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UK house prices slip by 0.5% as ‘peak buyer demand likely to have passed’

The average UK house prices slipped by 0.5% in June as the full stamp duty holiday came to an end, according to an index.

It marked the first monthly fall since January, indicating that the peak of buyer demand is now likely to have passed, according to the research from Halifax

But typical property values were still more than £21,000 higher than a year earlier, the bank said.

The price drop in June meant annual house price inflation eased back slightly from May’s 14-year high of 9.6% to 8.8%.

Across the UK, the average house price in June was £260,358.

The stamp duty holiday in England and Northern Ireland is now being tapered, before being phased out completely in the autumn.

The “nil rate” stamp duty band shrank from £500,000 to £250,000 from July 1, prompting a rush of buyers trying to beat the deadline, and it will revert to its normal level of £125,000 from October 1.

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Russell Galley, managing director, Halifax said: “With the stamp duty holiday now being phased out, it was predicted the market might start to lose some steam entering the latter half of the year, and it’s unlikely that those with mortgages approved in the early months of summer expected to benefit from the maximum tax break, given the time needed to complete transactions.

“That said, with the tapered approach, those purchasing at the current average price of £260,358 would still only pay about £500 in stamp duty at today’s rates, increasing to around £3,000 when things return to normal from the start of October.

“Government support measures over the last year have helped to boost demand, particularly amongst buyers searching for larger family homes at the upper end of the market.

“Indeed, the average price of a detached home has risen faster than any other property type over the past 12 months, up by more than 10% or almost £47,000 in cash terms.

“At a cost of over half a million pounds, they are now £200,000 more expensive than the typical semi-detached house.

“That power of home-movers to drive the market, as people look to find properties with more space, spurred on by increased time spent at home during the pandemic, won’t fade entirely as the economy recovers.

“Coupled with buyers chasing the relatively small number of available properties, and continued low borrowing rates, it’s a trend which can sustain high average prices for some time to come.”

Looking across the UK, Halifax said Wales (12.0%) continues to lead the way for annual house price growth, registering its strongest performance since April 2005.

Northern Ireland (11.5%), the North West (11.5%), Yorkshire and Humberside (10.9%) and Scotland (10.4%) also registered double-digit gains.

For Northern Ireland and Scotland, the annual price rises were the highest recorded since late 2007, while for the North West and Yorkshire, price inflation was the strongest since early 2005, the report said.

At the other end of the scale, the South of England continues to lag somewhat, with eastern England and the South East recording price inflation rates of around 7%, Halifax said.

In London, property values were up by just 2.9% year on year, with several unique factors weighing on the market there, the report added.

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

Mr Gardner said of UK house prices generally: “We would still expect annual growth to have slowed somewhat more by the end of the year, with unemployment expected to edge higher as job support measures unwind, and the peak of buyer demand now likely to have passed.”

Tomer Aboody, director of property lender MT Finance, said: “Even though property price increases in London have been less stellar than elsewhere, prices are still at their highest in the capital and continue to rise, putting property ownership further beyond the reach of first-time buyers in particular.”

Anna Clare Harper, chief executive of property consultancy SPI Capital, said: “The tapering down of the temporary stamp duty reduction takes the pressure off demand.

“However, supply is still constrained, construction is getting harder and more expensive, and a mass sell-off from property owners is unlikely in the absence of significant interest rate rises.”

Mark Harris chief executive of mortgage broker SPF Private Clients, said: “Cheap borrowing and affordability will continue to give buyers more purchase power, and result in continued demand, even if the peak of the market has passed.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics) said: “We don’t expect this new balance between supply and demand to change much over the next few months, particularly if economic growth can make up for the ending of the furlough scheme.”

