Tag Archives: financial
Prime country house price growth in the UK slowing, latest data suggests
Price growth in the prime country house market lost some of its momentum in the latter half of 2014, with property values increasing by just 0.5% during the second half of the year. This compares to growth of nearly 3% over the first six months of 2014, according to the latest prime property analysis from real estate firm Knight Frank. The annual change in prime property prices in 2014 was 3.4%, in line with the firm’s forecast for the year. The number of prime country house sales in 2014 was 3% higher than in 2013 and prime country house prices are forecast to increase by 2% in 2015. According to Oliver Knight, of the firm’s residential research team, the countdown to the 2015 general election, tighter mortgage lending and the prospect of an interest rate rise, all contributed to slower price growth in the second half of 2014. ‘More restrained price growth in recent months reflects what has happened in the mainstream market, with the Nationwide House Price Index having eased for the fourth consecutive month in December. Any slowdown in the wider market is likely to have an impact on buyer sentiment in the prime markets,’ he explained. ‘In spite of more moderate prices rises, market activity has remained robust. The number of prime country house sales completed by Knight Frank in 2014 was 3% higher than the previous year and 24% higher than in 2012, indicating that demand remains strong,’ he said. He also pointed out that reforms to stamp duty, announced by Chancellor George Osborne during the Autumn Statement, sparked a flurry of activity in early December as prime property buyers looked to move ahead of the rate change. Under the new rules, buyers of homes valued at more than £937,500 face higher stamp duty charges. As a result, the day prior to the new rules coming into force, was the busiest day of 2014 for the prime country market in terms of transactions levels. ‘It is possible that the prime sector of the market may take some time to absorb the changes as a result of the higher upfront cost of moving, with harder negotiations between buyers and vendors likely,’ said Knight. He also explained that prime country house prices are still trading at a large ‘relative’ discount to prices in London, having experienced several years of static or modest growth since the end of the financial crisis and prime prices remain 16% below the previous market peak. Also, price performance is increasingly dependent on property type. While the average cottage increased in value by 6.8% in 2014, manor houses rose by just 1.4%. ‘We are forecasting average price growth of 2% across the prime country market in 2015, but do not rule out some areas of outperformance, especially in key commuter towns,’ Knight concluded. Continue reading
More UK landlords opting for low cost short term buy to let mortgages
The proportion of landlords in the UK favouring shorter two year fixed rates for mortgages has doubled in a year, new research suggests. It means fewer are looking at longer term fixed rate mortgages as the shorter terms loans are offering much lower deals at a time when the prospect of an interest rate rise recedes. The research from specialist broker Mortgages for Business also found that despite cheaper borrowing costs, some 73% of landlords want buy to let lenders to relax their lending criteria, up from 47%. A breakdown of the data shows that as of the final quarter of 2014, the proportion of property investors favouring two year fixed rates has increased to 23% from just 12% in the first quarter of the year. By contrast there was a decline in the proportion of landlords who would choose longer term fixed rates. In a marked reversal, fewer would now fix their mortgage repayments for three years than would prefer a two year deal. Just 15% prefer three year fixed rate products, down from 21%. The proportion of property investors who would fix for five years has fallen less dramatically, from 34% in the first quarter of 2014 to 31% in the final quarter. Moreover, in the latest figures only 8% would opt for a 10 year fixed rate if available, down from one in 10. ‘Tempted by cheap rates, landlords are deciding to take their chances with a shorter term deal. It’s true that these ultra-competitive mortgage rates will probably continue for some time as the financial world increasingly predicts virtually zero inflation in the UK and Eurozone, plus a cooling rate of economic growth,’ said David Whittaker, managing director at Mortgages for Business. ‘That doesn’t mean there’s no room for caution. Even in such an exceptional situation, rates are still expected to rise in due time. However, landlords now seem willing to take the chance that won’t happen for at least a couple of years,’ he explained. ‘However, we maintain our recommendation to fix for longer, particularly where the pricing difference between three and five year fixed rates is narrow,’ he added. Overall, the proportion of landlords who say lenders should be doing more to support property investors has risen since the start of last year. This is now 64%, up from 58% in the first quarter of 2014. As borrowing costs have fallen, substantially fewer property investors feel mortgage rates should be lower, 10%, down from 19% at the start of 2014. Similarly, fewer respondents said they would like lenders to reduce fees at 12%, down from 20%, and only 5% felt that lenders should be lending more, down from 14%. The survey revealed that landlords with larger portfolios continue to feel marginalised by the majority of lenders. They would like to see lenders remove age restrictions and non-property related income requirements, increase lending to limited companies and take a more common sense approach to underwriting. ‘Unfortunately for the more seasoned… Continue reading
Latest data shows UK Help to Buy scheme has now helped over 73,000
The majority of sales under the UK government’s Help to Buy equity loan scheme continues to be to first time buyers representing 83% of total sales, the latest figures show. The data from the Department of Communities and Local Government (DCLG) also shows that the average (mean) purchase price was £211,566 in the first 20 months since the scheme was launched. The top six local authorities in terms of completed sales are Wiltshire with 664, Leeds at 628, Central Bedfordshire at 581, Milton Keynes at 516, Peterborough at 512, and Birmingham at 465. These figures firmly but to bed concerns that it would benefit people in London and the South East buy higher priced properties and also shows over 73,000 have benefitted. Figures also show that 30,269 households buying new and existing homes through the Help to Buy mortgage guarantee scheme and 5,518 households were supported into a new build home through the NewBuy scheme. The Help to Buy equity loan scheme was introduced along with other Help to Buy products to support people who can afford a mortgage, but struggle to save the deposits required by lenders in the wake of the financial crisis. ‘Our long term economic plan has turned this country around from the one we inherited, suffering from a crashed economy and a housing market where builders wouldn’t build, lenders wouldn’t lend and buyers couldn’t buy,’ said Housing and Planning Minister Brandon Lewis. ‘Now numbers of first time buyers are at their highest since 2007, house building continues to climb and planning permissions are at record levels. All these measures combined are helping record numbers of people into a new home, including 73,000 households benefiting from Help to Buy and we will keep striving to get that total even higher,’ he added. Continue reading
