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UK house price growth will continue to outpace inflation

Inflation is rising faster than wages are growing, but it will not outpace UK house price growth anytime soon, according to a major housebuilder.

In the near-term, high demand and a shortage of new properties coming onto the housing market are likely to push up house prices, and it would appear that many potential buyers have not been deterred by increasing costs.

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The ONS said increases in household and transport costs, such as electricity, gas and fuel bills, were the largest drivers in the rise of the Consumer Prices Index (CPI) measure of inflation to 6.2%, and yet Bellway, a top five UK housebuilder by number of homes built, said on Tuesday that rising house prices will continue to offset the impact of inflation.

Annual house price growth in the UK hit 12.6% in February this year, the latest data from Nationwide shows, pushing the average price of a home up more than £29,000 to £260,230.

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According to the lender, “a combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.”

Despite his short-term house price growth expectations, Jason Honeyman, chief executive at Bellway, accepts that rising costs is likely to cause demand for property to eventually slow in the medium- to longer-term.

“I worry about that cost-of-living increase impacting people’s appetite or ability to buy,” he said.

“It’s inevitable that the market will moderate, but I don’t think it will crash or grind to a halt,” he added.

By MARC DA SILVA

Source: Property Industry Eye

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Buyer demand remains unseasonably high across the UK

Residential property prices in the UK have increased to £245,200 as greater demand from buyers amid constrained stock levels continues to place upward pressure on prices.

According to the latest data from Zoopla, there was strong property price growth across all regions of the UK, with the average price of a home rising 8.1% on the year, up from 4.2% last February.

The property website said demand remains unseasonably strong across the country, with demand for family houses more than twice as high as usual for this time of the year.

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Gráinne Gilmore, head of research at Zoopla, said: “Demand is strongest for family houses, indicating a continued appetite for additional internal and external space. But demand is up across nearly all property types, indicating that those thinking of moving are in pole position to sell.”

Zoopla said new listings of homes for sale rose 5% above the five-year average, with listings for sale across the average estate agency branch up 3.5% in the 28 days to 20 March.

The stock of homes available to buy was 42% below the five-year average, compared to 47% lower in December last year.

But, despite new supply levels increasing this year, it will not be enough to reverse the overall supply-demand imbalance, Zoopla said.

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Sales agreed in the first quarter of this year jumped 38% compared to Q1 2020, according to Zoopla’s monthly house price index.

It expects the trend to contine in the coming months, as price growth and high demand triggers more homeowners to make a move.

Market activity is also being driven by a bounce back in demand in urban areas since the start of 2022.

At a regional level, Wales has registered the highest annual regional price growth for the 12th consecutive month, at 11.8%, while this has also contributed to 35% price growth over the last five years in the nation.

Despite this, Zoopla anticipates price growth to slow during the second half of 2022 as the surging cost of living, and rising mortgage rates apply a brake to the market.

Gilmore added: “Given the tick up in new listings of homes for sale, there is now a wider choice of homes for movers and all buyers. The increased economic headwinds, including the rising costs of living and increasing mortgage rates, property price growth will start to moderate as we move through the second half of 2022.”

By MARC DA SILVA

Source: Property Industry Eye

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House prices in London: the property market fell month-on-month but is expected to rise again in spring

The slight monthly dip in house prices may be a result of household caution following January’s interest rate rise.

The London property market slowed sharply in January following a surge in prices through the autumn, official figures reveal today.

The average cost of a home in the capital dropped 1.8 per cent from £519,653 to £510,102 during the month, according to data from the Land Registry.

That left prices just 2.2 per cent higher than a year previously, making London the slowest growing property market of any region in the UK.

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Across the country as a whole prices rose by 9.6 per cent to an average of £274,000 over the 12 months to January.

However, the picture in London was patchy with some boroughs still seeing strong year on year growth. Prices in Richmond were up 12.4 per cent, while Barking & Dagenham saw a 10.6 per cent rise, Tower Hamlets saw the biggest fall with prices down 5.1 per cent.

Mike Scott, chief analyst at estate agency Yopa said: “London is still growing much more slowly than the rest of the country, up by only 2.2 per cent on the year. This will be partly a response to London workers being able to live further from the office as they are now working more from home, and partly a continuation of a trend that started in 2016, with slower growth in London after its house prices had grown much more rapidly than the rest of the country for the previous several years.”

