The Office for National Statistics (ONS) has reported that average house prices in the UK during October 2021 increased by 10.2% in the year to October 2021, down from 12.3% in the year to September 2021.
The average UK house price was £268,000 in October 2021, which is £24,000 higher than this time last year.
Average house prices increased over the year in England to £285,000 (9.8%), in Wales to £203,000 (15.5%), in Scotland to £181,000 (11.3%) and in Northern Ireland to £159,000 (10.7%).
London is the region with the lowest annual growth at 6.2%.
Kevin Roberts, director at Legal & General Mortgage Club, said: “Despite the end of the Stamp Duty holiday, the market seems to show little sign of cooling down. A strong labour market, as well as the prospect of locking into record low mortgage rates, have combined to keep housing activity particularly buoyant. As the Bank of England seeks to keep a lid on resurgent inflation, borrowers may well be tempted to get a foothold on the property ladder before any rate rise comes into effect.
“Whether the current level of house price growth will extend into the new year, is an uncertain matter. Although the labour market remains secure following the end of government support, inflationary pressures, exacerbated by the emergence of the new Omicron variant, may place household budgets under significant strain. Against this ever-changing backdrop, the value of advice remains paramount. Independent and experienced advisers are well-placed to help borrowers navigate a potential knock to their finances, and help customers lock into a deal that is well aligned with their unique needs.”
The average first-time buyer’s home across Britain has increased in price by approaching £9,000 a year for the past decade.
FTBs are now facing an average cost of £225,607, up from £138,973 just a decade ago according to MoveStreets.
That’s a 62 per cent increase meaning that the average first-time buyer has seen the cost of a home increase by £8,663 per year on average since 2011.
Across London, the average first-time buyer now pays £437,511 to get a foot on the ladder, a cost that has increased by £18,134 per year over the last 10 years. First-time buyers in the South East (£12,043) and the East of England (£11,206) have also seen the cost of their first home jump by more than £10,000 a year since 2011.
Even in the North East where property prices have increased at the slowest rate, the average first-time buyer house price has climbed by £3,301 per year over the last decade.
At local authority level, the largest annual increases in the cost of first-time buyer homes have been in Kensington and Chelsea (£38,459), Hackney (£30,845) and Hammersmith and Fulham (£29,648), while outside of the capital Hertsmere (£19,581), Cambridge (£18,309) and Elmbridge (£17,534) have seen some of the largest annual jumps.
Adam Kamani, chief executive of MoveStreets, says: “While we’ve come to expect that property prices are likely to climb due to the government’s failure in providing enough new affordable homes, it really does put it into perspective when looking at how much they’ve increased in the last decade.
“To think that in a single year, the average first-time buyer property will cost a further £8,663 when compared to the previous year is quite amazing and it’s a wonder so many struggle to buy in the current climate.
“Let’s not forget this is only first-time buyer properties we’re talking about here, which should essentially be the most affordable on the market in any given location.”
The average UK house price hit a new record high of £272,992 in November, says the latest index from Halifax.
This means a monthly change of 1% – the fifth month in a row that house prices have increased – and an annual growth rate of 8.2%.
Halifax also notes that the quarterly change – up by 3.4% – is the highest seen since late 2006.
In Wales specifically, yearly growth totalled 14.8%, leading to the average house price in the country pushing past £200,000 for the first time ever.
And Scotland saw significant yearly growth, too. Here, the average house price went up by 8.5%, putting the average house price at £191,140 – also a newly minted record.
The report states that since March 2020, which it deems the start of the pandemic, house prices have increased by £1,691 a month on average, a total of £33,81 so far.
Halifax managing director Russell Galley believes that a stock shortage is driving the market, with a “strong labour market and keen competition among mortgage providers keeping rates close to historic low.”
He also points out that for first-time buyers, house prices have increased by 9.1% over the year compared to 8.8% for homemovers.
