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Severe shortage of properties for sale pushing up asking price, says latest index
The supply of property coming onto the market in England and Wales has fallen by 8% year on year and as a result prices are set to keep rising. The latest index shows that in the East England asking prices have already risen 2.1% this year as supply is overwhelmed by demand while overall the average asking price for England and Wales is up 0.7% month on month. The date from Home.co.uk also shows that asking prices have increased in all regions except the North West and North East during the last month. And year on year asking prices are up 8.1% overall. In the East of England the supply divide is the most acute and in this region asking prices are up 12.2% year on year, meaning it has overtaken both Greater London and the South East which saw annual rises of 12% and 10.3%. The index report says that across England and Wales, prices remain on a strong rising trend and this looks set to continue as interest rates are currently on hold until at least 2017. It also points out that the total stock of property for sale remains very low, and scarcity will continue to be one of the key drivers of the 2016 property market in the UK. The second key driver is ultra-low interest rates. The number of properties entering the market is down 8% compared to a year ago. The hardest hit is the West Midlands where 17% less new stock arrived on estate agents' books this January compared to January 2015. The East of England is also in the midst of a property drought and 14% less stock was registered on agent portfolios last month. Looking to the North and Wales, the picture is very different. Only small drops in numbers of properties entering the marketplace have been observed in the North East, North West, Wales and Yorkshire. Supply in these regions remains relatively buoyant and, consequently, prices show little if any upward progress. ‘With interest rates on hold at super low levels for the foreseeable future, we are likely to witness price growth continuing to ripple out from London across the rest of the country. Lack of supply will be the key driver and, as buy to let investment continues to soak up many of the available properties, so supply will continue to dwindle,’ said Doug Shephard, Home.co.uk director. ‘The London market is now maturing and is slower and with more moderate price rises. Investment capital is now making its presence felt further afield in the East and South East where prices are leaping ahead and supply of stock for sale is crashing,’ he explained. ‘We may expect the same or a similar market dynamic to become manifest in the West Midlands, the South West and the East Midlands towards the end of the year, together with significant price growth,’ he added. ‘What is clear is that this property boom is not going away while borrowing… Continue reading
Buy to let investors pushing up property prices in UK ahead of tax change
The UK residential property market saw a modest rise in new instructions in January but despite higher supply there is still considerable demand due to buy to let investors seeking to avoid Aprils stamp duty change. The latest residential market survey from the Royal Institution of Chartered Surveyors also says that this means that the near term pressure on prices is intensifying despite a higher level of supply. Feedback to the survey continues to suggest that the recent increase in demand is due to a rush of buy to let investors looking to buy before the 3% stamp duty surcharge comes into effect in April. Some 74% of respondents expect there will be an increase in buy to let purchase as supply picked up across UK, most notably in London where the increase has been significant with a net balance of +58% more noting an increase. Elsewhere, sales instructions across the UK were much flatter. New buyer enquiries rose for the tenth successive month in January, with the pace of growth in enquiries accelerating for a second consecutive report. As activity in the housing market gathers pace overall, agreed sales have risen over the month at the fastest pace since April 2014. The picture across the UK is mixed but most areas have seen a rise in sales since the start of the year and further increases are expected. Supply has also gathered pace in the past two months but stock remains low with 46 properties per branch from 44.5, which is still 21% down compared to a year ago. Even with an improvement in supply, the rush to acquire buy to let property is pushing prices up, with 49% more surveyors reporting prices to have risen in January. Looking ahead, house prices are projected to rise further over the next 12 months, with 72% more contributors expecting prices to increase rather than fall. In the lettings market, tenant demand increased once more, with all areas of the UK seeing a rise in interest from prospective tenants during the three months to January and at the same time, landlord instructions were broadly flat. This extends an uninterrupted run in which supply has failed to keep pace with demand stretching back to 2009. As a result, expectations point to continued rental growth in all parts of the UK both at 12 month and five year time horizons, the report says. ‘How the tax changes planned for the buy to let sector over the next few years plays out remains to be seen, but there are concerns raised in the survey that existing landlords will look to either gradually scale back on their portfolios or exit the market altogether as the more penal regime begins to bite,’ said Simon Rubinsohn, RICS chief economist. ‘Against this backdrop, it is perhaps not surprising that our key indicators point to further rent, as well as house price increases. Steve Bolton, founder of Platinum Property Partners, pointed out that those investors… Continue reading
Mortgage rate savings have been significant in UK over last two years
Fixed rate mortgages in the UK fell to their lowest levels in 2015, whilst the standard variable rate remained static, meaning the potential savings for borrowers have increased. Indeed potential savings have improved significantly by 50% over the course of the past two years, according to the latest research from Halifax. The average interest rate on a new fixed rate mortgage fell a further 0.59over the past 12 months, whilst there was no change in the standard variable rate over the same period. This means that the average fixed rate now stands at 2.66% compared with the average standard variable rate of 4.49%, with the gap between the two widening by 1.81 percentage points since August 2012. As a result the amount homeowners could be saving by switching to a fixed rate deal has increased by 50% in the past two years. In November 2013, the average monthly payment of a home owner who took out a two year fixed rate on a £100,000 mortgage would have been £485. At the same time, the payment on a standard variable rate mortgage would have been £551, a monthly saving of £66. According to the research a borrower taking out a fixed rate in November 2015 would be paying £457 a month on a £100,000 loan compared with £555 on the average standard variable rate, saving of £99 a month and 50% higher than two years’ earlier. ‘With the base rate remaining at record low levels for another year, fixed rate mortgages fell further in 2015. Over the past three years average rates have fallen sharply, significantly widening the gap between them and standard variable rates. As a result, borrowers have been able to make considerable savings,’ said Craig McKinlay, mortgages director at the Halifax. ‘Whilst remortgaging activity has picked up in the last year, this is only in line with new loans. As a result, remortgage activity’s share of all lending has remained relatively subdued, especially when compared to its strength in 2008,’ he explained. ‘Without the concern of a base rate rise in the immediate future it seems borrowers’ appetite to remortgage has been dulled, meaning that some could be missing out on significant savings,’ he added. The research also shows that remortgage activity remains well below the 2008 peak. The widening gap between fixed rates and standard variable rates appears to have helped improve remortgaging’s share of all new mortgage lending from 29% in August 2012 to 32% in November 2015. However, this growth is far slower than that seen in the gap between fixed and variable rates, and demonstrates that remortgaging remains considerably below the peaks of 50% that it reached in 2008. Continue reading
