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Pent-up demand pushes up competition for property despite coronavirus

Years of pent-up demand are driving up competition for UK properties despite the coronavirus pandemic, a new survey from estate agent Knight Frank has found.

The firm found that discounts are still being negotiated due to the ongoing downturn caused by the pandemic, but sellers are fast hardening their resolve as demand grows more quickly than supply.

The number of new prospective buyers registering was 94 per cent higher than the five-year average in the week ending 25 July, compared to a 54 per cent increase in property listings.

According to the survey, the imbalance is the same in London and in the rest of the UK, suggesting that competition is growing all around the country.

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Knight Frank’s head of UK residential research said that a number of factors meant that prices were now “firmer” than they were a year ago.

“What’s happening is the release of pent-up demand that has been building for years against the backdrop of Brexit, tax changes and tighter lending rules”, he said.

“This is putting upwards pressure on prices. In fact, prices are firmer now than they were a year ago, based on the level of offers made and accepted.”

In July the average offer was accepted at 98 per cent of the asking price, one per cent higher than in the same month last year.

Similarly, offers made have gone from 94 per cent to 95 per cent over the last 12 months. Indeed, there have been numerous instances where agreed prices have exceeded the asking price in recent weeks.

Bill added: “I would expect the market to eventually self-correct as there is probably only so far prices can climb against the backdrop of a global pandemic.

“What should simultaneously begin to emerge is what the new longer-term normal looks like. The property market will be no different from many other sectors of the economy in that respect.

“It will ultimately depend on issues outside of its control including vaccine development and the government furlough scheme but for now, prices are heading in one direction.”

By Edward Thicknesse

Source: City AM

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UK house prices surge the most in 11 years as lockdown lifts

UK house prices jumped the highest in 11 years this month, adding to signs that parts of the economy are rebounding rapidly as coronavirus restrictions are eased.

Mortgage lender Nationwide said average house prices leapt by 1.7% in July, above all forecasts in a Reuters poll of economists and the biggest monthly increase since August 2009, when the market was recovering from the financial crisis.

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

The Bank of England reported that mortgage approvals – a first step to house purchases – quadrupled in June after hitting a record low in May, though they remained more than 40% below pre-pandemic levels.

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Prices are now 1.5% higher than they were a year ago, though Nationwide said that on a seasonally adjusted basis, they were 1.6% below a peak reached in April.

The mortgage lender said it expected price gains to continue in the short term, helped by a temporary cut in property purchase tax which finance minister Rishi Sunak announced this month to help what he saw as an ailing market.

But these price increases risked proving a “false dawn” if unemployment surged later this year when temporary job support measures end, Nationwide’s Gardner warned.

Britain’s economy shrank by a quarter over March and April due to the unprecedented hit from the coronavirus lockdown.

Some Bank of England officials fear that while there might be an initial rapid bounceback, this will rapidly slow and it could take years for the economy to regain its former size.

Retail sales are almost back at pre-pandemic levels, for example, but many pubs, restaurants and entertainment venues are closed or operating below capacity due to social distancing restrictions and public concern about the coronavirus.

Reporting by David Milliken

Source: UK Reuters

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Property asking prices jump to a record high

The average price of property coming to market in Britain is at a record high of £320,265, data from Rightmove has revealed. In addition to the rise in property asking prices, the number of people contacting estate agents about house viewings is up by 75% so far in July compared to the same period last year.

The average asking prices are 2.4% higher than in March pre-lockdown. The number of sales agreed this month is also now exceeding last year’s figures in England, Scotland and Wales. Almost half (44%) of new listings that came up for sale in the first month after the market re-opened on the 13 May have already been marked as sale agreed, compared to 34% at the equivalent time last year.

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The number of monthly sales agreed is up 15% in England on last year, and in the five days after the stamp duty announcement it jumped to 35% up on the same days a year ago. Total available stock has also reportedly recovered to being 13% down in Britain following a steep decline, with Rightmove claiming that the stamp duty holiday may encourage more sellers to the market to ensure they have ample time before the 31 March deadline.

Miles Shipside, resident property expert at Rightmove, said: “The busy until interrupted spring market has now picked up where it left off and has been accelerated by both time-limited stamp duty holidays and by homeowners reappraising their homes and lifestyles because of the lockdown.

“The strength of buyer demand has contributed to record prices, with the 3.7% annual rate of increase being the highest for over three and a half years.

“There is a window of opportunity for sellers to come to market and to find a buyer who is tempted by the stamp duty savings. Although March next year may sound like a long time away, in reality sellers need to find a buyer before Christmas, to allow a further three months for completion of the legal process to beat the deadline.

“While property is selling much faster than a year ago, it’s important not to over-price and miss this window. It’s still a price sensitive market with buyers having limits on what they are able to borrow, and the uncertain economic outlook making them more cautious.”

