Average property prices in key UK cities up 2.1% year on year

Average property prices in key UK cities increased by 2.1% in the year to May 2019 but values vary depending on location from a rise of 5% in Liverpool to a fall of 4% in Aberdeen, the latest index shows.

Residential values also continue to fall in London and Cambridge while the rate of growth has weakened across southern England, mainly due to market fundamentals, including affordability, according to the Zoopla cities index powered by Hometrack.

After Liverpool, the next highest annual rise was 4.6% in Belfast, followed by 4.5% in Nottingham and Leicester, then 4.3% in Manchester, and 4% in Edinburgh, Birmingham and Glasgow.

After Aberdeen, there was a 0.5% fall in prices in Cambridge and a 0.4% fall in London. Prices increased by just 0.5% in Oxford and Portsmouth and by 0.8% in Southampton.

The index report also looked at the development of housing affordability for first time buyers. They are the largest group of buyers, accounting for 36% of sales. The research shows that the gross household income required by a first time buyer to buy a typical city home has increased over the last three years by £4,500, or 9%, to £54,400.

The income to buy ranges widely from a low of £26,000 in lower value cities such as Liverpool and Glasgow to a high of £84,000 in London but the income to buy across the three most expensive cities has fallen 5% since 2016. The report says that this is a result of a small fall in prices and a 0.5% decline in average mortgage rates since 2016. The income to buy in Aberdeen has fallen by 12% due to a sizable fall in average prices since 2015.

The income to buy has increased across all other cities since 2016 by as much as 20% in Leicester and 19% in Manchester. This is a result of above average house price inflation over the last three years.

Looking at the prospects for housing demand and house price growth moving ahead, it is more important to focus on the absolute income to buy, according to Richard Donnell, research and insight director at Zoopla. The data shows this remains at or below the national average in all cities outside southern England, except for Edinburgh.

‘There is a clear link between the income to buy and recent developments in house price inflation. In simple terms, the higher prices rise, the greater the income to buy and this reduces the number of potential buyers. The net result is weaker demand, fewer sales, lower price growth and, in some areas, price falls,’ said Donnell.

‘It is no surprise that housing sales have declined across southern England and price growth has weakened. Price falls are concentrated in the highest value markets across South Eastern England,’ he added.

Original Source: Property Wire https://www.propertywire.com/news/uk/average-property-prices-in-key-uk-cities-up-2-1-year-on-year/

Landlords with bigger portfolios more likely to invest further

British landlords now have an average of 13.1 properties in their portfolio, up from 12.8 properties three months ago, the latest figures show.

Those with bigger property portfolios are more likely to add to their investment than those with a fewer number of properties and investment in HMOs are rising, the research from Paragon shows.

It also shows that landlords with between 11 and 20 properties have grown as a proportion of the survey population from 14% to 18%. As a result, average portfolio values are getting higher, rising from £1.68 million in the first quarter of 2019 to an all-time high of £1.76 million.

Some 11% of larger scale landlords are likely to be considering a property purchase in the next quarter than their smaller scale counterparts of whom just 4% are considering doing so.

The number considering buying HMO property has increased sharply, up from 5% to 20% and the firm says that this indicative of higher experience levels amongst prospective buyers and that it also suggests that landlords are looking to add higher yielding properties into their portfolios perhaps to offset some of the pressure from rising tax costs.

Despite the higher activity levels among larger scale landlords, overall landlord sentiment remains subdued with only 13% of landlords feeling optimistic about the future.

Not surprisingly therefore, landlords continue to take steps to bolster their financial position with debt still barely over one third of average portfolio value and mortgage payments as a proportion of rent down from 27% to 25%.

‘Professional landlords with larger portfolios make up the backbone of the UK’s Private Rented Sector and it’s encouraging to see them continue to build their property portfolios,’ said John Heron, director of mortgages at Paragon.

‘However, with a heightened interest in higher yielding property types and an increasingly prudent approach to financial management, it’s clear that landlords are proceeding cautiously as they seek to head off the twin challenge of higher tax and growing economic uncertainty,’ he added.

Original Source Property Wire https://www.propertywire.com/news/uk/landlords-with-bigger-portfolios-more-likely-to-invest-further/

Optimism remains high among UK landlords research shows

The latest research from Cambridge & Counties Bank, has revealed that despite the seemingly never ending Brexit circus and challenging financial climate, around two thirds of UK landlords are optimistic about the outlook for the residential buy-to-let sector over the next three years.

Of this, more than one in 10 are “very” optimistic in terms of investment growth and yields.

The research highlights that a significant number of landlords are using the current market volatility to grow their portfolios: nearly a fifth (19%) are looking to grow their portfolios by a third and 11% want to double it over the next three years. The research found that just 19% of landlords are looking to sell.