“We see this across different property types too,” he says, “with double-digit annual price inflation for flats (10.8%) over the last year compared to slower gains for detached properties (6.6%).
“This could suggest the ‘race for space’ is becoming less prominent than it was earlier in the pandemic, with industry data also showing the overall number of completed transactions has fallen back since the end of the stamp duty holiday.”
On the subject of flat prices outpacing that of houses, Hargreaves Lansdown personal finance analyst Sarah Coles says: “There are a few forces at play here. The ‘fear of missing out’ plays its part.
She explains: “Once prices start to rise quickly, anyone trying to get onto the property ladder starts to feel that unless they buy soon, prices will rise out of the reach of their deposit. It means they’re asking for help – both from government schemes like the Lifetime ISA and Help to Buy equity loan, and from their families.
“The Bank of Mum and Dad have seen the value of their own home rise, so they’re more comfortable about dipping into the equity in order to find a deposit for their offspring.
“And once they have the deposit in place, rock bottom mortgage deals are a major attraction, because first timers can fix at such low rates that it makes their monthly payments manageable.”
Coles continues: “But it’s not just first timers. Some of these smaller properties are likely to be second homes and buy-to-lets.”
This is a view shared by UK Finance, which just yesterday stated that an increasing amount of equity being withdrawn peaked in June 2021 – at the same time as when house purchasing activity was at its highest.
The peak amount being withdrawn – £106,000 – “together with the timing of this peak, suggest strongly that much of this has indeed been used to fund or part-fund additional property purchases,” UK Finance comments.
Quilter mortgage expert Karen Noye says: “At this stage, two months post stamp duty holiday withdrawal, it was hoped we might finally see a downtick in house prices.
“The still rising prices demonstrates that while the scheme did have an impact on house prices, it was not the only driver. The race for space appears to still be going strong, and when combined with the current demand outweighing supply, prices are still being pushed higher.
“Interest rates will be key over the coming months, and an increase would push mortgage rates up which will likely put potential buyers off. However, the new Omicron variant may have thrown a spanner in the works of any major changes planned by the Bank of England, meaning we are unlikely to see a rate rise just yet.
“While that may be the case, rock bottom mortgage rates are likely to creep up as an interest rate rise is still anticipated, it is just a question of when.
“Those waiting out the housing market boom in hopes of lower prices will likely have to wait a while longer yet.
“Regardless of whether house prices begin to drop, the likely increase in mortgage rates will contribute further towards the unaffordability of homeownership.”
Stamp duty jumped 67% to £10.2bn in the first half of the tax year, compared to 12 months ago, according to HMRC monthly data.
It said the rise was due to the slump in the property market caused by the pandemic in the first half of last year, followed by the surge sparked by the last July’s launch of the government’s stamp duty holiday.
Last month, stamp duty on property was up a record 76% from October last year, and 25% higher from the same month in 2019.
However, HMRC says: “Comparisons against receipts in the same period last year are not representative as they were heavily impacted by the effects of the Covid-19 pandemic.”
The overall tax take from the Treasury jumped 34% to £392bn in the first half of the current tax year between April and October, with higher receipts from a range of taxes, including the three largest revenue earners – VAT, income tax and national insurance.
The rise reflects more people leaving the government’s furlough scheme and returning to the workforce after the disruption of the pandemic.
Inheritance tax only made up £3.6bn of the tax take, but is a 20% rise on the same period a year earlier.
Hargreaves Lansdown personal finance analyst Sarah Coles says: “The enormous jump in stamp duty this tax year demonstrates the impact of the stamp duty holiday. And while the taxman may be rubbing his hands in glee, buyers are more likely to be wringing theirs.
“Tax is up a third in the first half of the tax year and stamp duty has soared by two thirds. And while the figures are distorted enormously by the impact of the pandemic, the dramatic impact of the stamp duty holiday is clear.
“It’s difficult to compare tax years, because the government brought in a set of rules to try to make it easier to manage tax bills, and another set to get us to spend more money and buy more property.
