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UK Property Market Predictions For 2015

UK Property Market Predictions For 2015

What Will Happen To
The UK Property Market In 2015?

Happy New Year to all our readers, and welcome to the usual confusion over what the year ahead will bring for the UK property market.

Property prices are still predicted to rise in 2015, albeit at a much slower pace than in 2014, with economists and property experts providing forecasts ranging from 3% to 5% property price growth.

However, there are a few events that might affect the UK property market in 2015, namely the general election that will be held in May and the growing probability of Bank of England (BoE) raising the base interest rate.

Regarding the general election, it all could depend which party wins or what coalition combination is named to form the Government, after Labour recently confirmed that they would introduce a mansion tax if they come to power. Meaning that the changes to Stamp Duty that were announced in the 2014 Autumn budget would be negated if Labour win.

Less clear is what will happen with Bank of England interest rates. It had been predicted that a small rise, either by a quarter to half of a percent, was going to be introduced before the end of 2014, but that didn’t happen. Then it was going to be early 2015 but that is now also looking very unlikely.

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Bank Of Scotland Accused Of Mortgage Fraud

Bank Of Scotland Accused Of Mortgage Fraud

Northern Ireland Attorney General Accuses Bank Of Scotland Of Committing Mortgage Fraud

John Larkin QC, Northern Ireland’s Attorney General, has accused the Bank of Scotland of committing mortgage fraud in relation to the way that the bank has treated customers who fell behind on their residential property mortgages.

An earlier court hearing had previously ruled that the Bank of Scotland had unfairly re-billed some of their own customers who had fallen into arrears with their mortgage payments.

The Bank of Scotland had decided to appeal the verdict of the earlier court hearing but decided to drop that appeal on Monday morning. The Bank of Scotland then rejected Mr Larkin’s claims, saying it strongly takes issue with the allegations.

A barrister for the bank, Stephen Shaw QC, said Mr Larkin’s view of mortgage fraud was “based on a misapprehension”.

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Governor of the Bank of England thinks Northern Ireland's House Prices Are Not Keeping Pace With Rest Of UK

Governor of the Bank of England thinks Northern Ireland’s House Prices Are Not Keeping Pace With Rest Of UK

Northern Ireland House Prices Not Keeping Pace With Rest Of UK

Mr Carney told the Andrew Marr programme that “if you look at the UK as a whole, everywhere bar Northern Ireland – we are now seeing house prices begin to recover”

On Sunday 16th February, the Governor of the Bank of England, Mark Carney said in a BBC interview with Andrew Marr said that Northern Ireland is the only part of the UK where house prices are not recovering, stating: “If you look at the UK as a whole, everywhere bar Northern Ireland – we are now seeing house prices begin to recover, so it is a more generalised phenomenon”.

However, Mr Carney’s comments provoked a backlash from Northern Ireland’s finance minister Simon Hamilton who reckons that Mr Carney’s remarks were at odds with analysis carried out by Stormont’s Department of Finance and Personnel (DFP).

Mr Hamilton posted on his Twitter account, “Doesn’t tally with DFP analysis. Never thought I’d have to correct a governor of BoE!”

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Published UK Property Data For 2014 Suggests A Record Start To The Year

Published UK Property Data For 2014 Suggests A Record Start To The Year

Published UK Property Data For 2014 Suggests
A Record Start To The Year 

Confirmation that the UK’s residential property market has returned to health is the first data from Rightmove covering 2014 which suggests that the year ahead looks good for property!

The Rightmove House Price Index (HPI) of 2014 shows that property asking prices increased by 1% in January.

Property prices are traditionally subdued in the first month of the year, prices increased just 0.2% in January 2013 and have usually fallen by an average of 0.2% in the month of January over the last decade.

The number of properties coming to market and activity is also up as both estate agents and property vendors look to cash in on the increased confidence in the UK property market.

Year on year property asking prices are up 6.3%, the highest annual rate of increase since November 2007, before the onset of the UK’s credit crunch. 

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House Prices Officially Rising Across The UK

House Prices Officially Rising Across The UK

UK House Prices Rising Faster Than Inflation

The Office for National Statistics (ONS) has recorded year-on-year house price increases across the UK with property values increasing by:

  • 5.6% in England
  • 5.4% in Wales
  • 2.5% in Scotland
  • 3.3% in Northern Ireland

The increase in house prices and activity in the UK property market has been credited to an increase in first-time buyers (FTB) purchasing residential property using the Government’s Help-To-Buy scheme.

