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HMRC: Residential transactions up 68.4%

Residential transactions in September stood at 160,950, 68.4% higher than September 2020 and 67.5% higher than August 2021, according to HM Revenue & Customs (HMRC).

The provisional seasonally adjusted estimate of UK non-residential transactions in September 2021 was 10,420, 20.2% higher than September 2020 and 8.4% higher than August 2021.

The provisional non-seasonally adjusted estimate of UK residential transactions in September 2021 is 165,720, 67.3% higher than September 2020 and 59.7% higher than August 2021.

The provisional non-seasonally adjusted estimate of UK non-residential transactions in September 2021 is 10,630, 17.8% higher than September 2020 and 17.0% higher than August 2021.

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John Phillips said: “As the UK housing market steadily edges closer to normality, property transactions are returning to familiar levels.

“There is no doubt that despite demand still desperately outweighing supply, the desire to move has not wilted for prospective buyers.

“Particularly those looking for larger homes as hybrid working models are adopted widely across the country and people seek office space at home. Buyers who find themselves in frenzied waters right now are – rightly so – making the most of low borrowing rates.

“As we look forward to the rest of 2021, it is safe to say that the number of buyers is not set to drop as people race to buy property before we see possible increases in interest rates.”

Stuart Wilson added: “Today’s findings are no surprise given the considerable activity witnessed in the run up to the conclusion of the stamp duty holiday.

“The holiday itself has been a resounding success, helping not only countless first-time buyers and second-steppers to move up the housing ladder, but also enabling silver spenders and last-time buyers to downsize, find more accessible housing, or move closer to family and friends.

“While the first-time buyer market was arguably the most buoyant, the stamp duty holiday encouraged more older borrowers to consider their options and we saw the tax break driving a 116% year on year increase in the number of people using equity release for property purchase.

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“This increase in borrowers using lifetime mortgages to fund purchase activity has been sustained even after the stamp duty holiday concluded at the end of September, suggesting that it was instrumental in driving awareness around this under-used benefit of lifetime mortgages. This is but one of its many healthy legacies.”

Richard Pike says “We are all on a bit of a roller-coaster ride at the moment.

“One moment we’re up and the next we’re down.

“The housing market climbed quickly to the top during the stamp duty holiday, then it dipped as expected, and now we’re heading up again.

“In reality, we’re still riding pretty high and house prices, as reported by the ONS, continue to climb as demand for properties with more space and away from city centres remains.

“Inflation may yet play its part and the Monetary Policy Committee will have a lot to think about in its next meeting.

“However, the economy is still fragile and, although raising interest rates may be the conventional way to put a lid on rising inflation, the question is, can we afford to hamper growth after such a long period of stagnation.

“We may well see interest rates rise in the coming months, but it is by no means a certainty.

“Coming out of the pandemic was always going to be a tricky time, but for now our market is weathering the storm while many other industries are taking the brunt.”

By Jake Carter

Source: Mortgage Introducer

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House price forecast: UK prices to stabilise in run up to Christmas

After a record breaking year, the housing market appears to have peaked and is set to cool, new research shows.

The latest Reallymoving House Price Forecast shows residential property prices will rise by just 0.1% over the final quarter of 2021 as the post-pandemic property market settles into a period of slower growth.

Prices will rise 1.3% in October, but decline by 0.1% in November and 1.1% in December. Conveyancing quote volumes are also on a downward trend, indicating a drop in buyer demand.

Conveyancing quote volumes continue to decline steadily, falling 4% between August and September, further indicating that buyer demand is settling back down to more normal levels.

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Reallymoving captures the purchase price buyers have agreed to pay when they search for conveyancing quotes through the comparison site, typically 12 weeks before they complete. This enables reallymoving to provide a three-month house price forecast that historically has closely tracked the Land Registry’s Price Paid data, published retrospectively.

It is estimated that house prices will rise by 1.3% in October as a result of deals agreed between buyers and sellers in July due to continued strong demand post stamp duty holiday and the limited supply of new properties coming on the market, creating greater competition for homes. This will be followed by a marginal fall of 0.1% in November and a larger drop of 1.1% in December, reflecting a drop in demand from buyers in the late summer as the post-pandemic property boom began to subside.

Following months of strong growth, house prices will rise by just 0.1% in the final quarter of 2021, bringing the average house price to £335,924 at the end of the year.

