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Strong demand ahead of a potential base rate rise – Rightmove

Every region of Britain saw residential property asking price records broken in October, as the national average increased almost £5,000.

It was the first time that every region broke asking price records since March 2007, according to Rightmove’s monthly house price index.

The typical asking price for a home has jumped in all regions of Britain, and now sits at a national average of £344,445, up 1.8% month-on-month, which is the biggest increase at this time of year since October 2015.

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The North West and Wales both saw especially strong growth in asking prices amounting to 2.3%. They reached £232,639 and £237,830 respectively.

The South West and London both saw a 1.9% monthly increase, with prices reaching £359,906 and £650,683.

The number of sales being agreed was up more than 15%, compared to the same time in 2019.

Rightmove put the increase down to property purchasers wanting to secure their new homes ahead of a potential base rate rise, which is looking increasingly likely for later this year.

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Tim Bannister, Rightmove’s director of property data, said:“Although more properties are coming to market, the level is still not enough to replenish the stock that’s being snapped up. Consequently, new price records have been set across the board, with every region of Great Britain and all of the three market sectors of first-time buyer, second-stepper and top of the ladder hitting all-time highs.

“This ‘full house’ is an extremely rare event, happening for the first time since March 2007. The stock shortages started after the first lockdown, and they look set to continue with the underlying housing market fundamentals remaining strong, and an additional incentive to buy and fix your mortgage interest rate before a widely expected rate rise.

“Mortgage interest rates are lower than they have ever been before and lenders are keen to lend in a competitive market, with employment and wage growth also robust. The number of sales agreed continue to be strong despite the end of the stamp duty incentives.”

By MARC DA SILVA

Source: Property Industry Eye

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House prices up 3.6% across England and Wales in the year to September 2021

Average house prices increased by 3.6% across England and Wales in the year to September 2021, according to e.surv Chartered Surveyors’ House Price Index.

On a monthly basis, average property prices rose by 1.2% between August and September 2021.

Overall, e.surv found that the average price of a house in England and Wales was £328,610 at the end of September.

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The data also shows that while some regions like the North East suffered their largest fall in the annual rate of growth (down by 6.3%) over the month, other areas like Wales fared much better.

Wales comfortably out-performed the rest of the country – having the smallest fall in price growth from 12.2% down to 11.2%.

Richard Sexton, director at e.surv, said: “House price growth is clearly in retreat in headline terms but there is little evidence of prices stagnating or falling. Indeed, regionally, there are substantial pockets of resistance to overall falls in house price growth.

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“The Land Transaction Tax holiday came to an end at the end of June – but the tax savings available in Wales were not as large as in England (£2,450 in Wales vs £15,000 in England).

“This is we think a key reason potentially why the fall in prices in Wales has not been as significant as in England over the past few months. Wales therefore stands out as having the highest annual rate of price growth at 11.2%.

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“In terms of property types, it’s worth noting too that, while the pandemic drove a race for space the price of flats in September staged a small recovery with the largest gains in flat prices being seen in prime central London and in Hammersmith and Fulham.

“On September’s data, there is little evidence that home buyers are being spooked by the end of the furlough scheme. Data from government points to a resilient job market that will further underpin buyer and lender confidence.”

By Jake Carter

Source: Mortgage Introducer

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RICS: Buyer demand steadies but stock issues remain

Buyer demand has leveled off somewhat, following a brief pull-back in the wake of the flurry of activity seen prior to the phasing out of the stamp duty holiday, the September 2021 RICS UK Residential Survey has found.

However, notwithstanding the steadier demand picture, the volume of newly agreed sales did slip back for a third month in succession, evidenced -15% of respondents citing a decline.

Looking ahead, near-term sales expectations improved modestly at the headline level up 11% from +6% beforehand. This would be consistent with a small acceleration in momentum through the rest of 2021.

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With regards to supply, the recent decline in new listings coming onto the market shows little sign of abating. Respondents reported that the number of appraisals undertaken during September was below the rate seen 12 months prior, with the net balance slipping to -26% from -10% back in August.

Tomer Aboody, director of property lender MT Finance, said: “The stamp duty holiday may have finally ended but a combination of low interest rates and a lack of stock on the market means house prices continue to rise, now and for the foreseeable.

“In particular, houses with outside space are doing well, giving buyers room to work from home and the living conditions they need in this post-pandemic world.

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“With rents rising as buyers who need to move can’t find available stock, or can’t afford to buy thanks to rising values, this is providing a boost to the rental market. With employers bringing staff back into offices for a day or two a week, this is pushing demand for rental properties near city centres.

