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Why the ‘mood music’ surrounding the housing market outside London has changed

An influx of new residents into Manchester, Birmingham, Leeds, Bristol, Edinburgh and Glasgow helped the housing market remain resilient during 2023, according to a new report.

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New research from global property advisor JLL shows there was a surge in demand from renters and buyers for prime residential properties across the UK’s ‘big six’ despite high inflation and interest rates.

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The report, which tracks residential development activity, prices and rents across the six areas, highlighted a desire from city centre residents to live in ‘vibrant, highly-amenitised and well-connected central locations’.

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City A.M.

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House prices fall by -1.4% in December – ONS

Average house price annual inflation was negative 1.4% in the 12 months to December 2023, compared with negative 2.3% (revised estimate) in the 12 months to November 2023, according to the latest data from the Office for National Statistics (ONS).

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The average UK house price was recorded at £285,000, which is £4,000 lower than 12 months ago.

Average house prices in the 12 months to December 2023 decreased in England to £302,000 (negative 2.1%), decreased in Wales to £214,000 (negative 2.5%) and increased in Scotland to £190,000 (3.3%).

The average house price increased in the year to Q4 (October to December) 2023 to £178,000 in Northern Ireland (1.4%).

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On a non-seasonally adjusted basis, average UK house prices increased by 0.1% between November 2023 and December 2023, compared with a decrease of 0.8% during the same period 12 months ago.

Of English regions, annual house price inflation was highest in the North West, where prices increased by 1.2%.

London was the English region with the lowest annual inflation, where prices decreased by 4.8% in the 12 months to December 2023.

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Source: The Intermediary

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UK house prices rise at fastest rate since January 2023

UK house prices rose 2.5% in the year to January, recording the biggest increase since January last year, as lower mortgage rates and fading inflationary pressures led to increased buyer and seller confidence, Halifax has said.

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January marked the fourth consecutive monthly rise, with a 1.3% uplift on December, the UK’s biggest mortgage lender said, with the average home costing £291,000, £3,900 more than in December.

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Kim Kinnaird, the director at Halifax Mortgages, said: “The recent reduction of mortgage rates from lenders as competition picks up, alongside fading inflationary pressures and a still-resilient labour market has contributed to increased confidence among buyers and sellers.

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Source: The Guardian

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UK house prices to rise by 3% in 2024

Knight Frank has revised its UK house price forecasts as inflation is falling faster than expected, with the company now suggesting that house prices will rise by 3% in 2024.

This compares to a decline of 4% which was predicted in October.

Knight Frank also expects cumulative growth of 20.5% in the five years to 2028.

This is partially a result of stronger demand, as the number of mortgage approvals was 10% higher in November than the previous year and the firms expects a double-digit percentage increase in sales volumes this year compared to 2023.

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The report forecasts slightly lower growth for the mainstream London market (+2%) this year as continued affordability constraints in the capital mean lower-value areas of the country are likely to outperform.

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In the prime country house market, Knight Frank expects a narrower decline this year (-2%) as the market comes down from the highs of the pandemic in recent years.

By Jodie Bradley

Source: Bridging & Commercial

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Have House Prices Fallen Or Risen In 2023?

9 2023 was a tough year for the property market. With an unstable mortgage market, where rates went on a rollercoaster ride, demand was subdued. Many commentators were predicting property prices to decline as a result. But have house prices fallen or have they risen in 2023?
House prices are often seen as a reliable indicator of the health of the property market. And while not infallible, they can offer an insight into how confident sellers and buyers are in the market.

The last year was not the best in terms of confidence in the market. Rising mortgage rates and high inflation has forced many people to put their plans to buy a new home on hold.

There was much speculation how the year will end regarding prices, with many predicting that they will fall. Now that we have data from several industry insiders, can we determine whether house prices have fallen or risen in 2023?

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Halifax Announces Slight Rise In House Prices in 2023
After Nationwide and Rightmove, Halifax has released its latest House Price Index for December 2023. The data shows that house prices have risen by 1.1% compared to November last year.

According to the lender’s figures, this is the third monthly price rise in a row, pushing up the average UK house price to £287,105.

Year-on-year, Halifax’s House Price Index suggests that house prices have risen by 1.7% in 2023, compared to 2022. This means house prices were £4,800 higher in December than in December the previous year.

However positive these figures appear, they contradict data from Nationwide and Rightmove.

Nationwide’s House Price Index for December 2023 showed that house prices have stagnated on a monthly basis in the final month of the year. Compared to December 2022, house prices have fallen by 1.8%.

Rightmoves’ final House Price Index of 2023 also says the year has ended with a decline in house prices by 1.1% compared to the year before. Their data put the monthly house price decline in December at 1.9%, compared to November.

