Housing Market
News covering issues affecting the UK residential property market, house prices, interest rates and buying and selling trends.
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London to be hit by triple whammy as experts predict soft property market during 2018
House price rises will slip behind inflation this year by half a percent across the UK and 1.6% in London, it has been predicted by over 30 leading property market experts. News agency Reuters, which polled the unnamed experts last week, says continuing worries over Brexit and weak consumer spending will subdue house price rises and investment confidence in the property sector. “Would-be sellers are holding onto assets for longer and buyers are being a little more diligent before committing to significant expenditures, all this against a backdrop of inflation-surpassing wage growth,” says Rod Lockhart of online mortgage firm LendInvest (pictured, left). Reuters says a majority of the experts it polled believed that the effect of the UK’s planned exit from Europe on London had been to decrease sales turnover, but that the picture was less clear nationally. Eleven of the 18 experts who answered the question on property sales said London’s turnover would decrease this year, driven by huge affordability problems, Brexit but also the government’s tax-hikes for landlords. “Quite simply, with loan-to-income ratios for first time buyers sitting at around four times, average salaries of £33,000, and your average flat in London costing over £500,000, it’s extremely difficult…
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NO DSS notices now “unlawful” claims Shelter following landmark case
Letting agents who try to screen out applicants for rented properties who are on benefits may now be breaking the law, it has been claimed. This follows legal action brought by Birmingham tenant Rosie Keogh with the help of housing charity Shelter against a lettings agency after she claimed to have been rejected because part of her rent was to be paid by housing benefit. “You feel like a second-class citizen,” she told the BBC. “I felt as a housing benefit claimant I was somehow not be trusted with paying my rent on time.” Rosie (pictured, left) says she hopes the case will stop the common NO DSS signs seen in many rental ads by setting a precedent making the “No DSS rule unlawful [which] will then open up the market so everyone can participate in it,” she said. The Moseley-based part-time cleaner and former para-legal secretary had a eleven-year track record of paying her rent on time before encountering problems in 2016 when she applied to rent a property marketed by lettings firm Nicholas George. She claimed that, because 60% of people on housing benefit are women, and that 95% of single parents are women, the agent’s actions discriminated…
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Dramatic drop in tenant arrears despite rising rents, says Your Move
There has been a dramatic reduction in the number of tenants who are in arrears despite rising rents across the UK, it has been claimed. Agent Your Move says 8.4% of its tenants were in arrears during January, down from 12.4% in December and significantly less than six months ago when arrears peaked at 13.7% of its tenants. It’s also much lower than the post-financial crash figure of 14.6%, which Your Move recorded in February 2010. Tenant arrears are improving despite rising rents, which Your Move says have increased by 2.5% across England and Wales over the past 12 months to an average of £829 per property, just under the Bank of England’s current reported inflation figure of 2.8%. Regional differences But the company says this figure masks regional differences. Rents increased by 2.9% in the North West but dropped by 2% in the North East. The data follows our report yesterday that the number of managed rental properties dropped by 8% during January, which ARLA blamed on the government’s recent tax increases for landlords and said would lead to increased rents. And the shocking difference in rents between London and the rest of the UK continues, Your Moves says.…
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Number of managed rental properties drops by 8% during January
The government’s tax-take on landlords is having the effect many predicted it would as the Association of Residential Letting Agents (ARLA) reports an 8% reduction in the number of rental properties managed by agents during January. ARLA says its member agents reported 184 rental properties managed per branch compared to 200 during December, the lowest figures for four months. Such an alarming contraction in the market during a traditionally busy period is also taking its toll on tenants’ finances, ARLA says. As the housing market forces more people into rented accommodation rather than ownership, ARLA says the number of tenants registered with agents increased from 59 to 70 per branch. Rough ride ARLA’s Chief Executive David Cox (pictured, below) says renters are in for a “rough ride” this year as the imbalance between supply and demand begins to push up rents. It’s already begun, ARLA claims, revealing that nearly a fifth of tenants experienced rent increases during January, up from 16% during December. The ARLA figures are backed up the latest rental index, which found that rents in the UK are rising across every region for the first time in two years. Buy-to-let lender Landbay, which produced the index, also…
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Property sales remain flat during January, says HMRC
Property sales in the UK during January increased by 1.3% month-on-month, hitting 102,610 transactions says HMRC, but down 0.1% year on year. These figures, which are seasonally adjusted to take account of the Christmas shutdown, are for all residential sales over £40,000. “Property transactions have remained stagnant for quite some time now,” says Richard Sexton, Director of e.surv (pictured, left). “Although our latest research showed one-fifth of mortgage approvals went to first-time buyers last month, if we are to see a real boost in numbers and overall market activity, we need to address our country’s limited housing supply which is acting as a roadblock.” Jeremy Duncombe, Director, Legal & General Mortgage Club, (pictured, right) says: “It is clear that a lack of housing supply across the UK continues to take its toll on the market. “Not only is it having an impact on potential borrowers who want to make their first move onto the property ladder, but it’s also limiting the options available to those who are looking to downsize in later life.” But HMRC’s detailed figures also reveal that, despite much commentary from agents about a difficult market in London and the South, overall UK transactions have been increasing each…
