has warned that demand outstrips supply.

House prices in Scotland are growing faster than the rest of the UK with the average property £154,798 – an increase of 3.5% year on year, according to government House Price Index (HPI) figures released today.

The UK average was £235,298, up 2.2% on November 2018 and an increase of 0.4% on the previous month.

The volume of residential sales in Scotland in September 2019 was 8,628, an increase of 1.8% on the original provisional estimate for September 2018. This compares with an increase of 3.3% in England, 1.3% in Wales and 4.9% in Northern Ireland.

The HPI report says: “Prices vary across Scotland, with the highest-priced area to purchase a property being City of Edinburgh, where the average price was £277,600, and the lowest-priced area being East Ayrshire, where the average price was £95,941.”

Paul Denton, chief executive of Scottish Building Society, said: “The figures relate to November, so it is too early to assess the long-term impact of the General Election result on the Scottish market.

“Many commentators predict economic uncertainty to ease in 2020 with a resultant increase in transactions. However, while consumer confidence is important, demand continues to outstrip supply. We would support any initiative to help people on to the property ladder, including accelerating the number of new homes being built.

“Last month, we became one of the first lenders to take applications from the Scottish Government’s First Home Fund . This will make the housing market fairer by providing £150 million until March 2021 to help 6,000 people buy their first home.”

The UK HPI is calculated based on completed sales at the end of the conveyancing process. This means that while the UK HPI may not be as timely in publishing as the other measures, it is however ultimately more complete with coverage of both cash and mortgage transactions for the whole of the UK.

Source: Scottish Construction Now

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Property inflation three times wage over last decade

– The average UK property price has risen 43% since 2008, while wages have increased by just 15% over the same period

– If wages had increased at the same rate as house prices over the past 10 years, the average annual UK salary would now be £35,113

– London boroughs and Home Counties play host to the UK’s highest earning homes

– Homeowners have also benefited from falling mortgage rates over this period, as despite property values rising by 43% monthly mortgage payments have increased by just 3%

New analysis from independent mortgage broker Private Finance shows the average UK home has increased in value almost three times faster than its owner’s wages over the past decade.1

The average UK home experienced a 43% rise in value between 2008 and 2018, from £160,954 to £229,861.

In comparison, the average annual UK salary has increased by just 15% from £24,606 to £28,860 over the same period. Had wages experienced the same percentage increase as house prices, the average employee would now be earning £35,187 per year.

London boroughs and Home Counties home to highest earning properties

Homeowners in London boroughs and the Home Counties have witnessed their homes outperform them to the greatest extent.

The average property price in Kensington and Chelsea has soared by 85% over the ten-year period, while wages have increased by just 3%.

Had homeowners in Kensington and Chelsea seen their wages increase to the same extent as the value of their homes then the average salary in the borough would now be £112,124.

Table 1: Top 10 hardest working regions for house prices

Local AuthorityGrowth in wages 2008-2018 (%)Growth in house prices 2008-2018 (%)2018 annual wagesAverage earnings if wage growth matched house price growth
Kensington and Chelsea3%85%£62,088£112,124
City of Westminster-1%78%£55,515£99,289
Camden9%89%£44,886 £77,424
Hammersmith and Fulham11%69%£46,306£70,057
Islington12%83%£43,820£70,191
Richmond upon Thames15%84%£48,235£75,703
Hackney18%89%£33,800£52,720
Haringey12%96%£33,597£58,044
South Bucks7%65%£42,812£65,623
Elmbridge-11%66%£43,030£79,381

Property values rise as mortgage costs fall

Not only have homeowners benefited from rising property values over this period, but falling mortgage rates mean that the monthly cost of owning a home has become considerably more affordable – making their return on investment even more lucrative.

From 2008 to 2018, the average two-year fixed rate mortgage at 75% loan-to-value (LTV) has fallen from 4.77% to 1.73%. While house prices have increased, the average UK homeowner who purchased at the end of 2018 would only be paying £18 (3%) more per month on their monthly mortgage payments thanks to falling mortgage rates, this is despite the average loan size increasing by 43%.2

Graph 1: Bank of England average 2 year (75% LTV) fixed rate mortgage rate

Property inflation three times wage over last decade Commercial Finance Network

Table 2: Monthly repayments for average UK homeowner3

YearInterest rate (2 year fixed 75% LTV)Monthly mortgage payments
20084.77%£690
20181.73%£708
10-year difference304 bps+£18

Simon Checkley, Managing Director at Private Finance comments:

“Property first and foremost provides a roof over your head and a place to call home; however, over the long term it can act as a lucrative investment. With falling mortgage rates making the cost of owning a home even more affordable, homeowners’ potential return on investment could be set to become even greater.