So what’s going on? Have house prices fallen or risen? The difference is down to the use of different datasets.

Halifax and Nationwide are likely to base their figures on data from properties bought with their mortgages, Rightmove uses property prices from all properties listed on their portal.

As such, Rightmove’s data seems to be the most complete. However, not all properties are listed on the portal. This means that all these figures have to be taken with a pinch of salt.

The most complete data to establish if prices have risen or fallen comes from land registry data. So we will have to wait for the Office forNational Statistics’ House Price Index to know for sure, which will be released mid to end of January.

But the likelihood is that house prices will have fallen by around 1% at the end of December 2023 compared to the previous year.

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Predictions For Next Year
While the currently available data doesn’t help to definitively answer the question of have house prices fallen or risen, there is more consensus about what direction prices will go this year.

Most commentators, including Rightmove and Nationwide, agree that house prices are likely to decline in 2024. Even Halifax believes that house prices will drop by between 2% and 4%.

Despite mortgage rates having come down recently as lenders compete for borrowers, mortgage rates are still at an elevated level. Inflation is also slowing, but prices for many everyday items are still high, putting pressure on many household budgets.

The current economic uncertainty will likely continue into 2024, keeping many buyers and sellers cautious.

Source: Property Road

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Property industry delivers verdict on new UK house price data

Property prices in the UK rose for the third consecutive month in December 2023, according to the latest Halifax HPI data.

The cost of an average UK home rose to £287,105, up £3,066 (+1.1%) from November, reaching the highest level since March 2023.

According to Halifax, this means the housing market beat expectations in 2023 and grew by 1.7% on an annual basis.

The average property price is now £4,800 higher than it was in December 2022.

Kim Kinnaird, director for Halifax Mortgages, said: “Whilst it’s encouraging that we saw growth in the last three months of the year, this was preceded with property price falls for six consecutive months between April and September.

“The growth we have seen is likely being driven by a shortage of properties on the market, rather than the strength of buyer demand. That said, with mortgage rates continuing to ease, we may see an increase in confidence from buyers over the coming months.”

Across all the UK regions, Northern Ireland recorded the strongest house price growth in 2023, with properties increasing by 4.1% to £192,153. Scotland saw property prices rise by 2.6% to £205,170.

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At the other end of the scale, the South East fell most sharply, with houses there now averaging £376,804, down by £17,755 (-4.5%).

Kinnaird said: “As we move through 2024, the UK property market will continue to reflect the wider economic uncertainty and buyers and sellers are likely to be naturally cautious when considering making a move.

“While wage growth is now above inflation, helping to ease cost of living pressures for some and improving housing affordability, interest rates are likely to remain elevated for as long as inflation remains markedly above the Bank of England’s target.

“Our latest forecast suggests house prices could fall between 2% and 4% during the coming year, although, as with recent years, forecast uncertainty remains high given the current economic climate.”

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

More reaction

Anthony Codling, managing director, equity research, RBC Capital Markets, said: “The demise of the UK housing market is somewhat over reported. Most, including us, thought house prices would fall during 2023, and most think they will fall in 2024, but not us.

“With rising wages, falling inflation, falling mortgage rates, and increasing talk of election-related housing stimulus packages, we expect house prices to rise in 2024. Our pessimism was misplaced in 2023, and we don’t want to make the same mistake twice.”

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Source: Property Industry Eye

By Jerome Smail

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Savills predicts over 8% annualised returns in eight UK property sectors for 2024

Savills forecasts that eight asset classes in the UK property market are set to achieve annualised returns exceeding 8% for 2024.

This includes buy-to-let in the North West, London industrial properties, and retail warehouses, which are expected to be the top performers, with annualised investment returns between 8.5% and 9.2% from 2024-2028.

The upcoming year is seen as an opportune time for commercial investors, as retail, industrial, and office spaces are projected to be more affordable. The private rented sector’s challenges are likely to prompt institutional landlords to focus more on Built to Rent and Purpose Built Student Accommodation.

Farmland is also identified as a key area, expected to contribute significantly to net zero initiatives. Demand for prime arable land, primarily for food production, is anticipated to remain high, influenced by global events and environmental concerns.

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Richard Merryweather, Savills joint head of UK investment, highlights the positive shift in the market: “The factors that drove falls in UK property values and transaction levels over the last two years are expected to improve in 2024. There will be significant opportunity – especially in the commercial and residential spaces – for investors to buy at the bottom of the market.”