Detached homes saw the biggest fall, down just over three per cent, reversing the “race for space” trend of the pandemic years, when flats were the hardest to sell.

House buyers may have been more cautious about taking on large mortgages in January after the Bank of England increased its key interest rate in response to rising inflation in December, making home loans more expensive.

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Today’s higher than expected rise in inflation to 6.2 per cent makes further interest rate hikes more likely over the coming months.

However, despite the dip in prices in February most London agents have seen strong demand from buyers and a severe shortage of stock in February making it more likely that prices will start to rise again in the spring.

Comparing annual house price rises with average salaries, estate agent Savills warned of a looming housing affordability crisis. UK house prices rose by more than £24,000 in the year to February while average wages were £31,285 in 2021, meaning the average home value rose by 77 per cent of gross earnings.

Homes in the South East — the traditional London commuter belt — rose by almost £38,000, 11 per cent higher than median annual earnings for the area.

Lawrence Bowles, director of research at Savills, said: “The ONS housing affordability analysis released today revealed that house prices rose faster than earnings in almost all (91 per cent) local authorities across England and Wales last year.

“Rapid house price growth and rising interest rates are creating a perfect storm for first-time buyers. Additionally, with Help to Buy due to end just a year from now, we expect the housing market to become increasingly polarised between those whose parents can afford to help them onto the housing ladder and those who can’t.

“Aspiring first-time buyers will be watching to see what new support the government can offer them to their keep dreams of home ownership alive.”

By Jonathan Prynn

Source: Evening Standard

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Housing market set to cool after prices rise by a fifth in five years

House prices have climbed by more than a fifth in the past five years, boosted by unprecedented buyer demand and increased household savings after the pandemic.

Asking prices rose by more than 8pc in the year to February, according to property website Zoopla, and have jumped by 21.5pc since 2017.

House price growth has been propped up by a chronic shortage of homes for sale in the past two years, with the average property in the UK now priced at £245,200.

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Homeowners have enjoyed huge price growth and unprecedented competition amongst buyers since the property market reopened after the first lockdown in the summer of 2020.

Homes which list for sale have been snapped up by desperate buyers within weeks. Almost a third more sales were agreed in the first three months of 2022 compared to pre-pandemic levels, according to Zoopla.

The company reported buyer appetite remained “unseasonably strong”, despite predictions the market would begin to cool this year.

Gráinne Gilmore, of Zoopla, said: “Demand is strongest for family houses and more than twice as high as usual for this time of the year.

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“But demand is up across nearly all property types, indicating that those thinking of moving are in pole position to sell.”

Buyers have rushed to purchase whilst they can still access historically cheap mortgage deals and before interest rates rise further. The Bank of England earlier this month made its third consecutive increase to the Bank Rate, to 0.75pc, and further rises are expected.

Despite soaring buyer demand, the supply of homes for sale in February was still 42pc lower than the five-year average. Zoopla predicted supply would build in the coming months, but warned it would not reverse the extreme demand imbalance this year.

Ms Gilmore added: “The increased economic headwinds, including the rising costs of living and increasing mortgage rates, property price growth will start to moderate as we move through the second half of 2022.”

By Rachel Mortimer

Source: Telegraph

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February sees residential transaction number move upwards

Residential property transactions grew by 15.3% on a monthly basis in February 2022, official government figures show.

In total, on a provisional and non-seasonally adjusted basis, there were 96,250 transactions of this type, which is 20.6% lower than recorded in February 2021.

However, as Dashly founder Ross Boyd puts is: “Comparisons between February this year and last are like comparing apples with pears given the impact the stamp duty holiday had on transaction levels.”

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The figures also show that on a non-adjusted estimate, there were 9,860 non-residential transactions in February, which was 17.4% more than in January and 10.2% higher on the year.

Seasonally-adjusted, the report counts 112,260 residential transactions – a 4.4% improvement on January and 20.8% lower than seen in February 2021, and 11,020 non-residential transactions – 9.5% up on a monthly basis and 8% up on a yearly basis.

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Mark Harris comments: “Some heat has come out of the purchase market compared with last year but the remortgaging market is picking up as borrowers attempt to lock into low mortgage rates before they disappear.

“Increasing living costs, rising mortgage rates and higher taxes make for an unwelcome triple whammy which may put the brakes on the housing market unless the chancellor comes up with a strategy to soften the blow in his spring statement.’