Despite the strong level of optimism, Brexit remains a key uncertainty for property sector professionals with two fifths (40%) of landlords conceding that it is top of their list of concerns. Brexit is seen as a bigger risk than rising interest rates (cited by 32%), a lack of confidence in the stability of lenders (32%), and rising levels of tax (also 32%).

While the BTL sector is viewed most positively, a similar number (61%) of landlords are equally optimistic about student accommodation in terms of growth (with 16% being “very” optimistic). Office buildings and properties are viewed positively by two fifths (41%) of respondents – though almost a third are not optimistic.

In addition to growing their property portfolios, a significant number of landlords say they will be refurbishing their BTL and investment properties, with an average of £10,000 set to be spent. One in 10 (11%) of respondents to the Cambridge & Counties Bank study said they would spend more than £20,000, with 4% forecasting they would invest more than £50,000 in their estate.

As part of its property finance offering, Cambridge & Counties Bank2 provides refurbishment loans for experienced property investors, landlords and developers looking to upgrade or convert an existing property into a residential, commercial or mixed-use property for the purpose of either rental or sale.

Simon Lindley, Chief Commercial Director, Cambridge & Counties Bank, said: “In spite of Brexit worries, it is great to see that the overall outlook for the commercial property sector is one of optimism. At Cambridge & Counties Bank, we remain very much focused on supporting our clients with our comprehensive product suite and in doing so maintain our market leading level of customer satisfaction.”

One of the shocking results of the research was the growing concern among landlords with regards to the financial stability and strength of their banking partners. Just one in five (20%) said they were very confident of their lender’s stability, with 18% of landlords saying they are “not confident” in their lenders stability given recent announcements of funders going into administration or closing their books to new business.

Simon concludes: “Cambridge & Counties Bank has seen a steady stream of borrowers switching from other lenders, often recommended by the intermediaries and brokers we work closely with on a daily basis. We are actively focused on becoming the bank of choice for professional property investors and landlords, and will capitalise on the record set of results we posted for FY2018 and the momentum we have across the UK to grow our market share further.”

Price of property coming to market within a whisker of new record

Towns and cities across the country are continuing to defy ongoing Brexit uncertainty as four northern regions are seeing record price highs, new Rightmove data has shown.

The places setting new all-time price highs are the East Midlands, the North West, Wales and Yorkshire & the Humber, with these regions also outperforming the national average in terms of the number of properties coming to market and the levels of sales agreed so far in 2019.

Rightmove’s property expert Miles Shipside said: “With the country supposedly consumed by the twists and turns of Brexit, it’s surprising that the price of property coming to market is within a whisker of setting a new record.

“At £91 below June 2018’s figure of £309,439, it’s within touching distance of the previous high. More buoyant markets in the north and midlands are helping to nudge up prices due to the seemingly relentless strength of buyer demand. Buyers in four regions are seeing higher new seller asking prices on average than ever before.”

As we enter the summer market, new seller supply remains constrained throughout the UK, down by an average of 5.0% versus the same period in 2018.

The hesitancy of would-be sellers coming to market in the south means less property choice for buyers and fewer sales agreed in those regions.

Despite this, the national average for the number of sales agreed in the first half of the year is down by only 4.3% on the same period last year. The regions which have set new price records are again all selling better than the national average, with Wales 0.2% ahead of last year, Yorkshire & the Humber down by 1.9%, the North West dropping off by 3.3%, and the East Midlands down by 3.7%.

Shipside added: “The national market faces a range of challenges, with overall average asking prices barely changed from last year, and activity levels slightly lower. Some buyers are hesitant due to the long-drawn-out uncertainty of Brexit, and there is also a slight tightening of mortgage availability and stretched buyer affordability, especially when it comes to raising a deposit.

“There is however a marked north/south divide as all northern regions are selling better than those in the southern part of the UK. To sell in these more difficult locations you have to undercut the asking prices of similar properties, and preferably have a well-finished and expertly marketed home that will all combine to stir hesitant buyer interest.”

Original source: https://www.rightmove.co.uk/news/articles/property-news/price-of-property-coming-to-market-within-a-whisker-of-new-record/

UK mortgage market picks up, with downward buy to let lending trend halted

The UK mortgage market picked up in April and the cooling buy to let sector appears to be seeing a halt in its decline, the latest industry figures show.

There were 27,370 new first time buyer mortgages completed in April 2019, up 7.95 year on year, according to the data from UK Finance.

The data also shows that there were 25,450 home mover mortgages completed in April, 6.4% compared with the same month a year earlier.

