Housing Market
News covering issues affecting the UK residential property market, house prices, interest rates and buying and selling trends.
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House prices stable as transactions dip
The latest house price data from the Land Registry shows that house prices in England and Wales remained stable on a monthly basis, despite figures from HM Revenue and Customs (HMRC) revealing that there was a drop in transactions. Although prices remained flat overall on a monthly basis, there were parts of England and Wales that saw rises, led by London where the average price of a home appreciated by 0.7 per cent month-on-month. On an annual basis, the Land Registry data revealed that prices rose by an average of 4.6 per cent in the year to May 2015 to £179,696. Again, London led the surge, with prices in the capital increasing by 9.1 per cent year-on-year. “Land Registry data shows that house prices are continuing to march upwards with London and the South East seeing the greatest annual growth,” said Brian Murphy (left), Head of Lending at Mortgage Advice Bureau (MAB). “The trend is not deterring homebuyers, as mortgage approvals are also at their highest since the Mortgage Market Review (MMR) was implemented according to the British Bankers’ Association (BBA). But it does mean that the average borrower is taking out a bigger loan than at any point since…
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Property demand continues to soar
With uncertainty regarding the outcome of the general election over, demand to buy and rent property rose sharply in May, according to the National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents (ARLA), but property supply is not keeping pace. The NAEA report that demand from buyers hit an eight-month high last month, with 383 house hunters registered on average per branch in May, up from 344 in April, and the highest number recorded since September 2014, when 406 house hunters were registered. The supply of properties coming onto the sales market also rose in May with 46 houses up for sale per NAEA member branch, compared to 43 in April, but remains well below the level needed to help meet rising demand levels. Nevertheless, this led to a marginal rise in the number of sales per member branch, with nine sales agreed in May, compared to eight in April. Mark Hayward (left), Managing Director at NAEA, said that the increase in the volume of house-hunters searching for homes was owed to a rise in confidence following the certainty that the outcome of the General Election delivered. He commented, “The housing shortage will not be solved…
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Housing policy set to dominate London Mayoral elections
The chronic shortage of residential properties in London is one of this country’s “biggest public policy failures of the last 50 years”, according Lord Bob Kerslake (right), who has been appointed Chairman of a new commission set up to help boost the supply of affordable homes in the capital. Lord Bob Kerslake, the former head of the civil service and existing Chairman of Peabody, will, along with Terrie Alafat, Chief Executive of the Chartered Institute of Housing (CIH) head up the Institute for Public Policy Research (IPPR) commission, which will also be joined by Mark Clare (left), the outgoing Chief Executive of Barratt Homes, Nick Walkley, Chief Executive of Haringey Council and Professor Rebecca Tunstall of the University of York. Lord Kerslake said the lack of housing in London, particularly affordable properties, may deter many firms from relocating to the capital, while many couples are being forced to delay having children. “This is one of the defining challenges for London,” he said. “It puts at risk London’s global status because if it becomes increasingly too expensive to live in London, why would businesses come here?” The new Commission on Affordable Housing in London, set up by the IPPR think tank,…
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Do builders really have too many land banks?
If you’ve ever wondered why it takes so long for new homes developments in your area to go from planning permission to completion, then a report by the Campaign for Rural England (CPRE) attempts to explain the strange world of land banks. The CPRE’s dossier on new homes building in the UK is a damming summary of the factors that prevent more new homes being built in the UK, something that frustrates many of the agents waiting to sell them. The Getting Houses Built report, published this month, lays the blame at the feet of the developers, which it collars for focussing too much on profit while “dictating supply but not meeting need”. One of the more surprising facts to emerge from the report is that the nine largest volume builders have a land bank of some 340,000 housing plots. While the CPRE admits that shareholder value will never override national house-building targets, it says the high levels of land ‘banked’ reveal the need for urgent reform. To fix this problem, the CPRE suggests that developers are granted planning permission on a ‘use it or lose it’ basis with a five-year limit, after which land would be compulsorily purchased off…
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Remove barriers to boost house building levels, says Savills
Private house builders could start building significantly more new homes in England if barriers to growth were cut, according to Savills. A new report from the property firm makes various recommendations on ways that house building levels could be increased, with a view to reducing the ever growing supply-demand imbalance in the market. The recommendations include increasing planning consents in high demand areas; boosting the supply of land; continued support for residential property developers and a rise in the building rate of local authorities and other bodies. In spite of a rise in the volume of new housing starts in recent months, Savills reported that there still remains a major shortfall, owed in part to insufficient land available for residential development. The report by Savills said there was the potential to construct 205,000 new homes per year, up 64,500 compared to the existing rate, if the supply of development land and planning consents increased in areas of high demand. At present, more than half of new homes – 54 per cent – are being built by the 11 largest house builders, while a third of new properties are being built by medium sized house builders. But Savills said that a…
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Property prices set to soar
Residential property prices are set to rise sharply over the next few years, as the supply of housing coming onto the market continues to fall, according to the RICS UK Residential Market Survey for May. The report shows that despite growing demand from buyers, the stock of homes per surveyor in May dropped to the lowest level since the data series started in January 1978, pushing home prices higher in the process, and at a quicker pace than in April. 34 per cent more surveyors saw prices increase in May as the supply of homes coming on to the market fell for the fourth month in succession with 19 per cent more surveyors reporting a decline in new instructions. According to RICS, the average stock of residential property per surveyor has fallen by around 12 per cent since the start of 2015. Consequently, 38 per cent more surveyors expect to see property prices increase over the next three months, supported in part by the fact that new buyer enquiries rose at the fastest rate in over a year. RICS Chief Economist Simon Rubinsohn (left) said, “There had been some hope that the removal of political uncertainty would encourage more properties…
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What does new benefits cap mean for private rental market?
