Tag Archives: credit
Seasonal summer dip fails to impact UK property market as demand remains high
House prices in the UK fell 0.8% this month, but this is much less than the usual summer seasonal fall off, according to the latest index from property portal Rightmove. Overall the marginal fall compared to a post credit crunch average August fall of 1.5% and a shortage of new sellers, down 8% on same period in 2014, and active buyers help to minimise usual summer holiday price falls. This takes the average asking price of a home in the UK to £292,284 which is 6.4% above a year ago, the data shows. But there is considerable variation within the market. First time buyers face a 1.8% rise with the average price in this market £177,977 while at the top end the average price is £524,822, a fall of 2.2%. Rightmove says that the strongest August price performance since 2007 demonstrates the continuing supply/demand imbalance in the property market. It reveals that the top three reasons for people not moving are not able to find somewhere to buy, the cost of moving and affordability. ‘While new seller asking prices have been muted by the traditional summer holiday property slowdown, the underlying shortage of property coming to market compared to buyer demand has helped to deliver the strongest August price performance since before the credit crunch,’ said Miles Shipside, Rightmove director and housing market analyst. ‘Buyers can normally pick up some bargains in August as sellers who are marketing their homes when they should be holidaying often have a pressing need to sell and mark their prices down pretty aggressively. At 0.8% down on the previous month, this is the least generous that sellers have had to be for eight years and a clear sign of upwards price pressure in the pipeline,’ he explained. Another factor highlighted by Rightmove is the lack of new build supply with current new home volumes still being well below the levels reached just before the credit crunch. ‘The historic new build shortfall results in there being a smaller overall housing stock available to come to market, while the current new build shortfall also limits the number of existing property owners who are looking to sell their house in order to buy the limited number of suitable brand new homes available,’ Shipside pointed out. ‘The shortage of suitable property being built exacerbates the vicious circle of not enough property on the market to meet demand, increasing prices, and a reluctance among home-owners to come to market if they think the prospects of finding and funding their next move are severely compromised,’ he said. ‘These stay away sellers who are seriously considering a move but have yet to put things into motion have concerns around a shortage of choice and stretched affordability. They could be helping to get the country’s limited property stock circulating, but they have concerns about coming to market, deepening the supply shortages affecting many areas,’ he added. He also explained that home owners are reluctant to put… Continue reading
UK buy to let tax change will restrict lending in the short term, says new report
The restriction of mortgage interest relief for UK buy to let landlords will, in the short term, curb lending in the sector, which currently makes up 15% to 16% of mortgage lending, according to a new analysis. At the same time, 2015 is on track to become the best year for buy to let mortgage deal issuance since the credit crunch, says the special report from Moody's Investors Service. ‘The government's decision to restrict buy to let mortgage interest relief reflects a willingness to put investors and owner-occupied borrowers on a more level playing field, given that the latter cannot claim tax relief on their mortgages,’ said Moody’s analyst Emily Rombeau. ‘First time buyers' affordability has declined, as they struggle to get on to the property ladder. Affordability constraints and demographic changes have increased the share of privately rented housing and this sector's evolution has strongly contributed to the rapid growth of the buy to let sector in recent years,’ she explained. ‘Repeat issuers and new players will support a robust pipeline of buy to let RMBS deals this year. Issuance for this segment has accounted for 25.6% of total UK RMBS issuance so far this year, up from 10.2% in 2014,’ she added. Over the coming months, Moody's forecasts that reduced demand for buy to let properties will soften UK house price growth. Moody's forecasts that UK house prices will nonetheless rise by up to 5% in 2015, albeit at a slower pace than in 2014. ‘Notwithstanding the softening in house price growth, the risk of an immediate house price decrease is limited given the housing shortage and the economic recovery,’ Rombeau pointed out. According to the Moody's report, the buy to let market has grown at a steady pace since early 2010, accounting for 16.8% of total gross mortgage lending and 25.3% of total house purchases as of the first quarter of 2015. Buy t let gross lending volumes have substantially increased, rising to £7.6 billion in the first quarter of 2015 from £2 billion in the first quarter of 2010. Paragon, the UK's largest buy to let specialist, has accounted for around 40% of buy to let issuance since the financial crisis, with a total of nine transactions collectively worth £3.2 billion, the report says. Mortgages also entered the buy to let securitisation sphere this year; the recently established specialist lender has already completed two buy to let transactions for a total amount of £426 million since January 2015. Moody's research says that, while UK house prices increased by 3.5% in the first half of 2015, according to data from the Nationwide, most regions, except for Northern Ireland and Yorkshire and Humberside experienced a further slowdown in annual price growth in the second quarter of 2015. The monthly year on year growth in UK house prices gradually declined to 3.3% from 11.8% in the 12 months to June 2015. David Whittaker, managing director of Mortgages for Business, said that… Continue reading
Stamp duty hike hits prime property market in UK, research suggests
Sales of homes worth over £1.5 million in the UK have reached a plateau and are set to fall for the first time in two years due to property tax change, according to a new report. This is despite growth in this price sector of 36% year on year from 2012 to 2014, says the latest market analysis report from national estate agents Jackson-Stops & Staff. ‘The wider UK residential property markets are reasonably buoyant now that we have the general election behind us and the uncertainties that any potential political changes bring,’ said Nicholas Leeming, chairman of Jackson-Stops & Staff. ‘However, the revision to stamp duty rates late last year has contributed to the widespread stagnation of the higher valued markets in 2015, both in London and the country, where many properties are finding it difficult to attract buyers,’ he explained. ‘Sale volumes have plateaued across the country in response to high transaction costs, reflecting the fact that the UK has one of the highest taxed property sectors in the world,’ he pointed out. Under new stamp duty legislation the value portion between £925,001 and £1.5 million has resulted in an additional 10% bill, and anything above £1.5 million added another 12% charge. ‘We have an ageing house owner population with too few younger entrants onto the property ladder. Mortgage funding is difficult to raise for people in their forties, even if they have been previous house owners, irrespective of their credit history,’ Leeming said. ‘We need to encourage trading down so that larger houses are released to families needing more space. The changes to inheritance tax will incentivise older house owners to trade down, but we also need to enable property owners to move without new restrictions to mortgage funding and reduce the top levels of stamp duty to free up the higher value markets at no net loss to the Exchequer,’ he added. Alastair Hancock, the firm’s director at its Sevenoaks office, revealed that over a third of available stock is priced in excess of £1.5million and this is due to a lack of incentives for buyers at the mid to high end of the market. ‘Since the stamp duty hike last December, we have seen a significant decline in volume of sales at this level as the 12% continues to penalise the country house market, which is still struggling to recover from the recession,’ he said. Continue reading
