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Annual house price growth slowed to 10% in September

Annual house price growth eased to 10% in September, from 11% in last month, according to the latest house price index from Nationwide.

On a monthly basis, house prices rose by 0.1%, after taking account of seasonal effects. As a result, house prices remain 13% higher than before the pandemic began in early 2020.

Wales was the strongest performing region with house prices up 15.3% year-on-year, the highest rate of growth since 2004.

Price growth remained elevated in Northern Ireland at 14.3% and growth in Scotland picked up to 11.6% in Q3, in contrast to the previous quarter when it was the weakest performing part of the UK at 7.1%.

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England saw a slowing in annual house price growth to 8.5%, from 9.9% in Q2. Price growth in northern England continued to exceed that in southern England.

Yorkshire & Humberside was the strongest performing English region for the second quarter in a row, with prices up 12.3% year-on-year, followed by the North West, which saw an 11.4% rise.

London was the weakest performer, with annual growth slowing to 4.2% from 7.3% last quarter. The surrounding Outer Metropolitan region, which includes places such as Luton, Watford, Sevenoaks and Woking, also saw a softening to 6.8%, down from 8.2% in Q2.

Robert Gardner, chief economist at Nationwide, said: “House prices have continued to rise more quickly than earnings in recent quarters, which means affordability is becoming more stretched.

“Raising a deposit remains the main barrier for most prospective first-time buyers. A 20% deposit on a typical first-time buyer home is now around 113% of gross income, a record high.

“Due to the historically low level of interest rates, the cost of servicing the typical mortgage is still well below the levels recorded in the run up to the financial crisis. However, even on this measure, affordability is becoming more challenging.

“For example, if we look at typical mortgage payments relative to take home pay across the country, it is notable that in the majority of UK regions (10 out of 13) this ratio is now above its long-run average. By contrast, pre-pandemic, this was only the case in one region (London).

“Recent price patterns suggest an element of rebalancing is occurring where most of the regions that have seen the strongest price growth are those in which affordability is still close to or below the long run average.

“As we look towards the end of the year, the outlook remains uncertain. Activity is likely to soften for a period after the stamp duty holiday expires at the end of September given the incentive for people to bring forward their purchases to avoid the additional tax.

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“Moreover, underlying demand is likely to soften around the turn of the year if unemployment rises as government support winds down, as seems likely.

“But this is far from assured. The labour market has remained remarkably resilient to date and, even if it does weaken, there is scope for shifts in housing preferences as a result of the pandemic – such as wanting more space or to relocate – to continue to support activity for some time yet.”

Sundeep Patel added: “With the modest slowdown in annual house prices to 10.0% in September, from 11.0% in August, it’s widely felt UK house prices peaked at the height of Summer and will now start to stabilise as we move into the Autumn.

“Government support and tax reliefs certainly helped to inflate house prices this year and in some areas demand is still at record levels.

“However, with stamp duty and furlough winding up, and the Bank of England deliberating to whether to raise interest rates, the bubble created by frenzied property buying is soon likely to pop.

“That said, demand for buy-to-let has been on the rise in certain regions lately as property investors bid to capitalise on local prices doing well in the post-pandemic market.

“Even with the prospect of activity calming, there will be a widening gap for specialist lenders to cater to the ever-changing financial needs of borrowers.”

Nigel Purves said: “Whilst there was a slight cooling in house price growth, house prices remain far higher than before the pandemic – causing major affordability issues for aspiring homeowners.

“With the stamp duty holiday drawing to a close and the government’s pandemic support coming to an end, most would-be buyers don’t have an easy road ahead.

“Average deposits are sat at £60,000, and strict lending criteria mean that the low mortgage rates aren’t available or accessible for most people.

“If we’re going to see real and lasting change for the UK’s reluctant renters, there needs to be focus on a pushing the market to adopt a more flexible, innovative, and realistic approach that will help a greater number of people take their first step onto the ladder.”

By Jake Carter

Source: Mortgage Introducer

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Annual house price growth cooling – Halifax

The latest Halifax House Price Index is showing Annual house price inflation at 7.6% compared to 8.7% in June with the average UK property price now £261,221, up 0.4% in July.

However, Wales recorded its strongest house price growth since 2005.

Russell Galley, Managing Director, Halifax, said: “House prices rose by 0.4% in July to add £1,122 to the cost of the average property, pulling back some ground lost during June (-0.6%, -£1,543). Annual price growth fell to +7.6%, its lowest level since March. This easing was somewhat expected given the strength of price inflation seen last summer, as the market began its recovery from the first lockdown, and with activity supported by the start of the stamp duty holiday. In cash terms, typical prices now stand at just over £261,000, a little below May’s peak but still more than £18,500 higher than a year ago.

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“Recent months have been characterised by historically high volumes of buyer activity, with June the busiest month for mortgage completions since 2008. This has been fuelled both by the ‘race for space’ and the time-limited stamp duty break. With the latter now entering its final stages (the zero per cent rate only applies to the first £250,000 of the purchase price, before reverting to standard rates from October), buyer activity should continue to ease over the coming months, and a steadier period for the market may lie ahead.

“Latest industry figures show instructions for sale are falling, and estate agents are experiencing a drop in their available stock. This general lack of supply should help to support prices in the near-term, as will the exceptionally low cost of borrowing and continued strong customer demand.

“Although there remains some uncertainty over the impact on employment from the unwinding of government support schemes, on balance the risks to the macro-environment are receding, with consumer confidence improving, the labour market recovering, and the economy expanding as restrictions are lifted. Overall, assuming a continuation of recent economic trends, we expect the housing market to remain solid over the next few months, with annual price growth continuing to slow but remaining well into positive territory by the end of the year.”

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

Regions and nations house prices

While many regions saw annual house price growth slow somewhat in July, reflecting the broader national picture, that certainly wasn’t the case everywhere.

Once again, Wales and the North of England (specifically the North West and Yorkshire & Humberside) continue to lead the way, posting the strongest annual rates of house price inflation, whilst the South West also recorded a double-digit year-on-year rise. Notably, the 13.8% annual increase in house prices in Wales was the strongest growth recorded since March 2005, whilst for Yorkshire, the 11% gain was also the highest for over 16 years. London continues to lag all regions in terms of annual inflation (+2.5%), whilst gains in the South East and Eastern England remain amongst the lowest in the UK.

HMRC monthly property transactions data for UK home sales increased in June 2021 to the highest ever level. UK seasonally adjusted residential transactions in June 2021 were 198,240 – up by 74.1% from May (up 108.6% on a non-seasonally adjusted basis). The latest quarterly transactions (April-June 2021) were approximately 3.8% lower than the preceding three months (January 2021-March 2021). Year on year, transactions were 219.1% higher than June 2020 (216.1% higher on a non-seasonally adjusted basis). (Source: HMRC, seasonally-adjusted figures)

The latest Bank of England figures show the number of mortgages approved to finance house purchases fell in June 2021 by 6% to 81,338. Year-on-year, the June figure was 98% above June 2020. (Source: Bank of England, seasonally-adjusted figures)

Source: Property118

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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’.

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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