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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

– East Midlands, £214,542, 8.6%

– Eastern England, £303,834, 7.6%

– London, £511,234, 2.9%

– North East, £152,989, 9.2%

– North West, £201,836, 11.5%

– Northern Ireland, £163,484, 11.5%

– Scotland, £183,359, 10.4%

– South East, £353,618, 7.3%

– South West, £269,142, 9.8%

– Wales, £192,507, 12.0%

– West Midlands, £221,661, 8.1%

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

By Vicky Shaw

Source: Independent

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House price inflation reaches strongest point in seven years

Annual house price inflation is now at its strongest level in nearly seven years, according to the Halifax House Price Index.

The average UK property price has reached £261,743, a new record high.

On an annual basis, house prices have risen by 9.5%, on a quarterly basis they are up 2.4%, and month-on-month, prices have increased by 1.3%.

All UK regions, bar the North East, saw an acceleration in year-on-year house price inflation last month.

The strongest growth was once again recorded in Wales, up 11.9% annually, closely followed by the North West and Yorkshire & Humber, both of which posted double-digit annual growth.

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For Wales and the North West, these are the biggest percentage gains since April 2005, and for Yorkshire & Humber since June 2006.

The South of England, however, traditionally the driving force of national house price performance, is lagging behind the rest of the country; this is especially the case in Greater London, where average prices are still 3.1% higher than a year ago but growing more slowly than the rest of the country.

Russell Galley, managing director of Halifax, said: “House prices reached another record high in May, with the average property adding more than £3,000 (1.3%) to its value in the last month alone.

“A year on from the first easing of national lockdown restrictions, and the gradual reopening of the housing market, annual growth surged to 9.5%, meaning the average UK home has increased in value by more than £22,000 over the past 12 months.

“Heading into the traditionally busy summer period, market activity continues to be boosted by the government’s stamp duty holiday, with prospective buyers racing to complete purchases in time to benefit from the maximum tax break ahead of June’s deadline, after which there will be a phased return to full rates.

“For some homebuyers, lockdown restrictions have also resulted in an unexpected build-up of savings, which can now be deployed to fund bigger deposits for bigger properties, potentially pushing property prices even higher.

“Whilst these effects will be temporary, the current strength in house prices also points to a deeper and long-lasting change as buyer preferences shift in anticipation of new, post-pandemic lifestyles – as greater demand for larger properties with more space might warrant an increased willingness to spend a higher proportion of income on housing.

“These trends, coupled with growing confidence in a more rapid recovery in economic activity if restrictions continue to be eased, are likely to support house prices for some time to come, particularly given the continued shortage of properties for sale.”

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Mark Harris, chief executive of SPF Private Clients, added: “House price growth in the south of England may be lagging behind the rest of the country but property prices are still more expensive there than elsewhere.
“While buyers are prepared to go further in the search for more space and less need to be in the office every day, pushing up demand for property away from the capital, it remains to be seen whether this is a long-term trend or whether the attraction of city centres will return at some point.
“Cheap borrowing and affordability is giving buyers more purchase power, which is pushing up prices.
“Lenders remain keen to lend and have plenty of cash to do so, resulting in ever-lower mortgage rates from sub-1%.
“However, lenders aren’t only targeting those with big deposits or similar levels of equity in their homes, with options also increasing for first-time buyers at 95% loan-to-value and the first properties being sold under the government’s First Homes initiative.
“This is just as well given that rising property prices are not good news for first-time buyers, and will make getting on the housing ladder even more of a struggle.”
Sundeep Patel, director of sales at Together, said: “The surge in demand for property we’re continuing to see showed no indication of slowing last month.

“House prices reached another record high in May, up by 1.3% (more than £3,000) in value than in April. Annual growth also surged by 9.5%, with the average house price in the UK now at £261,743.

“However, with the stamp duty tax break starting to taper off from the end of this month, we’re likely to see this unprecedented rush for new homes ease off by the time we hit the end of summer.

“The recently released travel traffic light list for UK holidaymakers may also dampen activity as people prepare to make a break for guaranteed sun and so stick a pin in their property plans back home.

“How the property market will shape up by the end of this year is no way near certain.

“However, whether house prices have been artificially inflated or not, it is possible the backlog in demand from keen buyers will markedly increase opportunities for specialist lenders, as increased volumes of borrowers turn to finance such as bridging loans to quickly purchase their ideal homes.”