The shortage of stock as reported by agents is supporting property prices as the market adjusts to the end of all stamp duty incentives and the end of the furlough scheme, with the prospect of an imminent base rate rise an added incentive for buyers to get deals done as quickly as possible and secure a fixed rate mortgage deal while low-cost deals remain.

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Rob Houghton, CEO of reallymoving, commented: “A return to slower growth and a steadier housing market is welcome, but there are a number of factors converging which could knock consumer confidence over the coming months such as the supply chain crisis, rising inflation and living costs, plus the prospect of increasing interest rates – though it’s too early to see their impact in the data yet. While the reduced supply of new homes for sale is making things difficult, buyers who are ready to move now are keen to press ahead and lock in a fixed-rate mortgage deal, helping keep their borrowing costs low.

“First-time buyers who have found themselves increasingly priced out of the market will be encouraged by evidence that the post-pandemic property boom is running out of steam, with prices falling over the final quarter in five UK regions and less competition for starter homes now that stamp duty incentives are over.

“For those who have held off making their move due to the frenzied market conditions over the last few months, now is a good time to buy and lock in a five-year fixed rate deal that will insulate them from any imminent rate rises and make it easier to ride out any short-term inflationary pressures.”

By MARC DA SILVA

Source: Property Industry Eye

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Residential transaction numbers grow 20% in August: HMRC

Government figures show that, totalling 98,000, residential transactions in the UK during August 2021 were 20.8% higher than in August 2020.

On a monthly basis, transactions of this type increased by 32%, the data adds.

It also shows that non-residential transactions, at 10,250, grew by 28.2% on a yearly basis in August – 5.8% when measured monthly.

This comes after HMRC reported transaction numbers slipping by almost 63% on a monthly basis in July.

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John Phillips says: “Property transactions are returning to a more recognisable level.

“The peaks and troughs of the past few months have been more erratic than in the past, but these should begin to level out as we move away from the stamp duty holiday.

“One thing that the latest data proves is that the tax savings were not the sole driving force behind the vast majority of moves.”

He adds: “Despite the end to furlough in a few weeks, vacancies have exceeded 1m for the first-time, so there are jobs out there, and the number of buyers is unlikely to fall significantly.

“Confidence in the economy is growing and people are now switching jobs, so this may test lenders criteria on probationary periods, but it is unlikely to be a significant blocker for many.”

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And Anna Clare Harper looks abroad in her commentary: “The Evergrande crisis highlights how over-leveraging can bring investors and homeowners down. Regardless of transactions data, prices can go down as well as up. A big cause of this is lending; just because you can borrow to acquire property with low deposits, it doesn’t mean you should. Buyers must remember that both capital and interest repayments must be paid.

“The good news for UK house buyers lies in a key difference between the Chinese property market and the UK property market: supply constraints. In the UK, we suffer an ongoing shortage of housing stock, which in turn means prices are expected to continue to grow.

“For this reason, although Evergrande is terrifying, and UK transactions rising and falling by 32% in a month seems volatile, the UK market is likely to remain more measured in its fluctuations,” Harper concludes.

By Gary Adams

Source: Mortgage Finance Gazette

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Strong property price growth ‘to persist through 2021’

Residential property prices in the UK accelerated in August, with values now 13% higher than before the pandemic, according to the latest data from Nationwide.

The building society said that annual property price growth sped up, to 11%, with the average home costing £248,857, with signs that prices could rise further.

According to the figures provided by Nationwide, property prices recorded their second largest month-on-month rise in 15 years, up by 2.1%.

The Nationwide’s chief economist, Robert Gardner, said: “As we look towards the end of the year, the outlook is harder to foresee. Activity will almost inevitably soften for a period after the stamp duty holiday expires at the end of September.”

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House prices in the summer usually see a dip as people’s attention turns to summer activities, but August has defied all odds with.

Nicky Stevenson, managing director at Fine & Country, commented: “This latest spike is stunning given that most analysts expected prices to decelerate as the stamp duty holiday entered its final throes going into the autumn.

“Those forecasts have now all proved wrong, and after a bumper summer which featured record borrowing, growth in Britain’s housing market still shows no sign of dampening.

“While the stamp duty holiday savings on big homes is quickly vanishing, a greater proportion of market activity is now in the mass market sector, buoyed by the resurgence of buy-to-let investing and first-time buyers.

“It is these sectors that continue to power double digit growth across the country.

“Based on this latest data, the market may well be running red-hot for some time to come, fuelled by low cost of borrowing, shrinking housing supply and government incentive schemes for first time buyers.

