Rightmove: “Asking prices hit record high despite EU vote.”
NAEA: “Referendum uncertainty triggers three year low for house buyer demand.”
RICS: “Post-referendum uncertainty hits sentiment.”
Nationwide: “Slight uptick in house price growth in June.”
Halifax: “Annual house price growth eases to 8.4 per cent.”
LSL Acadata HPI: “House prices in June continue to rise by 0.6 per cent.”
Hometrack: “House price boost in regional cities, with Brexit impact uncertain.”
Kate says: As they say in football, this year is likely to be a game of two halves! The first part had a positive impact on the market with a rush to buy before the three per cent stamp duty was implemented on second homes and for the second half of the year, price growth is likely to be dragged down (not necessarily fall), with the EY ITEM club predicting prices will end up around 4.8 per cent higher than last year – suggesting price inflation will now lag.
East of England is a new hotspot, led by towns such as Luton and Thurrock with annual growth of 21% and 16 % respectively.
It’s important to note that the indices above track the market at different times and areas, hence the different trends and average prices.
England is doing well versus Wales, Scotland and Northern Ireland, with the latter still suffering from serious overpricing with a potential bubble being identified in the future if prices never recover. But this is down to a few areas, such as London, Cambridge, Bristol, Milton Keynes and Reading. In contrast, some areas such as Newcastle and the North East in general are seeing no growth at all, with properties selling at 13 per cent less than they were bought for before the credit crunch. Property price movements are hugely diverse. In five of the 26 towns and cities we track, their averages attract zero stamp duty, while 10 areas are selling property for less than £150,000, showing that affordability isn’t an issue ‘everywhere’ across the UK.
In contrast, five areas have averages of over £250,000 with London and Cambridge averages rising to over £400,000.
SALES AND TRANSACTIONS DATA
Kate says: We often spend far too much time on what’s happening to property price movements and not enough on transactions. The data above shows the enormous impact the stamp duty change had on transactions, many of which were clearly brought forward as sales then slumped.
A fall in demand is a nightmare from an industry perspective. It reiterates the need for agents to diversify their client offering and make contacts to sell new homes.
Currently LSL Acadata HPI expects property transactions to recover, depending on the impact of Brexit. However over the coming months, transactions are likely to fall. Partly because the number of homes coming onto the market is going to be restricted due to factors including: economic uncertainty; much of the south having run out of steam post the credit crunch recovery and the tax changes to Buy to Let which, though it’s unlikely to stop existing investors, may reduce the number of new ones entering the market.
A fall in demand and supply is a bit of a nightmare from an industry perspective and re-iterates the need for agents to diversify their client offering and to make contacts to sell new homes – and especially shared ownership in London – as the number of existing homes coming onto the market is likely to be restricted.
RICS: “The outlook for price growth over the year to come has softened significantly with the 12 month price expectations balance coming in at 0 per cent, down from 54 per cent the previous month. Expectations moderated in all parts of the UK but only turned negative in London and East Anglia, where a number of contributors expect prices to fall. (Jun 16).”
LSL Acadata HPI: “The country has a new hot spot for house price growth: the East of England region, led by commuter towns such as Luton and Thurrock. With annual growth of 21 per cent and 16 per cent, respectively, these continue to shrug off the uncertainty, and even these trail Slough in Berkshire. Bolstered by the Crossrail development’s links to central London and a growing local economy, it was again the strongest performing single unitary authority this month, with 21.5 per cent annual growth. (Jun 16).”
Hometrack: “A pattern of stronger growth in regional cities is emerging with highest growth rates in the last quarter in Liverpool (5.4 per cent), Bristol (4.2 per cent), Manchester (3.9 per cent) and Leeds (3.7 per cent). The question now is how the referendum result will impact the near to medium outlook. (May 16).”
DEMAND FOR PROPERTY
NAEA: “Despite demand falling, sales to first time buyers increased in May, with 27 per cent of total sales made to the group. The number of sales agreed on average per branch decreased in May, from nine to eight this month – the same as in January. (May 16).”
RICS: “The more southern parts of England saw the sharpest fall in demand with 58 per cent more surveyors in London seeing a decline rather than a rise in buyer interest. In East Anglia and the South East, respondents reported a fall in enquiries. (Jun 16).”
LSL Acadata HPI: “The unusually high levels of sales in March, due to buyers bringing forward their purchases prior to the 3 per cent stamp duty surcharge on second homes and investment properties, were followed by extremely low levels of sales in April and May. In both months, sales were 24 per cent lower than the same two months last year. In June 2016, we estimate that sales have reached 72,000, 13 per cent lower than in June 2015. (Jun 16).”
Bank of England: “The number of loan approvals for house purchase was 67,042 in May, compared to the average of 70,598 over the previous six months. (May 16).”
BBA: “Gross mortgage borrowing of £12bn was 10 per cent higher than in May 2015. House purchase approval numbers have bounced back a little from the low numbers seen in April (following the surge in the first few months of 2016) but are still two per cent lower than in May 2015. (May 16).”
SUPPLY OF PROPERTY
Rightmove: “Some signs of referendum-associated uncertainty with fewer new sellers coming to market: newly-marketed property numbers down 5.3 per cent compared to average at this time of year and most reluctant are owners of larger homes (four or more bedrooms), down 6.6 per cent on the average. (Jun 16).”
NAEA: “The number of properties available increased marginally in May, from 35 properties available per branch in April, to 37 last month. (May 16).”
RICS: “The supply of properties coming available for sale across all areas except Norther Ireland reported a decline rather than a rise in new instructions. (Jun 16).”
NEW BUILDS AND PROPERTIES FOR SALE
During March ‘16 – May ’16:
- The number of NHBC new home registrations was 41,180, up five per cent decrease on the same period last year (43,452)
- 31,669 were registered in the private sector, up three per cent decrease compared to last year (32,494)
- 9,511 were registered in the public sector, up 13 per cent decrease compared to last year (10,958) Source: RICS
NEW BUILD STOCK COMING TO THE MARKET
HBF: “Residential planning approvals slipped back during the first quarter of 2016 from the high level seen in the final three months of last year, but remained ahead of a year ago. At 73,300 the number of units approved during the quarter was 14 per cent down on the previous quarter, but four per cent up on the first quarter of 2015. The year on year rise was driven by 17 per cent increase in the number of private housing units approved. In contrast 20 per cent fewer social housing units were approved. (Q1 16).”
NHBC: “Almost 13,000 new homes were registered to be built in the UK in May according to NHBC.
A total of 12,975 new homes (9,621 private sector; 3,354 public sector) were registered in May, compared to 14,149 (10,862 private sector; 3,287 public sector) 12 months ago, a decrease of 8 per cent compared to a year ago. However, completions were up 8 per cent for the month compared to last May (12,045 in 2016; 11,149 in 2015). There were 41,180 new home registrations in the rolling quarter (March 2016 – May 2016), a decrease of five per cent on last year’s figures (43,452).
“During these three months, four out of 12 UK regions experienced increases in registrations, compared to 2015, including the South East (up 21 per cent) and the North East (up seven per cent). (May 16).”
Kate says: It is good that supply of properties are increasing this year as we desperately need new stock going onto the market to help satisfy demand and boost the stock availability for the industry, which helps to drive local economies too.
However, for the government and the housing industry to achieve it’s 250,000 a year target, quarterly figures need to rise.
The good news though is the increase in public sector housing – a ‘housing crisis’ doesn’t exist everywhere for everyone, it’s mostly specific to each area and a problem due to a lack of social and affordable homes.
Kate Faulkner, Property Market Analyst and Commentator
Telephone: 01652 641722