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House price growth has slowed by four per cent in April according to the latest government figures.
Data from the Office of National Statistics has shown that house price growth in April stood at 5.5 per cent, down from 9.6 per cent in March. According to the ONS, the pace of annual house price growth fell across the majority of the UK in April 2015.
House price annual inflation was 5.8 per cent in England, 1.3 per cent in Wales, 2.2 per cent in Scotland and 8.8 per cent in Northern Ireland.
However, the Eastern region is still leading the way in terms of price growth. Annual house price increases in England were driven by an annual increase in the East (9.6 per cent) and the South East (8.4 per cent) the ONS said.
Excluding London and the South East, UK house prices increased by 5.0 per cent in the 12 months to April 2015, but on a seasonally adjusted basis, average house prices fell by 1.3 per cent between March and April 2015.
First time buyers are still being disadvantaged in the pricing stakes. In April 2015, prices paid by first-time buyers were 5.8 per cent higher on average than in April 2014. For owner-occupiers (existing owners), prices increased by 5.4 per cent for the same period.
The average price paid for a house by a first-time buyer was £209,000.
The average price for properties bought by former owner-occupiers (existing owners) increased by 5.4 per cent in the year to April 2015, down from an increase of 10.3 per cent in March 2015. In April 2015, the average price paid for a house by a former owner-occupier was £314,000.
During the year to April 2015, prices paid for new dwellings increased by 9.0 per cent on average, compared with an increase of 13.6 per cent in the year to March 2015. According to the ONS, the average UK house price for new dwellings in April 2015 was £270,000.
The average UK house price for pre-owned dwellings in April 2015 was £272,000.
So it makes sound economic sense to look for a new home from house builders such as Larkfleet Homes, which has a number of developments in the region to suit all price ranges.
When it comes to impressions of the housing market a report from the Halifax has found a wide disconnect between prospective first-time buyers and their parents. While just 12 per cent of parents believe it is ‘virtually impossible for first-time buyers to obtain a mortgage’ this rises to 21 per cent of prospective first-time buyers.
The Generation Rent Report contains data from interviews with over 40,000 20-45 year olds built up over five years, and over 4,000 parents of 20-45 year olds over the last four years. In recent years, it has shown parents and Generation Renters were both more pessimistic about the first-time buyer market (with 21 per cent of parents and 29 per cent of prospective first-time buyers saying it was virtually impossible three years ago in 2012).
However, with improving economic conditions and an increasing number of first-time buyers since then, both parents and prospective first-time buyers have become more optimistic – although more than a fifth of Generation Renters still believe it’s virtually impossible.
Despite increased optimism from parents The Generation Rent Report also found that first-time buyers moving back in with Mum and Dad is a growing issue, and in 2015 28 per cent of parents said their children moved back to their family home, compared to 24 per cent in 2012.
Looking at how parents have supported their children in buying their first home, it becomes apparent that direct parental contributions towards the costs of a mortgage have remained steady.
While a contribution towards a deposit has remained the single largest type of contribution the numbers have remained steady. The only increase in the last four years has been those helping with the actual costs of moving house.
Almost 60 per cent of parents who own a property said they had contributed or were planning to contribute towards their child’s deposit. This compared with 24 per cent of parents who rent. Furthermore, 24 per cent of parents who own said that they were, or plan to be a guarantor on a mortgage compared with just seven per cent of parents who rent.
As parental help is evidently more important for the people who want to get on the property ladder, it is interesting to note that parents who own their own home are more likely to help their children than those who rent. This clearly emphasises the importance of property ownership for the prosperity of future generations.
Craig McKinlay, mortgage director at the Halifax, said: “The Generation Rent Report shows a clear divide between parents and their children as regards optimism over getting on the housing ladder. In reality there are more mortgages available which require a 5 per cent deposit and first-time buyer numbers are increasing. But whether it is giving their children a cash lump sum or providing a roof over their heads while they save, it is clear the bank of mum and dad will have a role to play in helping their children get on the property ladder for the foreseeable future.”