“The boom goes on.”

The widening supply-demand imbalance has also been a major factor in the housing market.

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Sam Mitchell, CEO of online estate agent Strike, said: “Let’s not forget that although the stamp duty holiday has ended, there is still a huge supply and demand imbalance issue in the UK, and the incentives that are still available – like the stamp duty savings still to be had for houses under £250,000 – are driving this imbalance further.

“The other incentives on offer will no doubt contribute to this too, with increased availability of 95% mortgages and low interest rates just some of the things that buyers can take advantage of. And who knows, the government might also have something planned to keep the market moving, but only time will tell!”

Lawrence Bowles, director of residential research at Savills, concurred: “There’s more to the housing market than stamp duty. Nationwide’s latest figures show robust house price growth in August, even with a less generous, tapered stamp duty holiday.

“Housing demand is still strong and the supply coming to the market is limited. There were 19% fewer homes listed for sale in the first half of August compared to the average for 2017-19, according to our analysis of TwentyCi data. There were 8% more sales agreed over that same period.

“As a result, we expect strong price growth to persist through 2021, though annual growth figures will ease back as we start counting growth from a higher, post-lockdown base. We expect annual house price growth to settle around 9% by the year end, with no reason to anticipate a correction in the coming years, particularly given the widely held view that interest rates will continue to remain low for the foreseeable future.”

Marc von Grundherr, added: “We’re seeing no let up in the extreme levels of house price growth seen in recent months. These hot market conditions are likely to remain beyond the summer months and well into autumn as we enter what is traditionally one of the busiest times of the year for the UK market.

“Of course, a slight dip can be expected come the end of the year. But those running for the hills at the first sight of a marginal monthly decline will do well to remember that even the best performing markets are subject to seasonal influences.”

By MARC DA SILVA

Source: Property Industry Eye

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Residential transactions up 4.2% year-on-year

Residential property transactions in July 2021 were 4.2% higher, at 73,740, than in July 2020, according to HM Revenue & Customs (HMRC).

However, HMRC found that this figure was 62.8% lower than in June 2021.

The provisional seasonally adjusted estimate of UK non-residential transactions in July 2021 was 9,760, 21% higher than July 2020 and 5.9% lower than June 2021.

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Looking to the provisional non-seasonally adjusted estimate of UK residential transactions in July 2021, this figure was noted at 82,110, 1.8% higher than July 2020 and 61.5% lower than June 2021.

The HMRC provisional non-seasonally adjusted estimate of UK non-residential transactions in July 2021 was 9,730, 15.2% higher than July 2020 and 12.2% lower than June 2021.

Mark Harris said: “The stamp duty holiday focused the minds of many buyers who were already keen to move and improve their living conditions by acquiring more space both inside and out.

“Cheap mortgages have also played a significant part in the uptick in transactions and will continue to do so going forwards, even as the stamp duty holiday tapers off.

“Mortgage pricing continues to trend downwards, with a growing number of sub-1% products.

“But it is not just the deposit-rich who are benefiting from cheaper rates – those borrowing at higher loan-to-values are also seeing rates fall, with even 95% LTV deals now to be had at sub-3%.’

Jeremy Leaf, north London estate agent and a former RICS residential agent, added: “These figures for the period just after the withdrawal of the full stamp duty holiday are perhaps better-than-expected although reflect what we have been seeing – that buyers were still keen to proceed with their purchases, even though they were saving less than they would have done before the end of June.

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“The figures clearly illustrate how many people brought forward buying decisions to take advantage of the stamp duty holiday.

“The market is definitely calmer now but many are taking advantage of staycations to keep in touch with market activity, with listings slowly beginning to rise again as prospective sellers return from holiday.”

Clare Beardmore said: “It’s hard to predict with complete certainty what will happen to the housing market after the government’s stamp duty holiday finishes this month.

“Most expect the numbers of people looking to buy and sell a home will reduce, but that house prices will continue to grow steadily due to an overall lack of housing supply and continued interest from property investors and other groups, such as first-time buyers.

“What has become clear is that record demand for homes has significantly increased property values in many areas of the country, making it harder to step onto the ladder, or buy the same size home as this time last year for an equal amount of money.

“That being said, one of the best ways to manage the cost of buying or owning a home is by getting a great mortgage deal.