By Gary Adams

Source: Mortgage Finance Gazette

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Landlords confident for buy-to-let market outlook

Two-thirds (67%) of landlords are confident about the buy-to-let market outlook in 2022, according to Stephanie Charman, head of strategic relationships at Sesame Bankhall Group.

The figures were revealed within Shawbrook’s recent Changing Face of Buy-to-Let Report, which also found that 34% of landlords are planning to purchase another property this year.

Turning to the percentage of landlord clients considering opening limited companies for their buy-to-let properties, almost a third of broker respondents (29%) said that more than 75% of their portfolio clients were debating the move.

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That was according to a poll conducted by intermediary-only specialist buy-to-let lender CHL Mortgages during a Lender Spotlight webinar session, held in conjunction with Knowledge Bank.

Charman said that the rise in the number of landlords planning to buy this year is encouraging and has been backed-up by anecdotal feedback from lenders.

She went on to explain that lenders have reported seeing an increase in purchase activity within the buy-to-let sector, especially from landlords diversifying and purchasing HMOs and semi-commercial units.

“Our own forecasts point to a buy-to-let market of around £44 billion in 2022. This is slightly down on last year, with fewer new purchases without the stamp duty incentives,” she added.

Even when recent interest rate increases are factored in, rising rents, alongside competitive product pricing, are providing attractive yields, according to Charman.

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Despite these rising rents, a survey conducted by the Social Market Foundation (SMF) shows that 81% of renters said they are happy with their current property, and 85% said they are satisfied with their landlord.

In addition, the survey found that only half of renters expect to leave the private rented sector in the next 15 years, and 13% would be satisfied with long-term renting.

Looking to the average age of tenants, the data shows that, by 2035, more than half of private renting households are likely to include someone aged 45 or older. The Social Market Foundation also believes that couples and families will make up a rising proportion of renters.

“Given the challenges facing prospective first-time buyers in stepping on to the property ladder, the private rental sector continues to play a vital role in fulfilling the UK’s housing needs,” said Charman.

Charman went on to say that other significant buy-to-let drivers include the continued impact of the new Minimum Energy Efficiency Standards.

All buy-to-let properties must now be E rated, with consultations taking place to raise this benchmark to a C rating for new buy-to-let tenancies in 2025 and existing tenancies by 2028.

Within the consultation document from late 2020, it was suggested that the minimum EPC rating should be raised to a band C for all new tenancies by 2025, and all existing tenancies by 2028.

According to Charman, market speculation has suggested these timescales could be pushed out further.

“However, one thing is clear, change is coming and the buy-to-let market will look very different in the future,” said Charman.

When the new rules are implemented, many landlords will have additional upgrade costs to deal with – Charman estimates that for improving EPC ratings, the costs will range from £5,900 to £10,400 per buy-to-let property.

According to Shawbrook Bank’s report, 17% of landlords have already made efforts to improve the energy efficiency of their property, rising to 22% of portfolio landlords.

Of the landlords that had undertaken a refurbishment, 22% had replaced the boiler and heating system in their property, a further 23% had replaced the windows, and 18% had installed new white goods.

Charman believes the speculation around the change in requirements could lead to some divestment and consolidation, particularly among landlords with older, less energy efficient housing stock.

As a result, she said the expectation is that landlords will bolster their portfolio with new build properties.

“With so much change on the horizon, it is vital for advisers and landlords to keep up to date with the latest buy-to-let developments,” Charman added.

By Jake Carter

Source: Mortgage Introducer

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Property prices hit new record in March, Rightmove data shows

The average price of a property coming onto the market came to £354,564 in March, shows the latest house price index from Rightmove.

This 1.7% monthly increase, which compares to 2.3% in February, is the largest recorded for March since spring 2004.

It also means that as of this month, house prices grew 10.4% annually, the fastest growth seen for this metric since June 2014.

The index adds that all regions and counties bar London and Scotland experienced annual increases of 10% or more, which went up 6.3% and 8%, respectively.

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Rightmove director of property data Tim Bannister says that, with there being twice as many buyers as sellers in the market currently, “the imbalance between high buyer demand compared to low available property supply is the greatest that we have ever seen for the start of a spring market.”

The data also shows that 22% of property deals are being agreed on the Rightmove website within the first week of going on sale, and 47% within the first two weeks.

Bannister continues: “Many of those who are selling in this record-breaking market obviously also face the prospect of buying again in the same market, and being in fierce competition against other buyers.

