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Are Property Price Rises Slowing?

Are Property Price Rises Slowing?

Is The UK Property Market Just Experiencing
A Seasonal Slowdown Or Is It Something Worse?

There are a lot of reports in the media attempting to suggest that the UK property market is doomed to failure, with the latest House Price Indices (HPI) published by mortgage lenders suggesting that the UK property market is slowing, however there are fears that it might be in more serious trouble.

Halifax latest figures show that property prices in the three months prior to September 2014 were 2.7% higher than in the preceding quarter but there was an average 0.6% property price rise across the UK during September, resulting in an average property price of £187,188 (GBP).

Halifax say that this is the second successive decline in the quarterly rate and predict that the annual house price growth rate has already peaked at 10% and future growth will be at a considerably slower pace. 

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UK Rental Market Remains Healthy Despite PRS Rent Falls

UK Rental Market Remains Healthy Despite PRS Rent Falls

UK Rental Market Remains Healthy Despite PRS Rent Falls

Rental price increases in many UK regions have slowed according to the latest data gathered by the latest Buy-To-Let Index conducted by LSL Property Services group.

The data showed that UK PRS rents increased by 1.5% in the 12 months to December 2013, less than half the 3.2% growth observed in 2012 and on the whole, UK PRS rents fell by 1% in December 2013, (around £8), reducing the average private rental sector rent to £745 (GBP) per calendar month.

The largest drop in PRS rental prices was observed in the South East, with rents down 2% since November 2013, rents also fell 1.9% in both London and Wales.

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Property Asking Prices Collapse In NovemberProperty Prices Rise At Fastest Rate For 6 Years…Or do they?

The asking price of property is supposed to be rising at the fastest rate for over 6 years, according to Rightmove, however, asking prices actually dropped by 2.4% during October, all but wiping out September’s 2.8% gain. This is the third dip in property prices in 2013.

UK property owners have raised the asking price for their properties by 4% compared to this time last year, marking the biggest annual rise in residential property prices since the financial crisis and property crash hit in 2007.

The average asking price that UK vendors want for residential property now averages around £246,237 (GBP), according to Rightmove, compared to £252,418 (GBP) in October.

It is worth pointing out that residential property asking prices usually fall by approximately 3% in November ahead of the festive season traditional slowdown.

So with residential property asking prices falling by just 2.4% in November suggests that the recent upturn in housing market activity will cushion the predictable seasonal drop.

Rightmove say that buyers still have a wide choice of property types to choose from as the UK property market is holding up relatively well for first-time buyers, as the number of flats and terraced properties on the market has declined more slowly than the number of detached and semi-detached properties this month.

Property prices in the East Midlands were 7.4% higher than they were in 2012, averaging £168,873 (GBP), outpacing property price rises in London.

The average asking price for a residential property in London is over three times greater than property values currently are in the East Midlands and asking prices in London have risen by 6.9% year-on-year, to reach a typical average value of £517,276 (GBP).

In fact residential property asking prices have increased across most UK regions apart from in the North, where residential property prices have dipped by 0.5% annually to average just £141,426 (GBP).

Property prices in Wales dropped by the smallest amount, down by 0.4% to reach a typical average of £165,110 (GBP), while desperate property vendors in London have dropped residential property asking prices by as much as 5% since October.

Rightmove said that traffic to its website has increased 30% in the last 12 months, a sure sign of growing demand from would-be property buyers. The property portal also said that the stock of unsold residential properties has fallen from an average of 71 per estate agency branch one year ago to 67.

Rightmove Director, Miles Shipside, said: “Estate agents expect a more buoyant 2014 as they pick up early signs of an increase in buyer interest and demand, so this side of Christmas could be the time for eager property buyers to hunt out keen property vendors and strike a deal. However, agents’ challenges differ wildly depending on local market conditions. While some are really concerned about future sales because of a lack of fresh vendors, others report vendors getting too brave too early on their asking price aspirations in less active parts of the country, potentially stifling a property market recovery before it has got going.”

The infographic below shows the increase and decreases in residential property asking prices in November 2013 compared to October.

Property Asking Prices Collapse In November

Property Asking Prices Collapse In November

Source: Rightmove.co.uk

Smaller Buy-To-Let Properties Provide The Best Rental Yields

Smaller Buy-To-Let Properties Provide The Best Rental Yields

Smaller Buy-To-Let Properties Provide

 The Best Rental Yields

A one-bedroomed rental property in Wales may not sound like the most glamourous of property investments but it could deliver the best rental returns for landlords according to a new in-depth buy-to-let report by the UK’s largest lettings agency Countrywide.