“Although there is growing speculation about an interest rate rise, this is still unlikely in the short term. If this is the case, and stock levels remain low, property prices will continue to rise. Stamp duty is possibly the only lever left to pull in order to increase stock by reducing or removing it for downsizers.”

Source: Mortgage Introducer

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Did the Stamp Duty Holiday Ignite a BTL Fever?

Despite the reduction in stamp duty bills, there is little sign that the stamp duty holiday led to large numbers of new investors purchasing buy-to-lets.

At their peak this year, investors purchased 14 per cent of homes sold across Great Britain in February, the month before the original end of the stamp duty holiday. However, over the entire course of the 15-month tax-break investors purchased 12 per cent of homes sold in Great Britain. This is marginally up from an average of 11 per cent during the 12 months before the holiday, but far from the 17 per cent recorded in Q4 2015 – the run up to the introduction of the 3 per cent stamp duty surcharge on 1 April 2016.

This means there were a total of 215,000 investor purchases across Great Britain between July 2020 and September 2021. While this figure is up from 164,300 during the equivalent period in 2018 and 2019, more transactions have taken place by other buyer types. Both these numbers remain below the 242,400 purchases which were made during the 15-month run up to the introduction of the 3 per cent stamp duty surcharge on 1 April 2016.

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Over the course of the15-month stamp duty holiday, the average buy-to-let investor’s tax bill fell by 35 per cent – from £8,500 in the month before the holiday, to an average of £5,500 between July 2020 and September 2021. For the average investor, this equates to almost three months’ rent.

The average bill came to £5,300 during the first 12 months of the holiday when investors paid the 3 per cent stamp duty surcharge on the first £500,000 of any purchase. It then rose 17 per cent to £6,200 when the threshold fell to £250,000 between July and September 2021. Average bills are set to return to around £8,400 from 1 October 2021, just below what investors were paying on the eve of the stamp duty holiday.

Overall, the holiday meant that the average investor paid less in stamp duty than at any time since April 2016, when the 3 per cent stamp duty surcharge was introduced. Despite this, the average bill during the holiday remained twice the level it was before the surcharge was introduced. This is partly why there hasn’t been as much of an increase in investor purchases this time around.

There is little indication that investors used their savings from the holiday to buy bigger properties in more expensive areas. Instead, 83 per cent of investor purchases were under £250,000, meaning their savings from the holiday were significantly smaller than those enjoyed by home movers. It also means that investors have been less sensitive to the change in the nil-rate stamp duty threshold since they tend to buy cheaper properties.

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During the holiday the average price paid by a landlord rose by just 1 per cent to £181,000, despite house price growth of 10 per cent over the same period. This suggests landlords were happy to pocket the tax saving rather than use it to buy a property which would generate more rent.

RENTAL GROWTH

Average rental growth across Great Britain hit 8.0 per cent in September, the third fastest annual rate of growth recorded this year. Nationally, regions in the South of England have continued to drive rental growth. The average rent on a new home rose 14.8 per cent in the South West, 14.7 per cent in the South East and 10.8 per cent in the East of England. September marked the sixth consecutive month where annual rental growth hit double figures in the South West.

London rents have also continued to recover. Although Inner London rents fell for the twentieth consecutive month, the 4.4 per cent annual fall was the smallest decline this year, and smaller than the 22.1 per cent decrease recorded in April when the market bottomed out. In Outer London, rents grew 3.2 per cent annually in September, rising for the thirteenth consecutive month. This kept Greater London rents overall in positive territory, up 1.8 per cent year-on-year.

Source: Property Wire

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Property market now standing on own two feet

Any fears of a property market collapse following the stamp duty holiday can now be put to bed, according to Marc von Grundherr, director of Benham and Reeves.

The Halifax House Price Index revealed that UK house prices rose by 1.7% in September, equating to an increase of £4,400 to the value of the average property.

This means that UK house prices are now at a record high of £267,500.

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von Grundherr said: “The stamp duty holiday clock has now well and truly expired and those to have seen a last gasp saving would have entered the market many months ago in order to complete in time.

“Of course, such heightened levels of market activity may inevitably bring a slight cooling in the rate of house price growth, but that’s to be expected.”

Looking to the London market, von Grundherr explained that it has been waiting patiently in the shadows watching high levels of activity play out across the rest of the UK.

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The higher price of property has long seen many London homebuyers disregard the importance of the stamp duty holiday, particularly since the price threshold was reduced, he revealed.

von Grundherr said: “However, we’ve seen a far more natural level of momentum building across the market and this looks set to snowball during the autumn and winter months.

