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UK property prices up in August despite Brexit worries
House prices in the UK increased by 0.6% in August and are now 5.6% above a year ago, according to the latest index figures to be published. This continued growth takes the average price of a home to £206,145, the data from the Nationwide shows, indicating that an expected fall due to Brexit has not yet materialised. The pick up in price growth is somewhat at odds with signs that housing market activity has slowed in recent months, according to Robert Gardner, Nationwide's chief economist, saying that this includes a softening of new buyer enquiries to the introduction of additional stamp duty on second homes in April and the uncertainty surrounding the EU referendum. Meanwhile, the number of mortgages approved for house purchase fell to an 18 month low in July. ‘However, the decline in demand appears to have been matched by weakness on the supply side of the market. Surveyors report that instructions to sell have also declined and the stock of properties on the market remains close to 30 year lows,’ Gardner explained. ‘This helps to explain why the pace of house price growth has remained broadly stable. What happens next on the demand side will be determined, to a large extent, by the outlook for the labour market and confidence amongst prospective buyers,’ he pointed out. He believes that it is encouraging that the unemployment rate remained at a 10 year low in the three months to June, though labour market trends tend to lag developments in the wider economy and it is also positive that retail sales increased at a healthy rate in July, up almost 6% compared to the previous year, even though consumer confidence fell sharply during the month. ‘However, business surveys suggest that the manufacturing, services and construction sectors all slowed sharply in July, and, if sustained, this is likely to have a negative impact on the labour market and household confidence,’ he said. ‘Most forecasters, including the Bank of England, expect the economy to show little growth over the remainder of the year. Indeed, these concerns prompted the Bank’s Monetary Policy Committee (MPC) to implement a range of stimulus measures at the start of August, which will provide support to economic activity and the housing market. Monetary policy measures will provide some support for households and the housing market,’ Gardner commented. ‘The MPC’s decision to lower UK interest rates from 0.5% to a new low of 0.25% will provide an immediate benefit to many mortgage borrowers, though for most the boost will be fairly modest. The MPC’s stimulus measures will also provide indirect support to the housing market, and not just by boosting wider economic activity,’ he added. According to Nicholas Finn, executive director of Garrington Property Finders, the data reveals a property market that is still unsettled rather than upbeat. ‘On the front line we’re seeing some strong intent but a lack of clarity among buyers. The cut in interest rates and resilient… Continue reading
Remortgaging in UK reached eight year high in July
Monthly gross remortgage lending in the UK was at its highest level for almost eight years in July, reaching £7.1 billion, according to the latest data to be published. Conditions for remortgaging were boosted by the decision in June to leave the European Union, says the accompanying report from outsourced property services provider LMS. This monthly figure for July is up by 27% from £5.6 billion in June and is the largest amount since October 2008 and 42% higher than July last year when £5 billion of loans were made. The number of remortgage loans also increased by 27% from 32,400 in June to 41,157 in July, the most since January 2009. The July total was up by 36% year on year. Rising house prices, declining swap rates and speculation about an imminent base rate change at the Bank of England have all contributed to a favourable outlook for the remortgage market, the report says. LMS data also shows that home owners are remortgaging more frequently and keen to capitalise on the competitive rates currently available. The term of the average loan that was remortgaged fell by 15% or nine months from five years in June to four years and three months in July, the lowest since October 2009. This was also 18% or 11 months lower than the average for July 2015. As the average remortgage loan size increased to £172,184 in July, up 9% from £157,557 in June, the average LTV also increased from 54% in June to 58% in July. LMS data suggests that more home owners are remortgaging to fund home improvements and pay off debt and this is a sign of consumer confidence, despite widespread speculation about the effects of the UK’s vote to leave the EU. The surge in remortgaging meant the total amount of housing equity withdrawn via this route in July rose 27% from £951.8 million to £1.2 billion. This was the greatest amount for more than eight years, since £1.4 billion was withdrawn in April 2008. ‘The aftermath of the UK’s vote to leave the EU has not overshadowed an environment that is ripe for remortgaging as product rates plummeted to new lows. Home owners have been quick to capitalise on this and there’s little sign that incentives to remortgage will disappear any time soon,’ said Andy Knee, chief executive of LMS. ‘People who remortgaged in July did so more frequently than they have for more than six years, no doubt to take advantage of low rates in many cases and reduce their outgoings. Feedback suggests almost two thirds remortgaged in July to take advantage of competitive rates, highlighting that significant savings are ripe for the taking,’ he explained. ‘Although there is little for home owners to fear in terms of a base rate rise over coming months, many could seek stability by remortgaging and fixing now, and we expect… Continue reading
Property prices up across most of Portugal including Lisbon and the Algarve
The average price of a home in Portugal increased by 5.4% in the second quarter of 2016 when compared to the same period last year, according to the data to be published. Property prices rose across most regions of Portugal during the quarter taking the national average to €1,187 per square meter. The data from online property information platform Idealista also shows that growth was led by gains in Lisbon where the average property rose in value by 6% year on year to an average €1,451 per square meter. It means that Lisbon still has the most expensive property in Portugal with prices in the centre up 9.1% to an average of €2,716 per square meter. Prices in the Algarve, which is popular with overseas buyers increased by 4% year on year to an average of €1,361 per square meter. The data also shows that in the north of the country prices increased by 2% to €907 per square meter an in Centro they were up by 1.9% to €948 per square meter. However property prices fell in Alentejo and Madeira, down by an average of 3.3% over the same period. But in Madeira, an archipelago in the north Atlantic that is part of Portugal, prices are the third highest at €1,102 per square meter, followed by the Alentejo at €1,101 per square meter. Continue reading