There were 18,920 new remortgages with additional borrowing up 0.3% year on year and for these remortgages, the average amount taken out in April was £54,000. Additionally, 19,140 were simple pound for pound remortgages, with no additional borrowing, 6.2% fewer than in April 2018.

In total, there were 3.1% fewer residential remortgages in April 2019 than in the same month a year earlier.

There were 5,100 new buy to let house purchase mortgages completed in April 2019, the same as this time last year while there were 14,400 remortgages in the buy to let sector, the same as a year ago.

Jonathan Sealey, chief executive officer of Hope Capital believes that the home mover lending market is picking up. ‘First time buyer mortgages have seen a rise of 7.9%, but this is not a huge surprise, as it is this area of the market that has remained strong throughout what has been quite a muted period in the mortgage market,’ he said.

‘What is encouraging is that we can see that for the second month running home mover mortgages are up, marking a rise of 6.4% on a year ago. And while I wouldn’t want to suggest this is a huge shift in sentiment, it is a positive sign, and, as the summer months tend to be the busiest in terms of home purchase, this figure will likely rise further over the next few months,’ he pointed out.

‘With a steady rise over the past few years in the trend for making home improvements rather than moving, this could suggest some home owners looking to remortgage in order to add value to their homes ie for a larger equity withdrawal, are now looking to alternative funding for a more tailored service,’ he added.

According to Richard Pike, sales and marketing director of Phoebus Software, the figures are good news for the buy to let market. ‘Given the regulatory and tax changes that landlords have had to withstand, this is somewhat surprising,’ he said.

‘Although there are many investors holding fire in the commercial world, the same cannot be said for consumer confidence. And, as we head into the summer months, when historically we expect to see an uplift in the housing market, I can see the current trend continuing,’ he explained.

Simon Heawood, chief executive officer of Bricklane, pointed out that the rental market has become increasingly difficult for new and existing landlords to navigate. ‘In addition to a raft of tax penalties, the recent introduction of the Tenant Fees Act and the proposed scrapping of ‘no fault’ evictions show that the market is moving in a pro-tenant direction,’ he said.

‘Landlords will soon be expected to provide a higher standard of service and, faced with diminishing profits and an increasing workload in the buy to let market, we expect to see more and more individuals revaluating their portfolios, with many then looking at alternative routes to invest in this asset class,’ he added.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, believes that first time buyers are increasingly taking advantage of improving affordability and reduced competition from buy to let landlords reeling from previous and imminent tax and regulatory changes.

‘Help to Buy, for all its criticisms, is still proving a useful tool and we are finding that many lenders will not do business with developers unless the scheme is on offer to its customers. The good news is that major corrections in the market are unlikely and for those buyers and sellers prepared to be realistic they can take advantage of almost record low mortgage and unemployment rates, as well as shortage of stock,’ he concluded.

Original source: Property Wire https://www.propertywire.com/news/uk/uk-mortgage-market-picks-up-with-downward-buy-to-let-lending-trend-halted/

UK is fourth happiest place in Europe when it comes to satisfaction with homes

he UK has been ranked the fourth happiest place in Europe when it comes to satisfaction with our homes, according to the GoodHome Report, the largest study of its kind ever conducted.

The research, which included a survey of 13,489 people across Europe, asking them a series of questions about happiness and the home, found that the Netherlands ranks number one for satisfaction with their homes, followed by Germany in second and Denmark in third.

Poor natural light, bad air quality and a lack of space were revealed as some of main reasons Brits are not satisfied with their living situation.

The study also revealed that despite the trope of location being everything, people viewed having access to green space as more important than where they live.

The report found our homes account for 15% of our total happiness – with health and fitness scoring 14%, and what we earn just 6%.

The report was created with independent thinktank The Happiness Research Institute, who stated that whether people lived in the city or countryside, it ‘made no significant difference to happiness.’

The report also shows that whether we own or rent has little impact on our happiness.

Meik Wiking, CEO of the Happiness Research Institute, commented: “Our research shows that often we look for happiness in the wrong places. “Sometimes what we think makes us happy and what really makes us happy are not the same – the report builds on the belief that our homes shape our lives.

“They are where we find comfort and safety, where we let our guard down and connect with our loved ones.

“In a world demanding more and more of our attention, our homes are where we can retreat and seek refuge.”

Home happiness levels across Europe (score out of 10):

1. Netherlands – 7.69

2. Germany – 7.60

3. Denmark – 7.47

4. UK – 7.40

5. Spain – 7.22

6. France – 7.17

7. Romania – 7.11

8. Italy – 7.02

9. Poland – 6.92

10. Russia – 6.57

Original source: Landlord today https://www.landlordtoday.co.uk/breaking-news/2019/6/uk-ranked-forth-happiest-place-in-europe-when-it-comes-to-satisfaction-with-our-homes