Tag Archives: cookies
New report sets out how sensitive the UK housing market is to the economy
There are almost 30 million residential properties in the UK with the market linked to income, wealth and availability of income which makes is sensitive to the overall economic climate, according to a new report. The overview from the Office of National Statistics (ONS) shows that as of 2014 there were 28.1 million properties and as the population continues to grow housing is set to remain an important topic. Since 1980, there has been considerable fluctuation in the UK housing market. Overall, there has been growing demand and relatively limited supply growth. House prices have been increasing, and first time buyers are finding it more difficult to get on the property ladder while home ownership among younger age groups generally has declined. The report points out that on average house prices have increased by 7% per year since 1980 and the year with the greatest annual increase in house prices was 25.6% recorded in 1988 while by 2015, the average price (mix adjusted) of a property in the UK stood at £279,000. There were seven years between 1980 and 2013 where, on average, UK house prices fell, the majority of which occurred during the recession of the early 1990s. The biggest drop, however, was 7.6% in 2009. The economic downturn in 2008 had a considerable impact on the UK housing market. The decline in house prices was accompanied by reduced mortgage availability and stricter lending criteria. The analysis also shows that the number of property sales in the UK almost halved from a peak of 1.67 million in 2006 to 0.85 million in 2009 but since then the number of sales has partially recovered, increasing to 1.23 million in 2015. According to the report rising house prices could partially explain the decline in the number of first time buyers taking out a mortgage, although other economic factors will play a role. From the 1980s until the early 2000s there were typically between 400,000 and 600,000 loans to first time buyers each year. However, in 2003 there was a 31% decline and then in 2008 there was a further 47% decrease, the largest in the series, as the economic downturn affected the housing market. In recent years the number of first time buyers has been recovering, although numbers fell in 2015 and the levels remain below those seen before 2003 and the reduction in the numbers of first time buyers has subsequently had an impact on the age of home owners. In 1991, 67% of the 25 to 34 age group were home owners. By the financial year ending 2014, this had declined to 36%. There were also reductions in home ownership over the same period for the 16 to 24 age group from 36% to 9% and for the 35 to 44 age group from 78% to 59%. By contrast, home ownership has increased among older age groups. Another changing aspect of the housing market is the percentage of purchase price being paid as… Continue reading
Equity release going from strength to strength in UK
Looming interest only mortgage due dates have driven a surge in sales of lump sum equity release plans to 40% of the market in the UK in the first quarter of 2016, according to a market monitor report. Some 40% of people are taking a single lump sum advance to reduce their debts, up from 30% for the same period in 2015, the data from the report from Key Retirement shows. The firm believes that the surge is largely being driven by customers who need the maximum cash available rather than drawdown as they are using the lump sum to pay off shortfalls in interest only mortgages. Average amounts released through equity release are now £76,000 and as high as £134,000 in London. The Market Monitor, which analyses data for Equity Release Council members and non-members, for the first three months of 2016 shows record growth with total property wealth released rising to nearly £415 million, up from £341 million last year. The detailed report by the over 55’s specialist shows rising numbers of retired home owners using their property wealth to pay down increasing debts including loans, credit cards and mortgages. Around 29% of customers used some or all of the money to pay off unsecured borrowing. Debt was primarily run up on credit cards or loans while 21% used some or all of their money to clear outstanding mortgages. 14% used the money to help with regular bills. ‘The record high number of equity release plans being taken out underlines how property wealth is an important part of retirement planning,’ said Dean Mirfin, technical director at Key Retirement. ‘Pensioners are making the most of successful property investment and rising house prices to substantially improve their retirement standard of living. However retiring in debt is still a major issue. It’s long been predicted that as the first large wave of interest only mortgages maturities begins more customers will turn to equity release to plug this gap,’ he added. The average amount released to boost retirement income increased 12% to £76,115 in the three months compared with £66,730. In London the average released was nearly £134,350 up from £129,991. Home and garden improvements remained the most popular way of using the money with 63% of those releasing equity from their home doing so for this purpose. Customers are also using the money to treat family and friends with 21% citing this as a main reason. A further 28% are using the money to pay for holidays. Across the country 10 out of 12 regions saw growth in the value of property wealth released with East Anglia recording an 80% rise, North West seeing a 48% increase and a 24% rise for London. The value released dropped 29% in the North and 16% in Northern Ireland. Growth continued in plan sales with 10 regions seeing increases and just two seeing decreases. The North saw plan sales decrease by 35% and Yorkshire and Humberside saw an 11%… Continue reading
Property sentiment remains steady in the UK, latest index shows
Households across the UK perceive that the value of their home rose in May, according to the latest house price sentiment index to be published. Some 25.6% of the 1,500 households surveyed for the index from Knight Frank and Markit Economics across the UK said that the value of their home had risen over the last month, while 3.6% said that prices had fallen. This resulted in a HPSI reading of 61.0 and although this was a slight increase on the 60.1 recorded in April, it remains below the peak of 63.2 reached two years previously in May 2014. The index report says that while sentiment picked up over the course of the month, it remains in line with the longer term trend. On a three month rolling basis the HPSI reading was 60.6 compared to 59.2 for the comparable period three months previously There was a notable pick-up in perceived house price growth among those aged 18 to 24 with the index rising to 57.7 in May, up from 52.6 in April, potentially reflecting affordability concerns among this age group. Conversely, household sentiment softened among those aged over 55 month on month, although such individuals remain the most bullish when it comes to perceived price growth. According to Gráinne Gilmore, head of UK residential research at Knight Frank, the steadiness of the headline house price sentiment index during such political uncertainty over the future of the UK in the European Union is a reflection that the fundamentals of the market remain unchanged. ‘There is still an imbalance between demand and supply of housing, and for those with access to deposit payments, mortgage rates are still near record lows. However, there has been some softening in sentiment among those aged 55 and over, the age-group who have the largest equity stake in the UK housing market,’ she pointed out. ‘While the sentiment reading for this group is still one of the highest, indicating they expect prices to rise, there has been a notable fall from last month, indicating that the current economic and political climate is affecting some corners of the market,’ she added. The future HPSI, which measures what households think will happen to the value of their property over the next year, rose slightly in May to 70.3, from 68.8 in April. Households in the South East were the most confident that prices will rise in the next 12 months at 79.5, followed by those in London at 78.2 and the East of England at 77.9. Expectations that interest rates will remain low for longer, as shown by Markit’s UK Household Finance Index, appear to have helped offset any concerns over the wider economic backdrop. Around 46% of households expect rates to rise in the next 12 months, down sharply from a peak of 78% in August 2015. Tim Moore, senior economist at Markit, explained that house price sentiment not only rose in May, but moved above the 2016 peak… Continue reading
