Tag Archives: autumn
UK house prices creep up month on month and year on year
UK house prices increased by 0.4% in July and annual property price growth edged up to 3.5%, according to the latest residential index from the Nationwide building society. The monthly rise follows a slight dip of 0.2% that was recorded in June and takes the average price of a home to £195,621. While annual growth has increased from the 3.2% recorded the previous month. According to Robert Gardner, Nationwide's chief economist, after moderating over the past 12 months, there are tentative signs that annual house price growth may be stabilising close to the pace of earnings growth, which has historically been around 4%. ‘This would bode well for a sustainable increase in housing market activity, though whether this will be maintained will depend on whether building activity can keep pace with increasing demand,’ he said. He pointed out that the outlook on the demand side remains encouraging. ‘Employment growth has remained relatively robust in recent quarters, and, after a prolonged period of subdued growth, wage growth is also edging up. With consumer confidence buoyant and mortgage rates still close to all-time lows, demand for housing is likely to firm up in the quarters ahead,’ he explained. But he added that it remains unclear whether activity on the supply side will catch up with demand. ‘The number of new homes under construction has started to pick up, albeit from historically low levels, and further increases are required if a sustainable recovery in the housing market is to be maintained over the longer term,’ said Gardner. The July index report also reveals the effect of significant changes to the stamp duty paid on sales which were introduced six months ago, resulting in bunching relating to the new tax thresholds. Gardener explained that the old slab structure used to result in significant distortions with a clustering of transactions at the tax thresholds. Under that system, paying £1 more would result in significant additional stamp duty being due. For example, paying £1 over the £250,000 or the £500,000 threshold used to trigger an additional £5,000 of tax. ‘Even though the change to SDLT only came into effect six months ago, the impact on the pattern of transactions is already evident, with much less bunching of transactions around the £125,000, £500,000 and in particular the £250,000 price points,’ he said. ‘Moreover, based on the first six months of transactions data from the Land Registry, nearly 235,000 purchasers in England and Wales have paid less tax under the new regime, with an average benefit of around £1,800,’ he added. He pointed out that the benefits are greatest in the South of England where average house prices are higher. ‘We estimate that around 85% of transactions in London, the South West and South East have benefited from the changes, compared with around 55% in the North, Yorkshire and Humberside, and the North West of England,’ said Gardner. ‘However, we estimate that around 5,000 or 2% of purchasers paid more, two thirds of whom… Continue reading
Prime property market across UK not picking up, new analysis suggests
Prime property outside of London increased by just 0.6% in the second quarter of the year, suggesting there has been little sign of a post-election bounce at the top end of the UK housing market as buyers remain cautious. A lack of upward pressure on prices has been consistent across all regions beyond London, with a lack of urgency among buyers in part stemming from a relatively sluggish market in the capital, according to the latest prime residential market report from real estate firm Savills. The report says that this has combined with relatively high levels of stock available on the market, built up largely as a result of a relative dearth of transactional activity in the run up to the general election. ‘For the time being this has slowed the ripple effect, despite the significant value gaps between London, the commuter zone and beyond, which would normally drive a flow of demand through the different segments of the prime housing market at this stage in the cycle. As a result, annual price growth in the prime regional markets stands at a subdued 1.6% on average,’ it explains. Though the threat of a mansion tax has now evaporated, the report suggests that the market continues to be held back by tax considerations. ‘In London and at the top end of the country market, the increased cost of stamp duty, following the Autumn statement of December 2014, remains a barrier to both price growth and activity,’ is says. Illustrating this fact, in the regional housing market over £2 million prices are 1.7% below their June 2014 level. In Scotland the introduction of the Land and Buildings Transaction Tax, which replaced stamp duty in April has introduced higher rates of tax at lower price points, has caused prime values to fall by an average of 0.6% in the past quarter and by 0.9% year on year. In England and Wales the markets under £1 million and between £1 million and £1.5 million have been less affected by these tax concerns but more affected by weak buyer sentiment and the restricted availability of mortgage debt feeding up from the mainstream markets. The report points out that despite a continued benign interest rate environment, transactions in the mainstream market appear to have plateaued at around 1.2 million per annum. With the mortgage regulations restricting the amount of debt prospective buyers are able to obtain and restricting their ability to trade up the market, this is still well short of pre-crunch norms, it adds. Although mortgage availability has a less significant direct impact in the prime markets, it will impact on some buyers in their 30s and 40s, the report also suggests. ‘While restricting the amount they can borrow, this may act as a catalyst for them to move into the commuter zone as they look to stretch their debt and equity further in less expensive markets,’ it explains. While sellers need to remain realistic in… Continue reading
Average UK house prices now above peak of 2007, latest data shows
Average house prices across the UK have now exceeded their Autumn 2007 peak and further increases are expected, according to the latest research figures. Findings of the research by the Connells Group, which has a network of over 520 estate agencies across the country, show a 2% uptick in prices compared to the peak. This comes after the value of property rose for the fourth consecutive month and the data also indicates a 4.5% increase on house values in the second quarter of this year compared to the first three months of the year. This exceeds the 3% growth that was forecast by Connells and overall the figures are very positive news, according to David Plumtree, Connells Group Estate Agency chief executive. ‘The economic growth, strong market confidence and post-election certainty has galvanised buyers and sellers to create a buoyant housing market. It certainly is a seller’s market and those looking to move should capitalise on this,’ he added. Separate research by online estate agent eMoov has found that demand for London property has increased for the first time this year, having declined steadily since June 2014. Demand across London’s boroughs has climbed by 7% since March, although it is still down 15% since this time last year. ‘It doesn’t surprise me that despite the market cooling in some of the capitals more prestigious boroughs, house prices in London have continued to rise. It’s long been accepted that London is one of the most expensive cities to live in the world, let alone the UK, but now that the average house price has tipped above the half a million mark, it really highlights how out of control the property market has become here,’ said eMoov chief executive officer Russell Quirk. He also pointed out that house prices outside of London and the South East have continued to increase by 5.2%, and this shows that the London exodus for more affordable property is continuing. ‘Hardly surprising given the new London average and the resulting ripple effect, as buyers search for a realistic way to get on the UK property ladder,’ he concluded. Continue reading