The ONS have revealed that annual house price growth outpaced the cost of living in November 2013, even after removing property market activity in London and the South East of England from the calculations, property prices were up by an average of 3.1%, compared with a 2.1% rate of inflation.

Property price increases in the UK are generally driven by market activity and price increases in London and its surrounding areas, although other regions have started to show accelerating property price increases.

Property prices in London were up by 11.6% in November 2013, compared with a year earlier, and property prices have also increased strongly across the whole of the UK according to official figures

Regional Property Price Increases

  • London: up 11.6%
  • South East: up 4.5%
  • West Midlands: up 4.4%
  • North East: up 4.2%
  • East: up 4.1%
  • Yorkshire and the Humber: up 3.2%
  • South West: up 3.1%
  • East Midlands: up 2%
  • North West: up 0.6%                           Source: ONS annual change, Nov 2013

UK regions are becoming far more buoyant and less reliant on activity in the London property market and the majority of buyers are having to look further afield than central locations to find affordable properties, creating a halo effect on property prices.

The annual increase in UK property prices in November follows on from the 5.5% rise observed in October 2013 and although the annual comparison did not show any acceleration, property prices were higher than the previous month increasing by 0.5% in November compared with October, with an average residential property valued at £248,000 (GBP).

The ONS house price index is based on mortgage completions, and is considered to be more comprehensive than House Price Indices (HPI) produced by mortgage lenders such as the Halifax and Nationwide whose figures are based on their own mortgage data.

Property Prices Increase As New Houses Built

Property Prices Increase As New Houses Built

Property Prices Increase As New Houses Built

On Tuesday, it was revealed that the Royal Institute of Chartered Surveyors (RICS), said 21% of its members had reported an increased workload during the second quarter of the year.

The poll, the most upbeat since the start of 2007, indicated that the reported recovery of the UK property market was widespread, with surveyors in almost all of the UK’s regions and industry sub-sectors becoming busier.

The best-performing regions were London and the South West, often referred to as the driving force behind the UK property market, while the worst region was Northern Ireland, the only part of the UK where RICS surveyors continue to see their workload shrink.

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UK Residential Property Prices Are Still Increasing

UK Residential Property Prices Are Still Increasing

UK residential property prices increased by between 0.3% and 0.6% in June depending on which house price index is viewed

Figures released by Nationwide and Halifax have some disparity; however, both report that residential property prices are increasing. 

Nationwide report that UK residential property is valued 1.9% higher than a year ago with the typical UK home worth £168,941 (GBP). 

Halifax report that UK residential property is 3.7% higher than in the same three months of 2012.

The data from Nationwide shows that the southern regions of England, especially London, continued to record stronger rates of property price growth and London also tops the table of property price growth in the second quarter index.

Overall the price of a typical residential property is up 1.4% compared with the same quarter in 2012.

10 of the 13 UK regions saw annual property price rises in the second quarter of 2013, however, Northern Ireland is still the worst performing region with property prices down 2.1% in the second quarter of the year.

London property prices increased by 5.2% compared with the second quarter of last year and the city has seen the greatest recovery in property prices of any region with prices now 5% above their 2007 peak at £318,214 (GBP).

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It Pays To Be A Property Owning Pensioner

It Pays To Be A Property Owning Pensioner

Pensioners property worth almost £770 Billion Pounds

It has been revealed by national newspaper, The Telegraph, that Pensioners in the UK own almost £770 Billion (GBP) worth of property outright, without any form of mortgage.

It is estimated that some 4.7 million retired property owners in the UK own their residential properties outright.

The total value of OAP property ownership has increased by £1.2 Billion (GBP) over the past three months, representing almost £770 Billion (GBP) worth of property held outright, without a mortgage.

The survey was conducted in England, Scotland and Wales by advisory firm, Key Retirement Solutions, however, the survey didn’t cover properties in Northern Ireland.

The survey revealed a two-speed property market in the UK, with London seeing a significant rise in over-65s’ property wealth, however, the value of property wealth was much lower in the neighbouring South-East region.

