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Annual house price growth accelerated in June

Annual house price growth accelerated in June, and now stands at over 13 per cent, the Nationwide’s latest House Price Index suggests.

The 13.4 per cent annual rate of increase is the highest level recorded since November 2004. The month on month rate of increase was 0.7 per cent, meaning an average priced house went up by over £2k between May and June.

Strongest price growth was in Northern Ireland, weakest was in Scotland.

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While strong house price growth is partly due to ‘base effects’, with June last year unusually weak due to the first lockdown, the market continues to show significant momentum, said Nationwide chief economist Robert Gardner.

‘Indeed, June saw the third consecutive month-on-month rise, after taking account of seasonal effects. Prices in June were almost 5 per cent higher than in March.

‘Regional data for the three months to June indicates that all parts of the UK saw an acceleration in annual house price growth. Northern Ireland and Wales saw the largest gains, at 14 per cent and 13.4 per cent respectively. By contrast Scotland saw the weakest rate of annual growth, at 7.1 per cent closely followed by London at 7.3 per cent’.

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

Meanwhile mortgage payments are still affordable, said Gardner, but deposits remain a major hurdle for most first time buyers

‘Despite the increase in house prices to new all-time highs, the typical mortgage payment is not high by historic standards compared to take home pay, largely because mortgage rates remain close to all-time lows. In fact, on this measure affordability remains broadly in line with its long run average,.

‘However, house prices are close to a record high relative to average incomes. This is important because it makes it even harder for prospective first time buyers to raise a deposit. For example, a 10 per cent deposit is over 50 per cent of typical first time buyer’s income’.

Underlying demand is likely to remain solid in the near term as the economy unlocks, said Gardner. ‘Consumer confidence has rebounded while borrowing costs remain low. This, combined with a lack of supply on the market, suggests further upward pressure on prices. But as we look toward the end of the year, the outlook is harder to foresee’.

Source: Landlord Knowledge

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UK housing market: annual house price growth hits 7.1% in April

House prices in the UK have soared since the easing of the first lockdown. The boom in prices shows no signs of slowing down, with April 2021 seeing the highest monthly increase in average house prices, according to new data. Here’s why the UK housing market is booming and why the trend could continue for the next few months.

What is happening to the UK housing market?

According to new data from the Nationwide building society, annual house price growth in the UK rebounded to 7.1% in April, up from 5.7% in March.

The stats show that month-on-month prices rose 2.1% in April, which is the biggest monthly rise since February 2004.

According to the BBC, this sharp increase has prompted some analysts to suggest that the UK housing market is ‘on the boil’.

The average UK home is now worth £238,831. That’s 15,916 more than it was worth a year ago.

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What is causing the boom in housing prices?

Lockdown has caused many people to reassess their living arrangements with particular emphasis on extra rooms, space and gardens.

This has increased demand in the housing market. And since there are not nearly enough houses to match the demand, prices have shot up.

The stamp duty holiday has also played a role, albeit a smaller one, in house price growth. Some people are moving forward with their planned house moves in order to benefit from the tax break.

What does the future hold for the UK housing market?

According to the BBC, there is scope for annual house price growth to continue accelerating in the next few months as housing supply still does not match the demand.

And while many industry experts originally forecast that the UK housing market would decline in 2021 due to the end of the stamp duty holiday and the economic effects of the pandemic that would reduce affordability, many have revised their forecasts upwards.

The main house price forecast for 2021 now is that house prices will go up, with Knight Frank predicting a growth of 5% by the year’s end.

The revision comes in the wake of government support measures, anticipated relaxation of coronavirus restrictions and the successful roll-out of the Covid vaccine, all of which are expected to help mitigate any adverse effects of the pandemic.

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

What do changes in the housing market mean for buyers?

The continued rise in house prices is generally bad news for aspiring homeowners, especially first-time buyers.

However, many people have been able to save money during lockdown. And since a good number of first-time buyers usually get some help from their families when it comes to raising a deposit, it means that a lot of them might actually be in a good position to purchase a home even as prices rise.

There are several government schemes currently available to help first-time buyers get onto the property ladder.

These include the Help to Buy: Equity Loan scheme and the 95% mortgage scheme. Both can help buyers secure a mortgage with just a 5% deposit.

Alongside these two, there are other options to help homebuyers.

Lifetime ISA

This is available to people aged between 18 and 39. You can save up to £4,000 a year in your account to be used for buying a home. The government will top it up with a 25% bonus each year. So if you save the full £4,000, the government will top it up with an additional £1,000.

Shared ownership

This is a scheme that lets you buy a 25% to 75% share of a property and then pay rent on the rest. You’ll have the option to buy a larger share later.

First Homes

A proposed new policy that will provide homes to first-time buyers at a discount of 30% on the market value.

Taking advantage of these schemes could help reduce the initial costs of owning a home. However, it’s always best to remember that a home is a long-term investment and focus on getting the right home for your needs and financial circumstances, both now and in the future.

By Sean LaPointe

Source: The Motley Fool

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House price growth to reach 17.5% by year end

Annual house price growth will reach 17.5% by the end of the year, according to quote service Reallymoving.

