Tag Archives: financial
Average UK property price up to £200,000, latest index shows
Property prices in the UK increased by 0.8% month on month in December to an average of £196,999 and up 4.5% year on year, according to the latest monthly index to be published. The data from home lender, the Nationwide, shows that after moderating during the first six months of 2015, house price growth has remained in a narrow range between 3% and 4.5% in the second half of the year. All regions except Scotland saw increases in house prices in 2015, though all recorded slower rates of annual price growth than in 2014. London was the strongest performing region for the fifth year running, with average prices up 12% year on year. The Nationwide’s quarterly index, however, shows that average prices in London are now 50% above their pre-crisis peak in 2007, while in the UK overall prices are around 7% higher. The neighbouring Outer Metropolitan region took second place, with prices up almost 11% compared with the fourth quarter of 2014. Yorkshire and Humberside was the weakest performing English region, with prices up 0.4% year on year. House prices continue to recover in Northern Ireland, with annual growth of 6.5% in the fourth quarter, although average prices are still 44% below their pre-crisis peak. Wales saw a 0.7% year on year increase in average prices, similar to the 1.4% increase recorded in 2014. Scotland was the only region to see prices fall over the year, with prices down 1.9% compared with the fourth quarter of 2014. The full data also suggests that in England the North/South divide has widened further. Average house prices in England increased by 2.2% in the fourth quarter and were up 6.9% year on year. Price growth in the South exceeded that in the North for the 27th consecutive quarter. Prices in Southern England, that is the South West, Outer South East, Outer Metropolitan, London and East Anglia, were up 8.9% year on year, whilst in the West Midlands, East Midlands, Yorkshire & Humberside, North West and North prices rose by just 1.6%. In cash terms, the gap in average prices between the South and the North of England widened further and now stands at nearly £159,000, around £23,000 higher than a year ago. Looking ahead to 2016, the risks are skewed towards a modest acceleration in house price growth, at least at the national level, despite the likelihood of interest rate increases from the middle of next year, according to Robert Gardner, Nationwide's chief economist. ‘Further healthy gains in employment and rising wages are likely to bolster buyer sentiment, while borrowing costs are expected to rise only gradually. However, the main concern is that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability,’ he said. ‘Overall, we expect UK house prices to rise by 3% to 6% over the next 12 months. It remains an open question whether the striking divergence in regional house price performance evident in… Continue reading
UK buyers want a return to 100% mortgages
Half of home buyers in the UK would welcome a return to 100% loan to value mortgages to jump the hurdle of not being able to save a big enough deposit, a survey has found. The poll of 2,000 people reveals that half of those who plan to buy a home within the next two years are in favour of a relaxation of the lending criteria including 100% LTV mortgages. The research by lender and mortgage broker Ocean Finance also found that buyers of all ages want to see lenders offer zero deposit mortgages again, with those aged 25 to 34 most keen. 100% LTV mortgages disappeared as part of a major overhaul of the financial market that led to the Mortgage Market Review (MMR) being introduced in April 2014. The Review, the biggest piece of mortgage regulation in a decade, tightened the rules on the size of deposit required to get a loan. It also placed responsibility on lenders to ensure borrowers only get a mortgage they can afford. In practice, the new regulations have meant that borrowers face increased scrutiny about their income and spending, and often need to save large deposits to gain approval for a mortgage. ‘Buyers would welcome a return to 100% LTVs and many lenders would like to offer them,’ said Gareth Shilton, Ocean’s spokesperson. ‘Many people trying to get on to the housing ladder struggle to get enough cash together for a deposit, then house prices rise further, and they find themselves stuck on a never-ending treadmill,’ he pointed out. ‘The Mortgage Market Review states that lenders must ensure buyers can afford a mortgage. So it’s frustrating for those buyers who are able to prove they can afford a mortgage, but can’t raise a deposit because of their rent and living costs,’ he explained. ‘It would be a brave lender who is the first to go back into the mass market with 100% LTVs, although others would no doubt follow suit,’ he added. Continue reading
Downsizing is seen as too expensive for many retired home owners in UK
Downsizing is not an option for many home owners in the UK, with stamp duty, legal costs and move costs discouraging people from moving to a smaller property, new research shows. The average equity release customer has lived in their home for 21.8 years before cashing in on their property wealth, says the analysis from over 55s retirement specialist Key Retirement. But pensioners in London own their homes for nearly 26 years before accessing the wealth and the report also reveals that nearly one in three who release equity have lived in their homes for 30 years or more. The firm believes this illustrates why, for many, downsizing is simply not an option. Indeed, home owners who bought in early 1993 have seen average UK prices rise from £60,850 to around £203,800, a rise of nearly £143,000, while Londoners buying in 1989 will have seen average prices rocket from £96,130 to around £408,000 giving them gains of around £312,000. Retired home owners trying to downsize to release wealth typically face stamp duty of 2% on the proportion of a home’s value over £125,000, rising to 5% for the proportion over £250,000. ‘Stamp duty, legal and removal fees and the cost of turning their next house into a home make downsizing an expensive option for many,’ said Dean Mirfin, technical director at Key Retirement. ‘The upheaval and risks of losing touch with friends and family as well as local services, including healthcare, can all impact negatively on the decision to move, as well as the fact that these homeowners are very attached to their homes, which they have invested in for many years,’ he added. Cost and other issues aside, the difficulty of finding a suitable home to move to is cited by many as a key driver in them wanting to stay put and reinvest in their current property, many choosing to future proof their home to be suitable for them as they age, the research also suggests. Market analysis shows the number of homes for sale has slumped to a record low in November adding to the struggle for older homeowners to find a suitable home to move to. ‘Downsizing is logical and sensible and should work in theory for many but turning the theory into practice is tougher than it seems and the theory overlooks a wide range of issues that are important to retired home owners,’ said Mirfin. ‘Equity release customers are accessing an average of nearly £75,000 from their property wealth without having to tackle the financial and emotional issues involved in moving home. The average customer has owned their home for nearly 22 years and has clearly benefited from house price growth but prefers to stay in their house rather than going through the upheaval and costs of moving,’ he explained. ‘Until we are building the right sort of properties and in the right quantities both the math and availability to facilitate downsizing remain a huge challenge,’ he added. Continue reading