The average value of property owned by pensioners without any form of mortgage increased by almost £12,000 (GBP) in London, but fell by £1,570 (GBP) in the South-East, the survey found.

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UK Property Market May Be Divided But Are House Prices Still Increasing?

UK Property Market May Be Divided But Are House Prices Still Increasing?

UK Property Valuation Confusion

New data from the Office for National Statistics (ONS) has shown regional differences in the UK property market over the past year, but according to their data, there was a 2.3% increase in UK property values as a whole during the year.

Mortgage lenders have taken a different view, producing their own data suggesting that property values have fallen by a much greater amount over the same period.

UK property value changes by country

  • England – Property values up by 2.8% over the 12 months to June 2012
  • Northern Ireland – Property prices fell by 12% over 12 months
  • Wales – Property values remained unchanged over the last 12 months
  • Scotland – Property values decline by 1% over the 12 months to June 2012
    (ONS data)

According to the Office for National Statistics the overall average UK house price is approximately £231,000 (GBP), however mortgage lenders reckon that on average UK property values are an average of £164,389 (GBP).

Average UK property prices by country

  • England – £240,000 (GBP)
  • Northern Ireland – £131,000 (GBP)
  • Wales – £154,000 (GBP)
  • Scotland – £180,000 (GBP)
    (ONS data)

The variation in property prices across the UK has been effectively driven by a rise in London property values (up 6.5%) creating a knock on effect for the rest of the country. eg: Property value increases of 2.3% and 2.2% in the South West and South East of England respectively.

In Scotland the decline saw property values fall by 1% during 2011/12 with the average house value remaining at around the £180,000 mark. In Wales the property market was fairly stagnant with prices remaining at an average of £154,000.

England was the only country in the UK recording a yearly increase in property prices, with 2.8% growth in the 12 months to June 2012, while property prices in Northern Ireland dropped by almost 12% over the same time frame.

Residential property affordability is at its most favourable in almost a decade, according to the latest Lloyds TSB Affordable Cities Review.

My home town of Salford, in the North West, is the most affordable UK city with an average property price of £102,391 that is 3.81 times the average gross annual earnings.

This partly reflects a 32% fall in house prices in this part of Greater Manchester since 2008.

The average price for a home in a UK city is £173,202 equating to 5.5 times the average gross annual earnings.

This is an improvement on 5.7 times the average gross annual earnings in 2011 and is significantly below the peak of 7.2 times the average gross annual earnings observed in 2008.

10 most affordable UK cities, 2012

UK cities

Region

Price to Earnings ratio

Salford

North West

3.81

Londonderry

Northern Ireland

3.87

Bradford

Yorkshire and the Humber

3.98

Lancaster

North West

4.00

Stirling

Scotland

4.04

Belfast

Northern Ireland

4.08

Durham

North

4.08

Lisburn

Northern Ireland

4.09

Hereford

West Midlands

4.26

Birmingham

West Midlands

4.43

UK cities average

 

5.51

Sources: Lloyds Banking Group, ONS

The marked improvement in affordability in UK cities over recent years has been driven by the significant fall in residential property prices.

Since 2008, the average house price within a city has fallen by 18% (£37,403) from £210,605 in 2008 to £173,202 in 2012.

  • 7 out of the 8 most affordable cities are in Northern Ireland and the North of England.
  • Ely in the East of England is the most affordable city in the south of England (4.60).

The least affordable city in the UK is Truro in the South West where the average property price (£250,489) is nearly ten times (9.71) the average gross earnings in the area. The benefits to the quality of life associated with living in this picturesque part of Cornwall have supported residential property prices in this area for the past decade.

Oxford (8.80) is the second least affordable city, followed by Winchester (8.76). Inverness (5.97) and York (5.95) are the least affordable cities outside Southern England.

Suren Thiru, housing economist at Lloyds TSB, commented: “The improvement in housing affordability within many of our major urban conurbations has been significant during the past few years and reflects the decline in house prices over the period. There is, however, a distinct north-south divide to the locations of the most affordable UK cities. Looking forward, the marked improvement in city affordability is likely to help support demand for those able to enter the housing market. Much of this benefit, however, maybe offset by the continuing difficulties many households face in raising a deposit and uncertainty over the outlook for the UK economy.”

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