“Mortgage repayments are normally the biggest regular expense a person will have, so locking in a better rate could effectively mean giving yourself a pay rise, if it results in hundreds of pounds saved each month.

“Speaking with an independent adviser is a great place to start when on the hunt for a mortgage, as it will often mean accessing a much larger range of options and potentially finding a deal which is better suited to your individual financial needs.”

By Jake Carter

Source: Mortgage Introducer

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HMRC: Residential transactions up 9% in Q2

Residential property transactions in Q2 2021 were 9% higher than in Q1, and 175% higher than in Q2 2020, according to the HMRC Q2 Stamp Duty Statistics.

The HMRC data also found that non-residential property transactions in Q2 2021 were 12% higher than in Q1, and 79% higher than in Q2 2020.

Total Stamp Duty Land Tax (SDLT) receipts in Q2 2021 were 12% higher than in Q1 2021, and total SDLT receipts in Q2 2021 were 92% higher to those in Q2 2020.

Residential property receipts in Q2 2021 were 12% higher than Q1 2021, and 90% higher than Q2 2020 and non-residential property receipts in Q2 2021 were 11% higher than in Q1 2021.

The 2% surcharge on the purchase of properties by non-residents was introduced on 1 April, to date this has resulted in 2,700 transactions paying £19m.

HMRC said the increase in residential transactions in the last four quarters was impacted by the introduction of the SDLT holiday for residential properties and an ongoing strength in the housing market.

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Looking to First Time Buyers Relief, up to Q2 2020 there were 540,900 claims that benefited from that relief, and the total amount relieved by these claims was £1.2bn over the period.

An estimated 84,700 transactions were liable to higher rates for additional dwellings (HRAD) in Q2 2021, with the 3% element generating £485m in receipts, a decrease of 70% from the previous quarter, and a rise of 125% compared to Q2 2020.

Conor Murphy, chief executive at Smartr365, said: “The stamp duty holiday lit up what was an already heated property market and today’s encouraging findings reinforce just how instrumental this initiative has been in creating the ‘busiest H1 on record’.

“The stamp duty holiday has positioned the property market as a key driver in the UK’s economic recovery and thankfully enabled many in the industry to retain their jobs.

“Most remarkably, the break has created a golden opportunity for both first-time buyers and second-steppers to move onto or up the property ladder, when they otherwise would not have had the financial means to do so.

“However, with just eight weeks until the tax break draws to a close, the government should now plan how it will support buyers in its wake. Permanent reductions to stamp duty will help ensure homeownership remains an accessible venture and that the market retains its buoyancy come the end of September.

“It is crucial that this period of greater accessibility and heightened demand is not just a flash in the pan.”

Stuart Wilson added: “The stamp duty holiday has helped propel an already buoyant property market even further as the sector records one of its busiest periods ever.

“Today’s figures highlight the rush among prospective homeowners to meet the initial tax holiday deadline at the end of June.

“While much of the focus has been on the benefits of the stamp duty holiday for first-time buyers and second steppers, older borrowers have also been using this opportunity to find their forever home.

“We have seen the proportion of over-55s using equity release to fund property purchases triple from 5% to 15% since the outbreak of the pandemic.

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“However, the clock is now ticking with just eight weeks to go before the tapered holiday ends.

“A buyer purchasing the average property used for equity release can stand to save £3,000, but with advisers, lenders and conveyances continuing to face delays, it’s vital to not only work closely together but also to manage client expectations.

“Advisers must also ensure the process is as smooth as possible by working with their clients to prepare all the documentation required from the outset, while as much as 20 working days or more can be saved when clients engage with a specialist equity release solicitor.”

Cloe Atkinson said: “Today’s figures show how the stamp duty holiday successfully boosted demand from buyers right up until the final deadline.

“The high levels of activity the housing market has been able to sustain since the market reopened in 2020, despite the difficulties imposed by the pandemic, show the success of this policy and are also testament to how adaptable and innovative the property industry can be.

“There is, however, still more work to be done. While the tax break boosted the number of house sales, a lot of the savings for buyers were swallowed up by soaring house prices.

“As the tax holiday comes to an end and prices continue to rise, it’s more important than ever that the industry to addresses issues around affordability and accessibility, particularly for those who have been financially impacted by the pandemic.

“Investing in the right technology now is going to be crucial to the future of the market.

“Innovation like open banking has the power to make the mortgage application process more accessible, especially for borrowers with more complex financial histories.

“At the same time innovation in this area will also allow for faster and more efficient lending decisions.