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House hunters are returning to the property market, claims Rightmove
The latest house price index from Rightmove reveal rising home hunter activity, an increase in properties coming to market, and asking prices going up in all but one region of the UK. Also, the portal says the contraction in the number of homes being sold in recent months is now losing steam. Its figures, which are for January, reveal that the average asking price has increased by 0.8% across the UK; that the number of properties coming to market rose by 2%; and that agent stock held steady (see graph, right). Also, the number of homes sold contracted by only -1.6% during January, compared to -5.5% in the final quarter of 2017. As well as reporting record traffic to its website at 141 million visits last month, Rightmove says the hottest property market is in the Midlands, where asking prices are rising three times faster than the national average. “The average price of newly-marketed property in the Midlands is up by over 5% compared to a year ago, a marked contrast to parts of London and its commuter belt,” says Rightmove’s Miles Shipside (pictured, left). “Many buyers in the Midlands are willing and able to pay more to secure their…
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Revealed: why house sales are going down every year
Agents who wonder why the number of house sales continues to decline every year, and why it’s harder to find stock and buyers need ponder no more. The answer is that young middle-class buyers has been all but wiped out from the property market by fast-rising house prices over the past twenty years. Or at least that what is being claimed by the Institute for Fiscal Studies (IFS). The venerable organisation has crunched the figures and says that in 1995 65% of those between 25 and 34 years old in the middle 20% income bracket owned their own home, a figure that today is just 27%. The key reason for this, the IFW says, is that house prices have risen too fast. The mean price for a property in the UK has soared by 152% since 1995 when adjusted for inflation while the average family income has barely caught up, rising by just 22% over the same period. This has helped the average income to house price ratio to double from four to eight times, while for 38% of first time buyers the homes they want to buy are ten times their income, up from 9% of FTBs in 1995.…
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Don’t blame flat property market on recent interest rate rise, says Bank of England
The impact of last November’s half-a-percent interest rate rise on home buyer confidence has been offset by the UK’s cheap and readily-available mortgages, the Bank of England (BoE) has revealed in its latest update on the economy. The report, which is compiled by its 12 agents across the country by talking to 700 businesses including estate agents, looked at the economy from late November last year until mid-January 2018 and compared business activity with the previous quarter and year. As well as increasing its base rate from 0.25% to 0.5% in early November last year, the BoE’s Monetary Policy Committee last week said another interest rate rise could take place as early as May. It also said that more interest rates are in the pipeline as the economy grows, signalling an end to UK homeowners’ reliance on cheap mortgages and credit. The BoE Agents’ Report also says that housing market activity remains subdued but steady, held down by both weak supply and demand, but that the new-build and rental sectors remain buoyant, pushing up new-build prices and rents. “Housing demand was particularly weak in London and the South East, especially for the most expensive properties,” it says. The BoE report…
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City’s biggest Purplebricks backer faces tougher times
Traditional agents who are unhappy about the rise of the UK’s largest hybrid agency Purplebricks may find succour in the declining fortunes of its biggest backer, investment fund manager Neil Woodford (pictured, right). His company Woodford Investment Management has been investing millions of pounds into Purplebricks from 2014 onwards and publicly backed the agent’s ‘innovative approach’. Many of his firm’s key funds now include exposure to its stock, in one case of up to 7%. But the highly-successful City figure, whose own website describes him as one of the most influential UK investment managers of his generation, has been facing a stickier wicket than normal in recent months. Woodford specialises in property and has invested heavily in many leading UK property firms including, as well as Purplebricks, Taylor Wimpey, Barratt, Countryside, Crest Nicholson and several commercial property REITS. Only two months ago one of Woodford’s most successful funds, the LF Woodford Equity Income Fund, reported that its “strongest performance came from hybrid estate agent Purplebricks, which reported interim results that showcased the very positive progress it is making across the board”. But, as commentators at both The Times and The Financial Times have noted recently, the City thinks otherwise and…
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Stamp Duty changes to blame for 14% dip in property sales volumes says Your Move
The changes to Stamp Duty ushered in by George Osborne in 2014 have reduced property sales in London and the South by up to 30%, analysis of Land Registry data has revealed. The number of homes sold each year has plummeted by nearly a third in London and by 20% in the South over the past two years, according to the monthly Your Move/Acadata house price index, although the sales volume reduction has been less acute nationally, at 14%. These figures are also very different across the UK. For example, in the northern regions the volume reduction is just 11% while in Wales the number of homes sold increased by 2%. “The slowdown in London can now also be seen in the South East. Time will tell if the rest of England and Wales remains resilient,” says Oliver Blake (pictured, left), Managing Director of Your Move. His company’s index reveals one silver lining and potentially brighter times ahead for agents. The Christmas/NY shutdown for 2017/18 did not depress sales volumes as much as it usually does during the festive season. “We estimate that the number of housing transactions [during] January 2018 in England and Wales at 64,000, down by 15%…
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