Tag Archives: finance
Average UK house prices up 8.7% year on year in June, official data shows
Average house prices in the UK increased by 8.7% in the year to June 2016, up from 8.5% in the year to May 2016, according to the latest national house price index compiled by the Office of National Statistics (ONS). This took the average UK price to £214,000 in June 2016, some £17,000 higher than in June 2015 and £2,100 higher than the previous month but it should be noted that the data was recorded before any Brexit effect would be discernible. The HPI report says that strong house price growth has been seen since the end of 2013 but there is regional variation and in June the main contribution to the increase in UK house prices came from England. On a regional basis house prices increased by 9.3% in England over the year to June 2016, with the average price in England £229,000. Wales saw house prices increase by 4.9% to £145,000 while in Scotland, the average price increased by 4.6% to £143,000. The average price in Northern Ireland is was £123,000. London continues to be the region with the highest average house price at £472,000, followed by the South East and the East of England, which stand at £309,000 and £270,000 respectively. The lowest average price continues to be in the North East at £124,000. However, the East of England has replaced London as the region which showed the highest annual growth, with prices increasing by 14.3% in the year to June 2016. Growth in London remains high at 12.6%, followed by the South East with a 12.3% annual growth. The lowest annual growth was in the North East, where prices increased by 1.5% over the year. Richard Snook, senior economist, PwC, pointed out that the figures only capture one week of market activity after the vote to leave the EU on 23 June, so it is too early to draw any firm conclusions from this set of data. ‘Nevertheless, we expect that the vote to leave the EU will have a significant impact on the housing market. In our main scenario, average UK house property growth will decelerate to around 3% this year and around 1% in 2017,’ he said. ‘Cumulatively, our estimates suggest average UK house prices in 2018 could be 8% lower than if the UK had voted to stay in the EU,’ he added. According to John Goodall, chief executive officer of peer to peer platform Landbay, high demand drove the uplift in prices, with mortgage lending volumes jumping 16% in June alone. He pointed out that all eyes will be on next month’s figures, and early indications suggest house prices growth cooled slightly in July, but adding that any Brexit effect won’t be seen immediately. Increased house price growth in June could also have been due to the new stamp duty rate for buy to let purchasers, according to Andrew McPhillips, chief economist at Yorkshire Building Society. ‘This caused landlords to flood the market to beat the new rate,… Continue reading
UK property prices up 0.2% month on month in July and annual growth slowed
Residential property prices in the UK increased by just 0.2% month on month in July and by 5.5% year on year to £293,318, according to the latest index data to be published. But there has been a gradual decline in annual growth since February when it was running at 8.9%, and excluding London and the South East year on year growth was 4.8%, the figures from the LSL Property Services/Acadata index shows. The index also shows that quarter on quarter sales were down 20% year on year compared with the second quarter of 2015 but the index report says it is too early to say if Brexit is impacting the market. The East of England was the top performing region with annual growth of 9.3%, up from 9.1% the previous month. This was followed by annual price growth of 7.2% in the South East and 6% in Greater London. According to Adrian Gill, director of Your Move and Reeds Rains estate agents, while the vote to leave has definitely resulted in uncertainty, there’s near unanimity among commentators that the impact is yet to show in the figures and for now, we’re left with mixed signals. He explained that on the one hand, house price inflation on an annual basis continues to slow year on year but last month saw the market continue its fight back following price falls in March to May with July recording a modest gain after June’s 0.5% rise, with average prices up 0.2% or £700. However, overall this means prices remain £3,386 below their February peak, but £15,422 above their July 2015 levels. The index report suggests that the fall in sales is less to do with the referendum vote than the surge in activity to beat the 3% stamp duty surcharge introduced in April on second homes and buy to let properties. It points out that the spike in sales in March was followed by a massive decline the following month, from which the market has since been recovering. It also points out that transaction volumes have grown every month since April and are now well above February levels. Moreover, the exceptional sales level in March 2016 more than compensates for the decline since. ‘Overall, for the first six months of each year, we estimate transactions in 2016 at some 4% higher than in 2015. Sales volumes continued to increase in July, but again this still tells us little about the referendum vote, since transactions recorded at the Land Registry for the month mostly relate to offers made by purchasers in June, or even earlier,’ Gill explained. He added that the April stamp duty change may also account for much of the apparent slowdown in prices as prices increased above trend from January to March after the announcement of the change in the Autumn Statement last year. Meanwhile, from April 2016, with the new tax in place, a reduction in the number of higher-valued properties… Continue reading
Most UK landlords are part time with just one property
Most landlords in the UK still consider renting out a property to be a part time activity and the majority own just one property and manage their portfolio as private individuals, new research show. However, there is an apparent trend towards larger portfolios even although rents make up less than half of a landlord’s total income, according to the report from the Council of Mortgage Lenders (CML). But the research, carried out with BDRC and the London School of Economics, does show there is evidence that rent is increasingly becoming a significant income stream for part time landlords. In 2016 some 87% of landlords sampled manage their portfolio as an individual or as a couple, roughly unchanged from the 89% reported in 2010. The proportion operating as a company or other group comprises 14%, roughly on par with the 11% reported in 2010. Likewise, the vast majority of respondents in 2010 and 2016, 92% and 95% respectively, do not consider letting to be their main business or occupation. While most landlords still own just one property, there is an apparent trend towards larger portfolios. Between 2010 and 2016, the proportion of respondents who manage only one property fell from 78% to 63%. At the same time, the share managing two to four properties rose from 17% to 30%. The report suggests that this could be due to the difference in the samples of the two surveys. However, the sharp contrast between the 2010 and 2016 data is likely to reflect to some degree an underlying increase in average portfolio size. Such a finding would be consistent with CML data on the number of loans for buy to let house purchases, which has increased by about 19% a year since 2010. Generally, rental receipts make up less than half of a landlord’s total income. However, evidence suggests that rent is increasingly becoming a significant income stream. For about 90% of landlords, rental income is less than half of their total income, virtually unchanged since the 2010 survey. However, the share receiving no rent, typically due to a property being unoccupied, has dropped substantially from 21% to 5% over the past six years. At the same time, the share receiving up to one quarter of their income from rent has risen by about seven percentage points, and the share claiming between one quarter to one half of the income from rent has grown by 10 percentage points. The report suggests that this apparent shift may be attributable to differences in sample sizes. However, if it reflects an underlying trend, this would be consistent with the apparent increase in portfolio sizes, as it is easy to see how owning a larger portfolio would allow a landlord to draw a bigger chunk of their income from rent. Overall the report says that while it looks like the typical landlord is still an individual running a rental business on the side, there appears to have been a gradual expansion of… Continue reading