Here are average house prices and the annual increase across the UK, according to Halifax:

– East Midlands, £214,542, 8.6%

– Eastern England, £303,834, 7.6%

– London, £511,234, 2.9%

– North East, £152,989, 9.2%

– North West, £201,836, 11.5%

– Northern Ireland, £163,484, 11.5%

– Scotland, £183,359, 10.4%

– South East, £353,618, 7.3%

– South West, £269,142, 9.8%

– Wales, £192,507, 12.0%

– West Midlands, £221,661, 8.1%

– Yorkshire and Humber, £185,229, 10.9%

By Vicky Shaw

Source: Independent

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End of Lockdown Signals New Start For UK Property

In February, UK Prime Minister Boris Johnson announced the government’s four-stage roadmap out of COVID-19 restrictions. Housing experts are predicting that this also signalled the start of a new era for UK property.

Summary:

  • April 2021 has seen UK life start to get back to ‘normality’, with outdoor dining, non-essential shops, pubs and the beauty industry reopening, and even staycations allowed again.
  • Initial figures from across the housing industry indicate that UK property is reacting strongly to the ease of restrictions, with a ‘post COVID-19’ boom on the horizon.
  • Housing experts and professionals are predicting that the COVID-19 pandemic has changed the way we live, and how we see our homes, forever.

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Confidence in the market

Since COVID-19 became part of the lives of millions of people across the world, the UK government has always made it clear how important the country’s housing market is to the wider economy.

The housing market was re-opened earlier than many others around the globe and the government initiated extra support such as the Stamp Duty Land Tax (SDLT) that was introduced in July 2020 and extended in March 2021.

Looking at the recent data, this support appears to have made a huge difference to the UK housing market, confidence amongst professionals is high with the continued growth:

  • The latest house price index from Halifax shows that property prices increased by 1.1% between February and March 2021 and they are also now 6.5% higher than in March 2020.
  • Recent data from the Office of National Statistics demonstrates that the UK economy returned to growth in February, with output rising by 0.4%. Construction was the highest growth area (rising by 1.6%), providing further support to the UK housing market.
  • The latest economy and property market update from the Royal Institute of Chartered Surveyors (RICS) suggests that property activity is set to increase as lockdown restrictions are lifted. Specifically, their data is showing that tenant demand is remaining firm, with rents projected to rise by around 2.5% nationally over a 12-month time period.
  • Homebuyers and Investors are flocking to property portals, with Rightmove showing record days of activity in March and April. On Wednesday, 7th April more than 9.3 million people visited the property portal.

Employment figures are also thought to be a key indicator of the future strength of property market. Unemployment figures fell in March 2021 and the hope is that as businesses re-open, these figures will fall even further.

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

Low interest rates are also allowing mortgage borrowing to continue and the fears of an immediate economic shock caused by Brexit appear to be unfounded.

Confidence in the UK in general appears to have been bolstered by the government’s successful roll-out of the vaccination programme and people are optimistic that the country is hopefully on an ‘irreversible path’ out of lockdown. This allows people to more assuredly turn their attentions to matters such as buying houses and making investments.

Overseas investment

Overseas sentiment in the UK market seems to be following the trend of domestic confidence. According to data from estate agent ludlowthompson, the number of as landlords owning property in the UK has reached a five-year high. The number is currently at 184,000 which represents a 19% rise over the past five years.

While there are forthcoming implications from impending tax changes in the buy-to-let sector for overseas buyers, what the COVID-19 pandemic and Brexit show us is that the UK property market is robust enough to attract overseas investment even in the face of adversity.

Future of UK housing market

Many housing experts are forecasting that the market will be changed forever due to the effects of the COVID-19 pandemic. Working-from-home is no longer a perk given by a few choice employers but is being seen as a ‘normal’ way of working that will continue to be a big feature of our lives.

This is having a big effect on how people see their homes and how they need them to function. Many are now desiring bigger living spaces so that they can have a dedicated ‘working-from-home’ area, and the need for outside space in the form of a garden or balcony is also likely to have major implications on the UK residential scene.

