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Official figures confirm buying frenzy in UK in run up to stamp duty change
Official figures from HMRC confirm that there was a large increase in property sales in the UK in March 2016 which was associated with stamp duty change. House sales were 77% higher than March 2015 and 75% up month on month and the HMRC report states this must be directly linked to a rush to buy ahead of the new 3% stamp duty charge for additional homes. There has been plenty of anecdotal evidence that buy to let investors were rushing to beat the 01 April deadline and this is now confirmed. However it is likely that sales in April will fall considerably as a result of the frenzy. Even the seasonally adjusted estimate shows that the number of residential property transactions increased by 41.5% between February 2016 and March 2016 and increased 69.7% compared to March 2015. ‘The large increase in transactions for March 2016 is likely to be associated with the introduction of the higher rates on additional properties in April 2016,’ the HMRC report says. ‘Additional non-tax factors may have played a role as well, for example the Bank of England's plans to curb buy to let mortgages resulting in a rush to purchase,’ it adds. The HMRC figures also shows that for March 2016 the number of non-adjusted residential transactions was about 74.8% higher compared with February 2016. Lucian Cook, Savills head of residential research, pointed out that even on a seasonally adjusted basis volumes were up 40% on February 2016 against a backdrop of economic uncertainty, the forthcoming referendum on the future of the UK in the European Union referendum and no loosening of mortgage lending criteria. He also pointed out that the latest data from the Council of Mortgage Lenders shows mortgage lending was 43% higher in March compared to February, and 59% higher than March 2015. ‘This suggests that while borrowing to support this uplift in sales volumes has been significant, there has also been a notable weighting towards cash buyers. All these figures confirm a frenzy of buying activity before the 01 April introduction of the 3% stamp duty surcharge for additional homes purchases,’ Cook explained. ‘It underscores the significant distorting effect that stamp duty changes can have on the housing market. This is clearly a one off event and such volumes are unsustainable against a backdrop of economic uncertainty and the prospect of an increased regulatory environment for buy to let borrowing,’ he added. ‘We’d expect a significant fall in transaction levels in the second quarter of the year to offset the March activity and the stamp duty surcharge to act as a longer term drag on housing transactions,’ he concluded. Doug Crawford, chief executive officer of My Home Move, said that March was the busiest month the business has ever seen with a record number of transactions. The busiest ever day for completions was 31 March, reaching a total of 1,120 in the single day. ‘The new stamp… Continue reading
UK asking prices reach new high of £307,033
Average UK asking prices increased by 1.3% or £3,843 in April compared to the previous month and are up 7.3% year on year, according to the latest index figures. This takes the price of an average home to a record high of £307,033 with market activity having been pushed up due to a rush by buy to let investors to beat the April stamp duty change, says the index report from Rightmove. Indeed, the stamp duty deadline gave an early impetus to the bottom of the market and this had the knock-on effect of energising the higher sectors of the market as growth was driven by second-stepper and top of the ladder sectors. The report also says that smaller properties in the first time buyer and buy to let sector actually saw a month on month price drop of 1.4%. But overall while buy to let demand will not have gone it remains high overall with record visits on Rightmove in March. ‘The further demand boost from those looking to complete before 01 April has now dissipated, resulting in a 1.4% drop this month in the average price of a property coming to market in the first time buyer and investor sector,’ said Miles Shipside, Rightmove director and housing market analyst. ‘However, the momentum it created looks to have enabled owner occupiers of these properties to trade up. This has built an onward chain reaction of higher demand in higher price brackets as more people can move,’ he explained. He also pointed out that upwards price pressure has moved into the typical second stepper sector of three or four bedrooms excluding four bedroom detached properties. Prices are up by 0.6% or £1,512 this month, and this sector compared to the others has seen the largest year on year rise of 8.6% or £20,519. Meanwhile top of the ladder sector of four bedroom detached and five bedrooms or more has seen the biggest rise this month, up by 1.9% or £9,970. Their annual rate of increase remains the lowest however, at 5.1%. ‘While some felt that there would be a stampede of existing landlords selling to other landlords, these figures indicate that many of those who sold during the buy to let rush were actually first time sellers looking to trade up,’ said Shipside. ‘They used the heightened demand from investors competing fiercely with first time buyers to springboard themselves onto the next rung of the housing ladder. After several years of being held back from moving by post credit crunch price doldrums, they have now benefitted from a heady combination of price growth, historically cheap interest rates, and confidence of a quick sale with purchasers working to a tight deadline,’ he pointed out. ‘Trader uppers have now been unleashed and this has spread demand upwards and helped to form longer chains. Interestingly there has been a stamp duty double whammy effect pushing up prices in these higher sectors too. Earlier reforms in December 2014… Continue reading
Research shows over 35,000 high end home to be built in London in next decade
Over 35,000 prime homes are set to be built in London over the next decade, a rise of 40% compared to 2014, new research shows. The combined sales value of these properties is estimated at over £77 billion, and when combined the total floor space of these homes comes in at over 40 million square feet, far greater than the area of the whole of the City of London at 30.7 million square feet. These new homes, well out of the affordable range, will be built on 196 sites that span the breadth of the city, according to a report from global design and consultancy firm for natural and built assets Arcadis. It says that this ‘significant growth’ on the previous year demonstrates the extent to which the capital’s high end residential market is still viewed favourably in spite of the rapidly evolving UK housing market. The report also says that rising construction costs and growing land values have seen input costs rise, while a softening in demand due to successive stamp duty reform combined with economic slowdown in countries such as China has seen buyer interest ease. As a consequence, some investors may eventually reposition these assets away from prime housing and into premium office space, mixed use or even a greater number of smaller homes as they look to markets that offer a greater margin, it suggests. In terms of location, it is Chelsea and Fulham that have seen the greatest level of investment, followed by the Southbank and around the City, and the report says that this is evidence that the prime London property market is not confined to the West End but is now widely diffused across the capital. Some 10,914 homes are due to be built in Chelsea and Fulham, followed by 8,863 in Southbank, 5,898 in City and Fringe, 1,960 in Victoria and Pimlico, 1,754 in Midtown, 1,600 in Docklands, 1,104 in Kensington, 933 in Bayswater and Paddington, 589 in Mayfair and 427 in St John’s Wood. The total sales value of the homes to be built in Chelsea and Fulham is estimated at £20 billion, in City and Fringe at £7.3 billion, in Mayfair at £6 billion, in Belgravia at 5.6 billion, in Victoria and Pimlico at £5.1 billion, in Midtown at £4.7 billion, in St John’s Wood at £4 billion, in Kensington at 3.7 billion and in Knightsbridge at £2.4 billion. ‘Since around 2009, the value of prime residential property in central London has seen dramatic rises, making it one of the hottest markets in recent memory. So, it is hardly surprising that we have seen ongoing interest from investors all over the world,’ said Mark Cleverly, Arcadis head of commercial development. ‘What is interesting, though, is the continuous geographical spread we are seeing. Prime housing is springing up around regeneration areas and on the outskirts of the financial district, suggesting the days of the West End… Continue reading