Such is the urgency for home sales to be completed before the end of the stamp duty holiday, prices are expected to rise by 8.8% over the next three months alone, including a 6.1% increase between September and October.

If Reallymoving is accurate in its predictions, which are based on deals already agreed, then the typical price agreed will rise to just shy of £342,000 in December.

Rob Houghton, chief executive of reallymoving, said: “Our data indicates continued strong price increases in the run up to Christmas but the slowdown in the rate of growth in November and December could be an early sign that the post-lockdown spike in activity is beginning to run out of steam.

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“For the remainder of the year the stamp duty holiday will continue to support demand but the real test will be the start of 2021, when the window for offering on a property and completing before the March 31st deadline begins to close. This is likely to be in the context of rising unemployment and continued lockdowns, impeding economic activity and denting consumer confidence.

“Increasing numbers of first-time buyers have been locked out of the market in recent months due to competition for homes and the withdrawal of high Loan to Value mortgages.

“But if the government presses ahead with the launch of its proposed 95% loans in spring 2021, that would help overcome the biggest barrier to home ownership for thousands of first-time buyers, boosting demand at the lower end of the market at a crucial time.”

BY RYAN BEMBRIDGE

Source: Property Wire

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House prices recover in July

Annual house price growth has recovered to 1.5 per cent in July, according to the latest Nationwide House Price Index.

The figures, published today (July 31), also found that prices rose month-on-month by 1.7 per cent, in contrast to the fall of 1.6 per cent in June.

Robert Gardner, chief economist at Nationwide, said: “The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.

“The rebound in activity reflects a number of factors. Pent up demand is coming through, where decisions taken to move before lockdown are progressing.”

Mr Gardner added that the increased stamp duty threshold would “bring some activity forward” but also warned of a “false dawn”.

He said: “Most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the aftereffects of the pandemic and as government support schemes wind down. If this comes to pass, it would likely dampen housing activity once again in the quarters ahead”.

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 Jul-20Jun-20
Monthly Index (seasonally adjusted)435.9428.8
Monthly Change (seasonally adjusted)1.7%-1.6%
Annual Change1.5%-0.1%
Average Price£220,936£216,403

Islay Robinson, group CEO of Enness Global Mortgages, said: “Buyer demand has been turbocharged via a stamp duty holiday, mortgage rates remain very favourable, and buyers and sellers are returning to the market in their droves.

“We’re also seeing a strong return to form at the top-end of the market and from foreign buyers. All things considered, the outlook is a positive one, and we’ve seen the dark clouds of market decline make away for the perfect storm of property price growth over the coming months.” 

Jeremy Leaf, principal at estate agency Jeremy Leaf & Co, said the data was “not surprising” as pent-up demand continued to be released and new listings picked up since the housing market re-opened. 

“Activity has been given added impetus by the stamp duty holiday and continued low interest rates.”

However Shaun Church, director at Private Finance, said: “Although economic activity is slowly recovering, lenders remain cautious. Cuts to rates on lower loan-to-value products suggest lenders are keen to reduce their risk appetite to offset high uncertainty in the housing market.

“This is likely to create a barrier to entry for first-time buyers, adding to the heavy financial burden the pandemic has placed on many people in this age group.”

By Chloe Cheung

Source: FT Adviser

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Annual price growth at three year-high as supply lags demand – Zoopla

House prices across all English cities have risen above their 2007 pre-crisis peaks for the first time but Zoopla is warning sellers not to get over-excited when pricing their properties. Figures from the portal – based on Land Registry price paid data and mortgage valuations – found annual price growth among the UK’s largest cities last month hit a three-year high of 3.9%.

All cities, except for Aberdeen, where prices fell 4.3% annually, recorded annual house price inflation of at least 2% last month for the first time since February 2017.

The highest growth was in Edinburgh, up 5.9%, while Nottingham and Leicester each recorded growth rates of 5.3%.

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Zoopla highlighted that stock is also up 2.6% annually, but is lagging behind demand which is up 26%.

Stock levels in nine cities are lower than a year ago by as much as 6%, Zoopla said, with most of the shortages in areas where prices are rising fastest.

Richard Donnell, research and insight director at Zoopla, said: “It has taken 12 years for house prices in all English cities to return to their previous pre-crisis levels.

“Some cities returned to 2007 levels within four years, as the economy and job growth rebounded. In others, it has taken much longer as the mismatch between demand and supply has been less pronounced.

“An imbalance between supply and demand is supporting the current rate of house price growth – a trend we expect to remain in place over the first half of 2020.

“We do not expect a material acceleration in the rate of growth in the foreseeable future, as affordability pressures will limit the scale of price growth, especially across southern England.

“There is a risk that, in some markets, sellers may become unrealistic about the expected sales price for their home. This is more likely in London and southern England where the market has been weak, and supply remains constrained. Housing demand is up, but there remains a price sensitivity amongst buyers, especially in the highest value markets.”

By MARC SHOFFMAN

Source: Property Industry Eye