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Housing market ‘set to record its strongest year since 2007’

The housing market is set to record its highest level of sales this year since 2007, according to a property website.

Around 1.5 million sales will have taken place across the UK in 2021, Zoopla predicts.

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It added that housing transactions are expected to decline to 1.2 million in 2022, in line with the long-run average, but still relatively high compared to the past decade.

The impact of the pandemic on the housing market has further to run but at a less frenetic pace

Richard Donnell, Zoopla

Richard Donnell, from Zoopla, said: “2021 is set to be a record year for the housing market with the most moves by homeowners since 2007 and nearly £500 billion of home sales.

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“The impact of the pandemic on the housing market has further to run but at a less frenetic pace.

“We expect the momentum in the market to outweigh some emerging headwinds from higher living costs and the risk of higher mortgage rates.

“The latest data shows a turning point in the rate of house price growth, which we expect to slow quickly with average UK house prices up 3% by the end of 2022.”

Source: Shropshire Star

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Search Acumen: Property market levelling out

The property market has begun to level out compared with the start of the year, but remains incredibly active, according to Andy Sommerville, director at Search Acumen.

He added that demand is still strong, and that Search Acumen expects it to fuel activity in the property market well into Autumn and beyond.

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The latest UK monthly property transactions data showed that the provisional seasonally adjusted estimate of UK residential transactions in September 2021 was 160,950, 68.4% higher than September 2020 and 67.5% higher than August 2021.

Sommerville said: “These latest figures reflect the ambition of homeowners to get property transactions over the line whilst the stamp duty financial incentive still stood.”

He added that first-time buyers, families and those looking for properties outside cities have carried the weight of the market and have taken the most benefit from the stamp duty holiday.

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Somerville said: “Throughout the year, many lawyers have embraced digital ways of working in order to deliver efficiencies to the transaction processes and avoid burnout.

“Given the foreseeable levels of high demand, a long-term and sector-wide shift towards digitisation is needed if we are to accommodate speedier transactions and improve services to buyers in the long run.”

By Jake Carter

Source: Mortgage Introducer

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Energy efficiency requirements may slow housing market

The housing market may be stalled by government plans to require buyers to improve their new homes’ energy efficiency under their mortgage terms.

Property Mark, the trade body that represents letting agents, said the requirements – which have yet to be set out in detail – could initially deter people from moving homes.

Mortgage lenders will need to disclose the energy efficiency of homes they lend money for, plans published on Tuesday outlined.

Lenders will also have to set themselves goals to improve the insulation of homes on their books.

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Plans were included in the government’s roadmap to slash CO2 emissions by up to 70 per cent by 2030.

The plans could initially make older properties harder to sell, Property Mark’s policy and campaigns manager, Timothy Douglas, told CityA.M.

Home buyers may have to invest thousands of pounds in making improvements to their homes, something that could create “significant barriers,” Douglas said.

Mark Harris said there was “increasing impetus” behind the green revolution.

Landlords will also be required to ensure properties for new tenancies must have an EPC rating A-C.

“Without the correct incentives, these costs are likely to be passed on in the form of higher rents. Lenders such as Leeds and Landbay already offer green buy-to-let mortgages, with others expected to follow suit,” Harris added.

“Without changes or improvements, lenders may restrict lending to lower loan-to-values, higher pricing, or not lend at all. This could penalise those who are unable to adapt to or adopt new efficient technologies economically and potentially create the next round of mortgage prisoners.”

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Simon Gammon, Knight Frank Finance’s managing partner, said the current discounts in green mortgage products at the moment were “quite tiny,” with savings of hundreds not thousands to be made.

“Increasingly, what we are going to see is a differential in price between an efficient home and a non efficient home being remortgaged.”

It will be an incentive for home owners to improve their properties every time they remortgage, Gammon added.

Homeowners will also be able to apply for a £5,000 grant to install a heat pump from next year, in a ‘boiler upgrade scheme’, to slash emissions.

The National Residential Landlords Association (NRLA) has called on the government to confirm whether landlords will be able to apply for these grants from next year too.

“Eighty per cent of private rented households have gas central heating and replacing such systems will be both costly and vital to achieving net zero,” NRLA boss Ben Beadle said.

“Once again private landlords have been left waiting for the Government to publish details of the standards they will be required to comply with, the deadlines they must meet, and how such work should be funded.”

By Emily Hawkins

Source: City AM

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ONS: House prices up 10.6% annually in August

UK average house prices increased by 10.6% over the year to August 2021, up from 8.5% in July, according to the latest Office for National Statistics (ONS) UK House Price Index.

The average UK house price was £264,000 in August 2021, £25,000 higher than the same time last year.