A survey of more than 50,000 Private rented sector property owners has revealed Buy-to-let landlords are getting excellent rental yields in Wales, the North of England and the Midlands from 1 and 2 bedroom rental properties.

Landlords in many parts of Wales are achieving an average 6.7% rental yield (rent measured as a percentage of the property price), beating the North of England and the Midlands, which both average a 6.5% rental yield.

These figures are substantially higher than the average 4.6% rental yield observed in parts of Central London, regarded as the red hot heart of the UK’s property market.

One and two-bedroom rental properties have seen the greatest increase in average monthly rental prices in April 2013, with a 1.4% and 1.3% month-on-month increase to £679 (GBP) and £766 (GBP), respectively.

The detailed report into buy-to-let rental returns was conducted by Countrywide, who found that average monthly rental prices in England, Scotland and Wales have continued to increase for six consecutive months to reach an average of £842 (GBP) in April 2013.

But rent increases remain below the increased cost of living, with an annual average increase of just 0.8% measured against Consumer Price Index inflation of 2.8%.

However, average monthly rents have fallen within Central London, the South East, Wales and parts of Greater London.

The biggest rental price drop of 6.3% was seen in Central London, where average monthly PRS rental prices average £2,371 (GBP), more than double the £1,106 (GBP) recorded in parts of Greater London.

Rental returns by location

 

Rental returns by location - Source: Countrywide

Rental returns by location – Source: Countrywide

 

Nick Dunning, from Countrywide, said: “With renting for longer now the norm for many people as they save for a deposit to buy their first home, we are seeing more young families looking to rent cheaper accommodation, hence the increase in demand for smaller rental properties. While prime Central London has seen the greatest fall at 6.3%, this is simply reflecting the fact that in April stock levels in prime Central London were very high compared to last year which benefited from the Olympics. As a result this April, tenants tended to view multiple properties putting in lower offers, which some landlords accepted. However, as demand picks up into the summer, and supply and demand becomes more balanced, the same property could easily rent for more in August than in April.”

Returns by property type

 

Rental returns by property type - Source: Countrywide

Rental returns by property type – Source: Countrywide

 

Source: Countrywide

2nd Consecutive monthly fall in residential property mortgage approvals

2nd Consecutive fall in residential property mortgage approvals

Mortgage approvals for UK residential property

purchases dropped in February

The Bank of England (BoE) has confirmed that residential mortgage lending fell for a second successive month in February 2013 reinforcing previously released data from the Council of Mortgage Lenders (CML) and the British Bankers Association (BBA).

The Bank of England figures show that 51,653 residential property mortgages were approved in February, the lowest number since September 2012.

The overall figure was down on the Bank’s revised figure of 54,187 mortgage approvals expected for January, and the amount of mortgage approvals for the purchase of residential properties were less than was originally predicted for February.

Economists had forecast a fall in mortgage approvals, down to 53,700, according to a panel of estimates by Bloomberg. However, the Bank of England have said that remortgage lending in February had increased by 3.8% to 26,771.

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PRS Rents have fallen back for the first time since March across most of UK, says LSL

PRS Rent falls for first time in 8 months

PRS Rent falls for first time in 8 months

Private Rented Sector (PRS) Rents fell in November 2012 for the first time in eight months, but still remain 3.4% higher than in November 2011.

The latest LSL rental survey, which measures PRS asking price rents, says that the average rent was £741 (GBP) last month.

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UK Residential Property Prices Fall At Fastest Rate For Three Years

UK Residential Property Prices Fall At Fastest Rate For Three Years

UK residential property prices have dropped at the fastest rate for three years and now UK economists are warning that the double-dip recession will push them down further.

Nationwide published figures last week showing the average value of a residential property has dropped by 2.6% since July 2011.

The news is the biggest annual fall in UK property prices since August 2009 and follows a drop in property values almost every month since December.

In July 2012 the average UK residential property lost 0.7% of its reported value.

The figures from Nationwide also reveal a slump in average property prices since the peak of the UK property market in October 2007 when average residential property values stood at £186,044 (GBP).

Today the average property value is worth £164,389 (GBP), a fall of £21,655 (GBP) which is almost the equivalent of an average UK annual wage.

Robert Gardner, chief economist at the Nationwide said “The drop is unsurprising given the disappointing performance of the wider economy”.

Official figures showed that last month the UK was still struggling with the longest economic downturn in history.

National residential property prices mirror the economic struggle in the UK with only the shortage of habitable residential properties available preventing larger price falls in many parts of the country.

Mortgage lending figures are still poor, and lenders’ reluctance to lend is being felt most keenly by first-time buyers and landlords who want to expand their property portfolios.

