Residential Property Market Review – February 2018

Our monthly residential market review is intended to provide background to recent developments in property markets, as well as to give an indication of how some key issues could impact in the future.

First-time buyers reach a ten-year high

One of the UK’s biggest mortgage lenders, Halifax, has reported that the number of first-time buyers in the UK has reached a ten-year high at 359,000. The average deposit for these purchases has climbed by 91% over the last decade.

To put that into perspective, the average house deposit back in 2007 was £17,740, this has rocketed to £31,339 today. This can be largely attributed to the fact the average house price has risen by 21% (or £37,377) over the last ten years to £212,079.

The Halifax Managing Director, Russell Galley was quoted as saying: “This ten-year high in the number of first-time buyers shows continued healthy movement in this key area despite a shortage of homes and the ongoing challenge of saving enough of a deposit.”

Residential development land – values on the rise

In their recent Market in Minutes research paper on UK residential development land, Savills reports that residential land values have moved away from their historically benign state as land values are beginning to increase and competition for sites intensifies. This is particularly noticeable in the North of England and in Scotland. As a result of this, Savills forecast higher than average house price growth in Northern England over the next five years.

The report goes on to say that strategic land is a focus for investors and developers. Several major housebuilders are aquiring more of this strategic land, as it allows them to maintain their margins and retain greater control over their land pipelines.

At the same time medium-sized housebuilders are purchasing larger sites, with the typical build now encompassing an average of 87 plots per development, versus 72 plots seen in 2016.

Government’s new-build housing target doubtful

The Royal Institution of Chartered Surveyors (RICS) recently reported that just 12% of respondents to their survey believe that the government will be able to reach its target of 300,000 new-build homes across the UK over the next few years.

One of the main reasons cited by respondents to the survey for this perceived shortfall is the severe shortage of skilled workers and in particular, trained professionals, such as quantity surveyors.

Difficulty in finding suitable sites with the required planning consent is also seen to be a crucial problem, together with the lack of local authority infrastructure funds being made available for the necessary amenities to be put in place for such developments.

House Prices Headline statistics

HOUSE PRICE INDEX (DEC 2017)* 118.9*
Average House Price                         £226,765
Monthly Change 0.4%
Annual Change 5.2%
*(Jan 2015= 100)

·         The North East of England saw the highest monthly gain of 2.7%

·         The South East of England saw the only monthly decline (-0.5%)

·         London average house price now £484,173

House Prices Price change by region



Monthly Change (%)

Annual Change (%)

Average Price (£)

England 0.4 5.0 £243,582
Northern Ireland
(Quarter 3 – 2017)
  1.0 4.3 £130,482
Scotland   0.2 7.7 £148,783
Wales 1.0 5.4 £154,398
East Midlands   0.6 6.3 £185,694
East of England   0.2 5.2 £290,341
London   0.8 2.5 £484,173
North East   2.7 3.6 £130,838
North West   0.2 5.9 £158,370
South East   -0.5 4.2 £322,269
South West   1.0 7.5 £254,081
West Midlands Region   0.1 6.3 £191,050
Yorkshire & The Humber   0.2 2.8 £156,781
Source: The Land Registry
Release date: 13/02/2018 Next date release: 20/03/2018

UK Unemployment Figures

·         There were 32.15 million people in work

·         There were 901,000 people (not seasonally adjusted) in employment on “zero-hours contracts”

·         There were 8.77 million people aged from 16 to 64 who were economically inactive

Jobless total

Unemployment rate

Source: Office for National Statistics
Release Date: 21/02/2018

Mortgage Activity

·         2017 saw highest number of first-time-buyers in decade

·         5,300 new Buy-to-Let mortgages completed in December

·         There were 30,800 First-time-Buyers in December

Source: UK Finance (formerly Council of Mortgage Lenders)
Release date:

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.


Landlords facing higher interest rates, increased stamp duty and the phased loss of their buy-to-let tax breaks are beginning to pass on these increases to their tenants in the form of rent rises.


The tax changes were announced in 2015 by the then Chancellor, George Osborne, who saw them as a way to ‘level the playing field’, deterring buy to- let landlords from acquiring those properties that could instead be bought by first-time buyers anxious to enter the housing market.

The new tax rules mean that landlords who were able to claim mortgage tax relief worth 40% or 45% will find their relief restricted to the basic rate of 20% once the changes are fully implemented in 2020.

For the 2017–18 tax year, landlords are only able to offset 75% of their mortgage interest payments for tax purposes. This figure decreases by 25 percentage points each year until none can be accounted for in 2020–21, although a 20% tax credit will help. In addition, from April 2016, anyone purchasing an additional residential property for £40,000 or more pays a stamp duty surcharge of 3%.


Data from the Association of Residential Lettings Agents suggests that these changes are already filtering through to the lettings market. In November 2016, only 16% of agents saw landlords increasing rents, but that figure had risen to 35% by November 2017, and is widely expected to rise further over the coming months. Following the recent rise in interest rates, it’s likely that more landlords will be considering offsetting their rising costs by raising rents.

In addition, lenders have introduced more stringent vetting procedures for those landlords who own four or more mortgaged properties, and this may give rise to further changes in the dynamics of the buy-to-let market.

A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.


With the annual growth rate for UK residential properties having slowed to an estimated 1.8% at the end of 2017, this year could offer better prospects for would be first-time buyers. New data from Barclays Mortgages shows that there are some simple but effective ways of making sure you get a good deal when buying a property. Their research shows that one in five first-time buyers who bought over the last five years wish they had negotiated a better price for their property. Those who had paid more than the asking price did so to the tune of around £8,000 on average, £13,000 in London. This was largely due to fears that they would lose their purchase if they made an offer closer to the asking price.

So, the advice is to take your time. By getting an ‘agreement in principle’ from a mortgage lender, this will give sellers confidence that any deal they make with you has a good chance of going ahead.


Many estate agency websites give you access to data regarding the actual sale prices achieved for properties in the area where you are looking to buy, rather than what properties are currently on the market for. This information can help you form a realistic picture of what the property is likely to sell for, meaning you can pitch your offer accordingly.

If you find a property you are really keen on buying, get a professional survey carried out. By doing so, if there are defects that you will need to put right, the report should tell you what the cost of repairs is likely to be. If you’re still keen to proceed with your purchase, you can often use the survey findings to negotiate the price down.

In addition, as part of the mortgage process, your lender will want to carry out a mortgage valuation to ensure the value of the property will cover the amount you want to borrow. If it’s overvalued, the report will show what it’s realistically worth. Don’t forget that being a first-time buyer can mean that, from the seller’s point of view, you are a more attractive purchaser than another potentially-interested buyer who has a property they need to sell before they can proceed.


One of the big stories from the Autumn Budget was the abolition, with immediate effect, of stamp duty for first-time buyers purchasing properties worth up to £300,000. To help those in expensive areas, the first £300,000 of the cost of a maximum £500,000 purchase will be exempt from stamp duty, with the excess of up to £200,000 incurring 5% duty. This is a huge positive for all those first-time buyers saving hard to get a first foot on the housing ladder. The Scottish Government is deciding on any equivalent Land & Buildings Transaction Tax change.