Average house prices increased over the year in England to £281,000 (9.8%), in Wales to £195,000 (12.5%), in Scotland to £181,000 (16.9%) and in Northern Ireland to £153,000 (9.0%).

London continued to be the region with the lowest annual growth (7.5%) for the ninth consecutive month.

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Rob Barnard, director of intermediaries at Masthaven Bank, said: “The continued ‘race for space’ created by the pandemic has continued to drive up house prices, with the tapering of stamp duty relief over the past year hardly slowing momentum down.

“While booming levels of buyer activity are certainly encouraging, it is difficult to know if they will last.

“The end of the government support schemes, as well as expected tax hikes in the new year, could serve to weaken demand going forward.

“Indeed, the country’s economic outlook over the coming winter looks uncertain, from rising inflation to extensive supply chain issues.

“Amid this backdrop, borrowers will require the guidance of specialist lenders now more than ever to ensure they can get on the housing ladder.

“Prospective buyers struggling to buy a home, or those who have seen their financial circumstances take a knock over the past 18 months, will need the advice and personalised products which specialist lenders can provide.

“It will be vital that specialist lenders continue to innovate and develop tailored products and collaborate with brokers to understand the unique and shifting needs of customers.”

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Kevin Roberts added: “Structural factors have continued to drive unprecedented levels of buyer activity, from the enduring ‘race for space’ amid remote working, to the very affordable mortgage rates that are available to borrowers today.

“However, it is also possible that this uptick stems from the return of international buyers.

“In fact, our SmartrCriteria tool revealed that searches made on behalf of international buyers grew by 160% in August.

“Naturally, this coincided with the easing of international travel restrictions and the slowing of domestic purchase activity as the Stamp Duty holiday drew to a close.

“Whether such levels of demand will persist through Q4, however, is uncertain and seeking the guidance of an experienced adviser will be key as we face into the next few months.

“Independent mortgage advisers are well-placed to offer bespoke recommendations and inform borrowers of the best deals to help turn this corner.”

Anna Clare Harper said: “The temporary stamp duty reduction, alongside billions of pounds worth of loans and grants, was designed to protect consumer and investor confidence through the pandemic.

“Combined with lockdown-led upsizing, low interest rates making finance cheap, and competition amongst lenders, this has added to housing demand and a price boom, whilst supply is restricted.

“The trouble is, rising house prices are in direct conflict with other government objectives.

“More expensive housing makes homeowners feel confident, which is great for the economy, but also makes housing less affordable and less accessible.

“This is a recipe for social disaster, since it comes at a time when many landlords are giving up due to the burden of laws and regulations affecting properties and their management.

“The housing market has the potential to solve many social, economic, and indeed political problems.

“However, it also has the potential to increase divides in society.

“Perhaps the most obvious are geographical and age divisions. Firstly, there’s the ‘North-South’ divide, to be tackled by ‘levelling up’.

“Secondly, there’s the widening gap between older and younger generations, which is most likely to be tackled through tax.

“In terms of what next, the housing market will continue to be vital to our economy, and also vital to the achievement of wider government policy.

“It’s hard to see a future without tax reform of some kind to level the playing fields between the older ‘haves’ and younger ‘have-nots’.”

By Jake Carter

Source: Mortgage Introducer

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Scottish house prices continue to climb

Average Scottish house prices continued to rise in August, reaching £211,029, according to Walker Fraser Steele.

This followed a 1.8% month-on-month rise and a 12.1% increase in the year to August 2021.

All 32 local authority areas saw prices rise over the year, and transaction levels in August were at a seven-year high.

On a regional basis, Na h-Eileanan Siar saw the only yearly decline, falling by 8.1%, while Shetland Islands saw greatest monthly decline, also down by 6.7%.

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Meanwhile, Scottish Borders saw the largest annual rise, up by 28.4% and Stirling noted the greatest month-on-month increase, up by 5.9%.

Alan Penman, business development manager at Walker Fraser Steele, said: “At the end of July, the average Scottish house price stood at £207,344 but by the end of August this figure was £211,029 – reaching a new record high, with a rise of £3,685, or just under 2% in the month.

“The race for space continues to support the prices of larger properties.

“The scarcity of this type of stock coupled with the continued high demand means prices remain strong.

“Property at the top-end has performed well throughout 2021 and there is no sign of any imminent let-up.

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“We noted last month that the exceptional performance of larger properties was likely to continue and this month we have more evidence to support that view.

“People’s preference for more space and working from home has meant buyers have often sought properties that can accommodate new lifestyles.

“But we should remember that borrowers’ ability to afford these properties has in no small way been a result of the Land and Buildings Transaction Tax holiday earlier in the year, and the continued record low interest rates.