“As a result, our money is on London to finish the year with the most impressive performance where house price growth is concerned.”

By Jake Carter

Source: Mortgage Introducer

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Housing supply considerably lower than demand

Housing supply is still considerably below the level of demand, according to Tomer Aboody, director of property lender MT Finance.

Aboody said a combination of buyers needing to move and taking advantage of the low-interest rate environment where a number of mortgages are sub-1 per cent is pushing up house prices.

UK house prices rose by 1.7% in September, equating to an increase of £4,400 to the value of the average property, according to the latest Halifax House Price Index.

This means that UK house prices are now at a record high of £267,500.

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Nigel Purves, chief executive of Wayhome added that house prices continue to cause affordability headaches for the majority of hopeful first-time buyers.

He said: “With the furlough safety net officially removed and the average cost of a property at record highs, millions will be priced out of desired areas and forced into renting for far longer than they initially planned.”

Aboody added: “With house prices at levels of growth surpassing the 2007 boom, the continued desire of buyers to move and find more space is at the top of the agenda.

“More supply is desperately needed in order to help keep property prices in check so that they don’t become beyond the means of the average buyer.”

One way in which more properties can be released onto the market is by cutting or removing stamp duty for downsizers, encouraging them to move out of family homes into smaller homes, said Aboody.

Purves went on to outline that though the current landscape may be good news for sellers, the affordability crisis paired with restrictive lending rules continues to disproportionately affect those looking to take their first steps onto the property ladder.

He added: “It is clear that the property market needs to focus on finding innovative solutions to help hardworking people put down roots in homes they own.”

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Anna Clare Harper, chief executive of SPI Capital, said: “There’s two important subtleties worth mentioning. Firstly, not all house prices have gone up. Growth has been far greater for houses than flats. The ‘boom’ in prices has been particularly strong for properties suitable for homeowners. Prices have increased in more spacious properties with gardens outside major cities.

“Secondly, while the stamp duty relief helped achieve one government objective by keeping confidence high through the pandemic, it is at odds with another government objective of making housing affordable and accessible for all.”

Looking to what is next, Harper explained that construction has become harder and more expensive due to logistics issues, rising material costs and a shortage of labour.

As a result, she does not expect the UK is to meet its target 320,000 new homes per year in this context.

Harper added: “These two factors mean house prices are expected to continue to grow. However, we expect this growth to slow over the coming months as we settle in to the ‘new normal’.”

By Jake Carter

Source: Mortgage Introducer

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House price growth jumps in ‘insane September’

House prices in September experienced a growth rate not seen since February 2007, as buyers rushed to beat the final stamp duty holiday deadline.

The Halifax house price index, published today (October 7), showed prices rose by 1.7 per cent in the month, up from 0.8 per cent in August.

Annual house price inflation was 7.4 per cent in the year, up from 7.2 per cent in August, with the average house price in the UK now worth £267,587.

This reversed the recent three-month downward trend in annual growth, which peaked at 9.6 per cent in May.

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The rush to beat the stamp duty deadline could have played a part, experts believe.

The stamp duty nil rate band, which had been raised to £500,000 in July last year, dropped to £250,000 in June and returned to £125,000 at the end of September.

Russell Galley, managing director at Halifax, said: “While the end of the stamp duty holiday in England – and a desire amongst homebuyers to close deals at speed – may have played some part in these figures, it’s important to remember that most mortgages agreed in September would not have completed before the tax break expired. This shows that multiple factors have played a significant role in house price developments during the pandemic.”

Galley said the “race-for-space” as people changed their preferences had an impact, as well as the limited housing supply.

He added: “With estate agents reporting a further reduction in the number of houses for sale, this is likely to underpin average prices – though not the recent rate of price growth – into next year.”

George Franks, co-founder of London-based estate agents Radstock Property, said: “September’s insane price growth offers yet more proof that life and work changes brought on by the pandemic have been equally, if not more, influential on the housing market than the stamp duty holiday.”

He also pointed to the lack of supply, “coupled with absurdly low mortgage rates”, which he said would support prices in the short term and negate the impact of rising inflation.

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“The fundamentals continue to favour a stabilisation of the market rather than a fall in values.”

James Forrester, managing director of Barrows and Forrester, agreed the stamp duty break had less of an influence than many had thought.

“While there will no doubt be some form of erratic price movement on a month to month basis until the market settles down for good, we don’t expect the removal of this tax incentive to significantly impact the market at any level,” he said.

