House prices to rise 25 per cent over the next five years

House prices 3Hopes 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.”

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Residential construction suffers from election blues

HousebuildingHousebuilding 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.”

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Low mortgage rates could drive lending recovery

Mortgage applicationLow 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.”

 

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House prices edge closer to £200,000 milestone

LK924The average UK house price edged up to £196,067 in May in spite of an easing in the underlying rate of growth according to the latest House Price Index from The Halifax.

Annual growth was up 8.6 per cent while quarterly growth was two per cent. However, prices were 0.1 per cent don on the previous month.

Commenting, Martin Ellis, housing economist, said: “House prices in the three months to May were two per cent higher than in the preceding three months. This measure of the underlying rate of house price growth eased for the second consecutive month, falling to its lowest since January. Annual house price growth, however, rose marginally from 8.5 per cent in April to 8.6 per cent and continues to be in the narrow range of eight to nine per cent where it has been throughout 2015 so far.”

Home sales fell in April by 3.4 per cent to 97,020. Nonetheless, sales in the three months from February to April were marginally higher (+1.3 per cent) than in the preceding three months.

However, the volume of mortgage approvals for house purchases – a leading indicator of completed house sales – increased by 9.9 per cent in April. Although approvals in the three months to April were 6.6 per cent higher than in the preceding three months (November 2014-January 2015), they were 4.3 per cent lower than in the same three months a year ago.

The stock of homes available for sale also fell further in April and is currently at its lowest level for many years. New instructions declined in April for the eighth month in the last nine, contributing to the very low levels of supply.

Martin Ellis said: “Housing supply remains extremely tight with the stock of properties available for sale currently at its lowest level for many years. At the same time, ongoing economic recovery, increasing employment, real earnings growth and very low mortgage rates are all supporting housing demand. This combination has kept annual house price inflation well above earnings growth although activity levels are subdued.

“The imbalance between supply and demand is likely to continue to push up house prices over the coming months. Looking further ahead, the increasing level of house prices in relation to earnings is expected to dampen house price growth.”

Notwithstanding stilted growth in the market there was an increase confidence among buyers. The latest Halifax Housing Market Confidence Tracker shows that the net proportion of consumers who believe the next 12 months will be a good time to buy increased from +21 in March to +26 in April.

Prices for new homes remain affordable and house builders in the region, like Larkfleet Homes, have a range of properties to suit all budgets. Find out more here.

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Over 55s drive market for semis

Larkfleet The CroftRecent research from the Legal and General insurance company identified 5.3 million under-occupied homes in the UK and notes that there are 3.3 million over 55s looking to downsize.

Paul Stanworth, managing director of Legal & General Capital, said: “The Last Time Buyer market is an overlooked sector of the residential market. Given its scale and the receptiveness of this demographic to the possibilities of downsizing, it presents a powerful tool for addressing the housing supply issues this country faces.

“By failing to target this key demographic with good value, purpose-built housing for those aged 55+, Government and industry alike are missing an important trick.”

The UK suffers from a chronic under supply of age-specific housing. Demos, among others, has noted that only 2 per cent of the UK’s housing stock is retirement property, housing just one per cent of the 14 million Britons in their 60s (compared with around 17 per cent living in retirement accommodation in the US). All too often, this leads to older people living in homes that do not suit their needs, with moves often forced by circumstance rather than being a positive choice.

House builders such as Larkfleet Homes are addressing this problem. As well as semi-detached homes in a number of its developments Larkfleet also has age-specific developments at The Croft in Bourne for example which are specifically designed for the over 55s.

The number of ‘last time buyers’ looking to downsize could explain he recent uplift in the market for semi-detached properties.

According to Land Registry figures the price of semi-detached properties rose faster than any other property type in England to the end of April.

The value of semis rose 5.6 per cent against 5.4 per cent for flats and 5.1 for detached houses.

The average value of a property was £179,817 nationally. Outside London the Eastern region led the way where prices jumped 7.8 per cent.

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New online conveyancing portal goes live

veyo logoMoving house or buying a first house and wondering where you are in the process? Once the price has been agreed and the ball starts rolling everything seems to slow down leaving the vendor and purchaser wondering what’s going on. Communication is the key to avoiding difficulties which is where a new online conveyancing platform comes in.

Veyo is a comprehensive conveyancing portal which is rolling-out across England and Wales. The joint venture between the Law Society and Mastek (UK) Ltd brings together electronically all the processes, checks and documentation prepared and undertaken by solicitors and licensed conveyancers in the sale and purchase of residential properties.

Providing a full audit trail, and operating within a secure ‘trusted community’ of users, Veyo allows professionals to better communicate with each other, home movers and other key stakeholders, to satisfy obligations more efficiently and to facilitate the conveyance of residential property through established practice protocols. In doing so, the portal ensures greater efficiency for conveyancers, provides a significant reduction to business costs in terms of time spent on each transaction, and improves client service.

Desmond Hudson, Chairman of Veyo, said: “This initial go-live of Veyo marks the start of an exciting revolution in the conveyancing market. As an industry-first it’s crucial that we roll the product out strategically and our regional, targeted approach ensures that we can build a solid foundation in which the Veyo community can grow. With the home-buying process due to become much more efficient, secure and transparent, and over 1,800 conveyancing firms in England and Wales having registered interest in using Veyo already, the company is set to transform the whole market.”

The full Veyo service includes:

  • The ability to:
    • upload search results
    • transmit and receive key documents
    • exchange contracts online via the ‘Deal Room’
  • see the progress of a chain of transactions for homebuyers, estate agents and conveyancers via the ‘Chain View’
  • communicate and interface with professionals and clients in an online environment
  • transact residential property in a secure space
  • upload HMRC information
  • directly interface with Land Registry
  • Secure audit trail
  • Inbuilt free AML searches
  • Free conveyancing Forms
  • Fully functioning CMS

Designed with industry-wide adoption in mind, a critical element of the product is that it is an inclusive service for the whole market, from volume conveyancers to sole practitioners.

Costly and slow postal mail will become virtually redundant as most of the communication between conveyancing professionals and home-movers can take place online through Veyo. Meanwhile ‘client view’ ensures greater transparency throughout the transaction and less time spent by conveyancers and estate agents answering client queries, helping to improve overall customer satisfaction.

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Sharp rise in mortgage lending

Mortgage approvals 1Mortgage approvals surged in April leaving market observers quietly confident that house prices could rise in the summer months.

The leap in approvals of 6,131 from March to April is the biggest hike in six years and stronger than forecasters predicted. The last time approvals were at this level was in February 2009.

According to Bank of England figures, in April the total number of approvals for house purchases was 68,076, up from 61,945 in March and the highest number for over a year.

Early signs are that the market is settling following pre-election jitters.

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