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UK property supply down almost 5% in May
Residential property supply in the UK increased by 4.8% in May but a breakdown of the figures show that the number of homes for sale fell in half of the towns covered by the index. In total month on month supply was down in 50.4% of towns with the biggest falls coming in the towns of Southport and Loughborough at 28% and 24.1% respectively. The data from the index from online estate agent HouseSimple also shows that towns in the Midlands saw the biggest increase in supply with Lichfield up 56% and Chesterfield up 36%. The index, which tracks the number of new properties marketed every month in more than 100 major towns and cities across the UK and all London boroughs, also shows that of the areas that saw the biggest falls in supply some 47% were in the North of England. In London supply was also down by 2.4% overall in May with the City of Westminster seeing the biggest drop at 33%. The overall fall follows a decline of just 0.8% in April. The borough of Bexley also saw a significant fall following a huge peak in April, when new property listings were up 58.9%. However, despite the overall fall in London dome 53% of its 32 boroughs saw an increase in supply last month. Waltham Forest saw property supply rise 31% month on month following an 8% increase in April and Merton saw supply increase 30% in May following a 15% increase in April. ‘Although property supply was up in May, in large swathes of the country, the number of new properties listed fell,’ said the firm’s chief executive officer Alex Gosling. He believes that the confidence of buyers could be affected by the forthcoming referendum on the future of the UK in the European Union and predicts that in the run up to the poll on 23 June there could be a significant drop off in activity at a time when historically there is a lot of activity in the property market. ‘On the flip side, this could actually provide an opportunity for prospective buyers, who have their finance in place and can move fast, as they may be able to negotiate a good deal with motivated sellers keen to tie up a sale before 23 June,’ he added. Continue reading
EU vote contributing to slow down in home lending in the UK
A further slowdown in home lending in May ahead of the referendum on the future of the UK in the European Union means house purchase lending activity has fallen to a 12 month low. There were 65,113 house purchase approvals, down 1.7% from 66,250 the previous month, according to the latest Mortgage Monitor from residential chartered surveyor e.surv. This marks a 12 month low in lending levels and is the lowest monthly figure for home purchase loans since the 64,626 granted in May 2015. It follows monthly declines of 5.8% in April and 3% in March meaning volumes have fallen 10.5% over the last three months and the report says that the political uncertainty ahead of the EU Referendum may be causing caution amongst lenders and borrowers alike. The recent falls represent a marked turnaround from the peak in lending seen at the start of the year. January and February both saw strong numbers of house purchase approvals granted at 73,060 and 72,512 per month respectively as buy to let landlords and second home buyers pushed through purchases ahead of the stamp duty changes in April. Now, by comparison, the lending market is settling back into its usual rhythm. On an annual basis however, house purchase lending rose marginally in May by 0.8%. The proportion of small deposit lending also dropped slightly in May comprising 18.4% of total home lending, down from 19.1% the previous month. Meanwhile, lending to large deposit buyers, those with a deposit of 60% or more, picked up significantly and now makes up 30.7% of all borrowing. Richard Sexton, director of e.surv chartered surveyors, said that despite the uncertainty the mortgage market remains on an even keel and home buyers have more options than ever as lenders work to expand their range of mortgage options further. He pointed out that new mortgages with longer repayment terms and innovative inter-generational mortgages are offering financial buoyancy aids for buyers but there can be little doubt that the referendum is causing some nervousness within financial circles and bringing new unknowns with it. ‘This political milestone could impact the UK’s economic outlook and slowing growth could pose problems of its own for both lenders and borrowers. Juggling these challenges will be key to maintaining the current health of the mortgage market and lenders should brace themselves for possible surprises,’ he explained. ‘Faced with this uncertainty, it’s perhaps no surprise that home lending levels are falling slightly. The result is a slight tail off in the middle of the year as home buyers pause for thought and lenders are gifted more time to investigate the potential of offering additional mortgage choices. A lull in buy to let lending following April’s stamp duty changes has also added to this calming in the market,’ he added. The report also shows that small deposit loans(to buyers with a deposit worth 15% or less of their properties’ total value totalled 11,981 in absolute terms in May,… Continue reading
Call for UK to drop tax on new prime property developments
The UK Chancellor George Osborne should pause housing tax at the top end of the market or risk distorting the wider market, it is claimed in anew analysis report. Up to a 100% rise in stamp duty on high luxury homes has seen buyer interest drop at a time when there has been a 40% rise in prime properties planned in London, according to the report from design and consultancy firm Arcadis. It points out that the unintended consequences of successive stamp duty rises means projects in development for a number of years have been disproportionately affected and the delivery of affordable homes could be threatened as a result. Despite initially encouraging investment in prime residential property as a means of stimulating wider economic growth, the government has since changed policies mid-cycle, the report suggests. It says that this is regardless of the fact that many developers have already committed to major schemes. Since the end of 2014, the stamp duty alone on a £6 million home has almost doubled, rising from £420,000 to £810,000 when bought as a second property. The timing of these reforms has come just when certain parts of the market had already begun to slow. In order to ensure sales, some developers who had committed to schemes before 2014’s reforms have been forced to discount prices or resort to ‘stamp duty paid’ deals. These sales discounts have hit margins by as much as 4% on prime homes and up to 7% on super prime properties. Meanwhile, others have opted merely to delay construction, meaning that a significant number of affordable homes, planned as part of the original development, are not being built as quickly. Furthermore, with fewer would-be purchasers willing to pay such high rates of tax, many investors are eyeing homes under the £1.5 million price threshold. This additional wave of interest risks distorting the mid-market and inadvertently pricing out those people who would typically be looking to purchase these as family homes, the research adds. According to Mark Cleverly, Arcadis head of commercial development, to accelerate the delivery of affordable housing currently in the pipeline and ensure the construction sector remains sustainable, the Chancellor must impose a temporary reduction in stamp duty on new build properties. In tandem with this, he must better focus the debate onto ensuring acceptable levels of affordable housing are delivered as part of new developments. Cleverly suggests that this approach would get the market moving again, meaning both a steady flow of affordable homes coming onto the capital’s market and making schemes viable again for developers, safeguarding jobs and ensuring development can proceed as planned. ‘The Chancellor has to act on prime property tax. Despite initially encouraging investment in prime housing, the government since changed its mind and attempted to stem demand through ongoing tax increases and new fiscal regulations. This has prompted a drop in buyer interest at the very top of the market, creating… Continue reading