Nationwide refuses to predict if house prices will continue to fall, but economists have already made their own bleak forecasts, stating that UK house prices are likely to remain under pressure for the rest of the year.

Latest UK Residential Property News From The Royal Institute of Chartered Surveyors

Latest UK Residential Property News From The Royal Institute of Chartered Surveyors

Interest from potential buyers in UK residential property dropped off slightly during June 2012, with 10% more surveyors reporting a fall in new enquiries, according to the latest RICS survey.

This was also compounded by an insignificant proportion of new build residential homes hitting the market as new instructions dropped for a second successive month.

Overall activity in the UK residential property market has struggled to see any noticeable improvement since the end of the stamp duty holiday in March.

According to the latest Royal Institute of Chartered Surveyors (RICS) report, residential property supply and demand failed to turn a corner in June with newly agreed sales slowing for three consecutive months.

12% more chartered surveyors who responded to the survey across the UK reported falls rather than rises in newly agreed sales, while the average number of completed sales per surveyor over the previous three months fell fractionally to 15.5.

Residential property prices across the UK continued to fall last month, with 22% more surveyors reporting price falls rather than raises, the weakest reading since October 2011.

Regionally, London was once again the only part of the UK to report rising prices, although the pace of increase has slowed significantly since the start of the year.

Expectations for future residential property prices showed little change as a net balance of 19% more surveyors expect prices to continue to fall. However, there is optimism surrounding property transaction levels, with 11% of respondents predicting property sales to increase rather than decline.

Simon Rubinsohn, RICS Chief Economist said: “The housing market didn’t manage to turn a corner last month and activity remained in the doldrums. Fewer vendors looked to test the market and levels of buyer interest seem to have fallen back since the expiry of the stamp duty deadline earlier in the year. Although there is some positivity that the amount of sales going through is going to see an increase, it is unlikely that we will see any real movement until purchasing a property is more affordable and accessible for the likes of first time buyers.”

Online property portal, Rightmove states that it has recorded a drop in the average asking price for residential property this month, the first significant fall since January 2012.

Average UK residential property prices have fallen by 1.7%, a drop of around £4,138 (GBP),

The demand for residential property has been low due to a number of factors:

  • Euro 2012
  • The weather, deterring potential buyers from viewing properties,
  • The Olympics, for distracting people’s focus away from moving.

Righmove said that there were twice as many people trying to sell a property than those trying to buy one, with each branch of the agency having an average of 75 residential properties that they were unable to sell.

The company warned property vendors that further asking price cuts could be necessary to secure a sale.

Director of Rightmove Miles Shipside, said: “The fact that we have not seen major price falls in the UK and that many areas are not awash with ‘For Sale’ boards may lead some sellers to be over-optimistic with their pricing. New seller numbers may be down some 30% on the period prior to credit-crunch, but the numbers achieving a successful sale are down by half and average unsold stock levels are creeping up.”

The West Midlands was the only region in England and Wales where prices increased in July compared with the previous month – with asking prices up 2% to £191,121.

In contrast, residential property prices dropped most in London, compared with the previous month, with a fall of 3.6% to £460,304.

A leading mortgage lender has stated that on average UK residential property values are now 1.5% lower than a year ago. 

Average property prices in the UK slipped to £165,738 (GBP) down by 0.6% in June this year, compared with May 2012.

Robert Gardner, Nationwide Chief Economist, said: “The slightly weaker trend we’ve observed since March is unsurprising, given the difficult economic backdrop, with the UK economy dipping back into recession at the start of the year and few signs of a near-term rebound. Part of the weakness in property prices may also relate to the ending of the Stamp Duty holiday in March. However, the outlook for UK house prices remains highly uncertain.”

The perceived drop in property values is good news for property investors who negotiate directly with distressed property vendors, allowing them to ease the property owners financial burdens without breaking the bank.

Nationwide also estimate that over 200,000 First-Time Buyers (FTBs) saved around £1,800 each reaping maximum benefit from the Stamp Duty break. 

Popular property portal – Rightmove reckon first-time buyers are ‘surprisingly’ upbeat and that there are now more prospective first-time buyers than at any time over the last three years, with almost three in ten people expecting to buy property in the next 12 months.

However, the biggest concern for 33% is about raising a deposit, although this proportion is down from 42% a year ago.

Miles Shipside, director of Rightmove, said: “The results come as a welcome surprise, and hopefully, this three-year high in intending first-time buyers will come to fruition. It seems that some five years into the property market downturn, more people are beginning to get their heads and wallets around the new rules of first-time home ownership, though they still face some testing challenges.”

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