“Having a buyer for your own property, subject to contract, puts those who are buying again in a powerful position compared to buyers who have yet to sell, and agents report that these ‘power buyers’ are more likely to get the property that they want and negotiate the best deal on price.”

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North London estate agent and former Rics residential chairman Jeremy Leaf comments: “Although Rightmove reports that asking prices aren’t rising quite as rapidly this month compared with last, overall the numbers are still strong, reflecting the continuing huge mismatch between supply and demand.

“In our offices, we have found stronger interest in higher value, larger family homes, where buyers seem to find it easier to shrug off concerns about rising interest rates and events in Ukraine having an even more serious impact on household expenditure than previously.

“Nevertheless, transaction numbers are down a little from the heady days of most of last year, and transaction times are lengthening.

“Flats are a different story, particularly those without outside space and good connectivity, where stretched affordability and deposit raising is more of an issue.

“As a result, flat prices will probably soften rather than correct but are certainly not going out of fashion completely now hybrid work patterns are more firmly established.”

By Gary Adams

Source: Mortgage Finance Gazette

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UK house prices surge above £350,000 as demand outstrips supply

The average house price in Britain has surged above £350,000 for the first time ever as buyer demand outstrips the amount of homes on sale.

House sellers were typically asking for £354,564 for a property in March, up £5,760 on February levels in the biggest monthly price hike since 2004, according to data from property platform Rightmove.

The average price last month was also 10.4 per cent higher than the same time last year, the sharpest annual rise that Rightmove has recorded in any month since June 2014.

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Rightmove said that house prices had been stoked by the biggest mismatch between buyer demand and supply ever recorded, with more than double the amount of buyers as sellers currently active in the market.

But the firm’s director of property data Tim Bannister said the boom may settle in the coming months as economic pressures begin to bite.

“There are headwinds that seem likely to remove the current market froth in the second half of the year,” he said.

“We’ve just seen interest rates rise again, and there are further incremental increases forecast for the year which will raise mortgage rates for some.”

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Soaring Inflation and a looming cost of living crunch were also likely to affect buyer affordability and market sentiment in the coming months, Bannister said.

So-called ‘top-of-the-ladder’ homes were currently weathering the biggest jump in prices, with four bedroom or more properties recording an average jump of £23,619 due to the high demand and greatest scarcity of supply.

Despite the sharp rise in asking prices from sellers, agents have reported having to slash initial prices as prospective buyers are left “underwhelmed” by over-optimistic sellers, Rightmove said.

By CHARLIE CONCHIE

Source: City AM

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London house prices see record stretch of growth while average UK asking price breaks £350,000 for first time

Every month for the last year, annual house price growth has climbed. This is the longest stretch of year-on-year rises since the beginning of 2017 as London enters a strong spring sellers’ market.

The annual rate of growth in asking prices has increased every month since April 2021. This means the marketed price of a London home is 6.3 per cent higher this March than 12 months ago, taking the average to £664,400. From February 2021 to February 2022, the increase was as much as 7.3 per cent, up from 4.2 per cent from January to January.

The last time the capital recorded a sustained stretch of uninterrupted growth was from September 2009 to February 2017, according to the latest Asking Prices Index from Rightmove.

The time it takes to sell a property in London also dropped from 68 days to 57 this February after a high of 71 days in the same month last year – another indicator that the London housing market is restarting after the pandemic.

During the Covid-19 crisis many young workers and families chose to move out of Britain’s cities and into smaller towns and villages which quashed sales in the capital, especially in the inner boroughs.

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However, following the vaccine roll-out programme, the reopening of culture and hospitality, the return to the office and the re-emergence of overseas buyers, activity is picking up.

How long it takes to sell a property in London

MonthNo. of days
February 202171
March 202164
April 202157
May 202157
June 202157
July 202155
August 202158
September 202157
October 202157
November 202159
December 202163
January 202268
February 202257

Although the emergency stamp duty holiday ended in the autumn, demand to move in the UK has remained at a record high as the home moving boom continued to grip the whole nation, the report also shows.

The average price of property coming to market rose 1.7 per cent this month to £354,564 – breaking through the £350,000 threshold for the first time. This is the largest monthly rise for March since 2004 with an annual increase of 10.4 per cent.

The time it takes to sell on average in the UK fell from 44 days in January to 36 in February. The number of days from offer to completion was as low as 25 days in Scotland and 30 days in the south west of England.