“Many homeowners will undoubtedly take comfort in the fact that over the past 10 years, as they’ve worked hard to earn an income, their home has essentially been doing the same – and arguably even more successfully. Though house price growth has slowed in recent years, it remains buoyant in many areas of the country, and has historically remained strong over the long-term.

“This money needn’t remain locked away in our homes. For homeowners looking to stay put, or move to a more manageable house, downsizing and remortgaging are both options that can enable individuals to release some of the money earnt by their home to help them with their wider financial goals.”

Notes

1 Analysis based on ONS Price Data (December 2008 and December 2018) and ONS gross mean weekly earnings data (2008 and 2018) for local authorities across the UK. Local authorities only considered where full sets of both data are available.

2 Bank of England quoted household rates data, 2 year fixed rate 75% LTV (MONTH/YEAR).

2008 repayment calculation: Based on assumption of average UK house price in 2008 (£160,954). Average loan size (75% LTV) = £120,716. Mortgage term of 25 years.

2018 repayment calculation: Based on assumption of average UK house price in 2018 (£229,861). Average loan size (75% LTV) = £172,396. Mortgage term of 25 years.

Source: Property118

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UK property market peakes as average prices decline

The UK property market has peaked, and average prices are falling according to a property management firm.

Apropos by DJ Alexander Ltd has analysed official data and found that average prices in all parts of the UK (with the exception of Wales which continues to increase in average price) peaked between August and November of last year with average prices in London having reached their highest even earlier in July 2017.

All average property prices across the UK, England and Scotland peaked in August 2018 at £232,194, £152,411 and £249,127 respectively whilst in Wales the December 2018 average prices continued to rise reaching £161,845.

London prices reached their peak of £488,527 in July 2017 and have been below that level ever since and, in the latest month for data are 3.0 per cent below the peak.

The value of gross mortgage advances has grown to £73.5bn which is the highest level since Q4 2007. Of further concern is that the proportion of high loan-to-income (LTI) lending (loans above four times the value of annual income for a single buyer or above three times the annual income for joint buyers) has increased 1.7 per cent to 47 per cent with the share of loans with a loan to value (LTV) exceeding 90 per cent also increasing to 4.3 per cent.

The value of outstanding mortgages balances with some arrears increased for the first time since Q2 2016 in the fourth quarter of last year although still only accounts for one per cent of all balances.

David Alexander, joint managing director of Apropos by DJ Alexander Ltd, said: “Whilst there are concerns that the property market has stalled and is now falling back in most parts of the UK this is due to a number of factors rather than the enormous overheating of the market which occurred in 2007.

“London is undoubtedly suffering from a market which grew incredibly quickly and is now stabilising at a lower level. This will be because of individuals and investor worries over Brexit and continued economic uncertainty. The latest statement from the Chancellor that growth in the UK this year is slowing to its lowest level since 2012 will have done little to reassure the property markets.

“There is little doubt that the buy-to-let market has fallen back as smaller, more independent investors exit the market due to the enormous financial and regulatory changes which have occurred in the last couple of years. This will be taking some heat out of the market at a time when individual buyers may already be holding from commitment due to external factors.”

He added: “Although the value of debt is now at its highest level since Q4 2007 and high LTI lending is once again becoming a feature of the marketplace there is little sign of the same frenetic atmosphere which accompanied the 2007 property crash.”

Mr Alexander concluded: “Despite some of the gloom currently present within the market there are opportunities, there are possibilities for individuals and investors. It requires greater skill, a long-term attitude to the property market, and some courage to understand that property prices will always ebb and flow, but the overall direction is up.

“You need to take a medium to long term view to get the best out of a home or an investment. Short termism may sometimes win but as a rule it is a tactic which is likely to fail.”

Source: Scottish Legal