“The industry has come a long way since the market re-opened last year, it’s vital that it sustains this momentum and doesn’t settle for a return to the status quo.”

By Jake Carter

Source: Mortgage Introducer

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House prices set to continue rising as supply shrinks

Residential house prices will increase by 9% this year as the market is driven by the extended stamp duty holiday and the impact of repeated lockdowns, Savills has predicted.

The estate agent has upgraded its expectations from the 4% annual price growth it predicted in March, prior to the chancellor’s stamp duty holiday extension.

Savills still expect property values to rise by 21.5% over the next five years, in line with previous forecasts, as price inflation eases following the removal of incentives.

Price growth continues to be fuelled by historic low mortgage rates, along with greater demand from buyers for properties with more space and greenery following months of lockdowns.

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However, the company says that the shape of growth over the next four years is more difficult to forecast precisely given the extraordinary conditions of the past 18 months.

“Some of the growth generated by the extraordinary market conditions of 2020 and 2021 could unwind at times during 2022, but we see nothing on the horizon that would trigger a major house price correction,” said Lucian Cook, Savills head of residential research.

Savills mainstream house price forecasts and economic assumptions:

202120222023202420255yr Total
UK9.0%3.5%3.0%2.5%2.0%21.5%
London7.0%2.0%1.5%1.0%0.5%12.4%
Base rate0.1%0.1%0.1%0.3%0.5%
Unemployment (UK)6.0%4.6%4.0%3.7%3.6%
Annual Income Growth (UK)0.8%0.0%4.1%3.9%3.8%17.2%
Source: Savills, Oxford Economics

Cook continued “New buyer demand continues to outweigh supply despite the potential stamp duty saving falling from £15,000 at June 30 to just £2,500 until the end of September, and this against low levels of supply.

“This imbalance looks set to continue,  underpinning further price growth over the near term, particularly as people look to lock into current low interest rates.  But such strong growth in 2021 will leave less capacity for growth over the next few years, particularly as interest rates are expected to rise a little earlier than leading commentators had previously projected.

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“The rate at which interest rates rise will also shape price growth. A steeper than anticipated jump in rates would restrict growth, although it would have to be severe to lead to actual falls in values – an outside risk in our view.”

Interest rate rises are critical to the forecasts, Savills says. The forecasts assume a Bank of England base rate no higher than 0.5% by the end of 2025.

A number of other key factors point to what Cook describes as a ‘soft landing’ for the market, rather than any dramatic correction in property values. 

Since the market reopened last year, price growth has been driven in large part by more affluent buyers, less reliant on mortgage debt and able to lock into low fixed interest rates. More generally, the pace of economic recovery has helped reduce unemployment levels, stress testing of lending is now embedded in the system, while interest rate rises are still expected to be slow and modest by the end of 2025, meaning a gradual squeeze on affordability.

These factors underpin Savills five-year forecasts, but they also indicate limited capacity for further price growth at the end of this period, without substantially affecting who is able to buy and the number of potential transactions. 

First-time buyers are likely to be increasingly reliant on government schemes and, where available, on the generosity of the bank of mum and dad, according to Savills. 

After a strong start to the year, and over 200,000 transactions in June alone, transaction volumes are projected to total 1.62m this, more than a third – 35% – higher than the yearly average over the five years pre-pandemic.

Savills continues to expect the markets of the Midlands and the North of England to show the strongest house price growth, due to greater capacity for growth before hitting affordability ceilings.  In the short term, however, buyer attention is expected to turn back towards urban markets, including London, as social distancing restrictions and international travel restrictions ease.

This will see the ratio of regional to UK average values slowly converge over the next five years, as the lower value regions see stronger growth, “catching up” with the rest of the country.

 202120222023202420255 years to 2025Av value* Dec 2020Forecast value end 2025
UK9.00%3.50%3.00%2.50%2.00%21.50%£230,920£280,568
North West10.50%4.50%4.00%3.50%3.00%28.00%£176,925£226,464
Yorkshire & The Humber10.50%4.50%4.00%3.50%3.00%28.00%£172,326£220,577
Wales10.00%4.00%4.00%3.50%3.00%26.80%£169,846£215,365
Scotland9.50%4.00%3.50%3.00%2.50%24.40%£156,768£195,019
North East8.00%4.00%3.50%3.50%3.00%23.90%£137,531£170,401
East Midlands9.00%4.00%3.50%3.00%2.50%23.90%£200,951£248,978
West Midlands9.00%4.00%3.50%3.00%2.50%23.90%£207,603£257,220
South West8.50%3.50%3.00%2.50%2.00%20.90%£264,512£319,795
South East9.00%3.00%2.50%2.00%1.50%19.10%£336,984£401,348
East of England8.00%3.00%2.50%2.00%1.50%18.00%£310,240£366,083
London*7.00%2.00%1.50%1.00%0.50%12.40%£486,562£546,896
Source: Savills (*Nationwide)