There is a lot of help available to first time buyers in the Eastern region from developers such as Larkfleet Homes. The firm has a range of affordable properties in most of its developments in the region that are targeted to first time buyers. They also offer properties via schemes such as Help to Buy so it is worth going along to visit a show home or contacting Larkfleet via its website for more details.
The amount of money first time buyers have to pay from their incomes to service their home loans is at its lowest ever level according to data from the Council for Mortgage Lenders (CML).
First-time buyer loan sizes have increased since a year ago, though their income has grown faster in proportion relative to loan sizes which has meant a fall in the typical loan-to-income ratio. Loan-to-value ratios have also fallen compared to a year ago.
The typical amount borrowed by first time buyers was £125,545. Based on an income of £39,000 the capital and interest payment as a percentage of income was 18.5 per cent, down 0.3 per cent from a month ago and down one per cent on last year.
The CML has said that competitive mortgage rates mean first-time buyers are paying less to service their mortgage than any time since it began tracking this in 2005.
Despite increased affordability lending in April was weaker compared to a year ago and first-time buyers saw a decline in lending compared to March and April last year.
Paul Smee, director general of the CML, said: “House purchase lending in April was relatively subdued compared to last year, but similar to activity in March. The economy is recovering, with employment up, earnings growing, and competitive mortgage rates, so we expect activity to continue building as the year progresses.”
The price of property coming on to the housing market has leapt to an all-time high as the stability of a surprise majority-government leads to the biggest ever rise in month of June, up three per cent (+£8,460) to £294,351.
According to property website Rightmove, six out of ten regions have set new record price highs as supply/demand imbalance continues to head north.
Election certainty has boosted buyer activity but the anticipated rise in new seller numbers has failed to materialise resulting in higher demand and tighter supply highlighting the urgency for delivery of more new-build homes, such as those being developed by Larkfleet Homes.
The unexpected political certainty has helped to fuel a post-election price surge, with new seller asking prices rising by an average of nearly £8,500 compared to the previous month. The average price of property coming to market now stands at a new record high of £294,351, boosted by a near-instantaneous uplift in buyer demand and an unforeseen post-election drop in fresh property supply.
Miles Shipside, Rightmove director and housing market analyst said: “Some buyers had been holding back in the weeks before the election, leading to some sellers suffering an unseasonal price standstill in the late spring. In particular, sentiment and prices got hit in the mooted Mansion Tax price brackets. Now the unexpected election outcome has caused a strong rebound, prompting an upturn in buyer demand and helping new seller asking prices to hit their highest ever levels.
“While would-be buyers have been able to respond quickly, many potential sellers have so far failed to come to market. This has pushed up some of the asking prices of those properties that have been marketed, meaning that buyers are faced with paying a new average record price high for the more limited choice available.”
The previous asking price record was £286,133 set in April of this year, £8,218 below this month’s record. Pre-election jitters contributed to a small fall of 0.1 per cent in Rightmove’s May index, which has made the size of the rebound in June appear somewhat more dramatic. However, while June’s three per cent rise is partly catching up on lost ground from last month’s fall, it is also a reflection of strong housing demand not being matched by suitable supply in many parts of the country.
Evidence of this is that six out of ten regions have set new record price highs this month as the supply/demand imbalance and consequent upwards price pressure continues to head further north.
As well as the four southern regions, both the East Midlands and West Midlands reached all-time price highs this month. London has seen the strongest monthly price performance, up by 5.7 per cent, aided by the higher-priced boroughs seeing more top-end owners willing to come to market now that the threat of the Mansion Tax has been removed. Indeed much of this month’s national average asking price rise is due to a strong increase at the upper end of the market.
Shipside added: “While much of the price momentum has emanated from the south where the supply/demand imbalance is more acute, the strength of demand for the right property is resulting in a record price wave rolling further north, with the Midlands also at new highs. Sentiment and momentum seem to be flowing up the housing ladder too, as early year activity at the bottom and middle is now filtering through towards the top.”
According to Rightmove, the aftermath of the previous general election in May 2010 saw a 17 per cent surge in fresh stock, and a similar increase would have been a welcome — albeit temporary — relief for the under-supplied housing market, as well as for choice-starved buyers. Instead supply has tightened further, underlining the effects of the historic lack of new build.