“However, we can see the enormous impact of the stamp duty holiday. It has pushed the average house price to a record high of £270,000 – up £28,000 in a year, and driven transactions higher. This year we had the busiest ever September in the property market, as buyers rushed for the final stamp duty holiday deadline.
“In terms of stimulating the market and generating tax, the move was clearly effective. However, if you’re trying to get onto the property ladder, or move up it, the impact is likely to be far less welcome.
“As the tax break dies away, buyers now have nothing to gain from the short-term measure, and in the process it has made the challenge of buying a home even harder.”
The challenge of selling a property that has been garishly decorated over the Christmas period is one many agents will be familiar with.
Now an industry website, GetAgent, has produced guidelines which agents may want to give to sellers to reduce the risk of ‘inappropriate’ decorations.
1. Stick to white lights – Coloured, flashing lights aren’t everyone’s preference, and whilst some like the spirit they bring, it can put people off. Avoid the bright, coloured flashing lights for your tree and for any area around and instead opt for a more tailored and sophisticated palette with white lights. This creates a more neutral, all-round aesthetic appealing to more.
2. No exterior decorations – Avoid the large inflatable decorations or reindeer on the roof. Opt for white lights again if you want some festive cheer and keep it classy with a single welcoming door wreath or holly and ivy. Less is more when it comes to exterior decorations, especially if you have a for sale sign in the garden.
3. Use festive scents – Use the smells of cinnamon and mulled wine to your advantage over Christmas viewings and try festive candles, oil burners or have something festive baking. A real tree can also add an extra homely smell to your home.
4. Don’t cover the beauty –Be mindful not to cover up any structure or feature in your home which may be of interest to potential buyers. This could be something as simple as an oak stair rail or the mantelpiece. Remember less is more.
5. Light is everything – Natural light is essential for viewings, so make sure your decorating efforts don’t block any natural light, for example your tree in the middle of a bay window. Try placing your holiday pride away from any windows, and if you must, make sure the natural light still flows in.
6. Neighbourly love – Unfortunately it’s not just your own decorations that can put buyers off, it’s your neighbours too. Neighbours are a huge part for people moving house, and to see loud and garish decorations next door could certainly put potential buyers off. If you know your neighbours well, perhaps just let them know you are trying to sell over the festive period and to be mindful of potential buyers.
The private rental sector is already attempting to improve its EPC results according to research from Shawbrook Bank.
From 2025 new rules mean rental properties with an EPC rating of D, or below, will not be able to take on new tenants.
The bank’s study found that 17 per cent of landlords had made efforts to improve the energy efficiency of their property, rising to 22 per cent of portfolio landlords with four or more buy to let units.
For example, of all the landlords that had undertaken a refurbishment, 22 per cent had replaced the boiler and heating system in their property, a further 23 per cent had replaced the windows, and 18 per cent had installed new white goods.
Making properties more energy efficient can boost demand from tenants too.
Indeed, one in 10 private renters contacted as part of the study said that they would stay in their current property longer if their landlord made changes to the property which benefit the environment.
Tenants were also happy to pay more in rent should landlords make certain changes to their property.
Some 18 per cent of tenants said they’d pay more if windows were replaced, 15 per cent would pay more for a new boiler and heating system, and 10 per cent suggested that installing solar panels would justify paying more rent.
However, for those investors who own older properties – which are typically less energy efficient – it can be harder to improve the rating. This could mean that by 2025 some properties could be ‘unrentable’ and ‘unsellable’ warns the bank.
According to data from the Ministry of Levelling Up, Housing and Communities there are close to 13m homes in England and Wales currently with an EPC rating of D or below.
John Eastgate, property finance managing director at Shawbrook Bank, comments: “For many property owners in the UK, getting their property to a C rating is going to take a lot more than simply installing a new boiler. The reality is that for older properties – some of which may be listed- it will be an expensive exercise to make the necessary changes.