Source: Property Wire

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Criteria searches soar as property market gets back to business in June

Residential mortgage searches increased by 79% in June as brokers scoured the market for deals for furloughed workers and for products with temporary maximum LTV restrictions.

That’s according to the latest criteria activity tracker from Knowledge Bank which has provided an insight into borrower behaviour in the first full month after physical valuations and viewings resumed.

Overall, brokers’ searches were up to 68% in June as the market responded to eased restrictions following the Covid-19 lockdown.

But the residential market showed even greater pick up of searches, with a 79% increase – reflecting the demand in the market.

The terms brokers were searching for continued to follow the same pattern which has been dominant since the pandemic began.

Indeed, the main residential searches, Knowledge Bank revealed, included ‘Covid-19: Temporary Maximum LTV Restrictions’ and ‘Furloughed Workers’.

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What’s more, the ‘Temporary Maximum LTV’ term was also strongly represented in broker searches in the buy-to-let, second charge and bridging categories.

Matthew Corker, lender relationship manager at Knowledge Bank, said: “Lenders have been very active in June, withdrawing and then reintroducing higher-LTV products.

“Many have also adjusted their affordability and allowable income criteria, as details of the extension to the Government’s furlough scheme become clearer.

“It is no surprise to find that brokers are searching more frequently for these criteria. As demand returns to the market, lenders and brokers are having to move fast to stay ahead of the curve.”

Knowledge Bank has responded to this increase in demand by establishing a weekly Criteria Clinic, enabling brokers to discuss the issues and hot topics they are most concerned about with a panel of experts from a cross-section of lenders.

Top five searches performed by brokers on Knowledge Bank – June 2020 (source: Knowledge Bank)

1COVID-19: Temporary Maximum LTV RestrictionsLending to Limited CompaniesMaximum LTV / Loan To ValueEarly Repayment Charges
2Help To Buy Equity Loan SchemeFirst-time landlordCOVID-19 : Temporary Maximum LTV RestrictionsProperty with an Annex / Outbuildings / Land / Acreage
3COVID-19: Furloughed WorkersRequirement to be a HomeownerCapital Raising for Debt ConsolidationTimber Framed Construction
4Self-employed – one year’s accountsMinimum Income – Interest-Only / Part-and-Part Single ApplicantSelf-employed – one year’s accountsFlexible Payments / Ad hoc
5Maximum Age at End of TermCOVID-19: Temporary Maximum LTV RestrictionsIncome Multiple used for Affordability AssessmentMinimum Property Value
1Maximum LTV / Loan to ValueRegulated BridgingMaximum LTV for Commercial Investment
2Maximum LTC – Loan to CostMaximum LTVSemi-Commercial Properties
3Lend against LandCOVID-19: Temporary Maximum LTV RestrictionsMinimum Loan Amount
4Maximum Loan AmountMinimum LoanCommercial Owner Occupier
5 Barn ConversionMinimum Property ValueMixed-Use Properties / Part Commercial

By Kate Saines

Source: Mortgage Finance Gazette

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Buyers return to UK housing market as lockdown lifts

Buyers returned to the UK’s housing market last month as it reopened after months of standstill during the coronavirus lockdown, however activity remained low, the latest research showed.

The latest survey by the Royal Institution of Chartered Surveyors found that a net balance of 61 per cent of its members reported a rise in new buyer enquiries in June following a result of minus 94 per cent the previous month.

The number of new properties being listed for sale also jumped during the month, with a net balance of 42 per cent of Rics members reporting an increase rather than a decrease.

Despite the increase in supply, the average number of properties on estate agents’ books remained close to all-time lows, with just 39 on average per branch.

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The results of the survey were published the day after the chancellor announced a year-long stamp duty holiday, raising the payment threshold from £125,000 to £500,000, in a bid to boost activity in the market.

Simon Rubinsohn, Rics chief economist, said: “Key activity indicators in the Rics survey suggest that the market is enjoying a short term bounce following ending of the lockdown, with sharp spikes in the metrics tracking both buyer enquiries and new instructions.

“However, there are worrying signs that this rebound may quickly run out of steam against the backdrop of a tightening in lending criteria by mortgage providers, and the uncertain macro environment particularly with regard to the employment picture.

“Respondents to the survey highlight both of these issues in explaining the broadly flat picture regarding sales expectation beyond the immediate uplift.

“Meanwhile, the issues around the sales market appear to be shifting sentiment in the lettings market with, somewhat ominously given the prevailing economic climate, rent expectations beginning to edge upwards once again.”

By Jessica Clark

Source: City AM

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Property market rebounds as mortgage searches surge

Mortgage searches exceeded one million for the first time since lockdown began, according to data from Twenty7Tec as the property market bounced back.

Figures from the mortgage technology provider showed mortgage searches reached 1,174,659 in June, up from 683,078 in May.

