Residential Property Review – June 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.

Record high seen for £1million plus house sales

Recent Land Registry figures state that despite a small decline in the number of £1million plus houses sold in the UK in the first half of 2017, the second half saw a rebound. This culminated in a 5% increase in sales to 14,474 in 2017, a record high compared with 13,748 seen in 2016. This compares with only 7,862 £1 million plus house sales, recorded in 2012.

Whilst London remains the location that represents 60% of £1million plus house sales, other areas across the country were represented in the data. Eighteen local authorities outside the capital reported such sales, including Elmbridge in Surrey, Windsor, Maidenhead, the Chilterns, and South Bucks.

Louise Santaana of Lloyds, who analysed the Land Registry figures, stated: “As always, the highest number of transactions took place in the capital last year, however growth in London has started to slow for million pound properties. Overseas investors represent a good share of this end of the London market and some may be holding off buying, pending further clarity over Brexit.

Value of Scottish housing market rises to more than £160bn in last decade

A recent report from Registers of Scotland (RoS) states that the total value of the residential housing market in Scotland was £161.3bn in the period spanning 2007-8 to 2017-18.

Amongst their findings, RoS revealed that residential sales registered with a mortgage declined from 84.5% in 2007-8, to 68.3% in 2017-18. Another key finding from the report states that with 11,969 sales transactions reported, new-build property represented 11.7% of all-Scotland sales in 2017-18.

Kenny Crawford, the Business Development and Information Director of RoS, said: “The Scottish property market is a significant component of the Scottish economy. Overall, house prices remained relatively stable until 2012-13, but have been generally increasing since then.

He went on to add: “However, volumes in 2017-18 were the highest since 2007-8 and have been increasing year on year from the recent low of 70,507 in 2011-12

NHBC Foundation and Savills investigate new-build buyers’ preferences

The old adage ‘location, location, location’ being the primary driver for house purchase decision making has been challenged by a joint report from the National House Building Council and estate agents Savills.

Whilst location remains a major factor, other priorities have been identified as being of greater importance for new-build buyers. The top seven priorities for first-time buyers identified by the report, in order of preference, are Help to Buy availability, minimum maintenance, new home warranty, off-street parking, location, living space and neighbourhood. For first-time buyers, the top five amenities to be located near are; a bus stop, tube / tram / train links, convenience store, supermarket and local NHS services. Upsizers are more focused on education, with proximity to primary and secondary schools, ranking among their top five important amenities to be near when selecting a new-build home.

With Help to Buy a priority, this clearly outlines how rapidly the policy has impacted the housing market.

 

HOUSE PRICES HEADLINE STATISTICS

HOUSE PRICE INDEX (APR 2018)* 119.0*
AVERAGE HOUSE PRICE £226,906
MONTHLY CHANGE 1.2%
ANNUAL CHANGE 3.9%
*(Jan 2015= 100)

  • UK house prices rose by 3.9% in the year to April 2018
  • London was the slowest growing region at 1%
  • The South West was the fastest growing region with an annual growth rate of 6.1%

 

HOUSE PRICES PRICE CHANGE BY REGION

Region   Monthly Change (%) Annual Change (%) Average Price (£)
England   1.1 3.7 £243,639
Northern Ireland
(Quarter 1 – 2018)
  0.3 4.2 £130,026
Scotland   2.5 5.6 £148,952
Wales   1.6 4.4 £156,495
East Midlands   1.3 4.8 £184,480
East of England   -0.8 2.5 £286,447
London   2.4 1.0 £484,584
North East   4.2 4.5 £130,489
North West   0.0 2.4 £155,868
South East   0.9 3.5 £324,530
South West   1.8 6.1 £255,207
West Midlands Region   0.8 5.9 £192,090
Yorkshire & The Humber   1.4 3.5 £158,545
Source: The Land Registry
Release date: 13/06/2018 Next date release: 18/07/2018

 

AVERAGE MONTHLY PRICE BY PROPERTY TYPE – APR 2018

PROPERTY TYPE ANNUAL INCREASE
DETACHED
£342,154
(3.8%)
SEMI-DETACHED 
£214,717
(5.3%)
TERRACED
£184,304
(4.7%)
FLAT / MAISONETTE
£202,052
(1.0%)

Source: The Land Registry
Release date: 13/06/2018

Contains HM Land Registry data © Crown copyright and database right 2017. This data is licensed under the Open Government Licence v3.0.

MORTGAGE ACTIVITY

  • There were 26,700 new first-time buyer mortgages completed in the month, 3.5% higher than April 2017
  • The number of first-time buyers has grown year on year, outstripping the number of homemovers
  • There were 5,000 new buy-to-let house purchase mortgages completed in the month, 5.7% fewer than April 2017

Source: UK Finance (formerly Council of Mortgage Lenders)
Release date: 25/05/2018

Residential Property Review – May 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.

 

Highest number of vacant houses in England for decade

The UK government’s ‘Ministry of Housing, Communities and Local Government’ has revealed that the number of vacant residential properties across England has risen for the first time in a decade, by 2.6% in 2017 to 205,293. This figure represents 0.9% of the housing stock available across the country; according to estate agent Savills.

Regionally, London appears to be the hotspot, with 20,237 properties being left empty long-term in 2017, followed by Birmingham with 4,280 and Bradford with 3,931.

The Chief Executive of estate agent ‘HouseSimple’, Sam Mitchell, said that having empty housing stock on this scale, in a country suffering a supply crisis “…is a situation that needs to be addressed urgently.