By MARC DA SILVA

Source: Property Industry Eye

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Residential transactions up 219% annually in June

The provisional seasonally adjusted estimate of UK residential transactions in June 2021 was 198,240, 219.1% higher than June 2020, according to HM Revenue & Customs (HMRC).

On a monthly basis, this figure was up 74.1%.

The provisional seasonally adjusted estimate of UK non-residential transactions in June 2021 was 10,850, 58.7% higher than June 2020 and 6.8% higher than May 2021.

Looking to the provisional non-seasonally adjusted estimate of UK residential transactions, this was noted at 213,120, 216.1% higher than June 2020 and 108.5% higher than May 2021.

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The provisional non-seasonally adjusted estimate of UK non-residential transactions in June 2021 is 11,610, 61.1% higher than June 2020 and 30.3% higher than May 2021.

Further to this, the provisional non-seasonally adjusted estimate for UK residential transactions in June 2021 of 213,120 was the highest monthly UK total since the introduction of these statistics in April 2005.

Tomer Aboody said: “Looking at the highest levels of transactions since 2005, when data was first captured, the second quarter has seen properties flying off the shelves as buyers pay premium prices due to the lack of supply.

“But with mortgage interest rates at record lows, and some at sub 1%, borrowers are realising this is the opportune moment to stretch themselves in order to buy their dream home.

“This trend is likely to continue for a while yet, while money remains cheap, resulting in prices rising further due to lack of supply.

“Will the Chancellor look at possibly reformatting stamp duty so that downsizers don’t have to pay it or face a significant reduction?

“This would have the desired result of more properties coming to market, keeping a lid on prices while further boosting the wider economy.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “As always, it is transactions rather than the more volatile prices which are a better measure of housing market health.

“These figures clearly illustrate the frenzied rush to the finishing line for buyers to take advantage before the stamp duty holiday drew to a close.

“However, activity has reduced since, particularly in London where the savings were greatest.

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“Early signs are that sales will be down significantly but we have noticed nearly all of our transactions are continuing with very few renegotiations.

“This leads us to believe prices will not be markedly different over the next few months.”

Conor Murphy said: “The end of June brought closure to the first phase of the stamp duty holiday and one of the busiest periods ever witnessed by the property market.

“Today’s fantastic findings are testament to the success of the scheme in sparking further interest in an already busy market and positioning the industry as a key driver in the UK’s economic recovery.

“We have championed the stamp duty holiday as ‘the great equaliser’ since its introduction in July 2020 and will continue to do so long after its conclusion in two months’ time.

“The tax break has reduced the amount of upfront capital needed to get on the property ladder, made homeownership a more viable goal for thousands and provided a much-needed form of economic relief in a period where finances are increasingly strained.

“However, with brokers, conveyancers and lenders all juggling sky-high demand, it’s important that advisors manage client expectations and assess how mortgage tech can be used to streamline transactions before the holiday draws to an end in just 10 weeks’ time.

“Mortgage tech can act as an additional team member if used correctly.

“There’s no better time than today to see how features like one-click DIPs, task automation and digital ID verification can remove the legwork in your business, leaving you with more time to focus on what truly matters: providing clients with expert advice.”

By Jake Carter

Source: Mortgage Introducer

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Stamp duty holiday sees 22% rise in monthly property transactions

The Stamp Duty Land Tax (SDLT) holiday has delivered market stimulus that has far outweighed the immediate response to the 2007/08 financial crisis, according to analysis by Search Acumen.

And the current SDLT relaxation has so far triggered a 7% rise in house prices from June 2020 to February 2021, adding £17,265 to the price of the average home in England.

This rise has more than offset the £2,572 SDLT savings made on the average property.

On average 103,724 residential property transactions have occurred each month across England and Northern Ireland since the tax break was introduced, up 22% from the 84,691 average in the 12 months to March 2020.