June searches749,423425,2361,174,659
May searches324,676358,402683,078

Searches for purchase mortgages made up the majority of activity last month at 63.8 per cent, while remortgage searches accounted for the remaining 36.19 per cent.

This marked a contrast from May, when remortgage searches constituted the majority of searches at 52.47 per cent, with purchase searches making up the remainder (47.53 per cent).

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Estimated HM Revenue & Customs figures for May showed a 50 per cent drop in the number of residential property transactions year-on-year.

The property market was effectively closed for seven weeks during lockdown until May 13, when the government published guidance whereby anyone in England could move home again.

Phil Bailey, sales director at Twenty7Tec, said: “Remortgages were almost the only game in town during lockdown, at one point representing 75 per cent of the total mortgage searches”.

The data also showed a “mismatch” between the demand and supply of high loan-to-value mortgages. One in six (16.4 per cent) of all searches were for products at 90 and 95 per cent LTV, which made up only 2.5 per cent of the market in June.

Last month lenders temporarily withdrew products at 90 per cent LTV to protect service after high demand.

Some have resumed lending at 90 per cent LTV, albeit with a limited offering. Accord Mortgages relaunched with two five-year fixed deals in the week after its withdrawal, but exclusively to first-time buyers.

Commenting on the difference between demand and supply of high LTV mortgages, Mr Bailey said: “That’s going to prove tempting to some lenders who are willing to write business and take a risk.

“Perhaps it will be late summer until the furlough schemes are withdrawn and a clearer economic picture becomes available, but it will happen.”

By Chloe Cheung

Source: FT Adviser

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Housing market starts to reopen in Scotland as lockdown eases

From Monday 29 June, restrictions on housing moves will be eased in Scotland as part of the easing of its lockdown measures.

This will allow valuations and viewings to take place, and marks the initial stage in the reopening of the Scottish housing market.

This development in Scotland follows a similar move to ease lockdown on 19 June in Wales, which saw the government allow viewings to take place in vacant properties, and to ease restrictions on house moves where a sale has been agreed, but not yet completed.

In England, it has been more than a month since equivalent changes were made on 13 May.

First Minister Nicola Sturgeon, said: “The sacrifices that have been made – and I know how hard and at times painful they have been – have suppressed the virus.

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“They have also protected the NHS, and have undoubtedly saved a significant number of lives.

“They have also brought us to the position where we can now look ahead with a bit more clarity to our path out of lockdown, and I hope details announced today will provide people and businesses with more certainty in their forward planning.

“But let me be clear that each step on this path depends on us continuing to beat the virus back. That is why we must do everything in our power to avoid steps being reversed.

“The central point in all of this is the virus has not – and it will not – go away of its own accord. It will pose a real and significant threat to us for some time to come.

“Maintaining our progress also means all of us abiding by public health guidance.

“Wearing face coverings in enclosed spaces, avoiding crowded places, washing our hands and cleaning surfaces regularly, maintaining physical distancing, agreeing to immediately self-isolate and get a test if we have symptoms – all of these basic protections matter now more than ever as we all get out and about a bit more.”

A statement from the Welsh First Minister, Mark Drakeford MS, said: “This package marks a significant unlocking of the regulations and, for many aspects of daily life in Wales, we are moving into the amber phase of our traffic light system.

“We have been able to do this because of the actions everyone in Wales has taken to date in complying with the stay-at-home and stay local rules.

“We need everyone to continue to take steps to protect themselves and their loved ones as we find a way to live and work alongside coronavirus.

“This means working from home wherever possible, maintaining social distancing and frequent handwashing.

“For some people it may mean wearing a face covering in certain situations, for others it will mean continuing to shield.

“I want to thank everyone for everything they have done so far. Together we can keep Wales safe.”

Mark Hayward, chief executive at NAEA Propertymark and David Cox, chief executive of ARLA Propertymark, said: “It’s great news for consumers and the industry in Scotland that the property market is reopening on Monday.

“Whilst it is not a return to normal, the new guidelines will allow members of the public to view, purchase, rent and move into new properties…reinvigorating the housing market and boosting the economy.

“Of course, safety is paramount, and we encourage all agents to follow the Propertymark guidelines on property viewings and moves closely to protect themselves and others.”

By Jessica Bird

Source: Mortgage Introducer

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Northern Ireland dealing with pent up demand after reopening

Northern Ireland dealing with pent up demand after reopening – The Northern Ireland housing market is dealing with a flurry of activity after reopening on Monday 15th June.

The Guild of Property Professionals said a significant number of enquiries usually occur at this time of year – and losing March to June to the lockdown is only exacerbating this process.

Art O’Hagan, managing director of CPS Property, said: “As expected from the enquiries we received over the past few months, we are currently dealing with the pent-up demand that has built up over the lockdown period.