In 2024, investment focus is expected to shift to asset-specific basics rather than sector-wide trends. Strategic logistics projects, prime and green office spaces, and certain retail market segments are identified as areas with potential for better than average rental growth. The residential market is also expected to recover, with prospects for growth in mainstream house prices by 2025.

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By Ryan Fowler

Source: The Intermediary

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UK house prices rise again as easing of mortgage rates tempts more buyers

UK house prices rose for the second month in a row in November, according to a leading index, as a slight easing in mortgage rates helped coax more buyers into the market.

The average price of a UK property rose by £1,394 – or 0.5% – last month to £283,615, according to the mortgage lender Halifax.

It signals an uptick in activity across the housing market, where price growth has stalled over the past year because of an increase in interest rates and subsequent affordability pressures that have driven away otherwise eager buyers.

UK house prices have also been underpinned by a shortage of available properties over the past year, as many sellers wait for the market to normalise and prices to recover.

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On an annual basis, prices are down 1%, although Halifax said this was a “relatively modest” drop given the economic headwinds that have weighed on consumers over the past 12 months. Average house prices are still £40,000 above pre-pandemic levels, having been skewed during the Covid crisis, when people scrambled to buy larger homes.

“Recent figures for mortgage approvals suggest a slight uptick in activity levels, which is likely as a result of an improving picture on affordability for homebuyers,” Kim Kinnaird, the director of Halifax Mortgages, said. “With mortgage rates starting to ease slightly, this may be leading to increased buyer confidence, seeing people more inclined to push ahead with their home purchases.”

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However, Kinnaird said house prices were unlikely to continue their upward climb into the new year. “The economic conditions remain uncertain, making it hard to assess the extent to which market activity will be maintained. Other pressures – like inflation, the broader cost of living, overall employment rates and affordability – mean we expect to see downward pressure on house prices into next year.”

Northern Ireland has experienced the strongest rise in house prices over the past 12 months, with the average home costing £4,294 more compared with last year, at £184,684.

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The Guardian

By Kalyeena Makortoff

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UK house prices rise for third straight month as mortgage rates fall

Nationwide says average property price was £258,557 in November, £5,231 down on same month last year

UK house prices rose for a third consecutive month in November as the market responded to hopes that mortgage rate costs had peaked.

Nationwide, the UK’s biggest building society, said prices rose 0.2% month on month in November, after a 0.9% rise in October and a 0.1% rise in September. Economists polled by Reuters had forecast a 0.4% fall in prices in November.

It is the first time that homeowners have seen the value of their property rise at least three months in a row since the summer of last year.

On an annual basis, prices were down 2% in November, the best in nine months and after a 3.3% year-on-year fall in October.

The average price of a home was £258,557 in November, £5,231 down on the value of a typical property in the same month last year.

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Nationwide said the improvement in the market has followed the view that the Bank of England’s move to hold the base interest rate at 5.25%, after a run of 14 consecutive increases, means soaring mortgage costs will start to drop, fuelling more activity in the housing market.

“There has been a significant change in market expectations for the future path of the bank rate in recent months which, if sustained, could provide much-needed support for housing market activity,” said Robert Gardner, the chief economist at Nationwide. “By the end of November this had shifted to a view the rates have now peaked and that they will be lowered to about 3.5% in the years ahead.”

In November, the Bank of England kept the rate at 5.25% for a second time, albeit still at a 15-year high, which has helped to push some two- and five-year fixed mortgage rates back down to below 5% – down from peak levels of more than 6%.

Last month, the sharp drop in inflation from 6.7% to 4.6% fuelled hopes that the Bank of England might start cutting rates next year.

However, earlier this week Andrew Bailey, the governor of the Bank of England, said there was no immediate prospect of an interest rate cut as the Bank faces a tough battle to bring inflation back to its 2% target.

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Mark Harris, the chief executive of the mortgage broker SPF, said: “The direction of travel for new mortgage rates is downwards, with a number of lenders making reductions this past week and bringing some early Christmas cheer to borrowers.

“However, while interest rates appear to have peaked, those hoping base rate will move swiftly downwards again to the rock-bottom levels of the recent past are likely to be disappointed. Pricing is higher than borrowers have grown used to over the years, meaning those buyers relying on mortgages are more price-sensitive on the back of ongoing affordability concerns.”

By Mark Sweney

Source: The Guardian

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The housing market is booming – if you know where to look

Residential property prices in some parts of Britain have continued to increase strongly over the past year despite the wider housing market slowdown, according to Halifax.

More than 300 local authority areas across Britain were analysed during Q3 2023 based on Halifax’s house price index.

This was compared with Halifax’s house price data covering the corresponding period last year.