Anna Clare Harper, chief executive of SPI Capital, added: “Investors and homeowners alike are wondering whether the housing market boom is about to bust?
“With 9.5% house price growth in the year to May, despite the huge economic problems caused by the pandemic, it’s a sensible question.
“The truth is, what tends to happen in the housing market is different from what happens with other purchases and investments.
“In other sectors, when consumers get nervous, they stop spending so much. When investors get nervous, they are scared into selling.
“Things are different in the housing market because homes are ‘essential’. We all need a place to call home.
“So, unlike crypto ‘investments’ or shares, people tend not to sell unless they really need to. And, with interest rates low and forecast to remain so, it can be cheaper to pay a mortgage on an equivalent property than to pay rent.
“So a mass sell-off from property owners who have already managed to put down a deposit seems unlikely unless interest rates rise significantly.
“According to Halifax, average annual house prices are at an historic high, at £261,743, which will seem unaffordable to many – in particular younger people.
“A big cause of growth over the past year has been the desire for more space – and for those not moving, home renovations are increasingly popular.
“This is symbolic of our rising living standards which is, on the whole, a good thing. As a result, house prices and construction costs rising.
“This means, in turn, that the cost of renting, buying and improving homes are likely to continue to rise.”

By Jake Carter

Source: Mortgage Introducer

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Welsh house prices exceed £200,000

The average house price in Wales has topped £200,000 for the first time – now standing at £209,723, Principality Building Society’s Wales House Price Index for Q4 2020 has found.

Last year showed the strongest annual house price inflation in 15 years (8.2%).

Detached home prices were 11% higher than a year ago, as people search for space prompted by the pandemic.

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This is compared with 5-6% growth for most other property types.

Tom Denman, chief financial officer at Principality Building Society, said: “The strength of the housing recovery in the second half of 2020 is striking, and this reflects both the stimulus provided by the Welsh government in terms of the time-limited Land Transaction Tax holiday, the pent-up demand which built up during the first lockdown, and the race for space to buy bigger properties with larger gardens.

“In Q4, all local authority areas were reporting house prices higher than a year earlier. This increased demand has been driven by increased savings in many households during the lockdowns coupled with continued historic low mortgage rates. There has probably been some additional demand from buyers across the border with England, with house prices more affordable in Wales in relative terms.

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“The recent UK HM Treasury review of independent forecasts for 2021 showed wide divergences in house price expectations for the year. With so many unknowns it is impossible to offer a forecast with any reasonable accuracy. However, once there is more clarity on the containment of the virus and on the full re-opening of the economy, it will become easier.”

Merthyr Tydfil recorded the strongest rise on a quarterly basis of 18.2%, taking its average house price to £147,687, though this may have been exaggerated due to a modest amount of sales data.

In north Wales, Anglesey house prices rose by 16% annually to £237,782, while Conwy (£224,068) and Flintshire (£216,224) rose by 13.7% and 13.3% respectively.

In south Wales, Monmouthshire (£332,558) and Newport (£222,107) also achieved strong annual double-digit increases, rising 14.2% and 12.1% respectively.

BY RYAN BEMBRIDGE

Source: Property Wire

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House price inflation surges to 7.5% in October

House prices rose by 7.5% year-on-year in October due to strong demand for higher value homes, Halifax’s House Price Index has found.

Quarterly prices increased by a substantial 4.0%, bringing the average price to £250,457 across the UK.

However, month-on-month price growth slowed considerably, down to 0.3% compared to 1.5% in September.

Russell Galley, managing director, Halifax, said: “Overall we saw a broad continuation of recent trends with the market still predominantly being driven by home-mover demand for larger houses.

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“Since March flat prices are up by 2.0% compared to a 6.0% increase for a typical detached property. In cash terms that equates to a £2,883 increase for flats compared to a £27,371 rise for detached houses.

“This level of price inflation is underpinned by unusually high levels of demand, with latest industry figures showing home-buyer mortgage approvals at their highest level since 2007, as transaction levels continue to be supercharged by pent-up demand as a result of the spring/summer lockdown, as well as the Chancellor’s waiver on stamp duty for properties up to £500,000.

“While government support measures have undoubtedly helped to delay the expected downturn in the housing market, they will not continue indefinitely and, as we move through autumn and into winter, the macroeconomic landscape in the UK remains highly uncertain.

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“Though the renewed lockdown is set to be less restrictive than earlier this year, it bears out that the country’s struggle with COVID-19 is far from over.

“With a number of clear headwinds facing the housing market, we expect to see greater downward pressure on house prices as we move into 2021.”

Jamie Johnson, chief executive of FJP Investment, said: “The property market is moving from strength to strength. Amidst the uncertainty, buyer demand for bricks and mortar is pushing prices to record highs.

“Yet with the country now in a second lockdown, is this momentum about to suddenly run out? I don’t believe so. After all, the stamp duty holiday is still in play and the government has confirmed buyers and renters can still move houses throughout November. Clearly, it understands the importance of the property market in supporting the economy.

“I anticipate the rate of house price growth to slow down in November, however it will no doubt continue to remain in positive territory. People are clearly looking to invest in safe and secure assets during in this uncertain climate, and real estate has a proven track record of being resilient and quickly recovering from period of market volatility.”

BY RYAN BEMBRIDGE

Source: Property Wire

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