While there are many external factors that can be influential on the UK housing market, the reality is that it is a sector that will always bounce-back after a dip. With current house prices growing, demand remaining strong, and the UK government seemingly determined to ensure its strength, the future of the UK housing market is looking bright indeed.

Source: Select Property

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First-time buyers losing interest in city living

City living is losing its appeal among first-time buyers, with the vast majority now preferring more subdued locations, Trussle has found.

As it stands just 29% of first-time buyers plan to buy in a city, compared to 53% in a suburb.

Miles Robinson, head of mortgages at online mortgage broker Trussle, said: “The pandemic has increased the financial pressure many first-time buyers were already feeling, as well as creating a seismic shift in what people expect from their home.

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“As a result, financial pressures and rising house prices, alongside a desire for more outdoor space, means demand in more affordable rural locations is currently outpacing that for urban destinations.

“But lenders are starting to return to the market with higher LTV products, which could make more expensive homes in the city more accessible again.

“And, we may see renewed interest in city living once the vaccine has been rolled out and things begin to return to normality.

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

“As such, only time will tell if the current lust for country properties is a long-term trend or more of a spontaneous response.”

Higher house prices in urban locations are likely to play a huge factor in this trend, with 65% saying it’s ‘impossible’ to get on the housing ladder.

The research found that the average budget for a first home was £174,266.

BY RYAN BEMBRIDGE

Source: Property Wire

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Rental Market Buoyant Except In London

Rents in London have fallen during the Coronavirus pandemic, property portal Zoopla has reported. However, London is the exception and rents risen in a buoyant rental market across the UK as a whole, it said.

‘Average rents in London have fallen by 5.2 per cent over the last 12 months, reaching levels last seen in 2014’, Zoopla found. It puts this down to ‘new working patterns and lack of tourism during pandemic’.

In contrast, rents increased outside London by 1.7 per cent and rental has increased by a fifth over last year – strong demand that is being driven by a squeeze on lending to potential first-time buyers, said Zoopla.

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‘At the same time, supply remains constrained with levels of investment in buy to let still reduced following the changes to Stamp Duty (the additional 3 per cent surcharge on second properties) and the wider tax regime introduced from 2016 onwards’.

Renters are showing increasing interest in larger properties, especially those that may have access to outside space.

‘The search for space, first seen in the sales market, is now being firmly replicated by renters. Zoopla’s top searches for rental properties include the terms gardens, parking, garages, balconies and pets, reflecting a need for outdoor space and freedom necessary to cope with lockdown. There is also evidence that while the market as a whole is moving more quickly, the market for rented houses is moving more quickly than that for rented flats, reflecting this desire for more space among renters’.

‘For most of the UK, the demand/supply gap is underpinning moderate levels of rental growth’, said Zoopla head of research Gráinne Gilmore.

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‘The split in the rental market caused by COVID-19 has now crystallised and we are seeing the two-speed market firmly entrenched.

‘We haven’t seen the exodus of students from cities and, as more people are staying in the rental market given the squeeze on mortgage lending, higher levels of demand will continue to underpin rents. At the same time however, muted earnings growth will start to limit the headroom for rental growth in some markets.

‘The search for additional space, both indoor and outdoor, within the rental sector is also set to continue as the country goes through additional periods of lockdown’

Source: Residential Landlord

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Criteria searches soar as property market gets back to business in June

Residential mortgage searches increased by 79% in June as brokers scoured the market for deals for furloughed workers and for products with temporary maximum LTV restrictions.

That’s according to the latest criteria activity tracker from Knowledge Bank which has provided an insight into borrower behaviour in the first full month after physical valuations and viewings resumed.

Overall, brokers’ searches were up to 68% in June as the market responded to eased restrictions following the Covid-19 lockdown.

But the residential market showed even greater pick up of searches, with a 79% increase – reflecting the demand in the market.

The terms brokers were searching for continued to follow the same pattern which has been dominant since the pandemic began.