The study revealed that house prices rose in more than 70 areas, led by gains in the Brecon Beacons, Powys, in Wales, where house prices rose by an average of 17.4% year-on-year.

Kim Kinnaird, director at Halifax Mortgages, said: “There are multiple factors which can impact house prices in your local area, ranging from the mix of properties available and the extent of any new housing, to the quality of schools and abundance of job opportunities.

“What’s clear is that the UK housing market is not a single entity that performs in a uniform way across the country, there are differences. While at a national level the current squeeze on mortgage affordability has seen property prices fall over the last year, in many regions there remain pockets of house price growth. While a limited supply of properties for sale could be a factor, this also suggests in some areas, local market activity – and demand among buyers – remains strong.

“Many of the places highlighted in our research also benefit from more remote or rural surroundings and incorporate areas of outstanding natural beauty. These are traits which continue to be desirable for prospective homeowners, bucking the trend of the wider performance of the housing market.”

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Here are the top 10 local areas of Britain with the strongest house price growth over the past year, according to Halifax:

  1. Powys, Wales, £216,307, £253,958, +17.4%, or £37,651
  2. East Lindsey, East Midlands, £194,533, £220,421, +13.3%, or £25,888
  3. Moray, Scotland, £162,258, £179,606, +10.7%, or £17,347
  4. Babergh, Eastern England, £317,383, £349,965, +10.3%, or £32,583
  5. Sunderland, North East, £138,579, £150,862, +8.9%, or £12,283
  6. Ealing, London, £494,100, £531,127, +7.5%, or £37,027
  7. Westminster/City of London, London, £714,242, £767,350, +7.4%, or £53,108
  8. Bolsover, East Midlands, £167,398, £179,453, +7.2%, or £12,054

=9. Cumberland, North West, £165,346, £176,470, + 6.7%, or £11,124

=9. Rossendale, North West, £185,658, £198,102, + 6.7%, or £12,444

Here are the local areas with the strongest house price inflation in Scotland, Wales and the English regions over the past year, according to Halifax:

– East Lindsey, East Midlands, £194,533, £220,421, + 13.3%, or £25,888

– Babergh, Eastern England, £317,383, £349,965, + 10.3%, or £32,583

– Ealing, London, £494,100, £531,127, + 7.5%, or £37,027

– Sunderland, North East, £138,579, £150,862, + 8.9%, or £12,283

– Cumberland, North West, £165,346, £176,470, + 6.7%, or £11,124

– Moray, Scotland, £162,258, £179,606, + 10.7%, or £17,347

– Runnymede, South East, £439,825, £462,301, + 5.1%, or £22,476

– Torridge/West Devon, South West, £295,521, £306,436, + 3.7%, or £10,915

– Powys, Wales, £216,307, £253,958, + 17.4%, or £37,651

– Sandwell, West Midlands, £178,755, £185,798, + 3.9%, or £7,043

– Kingston-upon-Hull, Yorkshire and the Humber, £121,289, £127,523, + 5.1%, or £6,234

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

Commenting on the data, Tom Bill, head of UK residential research at Knight Frank, said: “The UK is made up of tens of thousands of individual housing markets, which means price growth can also diverge between two areas in the same local authority.

“Broadly speaking, more affordable parts of the country are gradually closing the gap with London, where affordability is at its most stretched. The gap will get narrower without closing as buyers look beyond the capital for better value.

“The more important point for anyone interpreting house prices at the moment, is that fewer transactions can distort the data. The underlying health of the housing market is not necessarily gauged by what is happening to house prices but rather transaction volumes, which are down by more than a fifth.”

Nigel Bishop of Recoco Property Search, commented: “An increasing number of house hunters discover the upsides of rural living and favour areas that not only sit within close proximity of parks but also offer a community feel and an array of lifestyle choices.

“It’s particularly city dwellers as well as young families, who wish to raise their children in a more quaint environment, that are driving this demand for properties in a more rural setting. Boutique towns and villages with restaurants, cafés, entertainment as well as sporting facilities are especially sought-after which has resulted in property prices in such locations to go up.”

Jeremy Leaf, north London estate agent, added: “These numbers are interesting because they show the pattern of values in different areas and how markets are not the same. There is no real substitute for studying the market and area you are interested in carefully because it may well be in front of ,or behind, the national average or pattern.
“The market is made up of many different micro markets, producing different results, which is why it is so important to do the groundwork. A national average figure should be relied upon as a guide only.
“In any event, we tend to be a bit too fixated on prices. There are other factors also worth taking into consideration such as transaction numbers, discount to asking price and time on the market, as well as supply and demand. From neighbourhood to neighbourhood the picture can alter significantly.”

By Marc Da Silva

Source: Property Industry Eye