Miles Shipside continued: “The top end £2m plus market sector has bucked the supply shortage with an 86 per cent leap in new-to-market properties in the 30 days after the election compared to the previous 30 days. That will be of no comfort or use to the mass-market which needs more choice in the right locations at more affordable prices.”
An active second-half housing market in 2015 is expected barring any external shocks to the economy. However, it remains to be seen whether stretched buyer affordability can reach sellers’ post-poll pricing. The new government and other stakeholders now need to urgently deliver more new-build homes, to stop asking prices being pushed up further as demand continues to outstrip supply of suitable homes in many areas, including the East Midlands.
Peter Woodthorpe, director of Readings in Leicester, said: “While we’ve had even more prospective buyers come into the market after the election we haven’t seen an increase on the supply side. The demand has been strong from people looking for all types of property, from flats to large detached houses, and it’s not just in the sought after locations. Over the past year prices in the area have increased by around 10 per cent, so it’s not surprising to us that this month sees a new asking price record in the East Midlands.”
Private housebuilders such as Bourne, Lincolnshire-based Larkfleet Homes, could deliver 150,000 new homes starts a year in England by 2020 according to new research from real estate advisor Savills. This projection is based on larger housebuilders pursuing controlled growth averaging six per cent a year, with similar growth among refinanced medium-sized builders and steady output from smaller builders bolstered by custom build and self-build sector.
This level of growth is dependent on a higher number of planning consents in strong markets where sales rates can increase, but also requires continuation of demand side support such as Help to Buy beyond 2020 to prevent starts tailing off at around 2018.
Without urgent action to release more land and obtain planning consent on it England’s housing shortfall will total one million within 10 years. Britain is facing an annual shortfall of 136,000 new homes across, 100,000 of which is in England. This gap can be reduced substantially, but only by boosting the supply of development land with planning consent in high demand locations and supporting a wider range of developers and delivery models, Savills analysis suggests.
In the year to the end of March 2015, some 140,500 new homes were started in England. Savills estimates that housing starts could reach 205,000 a year by 2020, a 46 per cent uplift. But, they say, this is only achievable if sufficient consented land is made available in the right places, where market conditions can support increased volume and speed of delivery.
Permissions for almost 200,000 homes were granted in England last year, but the rate of new planning consents is not keeping pace with housebuilding in the strongest markets in and around London and in the country’s strongest employment markets. In addition, Savills found that consents in many parts of the South East and east of England are falling well below objectively assessed need.
Susan Emmett, Savills residential research director, said: “Although we have seen an increase in new homes starts over the last two years, progress could come to a halt if housebuilders are not able to replenish their supply of consented land, particularly in the high demand markets of Surrey, Hampshire, Berkshire, Cambridgeshire and parts of Suffolk.”
Savills’ research has also found that policy focus on unlocking the potential to deliver new homes outside the private housebuilder model is also vital. Housing associations, local authorities and large-scale build to rent operators have the potential to deliver a combined total of 55,000 new home starts in England by 2020, more than double current rates of delivery, Savills estimates. Increased availability of skilled labour and materials are also vital.
“Unless bold steps are taken to boost delivery of new homes, we anticipate that the accumulated shortfall in England alone could rise to around a million over the next decade,” said Emmett.
“It is vital that decision makers recognise the importance of releasing substantially more land in the right places. Without this, additional demand will inevitably lead to higher land values, a squeeze on developer margins and a choking off of volume growth.”
Hopes for a post-election supply bounce-back have failed to materialise according to the latest residential market survey from the Royal Institute of Market Surveyors (RICS). Vendor instructions have fallen for the fourth consecutive month and the average stock of houses per surveyor has also dropped by around 12 per cent since the start of 2015 the survey has found, forcing up prices as a result.
House prices rose again in May, and at a quicker pace than in April, as the stock of homes per UK surveyor fell to a record low since the data series began in January 1978, according to the survey.
While 34 per cent more surveyors saw prices rise in May (the same month in which the Nationwide Building Society estimated that the average price of a home in the UK has now climbed to £195,000), supply to the market declined for the fourth consecutive month with 19 per cent more surveyors reporting a drop in new instructions.