But Karthik Srivats said the data showed that things had not got any easier for first-time buyers.

“Growth in prices continues to outstrip wages and raising a deposit the old-fashioned way through patient savings remains an unrealistic dream for most.”

He added one piece of good news for first-time buyers was that they had access to the stamp duty relief on purchases of up to £300,000 which may give them a “slight edge” going forward.

He added: “Rock bottom interest rates and a continued demand for bigger homes with more outdoor space may well support buyer activity for some time to come.”

By Sally Hickey

Source: FT Adviser

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London third for super-prime property availability

London is currently home to the third largest available level of super-prime property market stock, with just Hong Kong and New York placing above it, according to research from London estate agency Bective.

There are an estimated 63 billionaires currently living in London, accounting for 2.3% of the world’s total.

When analysing this number in relation to the city’s total population, Bective’s research found that London ranks third for the highest number of billionaires per 100,000 of the local population (0.70).

Just San Francisco (1.45) and Hong Kong (1.07) currently have more billionaires per 100,000 of the local population.

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Bective’s research also found that London sits within the top three in terms of the availability of super-prime property stock for existing, or future, billionaire homebuyers.

Bective analysed 10 global cities based on the level of homes currently for sale at the £10m mark or above.

The research showed that globally, there are 1,890 homes listed for sale at the very top end of the market across these 10 global destinations.

317 of these are located in London, meaning the city accounted for 16.8% of this global, super-prime property stock.

Just Hong Kong (904) and New York (537) are home to more £10m-plus properties listed for sale, accounting for 47.8% and 28.4% of the global market respectively.

In contrast, super-prime homebuyers face the toughest task in Moscow and Mumbai, with each nation accounting for just 0.1% of all super-prime properties on the market.

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Craig Tonkin, sales director at Bective, said: “It’s fair to say that the pandemic has proved more problematic for London’s super-prime market than it has for the rest of the UK market and ongoing travel restrictions have stifled demand at this very top tier since the start of last year.

“However, we’re now seeing signs that this is on the turn and the prime London market, as a whole, is well poised to make a swift recovery.

“Not only does it boast the quality of properties that appeal to the super-wealthy homebuyer, but it also has the available stock to sustain this appetite for high-end homeownership.

“As a result, London continues to rank as one of the dominant forces within the global, super-prime property market and the city remains an area of high interest for the world’s wealthiest homebuyers.”

By Jake Carter

Source: Mortgage Introducer

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High-end housing markets bounce back in PCL

The prime central London property market continues to recover on the back of higher demand, amid the easing of lockdown restrictions and the subsequent return to the capital as prices in the region continue to grow.

The latest research from Savills shows that property prices increased in Q3 2021 for the second consecutive quarter, rising 1.4%, indicating a turning point for the central London property market.

The study appears to suggest that the prime central London market has bottomed out and is growing for the first time since September 2014, despite the absence of international buyers.

This uptick has, according to the data, been led by growth in Notting Hill (+4.6%), Bayswater (+3.3%) and Holland Park (+2.6%) prime markets, and has been particularly driven by larger homes with gardens.

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The value of prime homes in other parts of the capital also continued to grow on the year. Prices outside of central London are up by an average of 2.7% on an annual basis, again underpinned by demand for large family homes, although growth across a wider range of properties is starting to return.

Table 1: Quarterly and annual growth across prime London

Q3 2021Prime Central LondonPrime North West LondonPrime South West LondonPrime West LondonPrime North East LondonAll prime London
Quarterly growth0.7%0.6%1.2%1.0%0.2%0.7%
Annual growth1.4%2.6%5.0%4.2%-0.6%2.4%

Most strikingly, the value of prime London houses with six or more bedrooms has risen by an average of 6.2% in the past year, while values of five-bedroom properties have grown by 5%.

Lucian Cook, head of residential research at Savills, commented: “Families searching for space has been the driving force within the prime London market throughout the pandemic. These buyers have been spurred on by the low-interest-rate environment which has cushioned any impact of the tapered withdrawal of the stamp duty holiday.

“However, as we edge back towards normality, we are seeing prices rise across a wider range of properties.

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“Year-on-year movements in the capital value of two and three-bedroom homes in London’s most desirable locations have now moved into positive territory. We are beginning to see the return of demand for the pied-a-terre in London, particularly from those who bought in the country.

“Consequently, prices for prime central London flats have grown on the year [+0.6%] for the first time since the 2014 market peak.”