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Since the measure was introduced, 171,303 extra deals have taken place compared to the pre-COVID period in 2019/20.

Search Acumen’s analysis showed the SDLT holiday of 2008/09 in the wake of the Great Financial Crisis saw an average of 60,048 transactions per month. This was down 27% from the previous 12-month average of 82,378 monthly residential property transactions.

Higher transaction volumes during the current holiday could be partly attributed to lending conditions being more favourable than in the aftermath of the financial crisis.

Strong credit availability has helped property transactions progress despite pandemic-induced disruption to the economy, with the tightening of credit mainly concentrated in the high loan-to-value (LTV) segment of the mortgage market.

Andy Sommerville, director at Search Acumen, said: “This analysis suggests the property market has been far more responsive to intervention compared to the post-financial crisis holiday.

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“The housing market’s strong performance compared to the wider economy highlights the contrast between the current healthcare crisis and its economic impacts, and the 2008/09 crisis which was rooted in financial markets.

“While many households have absorbed income hits and face greater job insecurity, the UK’s financial system has held up reasonably well since the onset of COVID. Lenders did pull back from the mortgage market in the early stages of the pandemic, but the flow of credit has gradually picked up as banks got to grips with the crisis.

“As a result, financing for house purchases has been in reasonably good supply and worked in tandem with the SDLT holiday to generate a level of activity not seen for a decade³, despite the unprecedented challenges of COVID-19.

“However, giving extra support for buyers has had many challenging consequences, from pushing up house prices and negating the average saving to heaping a heavy workload on time-pressured conveyancers.

“Property lawyers have been working around the clock to get people into their homes before the initial 31 March cut off. The conveyancing workload is unlikely to get any lighter given the holiday is now running until June and tapering through to September.

“In the long-term, the industry needs to put conveyancing capacity – not to mention mental wellbeing – at the top of the agenda given the pressure law firms have been under to ensure clients complete on time.

“It is clear the traditional way of performing due diligence on transactions is getting in the way of efficiency, and we need to pivot quickly to digital, data-led solutions that can improve the experience for homebuyers and their advisers.”

Source: Mortgage Introducer

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The UK Residential Property Market’s First £100 Billion Summer?

The forecast, which takes the current trajectory of the housing market and applies it to the rest of summer months, estimates that there will be 420,000 sales in the UK across June, July and August at a total spend of a record £107bn. This will make this summer the highest grossing quarter in UK residential property market history, and is in stark contrast to previous years. Throughout the past half decade, total spend from buyers during the summer months has averaged £69bn-per-year, a figure that comprised of a little over 300,000 sales.

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Speaking on the forecast, Nick Whitten, head of UK living research, said: “It is well-documented that the Summer is the best time to sell a home, with sentiment receiving a natural positive boost from the warmer weather. However, our data suggests that this post-lockdown summer will set a new record. The reasons behind the buying bonanza – with the most exchanges and highest total sales value on record – are threefold. The stamp duty extension to the end of June means that during the quarter eager buyers and sellers will look to force a deal through. This, combined with the increased financial stability many buyers are feeling as we unlock from Coronavirus, and the well-documented supply constraints in the UK market, means we can expect to see demand swallowing up available stock, pushing up prices but not to the extent that it will affect transactions.”

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The Government has set a clear priority to help more people onto the housing ladder through its Own Your Home campaign. The campaign puts the spotlight on six Government-backed support schemes to allow people to access some form of home ownership.

The forecasted spike in activity this Summer will be particularly evident in the north of England, which is predicted to see circa 100,000 sales – around 25 per cent of the total UK.

Stephen Hogg, head of north west and residential UK regions, said: “We have seen the market steadily improve and are fully expecting a further acceleration throughout the Summer. “North-shoring” is a trend we have seen pre-COVID but even more during and post-COVID with purchasers seeing better value for money in the north. Regional towns and cities continue to be voted the best places to live in the UK with less congestion and some of the best schooling. The regional cities are bouncing back quicker, HS2 offers further medium to long term growth prospects coupled with the Government’s levelling up agenda. Flex working is becoming the norm and therefore the need to live close to the Capital is diminishing. The historical brain drain of regional centres seeking high skilled high paid jobs in London is a thing of the past. With the likes of Manchester, Birmingham, Edinburgh offering opportunities equal to or not available in London they are now attracting a vast talent pool who in turn are boosting the local housing markets.”

BY PETE CARVILL

Source: Property Wire

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