“It’s welcome news that landlords are already acting ahead of the rule change in 2025 and it’s completely right that we should all be considering how to make our properties more energy efficient and environmentally friendly. Some owners, however, will need support from both lenders, and the government, to make these changes financially possible.
“Without this, we risk a substantial part of the private rental sector becoming unrentable and therefore unmortgageable and unsellable in 2025. With home ownership still out of reach for many this could leave us with a shortage of quality homes to rent.”
Original Article from Letting Agent Today 09/11/21
Over-65s saw their property wealth increase by more than £800 a month in the past six months, analysis from Key shows.
Over the past six months property owned outright by over-65s has increased in value by £24.225 billion, which is worth an average £4,833 for each older homeowners.
Their total property wealth now stands at £1.256 trillion with all parts of Great Britain benefiting apart from London, where property values fell as people looked to leave the capital and central London house prices underperformed. The biggest gains in the past six months were in Scotland and the South East with over-65s gaining more than £13,000 and nearly £12,000 respectively.
Since Key started analysing the mortgage-free property wealth of the over-65s in 2010 homeowners have seen growth of 61% – a total of more than £476 billion which is equivalent to around £95,000 per household over the past 11 years.
Over-65s have not seen the same boost to their incomes as they have seen to the value of their homes. Most recent Government data shows average pensioner incomes after housing costs only rising £12 to £331 per week – the equivalent of 3.7% – over the last 11 years. Pensioner couples have average incomes of £482 which is 6.8% higher than 11 years ago while single pensioners’ average incomes are 4.5% higher at £231.
Will Hale, CEO at Key, said: “The recent end of the stamp duty holiday may cool the property market somewhat but over-65s homeowners will continue to have a substantial amount of wealth tied up in their houses. This wealth can be accessed through products such as equity release and be used by older homeowners to address financial needs and wants through later life.
“The 61% rise in the property wealth of over-65s over the past 11 years dwarfs single digit increases in average pensioner incomes over that period and underlines the case for advisers and customers considering all assets when looking at financial planning at and through retirement.
“Equity release customers are increasingly using plans for a wide variety of purposes including securing their own retirement finances while also gifting money to family to help them on to the property ladder. Today’s modern equity release plans enable people to manage their borrowing in a flexible way and therefore to meet both needs and wants as their circumstances change through later life.”
Savills says an increase in the number of new builds bought for buy to let and other property investment will help developers recover from the demise of the Help To Buy scheme.
However, there may be a difficulty with the constriction industry being able to meet demand from investors and others.
Emily Williams, associate director of research at the agency, comments: “Despite the upcoming end of Help to Buy, there remains considerable appetite for new homes, and we expect delivery of affordable and private rental stock to expand to fill the gap left by Help to Buy.
“But the ability of developers and investors to build new homes is currently being limited by a lack of suitable consented land. There needs to be a continued effort to deliver more consents in high demand areas.”
Savills, in its latest housing market forecast, predicts that housebuilding volumes will not recover to pre-pandemic volumes until 2016 and even then delivery will be 60,000 below the government’s 300,000 homes per year target.
Delivery peaked in 2019/20 at 220,000 homes and fell to 190,000 in 2020/21. Volumes are expected to sink to 180,000 in 2021/2 and only recover 2019/20 volumes in 2026.
Starts slowed due to Covid but were already falling pre-pandemic, in part because housebuilders began to anticipate the end of Help to Buy, often shifting focus to smaller sites deliverable before the end of the scheme.
Also, sites gaining permission have been skewed to lower demand markets, with supply highly constrained in high demand locations. Renewed government commitment to delivering more homes in the north of the country suggests this is unlikely to change, the agency suggests.
Savills says: “Build to Rent is the only part of the private housebuilding market we expect to be significantly bigger in 2025/26 compared to 2019/20.