“In terms of the geographical performance of the Scottish regions, the area with the highest annual increase in average house prices in August was the Scottish Borders, where average prices have risen by 28.4%, which again reflects the fact that the mix of homes that have been sold in this area has trended towards the more expensive end of the market.”

By Jake Carter

Source: Mortgage Introducer

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Housing market is strong ‘but there is an underlying weakness that needs to be resolved’

UK property price growth slowed marginally last month as the stamp duty holiday came to a near end, but a drop in the number of homes being put up for sale looks set to keep driving up prices, according to the latest Royal Institution of Chartered Surveyors (RICS) survey.

The industry survey shows that the residential property price balance fell to +68 in September from a downwardly revised +72 in August.

Simon Rubinsohn, chief economist at RICS, said: “Both price and rent expectations [are] close to series highs pointing to greater pressure on affordability at a time when money markets are sensing interest rate increases coming sooner rather than later.”

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The UK property market appears to be strong on the surface but Tom Bill, head of UK residential research at Knight Frank believes that “there is an underlying weakness that needs to be resolved”.

He continued: “The imbalance between supply and demand is unsustainable and in many cases arises because prospective sellers are unable to find anywhere to buy themselves, creating a vicious circle of low supply. In some cases, they cannot even find properties to rent as a short-term option.

“There were 13 new buyers for every property listed in the UK in September. Over the last five years, the only time demand has exceeded supply to a greater extent was in January 2020, the first month of the short-lived Boris bounce.

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“The imbalance is keeping upwards pressure on prices but, like many other parts of the economy, needs to resolve itself over the next six months to ensure greater stability in the UK housing market in 2022.”

Fears that the end of stamp duty holiday would mean a tapering off in demand have evidently been disproved with demand for properties high, despite rising prices, according to Peter Beaumont.

He said: “While the ratio of average house price to average salary has never been higher, potential buyers are seizing a window of opportunity while borrowing rates remain low- before the chancellor announces measures to balance the books and the Bank of England steps in with measures to counter rising inflation.”

By MARC DA SILVA

Source: Property Industry Eye

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Property industry reaction to Rightmove House Price Index

The average asking price of property coming to market increased by 1.8% in October, the biggest rise at this time of year since October 2015, according to Rightmove.

The data reveals that the number of property sales being agreed was up 15.2% in September, versus 2019’s ‘normal market’ comparison.

Property industry reaction:

Director of Benham and Reeves, Marc von Grundherr, commented: “We’ve seen a second wave of activity hit the market in the wake of the stamp duty holiday as those who refrained from the chaotic market conditions seen over the last year now decide to take the plunge.

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“With the market remaining particularly buoyant, those entering with a property to sell are pricing high and this has caused yet further growth where asking prices are concerned. While initial asking price expectations are perhaps a little over-optimistic, to say the least, a lack of stock to satisfy demand means that homes are selling fast and for a very good price.

“We’re certainly starting to see stronger signs of a London market revival. House price growth across the capital has remained fairly muted in contrast to the rest of the nation but a return to the workplace and the return of foreign interest is starting to drive the market forward.

“Don’t be surprised to see London regain the property price growth top spot before the year is out.”

The managing director of Barrows and Forrester, James Forrester, said: “Instead of stumbling over the hurdle of a final stamp duty holiday deadline as many predicted, the market has posted an incredibly strong performance with asking prices climbing across every region.

“We’re now seeing definitive proof that while the stamp duty holiday may have acted as a starting pistol where the property market revival was concerned, the race certainly hasn’t been run and this strong upward growth is unlikely to dissipate anytime soon.

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“While it seems too soon to talk about Christmas, it won’t be long before it arrives and while many will be eying the New Year with regard to selling their home, now is the time to get your house in order so that come the 1st January you’re on the market and attracting interest.”

The founder and CEO of GetAgent.co.uk, Colby Short, commented: “This latest market performance may come as a surprise to some but we are heading into what is traditionally a very busy period for the housing market and we can expect to see more of the same as the end of the year approaches.

“Of course, the question is how long it will last and the answers to that question lie with the Bank of England’s Monetary Policy Committee. Should the decision be made to threaten our economic recovery with an increase in interest rates, we could the housing market slow considerably.”

Mark Ross, managing director of Redbrik, remarked: “Stock shortages continue to drive prices upwards, though accurate pricing rather than over-pricing is very important to get prospective buyers through the door.

“We expect prices to continue to rise, albeit at a steadier pace. This should give buyers and sellers more confidence to come to the market as they better understand the less frantic conditions.

“Extrapolating the market fluctuations, we’ve seen property firmly re-establish itself as a reliable long-term investment for owner-occupiers and investors alike. While we expect a 0.5% increase in the mortgage rate over the next six months, we predict rates will remain comparatively low as banks, and building societies compete for business.”

By MARC DA SILVA

Source: Property Wire

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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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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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