Help needed to shop around for cheaper mortgage deals

The City regulator, the Financial Conduct Authority (FCA) has stated that, with over 80% of the UK’s household liabilities comprising mortgage debt, it should be made easier for mortgage owners to shop around for lower-priced deals, particularly as the Bank of England is signalling a rise in interest rates in the near future.

Whilst the FCA acknowledges that competition in the mortgage market is currently “working well” for many people, it hopes that lenders may make their lending criteria available to other market lenders and that it should be made easier for borrowers to be able to compare mortgage brokers’ offerings.


The Executive Director of Strategy and Competition at the FCA, Christopher Woolard was quoted as saying: “For many the market is working well with high levels of consumer engagement. However, we believe that things could work better with more innovative tools to help consumers.”

Construction of luxury flats in central London falls in 2017

According to London Residential Research (LRR) and the highend estate agents London Central Portfolio (LCP), starts for new-build luxury flats in central London fell by 25.4% in 2017, compared with the previous year. LRR report that seven of the eleven inner London boroughs covered by its research saw declines; with Southwark seeing a 62% fall – despite the major development at Elephant & Castle – whilst Wandsworth also saw a decline of 42%. Altogether, the inner London boroughs have seen a fall of 3,810 new-build units being constructed.

LCP’s Chief Executive, Naomi Heaton, commented on this data: there was “a huge oversupply of over-commoditised new-build boxes” in London. “An awful lot of what was built was generic and overpriced and they struggled to sell It.

 

HOUSE PRICES HEADLINE STATISTICS

HOUSE PRICE INDEX (MAR 2018)* 117.6*
AVERAGE HOUSE PRICE £224,144
MONTHLY CHANGE -0.2%
ANNUAL CHANGE 4.2%
*(Jan 2015= 100)

  • UK house prices grew by 4.2% in the year to March 2018
  • Scotland showed the highest annual growth at 6.7%
  • The second fastest growing region was the East of England at 5.8%

 

HOUSE PRICES PRICE CHANGE BY REGION

Region   Monthly Change (%) Annual Change (%) Average Price (£)
England   -0.3 4.0 £240,949
Northern Ireland
(Quarter 1 – 2018)
  0.3 4.2 £130,026
Scotland   0.5 6.7 £146,009
Wales   -0.1 3.5 £152,999
East Midlands   -0.6 5.6 £184,736
East of England   1.0 5.8 £291,415
London   -0.9 -0.7 £471,944
North East   -1.5 2.1 £124,381
North West   -0.3 5.2 £157,461
South East   -0.2 3.3 £320,682
South West   -0.3 4.9 £249,839
West Midlands Region   -0.8 5.1 £188,697
Yorkshire & The Humber   -0.3 3.7 £155,251
Source: The Land Registry
Release date: 23/05/2018 Next date release: 13/06/2018

 

AVERAGE MONTHLY PRICE BY PROPERTY TYPE – MARCH 2018

PROPERTY TYPE ANNUAL INCREASE
DETACHED
£342,722
(5.3%)
SEMI-DETACHED 
£210,283
(4.6%)
TERRACED
£180,941
(4.6%)
FLAT / MAISONETTE
£200,157
(2.0%)

Source: The Land Registry
Release date: 23/05/2018

Contains HM Land Registry data © Crown copyright and database right 2017. This data is licensed under the Open Government Licence v3.0.

 

MORTGAGE ACTIVITY

Gross mortgage lending in March is estimated to have been £20.5bn

  • This is 2.3% lower than one year earlier

Source: UK Finance (formerly Council of Mortgage Lenders)
Release date: 26/04/2018

Are first-time buyers still underestimating the importance of a broker?

 “First-time buyers may not necessarily be factoring in support from brokers early on in their home buying journey”

Just 28% of potential first-time buyers plan to finance their property with a mortgage arranged by a broker, according to a survey by Yorkshire Building Society.

The research found that aspiring first-time buyers are underestimating the importance of a broker when they start their house-hunt.

However, of those who have purchased their first property within the last 12 months, almost half (47%) said they eventually turned to a broker for help with their mortgage.

Findings from the report also indicate almost a third (32%) of potential first-time homeowners would aim for a detached house as their first property and nearly half (49%) would consider a semi-detached house. Less than a quarter (24%) would be happy to settle for a studio or flat.

The findings also revealed how important purchasing a first home is to potential borrowers, with nearly two in five (39%) saying it is more important to them than any other life event, including getting married or having children.

Jeremy Duncombe, director of intermediary distribution at Accord Mortgages, said: “Buying a house is one of the biggest financial commitments someone can make in life so it’s no surprise that we see a shift in first-time borrowers turning to a broker for help in taking that important first step on to the property ladder.

“It does however highlight that first-time buyers may not necessarily be factoring in support from brokers early on in their home buying journey, perhaps because they’re unaware of how intermediaries can help. This shows there is still much opportunity for brokers to promote their services to help guide aspiring buyers to a mortgage best suited to their needs, at a potentially overwhelming time of their life.

“Our latest First-Time Buyers Report offers an insight into the world of first-time buyers and could help give brokers a better understanding of the challenges they face for example, or what they’re looking for in a property or mortgage which could help brokers when they are speaking to clients just starting out.

“From a customer point of view, it shows that an earlier conversation with a mortgage broker could help prospective first-time buyers consider their options and understand the possibilities sooner in the process.”

Article written by – Rozi Jones – Financial Reporter – http://www.financialreporter.co.uk/mortgages/are-first-time-buyers-still-underestimating-the-importance-of-a-broker.html