The government has published figures that reveal the impact of its 15-month-old household benefits cap which restricts payments to £500 a week for a family and £350 a week for a single person. Claimants who receive more than these figures have the excess deducted off their Housing Benefit entitlement and this, while applying to social housing providers, is also impacting the private rented sector – which costs the government approximately £10 billion a year in Housing Benefit payments. The scale of the cap has been significant, the figures released this week show. So far some 58,700 households have been affected and most of these have been larger families living in high rent areas. Before the election the Coalition hailed the scheme a success, saying some 22,000 households “have moved into work, reduced their Housing Benefit claim or [are] no longer claiming Housing Benefit at all”. The new Conservative government promised to reduce the cap further in its manifesto from a family annual maximum of £26,000 to £23,000 and this measure, the Queen’s Speech revealed, is to be introduced during the first year of parliament. What wasn’t mentioned in the speech was the affect this is likely to have on the…
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Airbnb makes a step closer to lettings market
The US-based home sharing website Airbnb, which enables its users to search through a database of over a million homes worldwide and 25,000 in the UK, has this week launched a professional property management software suite called Guesty aimed at professional landlords. At first glance the move would seem to contain little to worry the UK’s letting agents. Airbnb markets itself as a way for holiday makers to find affordable accommodation and avoid paying the high night rates that hotels and B&Bs charge. Described as part of the ‘sharing’ economy and using a model that’s compared with taxi service Uber, Airbnb recently claimed to have so far generated over half a billion pounds of economic activity in the UK. But what Airbnb is really muscling in on – in a way that might alarm some lettings agents – is the peripheries of the private lettings market as the service becomes a new and low-cost alternative income stream for landlords. The Guardian newspaper recently analysed more than 13,000 Airbnb listings in London – by far its largest UK market – and discovered that 6,600 of them offered an entire home or flat, rather than a spare room – a clear sign…
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Town planning expert slams Right to Buy scheme
Giving housing association tenants the right to purchase their homes will do nothing to solve the UK housing crisis but instead is aimed at targeting new Tory voters, a Birmingham City University expert has warned. Alister Scott, Professor of Environment and Spatial Planning at Birmingham City University, describe the Government’s plans to extend Right to Buy discounts to 1.3 million housing associations as a “double whammy and bad news for the provision of social housing”. The Government announced new measures in the Queen’s Speech to Parliament last week, giving tenants the Right to Buy their homes while requiring councils to sell off high-value properties and invest the proceeds into building affordable ones. But Professor Scott pointed out that history has shown that the replacements of new homes will not keep up with the losses of housing associations stock and high price stock of council housing, and that the spatial impact of where these properties are lost will be significant and will worsen the housing waiting lists. Professor Scott (right) also highlighted other Government initiatives that seem destined to fail. He commented, “David Cameron’s recent pre-election pledge for 200,000 new discounted houses is what I would call a ‘Ryanair approach to…
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PRS set to soar
The private rented sector (PRS) is expected to increase by 700,000 households to 5.5 million by 2020, accounting for one-fifth of the total housing stock in this country, according to a new report. A fresh study on the buy-to-let sector by Kent Reliance finds that the PRS now accounts for 18 per cent of all housing stock, after almost 150,000 new households were added to the PRS in the year to March. A higher number of buy-to-let investors entering the market coupled with capital growth have led to an average rise of 11 per cent in the total value of PRS property, or £97.8 billion, to £990.7 billion, with gains led by London, at £406.5 billion, followed by the South East at £147.6 billion. Andy Golding, Chief executive, Kent Reliance, said, “Buy-to-let has come of age, moving from a niche asset class to one big enough to rival the stock market. Landlords are seeing the benefit of a structural change in Britain’s housing market, with tenant demand ever strengthening. Yes, house prices are showing signs of steadying somewhat, but growth remains brisk.” If recent growth continues, the whole sector is set to be worth in excess of £1 trillion by…
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