“This unprecedented price level is being stoked by the greatest imbalance between buyer demand and the number of properties available for sale that we have ever measured at this time of year,” says Tim Bannister, analyst at Rightmove. “This is the strongest spring sellers’ market that we have ever seen in several metrics,” he adds.

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There are now more than twice as many buyers as sellers active in the market, which is the biggest mismatch between supply and demand that the property portal has recorded in its two-decade history.

In fact, 22 per cent of properties listed on Rightmove go under offer within the first two weeks of marketing – twice as many as in the pre-pandemic market of 2019.

“Usually buyer demand pauses in February for half term and then we see a slight break ahead of the spring but this year buyer enquiries picked up back straight away,” says Patrick Rampton of Rampton Baseley in Clapham. “There is pent up demand in the London market from Brexit and the pandemic, and with rising interest rates people want to secure a mortgage deal now. We might have half the stock but we are selling everything,” he adds.

Bannister stresses that now is the right time for cautious sellers who have been waiting for the pandemic to settle down but want to move ahead of rising interest rates and inflation. Although, the Rightmove business model is based on the listing of homes for sale.

Strutt & Parker’s Kate Eales believes despite historically low stocks, spring sellers are starting to emerge.

By Anna White

Source: Evening Standard

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House prices hit record high but slowdown looms

Scottish average property prices increased by almost 10% in 2021, led by growth in the cost of larger homes, according to an analysis of the latest data by property firm DJ Alexander.

The estate agency, part of the Lomond Group, said that between January 2021 and December 2021 average property prices in Scotland rose by 9.5%, led by gains in Edinburgh.

The Scottish capital experienced the largest average increase at 10.6% with Aberdeen the lowest among Scotland’s largest cities at just 2.2% with Dundee up 9.5% and Glasgow increasing 8.3%.

However, it is the increase in average prices for detached, and semi-detached homes which is most striking with double digit growth in all cities with the exception of Aberdeen whose detached homes increased by a healthy 8.1% – an increase of £27,318 – but were lower than the rest of Scotland due to continued uncertainty over the future of the oil and gas sector.

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Detached homes across Scotland increased by an average of 15.4% which is a £44,182 increase on 2020. However, Edinburgh topped the market overall with an average annual increase of £110,181 in the price of detached homes which equates to a rise of 18.3% year-on-year.

Glasgow had the second highest increase with a rise of 17.8% which is an average £67,067 higher over the year with Dundee increasing 15.1% which is £41,843.

Semi-detached and terraced properties experienced strong double-digit growth in Edinburgh and Glasgow, while Dundee’s largest properties also recorded high increases over the year. Flats had the lowest growth with a 4.1% increase in average prices across Scotland ranging from a rise of 7.8% in Edinburgh to a fall of 0.9% in Aberdeen.

David Alexander, chief executive officer of DJ Alexander Scotland, commented: “These figures reflect a very mixed picture across Scotland. While it is positive that there has been an overall substantial rise in average prices in the country it is clear that there are major differences in the performance of the market both geographically and by property type.

“Aberdeen remains flat and is unlikely to improve until there is some clarity over the future of the oil and gas industry. However, even despite the economic uncertainty the strength of pricing for the largest homes in Aberdeen remains the strongest sector even in the weakest city market.”

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He continued: “Edinburgh’s continuing popularity is remarkable and the increase in average pricing for detached houses is extraordinary. An increase of £110,000 on average for detached properties in just one year is unprecedented and, I would have to say, unsustainable in the long term. The buoyancy of the market has been unbelievable and the money available to pay these substantial amounts for property shows that the strength of Edinburgh’s property market has both deep roots and deep pockets.

“Glasgow and Dundee have also had a remarkable year with larger properties producing outstanding growth in 2021. With Edinburgh and Glasgow both having a near 20 per cent rise in average property prices for detached and Dundee at just over 15 per cent we can see that the top end of the market remains strong across Scotland which is a welcome outcome.”

Alexander added: “I believe that these figures represent a peak since, for me, there is really only one way for them to go in the next couple of years. There won’t be a sudden fall or drop in the market as the number of properties available remains woefully low, but I don’t think that substantial increases of this scale are sustainable in the medium to long term.

“I think we will continue to have positive growth but nearer the historic levels of between three and five per cent a year with outlier pockets of stronger activity continuing to surprise and make headlines but overall, a steadier market.”

By MARC DA SILVA

Source: Property Industry Eye

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