Tag Archives: investment
UK property market boosted by buy to let rush in march, official figures show
UK house prices increased by 9% in the year to March 2016, up from 7.6% in the year to February 2016, according to the latest official figures. House price annual inflation was 10.1% in England, 2.1% in Wales, 6.4% in Northern Ireland but fell by 6.1% in Scotland, taking the average price to £292,000, the data from the Office of National Statistics shows. Annual house price increases in England were driven by growth in London of 13%, followed by 12.2% in the South East and 12.1% in the East of England. However, excluding London and the South East, UK house prices increased by 5.9% in the 12 months to March 2016. The data also shows that on a seasonally adjusted basis, average house prices increased by 2.5% between February 2016 and March 2016 and prices paid by first time buyers were 9.7% higher on average than in March 2015. For owner-occupiers prices increased by 8.7% for the same period. This is the final release of the ONS House Price Index (HPI) which will be replaced by the new UK House Price Index from June 2016. Richard Snook, senior economist at PwC, explained that buy to let investors rushing to complete purchases before the 3% stamp duty charge on additional properties came into effect at the beginning of April has affected the figures. ‘This move undoubtedly drove up demand and prices in March and we would expect demand to soften over the next few months as a result. There are no signs of any Brexit related slowdown in this month’s figures, although the underlying trends are masked by the effects of the stamp duty change,’ he said. According to Rob Weaver, director of Investments at property crowdfunding platform Property Partner, the figures also show that the divide between north and south is widening while in London and the south east first time buyers are finding it harder to get on the housing ladder. ‘But with niggling doubts over the imminent EU referendum, we’re likely to see a short term dip in prices until the end of June. Then the fundamentals of strong demand and scant supply, rock bottom interest rates and healthy jobs market should reassert themselves,’ he added. Randeesh Sandhu, chief executive officer of Urban Exposure, the residential development finance provider, also believes that activity is likely to slow down in the coming months following these changes and also in the run up the EU referendum with consumers remaining cautious against the backdrop of a potential Brexit. ‘However, it is clear that demand for housing remains strong and any impact of a Brexit is likely to be a short term trend with activity returning to normal soon after any decision. Therefore a real focus needs to be given to the housing shortages the UK faces,’ he said. ‘In London, the new Mayor, Sadiq Khan, has the opportunity to inject some fresh policies to the London housing market where house prices are particularly steep. However, Sadiq’s plan… Continue reading
March saw unprecedented lending levels in UK due to buy to let rush
Home owner house purchase lending was up by 60% year on year in the UK in March but the overall lending figures were affected by a rush from buy to let buyers seeking to beat a new stamp duty surcharge. Overall on an unadjusted basis, home owners borrowed £13.8 billion and first time buyers borrowed £4.5 billion, up 32% on February and 29% on March last year, according to the latest figures from the Council of Mortgage Lenders. Home movers borrowed £9.3 billion, up 75% on February and 82% compared to a year ago while remortgage activity totalled £4.7 billion, down 2% on February but up 7% compared to a year ago. Landlords borrowed £7.1 billion, up 87% month on month and 163% year on year but CML director general Paul Smee pointed out that activity was distorted in March due to a rush to beat the introduction of changes to stamp duty on second properties in April, alongside the seasonal uptick in activity before Easter. ‘While the increases are substantial, these supercharged levels of activity are likely to be temporary and will fall back over the summer months,’ he added. Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), suggested that while activity has picked up among home movers, the leap in landlord lending makes it clear that price inflation has been fuelled by the Government’s stamp duty changes for buy to let properties and second homes, incentivising many buyers to bring their purchases forward where possible. ‘A policy move that aims to manage long term demand has therefore created short term tremors in the market and made it hard to predict how things will look when the dust settles. The Government’s hope is that first time buyers will find their prospects improved and lenders are certainly doing their bit with first time buyer lending up 29% year on year,’ he explained. ‘Continuing access to high loan to value (LTV) mortgages is an important part of this equation, and should not be frowned upon given the rigorous affordability checks in place,’ he pointed out. ‘Nevertheless, the UK needs a balanced housing market to prosper and playing politics across tenures cannot compensate for the underlying short supply of property. Added uncertainty from the upcoming EU referendum vote means the market is in urgent need of time and space to draw breath. Now is not the time to consider further tinkering under the bonnet after a rollercoaster start to the year,’ he added. According to David Whittaker, managing director of Mortgages for Business, it wasn’t just March which was exceptional. ‘The first quarter as a whole was strong as landlords reacted to tax changes. The dust will begin to settle in this part of the mortgage market through the second quarter of the year,’ he said. ‘Landlords have a new status quo and it’s not just the additional stamp duty that needs to be factored into… Continue reading
UK vote on future in EU could have major impact on housing markets
If the UK leaves the European Union there is a risk that the move could have a long last and damaging effect on the country’s residential property markets, according to a new report. It could affect current plans to build hundreds of thousands of new homes, compromise London’s position as a safe haven for property investment, but could also have positive effects for first time buyers. The report from the National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents (ARLA) compiled with the Centre for Economics and Business Research (Cebr), highlights a number of short and long term implications potentially arising from the upcoming vote. While the impact Brexit will have on migration policies is unconfirmed, imposing greater restrictions on foreign workers coming into the UK may compromise the UK’s ability to build homes with the Government having pledged to build one million new homes by 2020. It points out that construction based jobs are decreasing in popularity among UK nationals, and as 5% of current construction workers were born in other EU countries and workers from the are becoming more important than ever in filling the skills gap to boost housing stock. A leave vote could mean that in 10 years’ time there would be a severe skills shortage of construction workers, according to Mark Hayward, NAEA managing director. ‘Even if we then had planning permission, investment and materials to build more housing, we simply wouldn’t have the resource to put the bricks and mortar together. It has the potential to have a very damaging effect on the future housing market,’ he explained. But he added that a leave vote could provide first time-buyers with breathing space as demand for housing would be expected to ease off. The report also says that non EU businesses are currently attracted to the UK’s status as a gateway to the single market as it allows them to establish and grow their presence across Europe. In 2014 some 19% or £5.3 billion) of total FDI inflow into the UK came from EU sources and in 2013 some 17% of sales in London’s prime property market made to non-UK buyers were to European nationals. It suggests that in the event of Brexit, a portion of FDI would be re-directed to EU countries, freeing up housing units, particularly in London, previously purchased through FDI for British buyers. Also, if the UK does not maintain free movement of labour, the total population of the UK could decrease by 1.06 million and the report argues that with fewer people, demand will ease, making the market more accessible for first time buyers, as well as second steppers and last and last time buyers and this is will be especially apparent in London. Reduced migration would also affect the private rental sector. Currently, private renting is a more… Continue reading