Indeed, the main residential searches, Knowledge Bank revealed, included ‘Covid-19: Temporary Maximum LTV Restrictions’ and ‘Furloughed Workers’.

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What’s more, the ‘Temporary Maximum LTV’ term was also strongly represented in broker searches in the buy-to-let, second charge and bridging categories.

Matthew Corker, lender relationship manager at Knowledge Bank, said: “Lenders have been very active in June, withdrawing and then reintroducing higher-LTV products.

“Many have also adjusted their affordability and allowable income criteria, as details of the extension to the Government’s furlough scheme become clearer.

“It is no surprise to find that brokers are searching more frequently for these criteria. As demand returns to the market, lenders and brokers are having to move fast to stay ahead of the curve.”

Knowledge Bank has responded to this increase in demand by establishing a weekly Criteria Clinic, enabling brokers to discuss the issues and hot topics they are most concerned about with a panel of experts from a cross-section of lenders.

Top five searches performed by brokers on Knowledge Bank – June 2020 (source: Knowledge Bank)

RESIDENTIALBUY-TO-LETSECOND CHARGESEQUITY RELEASE
1COVID-19: Temporary Maximum LTV RestrictionsLending to Limited CompaniesMaximum LTV / Loan To ValueEarly Repayment Charges
2Help To Buy Equity Loan SchemeFirst-time landlordCOVID-19 : Temporary Maximum LTV RestrictionsProperty with an Annex / Outbuildings / Land / Acreage
3COVID-19: Furloughed WorkersRequirement to be a HomeownerCapital Raising for Debt ConsolidationTimber Framed Construction
4Self-employed – one year’s accountsMinimum Income – Interest-Only / Part-and-Part Single ApplicantSelf-employed – one year’s accountsFlexible Payments / Ad hoc
5Maximum Age at End of TermCOVID-19: Temporary Maximum LTV RestrictionsIncome Multiple used for Affordability AssessmentMinimum Property Value
SELF-BUILDBRIDGINGCOMMERCIAL
1Maximum LTV / Loan to ValueRegulated BridgingMaximum LTV for Commercial Investment
2Maximum LTC – Loan to CostMaximum LTVSemi-Commercial Properties
3Lend against LandCOVID-19: Temporary Maximum LTV RestrictionsMinimum Loan Amount
4Maximum Loan AmountMinimum LoanCommercial Owner Occupier
5 Barn ConversionMinimum Property ValueMixed-Use Properties / Part Commercial

By Kate Saines

Source: Mortgage Finance Gazette

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Stamp duty freeze leads to ‘busiest’ week for mortgage searches

The week following the stamp duty holiday announcement has been the busiest for mortgage searches all year, according to mortgage technology provider Twenty7Tec.

Yesterday (Tuesday 14 July) experienced the greatest number of searches in the year to date, highlighting how much of an impact the chancellor’s announcement to cut stamp duty has made on the market.

There was also a flurry of activity in the buy-to-let sector which had not been experienced since February. Twenty7Tec reported this week has been the busiest for buy-to-let searches, according to its platform’s data.

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Today marks exactly one week since chancellor Rishi Sunak announced he was freezing stamp duty on properties worth up to £500,000 until March 2021.

Phil Bailey, Sales Director at Twenty7Tec said: “Since the stamp duty announcement last week, the market has really hit its stride.

“The last seven days have been the busiest for mortgage searches all year and we’re handling increased volumes of searches each day. Yesterday was the busiest day of the year, closely followed by the day before. Yesterday’s residential mortgage searches were triple the volumes in lockdown.

“Buy-to-let has definitely pushed on and the past few days have been the busiest since the first couple of weeks in February.

“Our sense is that buy-to-let will increase further as the products are there for that part of the market and the risk profile of buy-to-let is still attractive to lenders.”

By Kate Saines

Source: Mortgage Finance Gazette