“Delivery rose from 7,000 to 14,000 between 2016/17 and 2019/20. A further doubling would give us an expected 30,000 homes within five years, equivalent to 14 per cent of all new homes completed in 2025/6. There may be opportunities for the sector to expand further, certainly tenant demand is not lacking.”
Original Article from Letting Agent Today 19/10/21
Tenant demand continues to rise and is now way beyond the long term average according to the latest market snapshot by the Royal Institution of Chartered Surveyors.
The snapshot is a sentiment survey, and the latest released this week shows a net balance of 62 per cent of surveyors reporting increasing tenant demand.
This is in line with figures seen over the past four months, RICS says, but is far beyond the long run average of 19 per cent.
“At the same time, the series on landlord instructions remains very much negative (as it has done in each month since July 2020) returning a net balance of minus 21 per cent” says RICS.
Rents are rising as a result and at the national level, some 55 per cent of respondents to the survey expected rents to rise further in the near future, with growth expected in every region.
In London, rents are now seen rising by approximately two per cent a year – RICS says this marks “a significant turnaround relative to six months ago, when rental projections were in negative territory.”
On the sales side, the market has cooled slightly following the end of the stamp duty holiday. But a continuing lack of supply is keeping the market buoyant.
Original Article from Letting Agent Today 15/10/21
Most people are willing to pay a ‘certainty premium’ of £1,200 per year for a long-term guarantee of fixed mortgage repayments, according to new research by Kensington Mortgages.
In a survey of more than 2,000 renters and 2,000 homeowners, 83% would consider a long-term fixed-rate mortgage over a short-term if it provided greater certainty of mortgage repayments.
Kensington said that there is, however, is a general lack of awareness around long-term fixed rate mortgages. While there are several long-term fixed-rate mortgages available on the market – ranging from five to 40 years, 26% of renters and homeowners believe the longest fixed-term rate available is between two and five years. 12% believe the longest is up to 40 years and 16% do not know at all.
The new study also reveals that most homeowners are unaware that long-term fixed rate mortgages can improve affordability. If homeowners were to buy again, 75% would choose a long-term fixed rate mortgage if it increased their chances of borrowing more and are able to buy a bigger home.
While 59% of homeowners surveyed are on a fixed rate product, 68% do not have a fixed-rate mortgage that exceeds five years.
Affordability is an issue first-time buyers and renters in particular struggle with when trying to buy; 25% of renters who attempted to purchase a home in the last five years were unsuccessful and of these, 23% did not pass affordability checks and 25% could not borrow as much as they needed. Yet many are eager to step onto the property ladder – 70% of renters would consider a long-term fixed-rate mortgage if it meant they could afford to buy instead of rent. Even three-quarters of homeowners (75%) would consider one next time if it allowed them to borrow more and buy a bigger home.
Despite the benefits, some general reservations are shared by renters and homeowners. The main reasons for wariness are: if interest rates in the wider market decrease and the borrower is locked in and unable to move the product elsewhere (33%), personal circumstances changing within the term (30%) and having to pay fees if moving home (26%).
However, when asked if they would still be concerned about these issues if there was a long-term fixed-rate product that removed these barriers, 88% would consider one.
Kensington Mortgages says it is looking to expand its product range to include a number of long-term fixed rate mortgages which will offer flexibility for borrowers looking to move or sell their home.
Vicki Harris, chief commercial officer at Kensington Mortgages, said: “While mortgage terms of 30 years or higher are the norm, our research shows that the benefits of long-term fixed-rate mortgages are less well-known.
“These products may have higher interest rates than shorter-term mortgages in the early years, but you can often borrow more and they reduce the risk of being unable to remortgage, if any financial circumstances take a turn for the worse after the mortgage is taken out. It also acts as a protection against any future interest rate rises.
“For some, it could be the only way to afford a property. And for those who are struggling to step onto the property ladder, speaking to a mortgage adviser about these products could be a serious alternative if they haven’t already been considered. That’s why we’re soon launching our own long-term fixed product range to help give borrowers even more choice and flexibility.”