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Residential Property Review – November 2017

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.

Bank of England’s Base Rate increase to have “modest impact

One of the UK’s leading mortgage providers, Nationwide, believes that the recent increase in interest rates from 0.25% to 0.5%, announced by the Bank of England, following the Monetary Policy Committee’s meeting in early November, will have only a “modest impact” on most UK households, because an increasing number of homeowners are now on fixed-rate mortgages.

The Chief Economist at Nationwide, Robert Gardner, believes that the number of homeowners on variable mortgage rates and therefore those most likely to encounter higher payments, has fallen to a record low of around 40%; this is a dramatic reduction from 70% seen in 2001.

He went on to add: “Moreover, a 0.25% increase in rates is likely to have a modest impact on most borrowers who are on variable rates.

By their calculations, given the 0.25% increase in interest rates, the average borrower will see an increase in their monthly payment of just £15 a month to £665 for the mortgage, equivalent to an average annual increase of £180.

Government seeks to make home buying “faster and less stressful

Sajid Javid, the UK’s Communities Secretary, has announced a Government sponsored eight-week review of the home buying/selling industry and announced that to achieve his aim of streamlining home-buying in England and Wales he wants to “hear from the industry.” By inviting feedback from mortgage lenders, solicitors and estate agents, he intends to “help save people money and time so they can focus on what matters – finding their dream home.”

This may be a timely intervention given that there are approximately one million homes bought and sold in England each year. Of these, nearly a quarter of transactions fall through as a result of multiple factors. Of these factors, by far the most contentious practice is that of gazumping. This is where a vendor, having already accepted an offer from one prospective purchaser, then accepts a higher offer from another purchaser.

Mr Javid hopes to be able to instil confidence in the industry by investigating the viability of schemes such as lock-in agreements and speeding up the entire process of home-buying and selling.

Some UK properties remain on the market for over six months

A recent survey by on-line estate agents Housesimple.com has found that more than 12% of UK properties remain on the market for six months or more. Their survey covered 50 of the UK’s major cities.

There was remarkable disparity in some of their findings. Belfast, in Northern Ireland, has the fastest turnover rate with only 1.9% of properties remaining on the market for 6 months or longer, followed by Reading and Northampton, at 3.6% and 3% respectively. At the other extreme is Sunderland, in the North East of England, seeing 28.5% of their properties still on the market after six months.

London reported that in the City of Westminster postal district, 22.5% of properties remaining unsold after six months.

HOUSE PRICES HEADLINE STATISTICS

HOUSE PRICE INDEX (SEP 2017)* 118.7*
AVERAGE HOUSE PRICE £226,367
MONTHLY CHANGE 0.4%
ANNUAL CHANGE 5.4%
*(Jan 2015= 100)

  • An annual price increase of 5.4% which takes the average property value in the UK to £226,367
  • The main contribution to the increase in UK house prices came from England
  • London saw the lowest annual price growth with an increase of 2.5%
  • London and Scotland saw monthly price falls in September

HOUSE PRICES PRICE CHANGE BY REGION

Region   Monthly Change (%) Annual Change (%) Average Price (£)
England   0.6 5.7 £243,945
Northern Ireland
(Quarter 3 – 2017)
  3.0 6.0 £132,169
Scotland   -1.3 3.1 £144,924
Wales   0.6 5.3 £152,661
East Midlands   0.7 6.4 £184,399
East of England   0.3 5.9 £289,301
London   -0.2 2.5 £483,568
North East   0.5 4.4 £130,271
North West   2.1 7.3 £160,951
South East   0.3 5.5 £324,465
South West   0.5 6.6 £252,737
West Midlands Region   0.4 5.7 £189,038
Yorkshire & The Humber   1.0 5.6 £158,884
Source: The Land Registry
Release date: 14/11/2017 Next date release: 12/12/2017

UK UNEMPLOYMENT FIGURES

  • There were 32.06 million people in work, 14,000 fewer than for April to June 2017 but 279,000 more than for a year earlier
  • There were 8.88 million people aged from 16 to 64 who were economically inactive
Jobless total
1.42m
Unemployment rate
4.3%
Source: Office for National Statistics
Release Date: 15/11/2017

MORTGAGE ACTIVITY

  • Housing market activity has built up modest momentum since the start of the year, helped by an increase in first-time buyer numbers
  • Nearly two-thirds of September mortgage activity was carried out by High Street Banks

Source: UK Finance (formerly Council of Mortgage Lenders)
Release date:
 25/10/2017

 

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.

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