Cook added: “A lot of these changes have been driven by the changing priorities of those who have either started to return to the office or who are contemplating it. In our September buyer survey proximity to the tube or train station took over from proximity to a park or green space at the top of buyers’ wish lists.

“Meanwhile we are yet to see the full force of international demand return to a prime central London market that continues to look like good value in a historical context. As international travel is progressively reinstated, we expect to see more pronounced price growth in this market, which has been a long time coming. “While we expect prices to end the year around 2.0% higher in 2021, we expect annual price growth to rise to 8% next year.”

By MARC DA SILVA

Source: Property Industry Eye

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Halifax: House prices reach record high

UK house prices rose by 1.7% in September, equating to an increase of £4,400 to the value of the average property, according to the latest Halifax House Price Index.

This means that UK house prices are now at a record high of £267,500.

This month-on-month rise is the strongest increase since February 2007 and ups year-on-year house price inflation up to 7.4%.

This also reversed the recent three-month downward trend in annual growth, which had peaked at an annual rate of 9.6% in May.

Wales continued to record the strongest house price inflation of any UK region or nation, with annual growth of 11.5% in September (average house price of £194,286).

Scotland also continues to outperform the UK national average, with growth of 8.3% (average house price of £188,525).

In both nations, the equivalent stamp duty holidays came to an end at an earlier date.

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The South West remained the strongest performing region in England, with annual house price growth of 9.7% (average house price of £276,226).

The North West saw the next biggest increase, with house prices up by 9% year-on-year (average house price of £201,927), marginally ahead of Yorkshire and Humber at 8.9% (average house price of £186,815).

The weakest performing regions in terms of annual house price inflation are all to be found in the South and East of England, though these are also the areas with the highest average UK house prices.

Eastern England has seen annual growth of 7.2% (average house price of £310,664) while in the South East it is 7% (average house price of £360,795).

Greater London remains the outlier, with annual growth of just 1% (average house price of £510,515), and was again the only region or nation to record a fall in house prices over the latest rolling three-monthly period (0.1%).

Russell Galley, managing director of Halifax, said: “While the end of the stamp duty holiday in England – and a desire amongst homebuyers to close deals at speed – may have played some part in these figures, it’s important to remember that most mortgages agreed in September would not have completed before the tax break expired.

“This shows that multiple factors have played a significant role in house price developments during the pandemic.

“The ‘race-for-space’ as people changed their preferences and lifestyle choices undoubtedly had a major impact.

“Looking at price changes over the past year, prices for flats are up just 6.1%, compared to 8.9% for semi-detached properties and 8.8% for detached.

“This translates into cash increases for detached properties of nearly £41,000 compared to just £6,640 for flats.

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“Against a backdrop of rising pressures on the cost of living and impending increases in taxes, demand might be expected to soften in the months ahead, with some industry measures already indicating lower levels of buyer activity.

“Nevertheless, low borrowing costs and improving labour market prospects for those already in employment are likely to continue to provide support.

“Perhaps the biggest factor in determining the future of house prices remains the limited supply of available properties.

“With estate agents reporting a further reduction in the number of houses for sale, this is likely to underpin average prices – though not the recent rate of price growth – into next year.”

Mike Scott, chief analyst at Yopa, added: “The Halifax House Price Index for September shows that there was a large monthly increase in house prices as we reached the final end of the stamp duty holiday, with average prices up by 1.7% for the month and the annual rate of increase rising to 7.4%.

“The mortgage approvals included in the September figure largely relate to purchases that will complete in later months and not benefit from any tax saving, so this is in effect already a post-tax-holiday figure.

“It is therefore further evidence that the withdrawal of the tax savings will have little effect on the over-heated housing market, which is still being driven by a severe shortage of homes for sale, good mortgage availability at record low interest rates, strong wage growth, pandemic-induced lifestyle changes and the involuntary savings built up by many during the lockdowns.

“Yopa thus expects the current strong rate of price growth to be maintained into at least the first half of 2022 as we continue to recover from the pandemic and return to a new normal.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Although reflecting some historical buying and selling, the housing market continues to demonstrate remarkable resilience bearing in mind the number of transactions brought forward in the last few months to take advantage of the stamp duty holiday.

“Nevertheless, we are finding activity has lost some oomph but there is still plenty of life left, supported by record low interest rates and supply, while though rising, is not doing so fast enough.

“The market also seems to be shrugging off rising inflation and the end of furlough, as well as widening economic concerns.”

August saw the average cost of a property reach £262,954, up 0.7% on July and the then highest figure on record.

By Jake Carter

Source: Mortgage Introducer

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