“With demand for houses is currently at a premium, there is no time like the present for vendors to get their homes valued and get their home listed.”

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O’Hagan saw over 140 viewers booked in for the first week of trading as a result of the pent-up demand.

Similarly, Daniel Henry, partner at Bensons, said: “When we returned on the 15th we had to deal with a surge of pent up demand. There were a large number of viewings needing to be organised and a significant number of new listings to be measured and inspected.”

Henry added that the office has been adapted to facilitate social distancing, while access is currently by invitation only.


Source: Property Wire

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Lockdown Easing Releases Burst In Housing Demand

Re-opening of the housing market in England following the coronavirus lockdown, led to a burst of enthusiasm from would–be buyers and a small increase in sales agreed. But, reported online property portal Zoopla, the starting point for renewed activity is a market bumping along at sales levels 90 per cent down on this time last year.

The firm’s latest UK Cities House Price Index found buyer demand across England shooting up by 88 per cent after the market reopened, exceeding pre-lockdown levels. But, said Zoopla, this jump in demand ‘is temporary and expected to moderate in the coming weeks’.

There was less of a bounce in cities in Scotland, Wales and Northern Ireland registered where housing markets remain closed.

Continued Government support for the economy and the availability of higher loan-to-value mortgages will shape the market outlook for the second half of the year, Zoopla concluded.

Although 60 per cent of would-be home movers across Britain said they plan to go ahead with their property plans, 40 per cent have put their plans on hold.

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‘After the market was suspended for 15 per cent of the year at one of the busiest times for market activity, a return of pent-up demand was to be expected, especially given the strong start to the year.

‘The scale of the bounce back in demand over the last week (to 17 May) varies across cities depending upon the country in which they are located. Despite a large rise in demand, London’s recovery is lagging behind, alongside cities in countries where the housing market is yet to reopen. Scotland, Wales and Northern Ireland have not recorded any major rebound in demand like that seen across English cities. Demand for homes in London has been partly diluted as would-be buyers look to commuter towns outside the capital in response to COVID’.

Zoopla’s latest data shows that demand has rebounded faster in cities along the south coast and in northern England. Portsmouth and Southampton are registering demand some 40 per cent higher than in February this year with strong growth also recorded in Newcastle and Leeds’.

Zoopla estimates there are currently 373,000 pre-lockdown house sales in progress. By reopening the market, the Government has improved the chances of a higher proportion of these stalled transactions completing.

‘That said, latest data suggests a small pick-up in the rate of fall-throughs since 12 May, but at levels well below the average for this time of year’, said Zoopla.

‘We currently expect a significant proportion of agreed sales to continue, but increased uncertainty over the economic outlook will see housing chains tested in the coming weeks’.

The coronavirus lockdown has created an unexpected boost to housing demand, said Zoopla director of research and insight, Richard Donnell.

‘The economic impacts of COVID will grow in the coming months and uncertainty is building. The majority of would-be movers plan to continue their search, encouraged by low mortgage rates and continued Government support for the economy.

‘However, we expect the latest rebound in demand to moderate in the coming weeks as buyers and sellers start to exert greater caution. Further support from the Government can’t be discounted and would help limit the scale of the downside risks’.

Source: Residential Landlord

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Property stocks jump as restrictions on UK housing market ease

Property stocks soared this morning after the government last night loosened lockdown restrictions on the UK housing market.

Shares in London estate agent Foxtons surged 8.31 per cent to 43.65p and online platform Purplebricks’ stock soared 11 per cent to 37.86p.

LSL Property Services, the owner of Your Move and Reeds Rains, saw its stock rise 6.74 per cent after the government lifted restrictions on estate agents.

Shares in Barratt Developments jumped 1.8 per cent to 500.72p, Bellway’s shares were up 1.99 per cent at 2,511p and McCarthy & Stone shares surged 3.56 per cent to 72.8p.

Berkeley Group’s share price was also up 2.78 per cent to 4,218p, making it the second biggest riser in the FTSE 100 this morning.

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Some housebuilders had already restarted work on construction sites during the lockdown, with Crest Nicholson the latest to announce that building will begin this month.

The developer’s shares jumped 3.76 per cent following the announcement.

Taylor Wimpey was the first this morning to announce a plan to reopen sales offices and show homes.

“The housebuilding sector is in the vanguard of businesses returning to work as lockdown conditions are eased,” said Russ Mould, investment director at AJ Bell.

“The need to get Britain building again is arguably pretty acute as even a short disruption could set back attempts to build enough new homes to meet demand over the long term.”

He added: “The next question will be whether people feel confident enough to buy and sell homes in the current uncertain environment.

“The fact several builders managed to complete transactions and take reservations through the lockdown suggests an impressive degree of resilience in the housing market.”

By Jessica Clark

Source: City AM