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Housing affordability falls in Scotland for third year in a row
Rising house prices in Scottish cities has led to a further deterioration in affordability with average values up 3% from £176,009 in 2015 to £181,077 in 2016. This has resulted in average affordability in Scotland’s cities worsening in the last 12 months from 5.25 to 5.36 times gross average annual earnings, the third successive annual decline in affordability. The data from the Bank of Scotland Affordable Cities Review also shows that on average, affordability in Scottish cities is now at its lowest level since 2009 but is still 12% lower than the peak of 6.12 times earnings in 2008 at the height of the last housing market boom. The overall improvement in affordability across Scottish cities as a whole over the past eight years has been driven by a combination of an increase of 10% in the gross average annual earnings and an average house price decline 3%. Edinburgh is Scotland’s least affordable city where the average house price is 6.12 times the gross average earnings in the city. With an average price of £220,099, houses in Edinburgh are more expensive compared with average earnings than in any other Scottish city. Inverness at 6.03, Aberdeen at 5.72, Dundee at 5.38 and Perth at 5.24 make up the top five least affordable cities in Scotland while Stirling is the most affordable city and the second most affordable in the UK with an average property price of £165,658 which is 4.11 times the gross average annual earnings. Glasgow is the second most affordable city in Scotland and 10th in the UK, with an average house price of £159,580, which is 5.07 times the gross average annual earnings in the city. House price growth has been highest in Aberdeen over the past decade and since 2011 Aberdeen has recorded the biggest price rise of any Scottish city over the past decade and with a gain of 58%, is the only Scottish city to appear in the top 10 UK cities with highest house price growth in fifth place. The report explains that this is as a result of rising housing demand due to the strong performance of the oil and gas sector over most of the period. More recently, Aberdeen has seen a 22% rise since 2011 but prices are not declining due to a decline in the resources sector. ‘The rising house prices over the past three years have resulted in a deterioration in home affordability in Scotland’s cities. Although affordability is at the lowest level since 2009, it is still much lower than the height of the last housing market boom in 2008,’ said Nicola Noble, mortgages director at Bank of Scotland. ‘Aberdeen has recorded Scotland’s highest house price growth over the past decade and more recently during the economic recovery, due to strong performance in the oil and gas sector,’ she added. Continue reading
Research reveals few homes for sale in London under UK average
Affordability is a major issue for Londoners with new research showing that more than a quarter of boroughs don’t have a single home for sale less than the country average of £191,812. Indeed, average London property prices currently stand at around £530,409 and in nine out of 32 London boroughs, 28%, it is impossible to find a property with an asking price under the Land Registry average. The figures from online estate agents House Simple show that Bexley is the only borough where you can buy a property for less than £100,000, with a studio flat currently on the market for just £94,995 while in Tower Hamlets there are no properties on the market for less than £250,000. The research also found that just four or 12.5% London boroughs have property where the buyer would not pay stamp duty with the threshold kicking in at £125,000. In almost half of the boroughs, the most affordable property for sale today is a studio flat, which are typically just 100 to 110 square feet in size compared to the average UK one bed flat which measures 495 square feet. ‘These figures reveal how desperate the plight is for ordinary Londoners on average salaries, hoping to buy their first property. How can they feasibly afford to buy when average property prices in the Capital are over £530,000?’ said Alex Gosling, House Simple’s chief executive officer. ‘Although this research reveals there are properties for sale below the UK’s average house price, the pickings are extremely slim and you’re getting very little square footage for your money. It’s a studio or nothing in many boroughs,’ he pointed out. ‘It’s not surprising that more and more people are starting to move out of London for value. Why pay £200,000 for a studio flat when you can buy a house for the same money just an hour commute away. It’s likely in the future we will see less and less people putting their first foot on the property ladder in London,’ he added. Continue reading
Estate agent figures confirm rush of buy to let buyers
Figures from estate agents confirm that there has been a rush from buy to let investors ahead of the new stamp duty deadline for additional homes in the UK. In February some 85% of estate agents reported an increase in the number of buy to let investors flooding the market to beat the stamp duty changes which come into effect on 01 April, according to the latest housing report from the National Association of Estate Agents (NAEA). The Chancellor’s announcement around stamp duty for additional homes made in last year’s Autumn Statement meant that in January and February this year 72% and 85% of agents respectively, saw an increase in interest from those hoping to purchase second homes. This meant that with added pressure from buy to let investors on the market, demand for housing was the highest level for 12 years in February. Indeed, the data shows that there were an average 463 house hunters registered per member branch, the highest since August 2004 when 582 were registered per branch. This is following an increase in January when estate agents reported 453 per branch, the highest since July 2015. The number of properties available per branch increased marginally from 33 in January to 35 in February, as the number of sales agreed per branch in February increased too. There were an average nine sales completed in February, back to the level seen in October 2015 and a rise from eight sales agreed per branch in January. The report also shows that 24% of total sales made in February were to first time buyers, a decrease of 5% points from January, as mounting pressure from buy to let investors increased competition. ‘It is evident from February’s report findings that we’ve seen a real sense of urgency from landlords trying to complete on sales ahead of the stamp duty reforms,’ said Mark Hayward, NAEA managing director. ‘However, the mounting pressure and increased demand for housing has meant that first time buyers have had to compete with landlords for property and as a result they have lost out,’ he pointed out. ‘We would like to say that come April things will look better for first time buyers. Schemes like the Help to Buy ISA, Help-to-Buy scheme and the new Lifetime ISA all sound great on paper, and there’s no doubt that some young people will definitely benefit from them,’ he explained. ‘But the crux of the problem though is that there is still a huge issue with supply and until we build more homes, and crucially the right sort of homes, we cannot fool ourselves into thinking we are doing enough to help people buy their own home,’ he added. Continue reading