Despite the rise in new buyer enquiries, which increased from a net balance of 4 per cent in April to 18 per cent in May, many respondents to the survey expressed some surprise at the lack of ‘post-election bounce’ in fresh supply following the unexpectedly decisive outcome to the poll. The North West and London saw the sharpest drop in instructions compared with April. More ominously, UK-wide listings have now failed to see any meaningful growth since the middle of 2013.
Additionally, although respondents reported a slight improvement in credit conditions with higher perceived loan to value ratios on mortgages to first time buyers and existing home owners, the average number of newly agreed sales per surveyor rose only very marginally to 19 (down from 23 in May 2014 and up from 18.9 in April 2015).
At a regional/country level, unbalanced price growth continues to be particularly marked across the market. Surveyors reported the highest price growth over the last three months in the North West, Northern Ireland, East Anglia and the South West, but alongside this, London is now seeing a slight turnaround, following seven consecutive months in which the net balance for prices was in negative territory, it has now been positive for two months in succession.
RICS chief economist Simon Rubinsohn said: “There had been some hope that the removal of political uncertainty would encourage more properties onto the market but the initial indications are that this is not proving to be the case. As a result, it is hardly surprising that prices across much of the country are continuing to be squeezed higher with property set to become ever more unaffordable.
“Indeed the feedback we are getting in the survey, which points to prices at a headline rising by another 25 per cent over the next five years, suggests that there is no real confidence that the measures necessary to deliver a meaningful boost to new supply will be put in place anytime soon.”
Housebuilding suffered a setback in May as contracts awarded for new build residential units reached its lowest point of the year.
According to the latest data from Barbour ABI, a chosen provider of construction data for the Office for National Statistics (ONS) and the Government, contracts were awarded to build 8,175 new build residential units in total across the UK in May, almost 8,000 units lower than this year’s peak of 15,812 units in January.
However, the construction industry is not likely be to fazed by this recent dip in figures, as early indications has shown that residential construction has had a strong start in 2015.
Contracts were awarded to build 49,707 residential units in the first four months of the year, compared to 33,757 within the same timeframe in 2014, resulting in a 32 per cent increase.
Commenting on the figures, Michael Dall, lead economist at Barbour
ABI, said: “With much uncertainty looming around the general election last month and a hung parliament looking like the probable outcome, it seems likely that investors and housebuilders decided to wait for the outcome of the election before coming to a decision on significant housebuilding projects.
“With the election now in the distant past, and the expansion of initiatives to support first time buyers, I expect house building to bounce back in June and have a strong second half of the year.”
Low interest rates could be driving lending for house purchases toward a slow recovery the latest statistics show.
The average interest rates for home loans in the UK have fallen to their lowest level since 2007 according to the latest figures released by the Bank of England.
Data shows that the average rate was 3.01 per cent in the first quarter of this year, down from 3.26 per cent in the final three months of 2014.
The proportion of lending for house purchase in Q1 2015 was 66.2 per cent, approximately 4.8 percentage points lower than in Q4 2014. The amount of gross advances for house purchase was 3.8 per cent lower compared with Q1 2014 at £30.1 billion and this is the lowest since Q2 2013.
Lending to first time buyers decreased by 2.4 percentage points to 19.4 per cent in Q1 2015 and over the past year the value of residential loans advanced to first time buyers decreased by £0.5 billion to £8.9 billion.
The Council of Mortgage Lenders‘ April estimate for total gross lending was £16 billion, one per cent down on the previous month and four per cent lower than the £16.7 billion of lending last April.
According to the CML lending appears to be in the throes of what it terms an incipient recovery. Mohammad Jamei, CML economist, said: “Although lending in April was fractionally down on the previous month and year, this followed a stronger March. Overall, we now seem to be on the cusp of a modest lending recovery.
“Household finances are generally improving as earnings growth continues to outstrip inflation, and mortgages are being offered at extremely competitive rates. As a result, we expect to see stronger lending in future months.”
EasternNewHomeBuyer 