Mike Smuts January 16, 2018 Uncategorized no responses

According to Rightmove it has been  busy start to 2018, visits are up by over 9% so far in January when compared to same period last year.

It was also revealed that the average price of property coming to market is up 0.7% this month, similar to the 0.6% rise at this time a year ago with a virtually identical number of properties coming to market.

Additionally, Rightmove says buyers are “still being very choosy”, as shown by the number of sales agreed in the last quarter of 2017 being lower than a year ago in all regions.

Overall, supply remains tight, with average overall stock per estate agency branch holding steady at 42 properties, the same as a year ago.

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Mike Smuts January 10, 2018 Uncategorized no responses

Latest released data from Halifax has shown that average house prices in the last three months of 2017 were 2.7% higher than the same period a year earlier

Other Key Findings

  • According to the lender, house prices between October and December remained 1.3% higher than in the previous quarter (July-September)
  • The Halifax data sets average house prices at £225,021 at the end of the year and is 2.4% higher than in January 2017 (£219,741).

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Mike Smuts January 5, 2018 Uncategorized no responses

The latest figures released by Nationwide have revealed that UK annual house price growth ended 2017 at 2.6%

Robert Gardner, Nationwide’s Chief Economist, comments: “Annual house price growth ended the year at 2.6%, within the 2-4% range that prevailed throughout 2017. This was in line with our expectations and broadly consistent with the 3- 4% annual rate of increase we expect to prevail over the long term (which is also our estimate for earnings growth in the long run).

However, this marked a modest slowdown from the 4-6% rates of house price growth recorded in 2016. Low mortgage rates and healthy employment growth continued to support demand in 2017, while supply constraints provided support for house prices. However, this was offset by mounting pressure on household incomes, which exerted an increasing drag on consumer confidence as the year progressed.

Saving for a deposit remains hard

Another key aspect of affordability is the deposit required and the time taken to save it. A 20% deposit in London is now in excess of £80,000 (based on the average first time buyer house price). This is around £30,000 higher than a decade ago. In other regions, such as the Midlands and Northern England, deposit requirements are similar to 2007, though it should be noted house prices were at or near their pre-crisis peak at this time.

It is arguably even more challenging to save for a deposit than it was a decade ago, due to falling real earnings (i.e. after taking account of inflation) and lower interest rates for savers. Based on the same incomes used for the earnings percentiles, we have estimated the number of years it would take the ‘typical buyer’ to save a 20% deposit, based on saving 15% of net income (take home pay).

In most regions, it would take around 8 years for the typical buyer (as defined above) to save for a deposit. This rises to nine years in the South East and to nearly ten years in London, even though the prospective typical buyer in the capital is in the top 10% of the income distribution.

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Mike Smuts December 28, 2017 Uncategorized no responses

According to Knight Frank data rising rents and capital values means total returns in prime central London are set improve.

Key Findings

  • Average rents in prime central London fell 2.2% year-on-year in December, which was the most modest decline recorded in 21 months.
  • Average rental values for existing homes have been falling year-on-year for more than two years due to rising supply but the pattern is now reversing.
  • A large spike in new lettings properties in the middle of last year, which followed the introduction of the additional rate of stamp duty in April 2016, was one of the factors behind the increase.
  • The other key reason has been a growing number of ‘accidental landlords’, a group of would-be vendors who are waiting for more pricing certainty before they return to the sales market.
  • The rate of new lettings properties coming onto the market has slowed. November was the first month in 2017 that recorded a year-to-date decline in the number of new lettings properties placed on the market, with a fall of 1.2%.
  • Demand remained stronger than last year, which will also underpin rental value growth. There was a 19% rise in viewings between January and November 2017 compared to 2016.
  • The number of tenancies agreed rose 14% over the same period while there were 17% more new prospective tenants registering.
  • From an investor perspective, in a world of low returns, the prime central London lettings market became a comparatively more attractive asset class in 2017.
  • The current average gross yield in prime central London is 3.2%. This is higher than the risk-free rate of a 10-year UK government bond, which was yielding approximately 1.2% in mid-December.

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Mike Smuts December 23, 2017 Uncategorized no responses

This week Knight Frank give their end of year report on the UK housing market and forecast for 2018.

Sales

“The sales market in prime central London (PCL) continues to move towards recovery mode as pricing adjusts to higher transaction costs and political uncertainty. Average prices were flat in the three months to November, which took the annual fall to -2.2%. It was the most modest rate of decline in more than a year and suggests that price declines are bottoming out.

Supply and demand indicators also underpin our view that pricing will remain relatively flat in the near-term. While the number of new prospective buyers is rising, the level of new stock coming to the market declined over the course of 2017. However, any recovery is not happening in a uniform manner. Instead, the market remains stratified and performance is linked to variables that include price bracket, the level of specification and amenity and the extent to which stamp duty rises have been priced in.

For example, properties worth £5 million-plus in PCL experienced a more rapid decline in pricing than sub-£5 million properties due to the effects of higher stamp duty. Pricing at this level is now recovering more quickly than the rest of the market, a trend we expect to continue into 2018.

Meanwhile, we expect sales volumes across prime London to remain below their historical rates in the near-term as stamp duty continues to have an impact on liquidity. Uncertainty generated by Brexit will also continue to impact sentiment, although an orderly transition period could see some pent-up demand released from 2019, which would have a positive effect on pricing.”

Lettings

“Rental values in prime central London fell 2.4% year-on-year in November, which was the most modest decline recorded since May 2016. Rental value declines are bottoming out as the rate of new supply slows down, which has been the result of fewer ‘accidental landlords’. In other words, fewer would-be vendors are opting to let their property as pricing and sales volumes stabilise in the sales market.

Other factors indicate that rates of new stock coming onto the market will decline, underpinning our forecast that rental values will move from negative to broadly flat in the near-term in prime central and outer London. First, the large spike in new stock that followed the introduction of the additional rates of stamp duty in April 2016 has been largely absorbed by the market. Second, a series of tax changes affecting landlords will cause some to re-evaluate their portfolios and act as a brake on new supply. Meanwhile, demand is likely to remain strong, particularly in the lowest and highest price brackets.”

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Mike Smuts December 13, 2017 Uncategorized no responses

NAEA Propertymark and ARLA Propertymark predictions for the rental/buying market for 2018.

ARLA Propertymark’s predictions and hopes for 2018, from David Cox, Chief Executive:

1: 59% letting agents think rent prices will rise next year, compared to just 19 per cent who predict they will decrease

2: 62% expect the supply of rental stock to fall in 2018, while 53 per cent think demand will continue to rise

3: 70% letting agents expect private rented taxes to rise further next year, as agents start altering their business models to survive in the wake of the Government’s ban on tenant fees.

David Cox, Chief Executive, ARLA Propertymark, said: “2017 was a big year for the lettings industry, and tenants felt the effects of this. Unfortunately, it looks like rising rent costs are going to continue into the New Year as agents need to be moving into a 0% fee business model by October, which will push rents up as the costs are passed through landlords and onto tenants. There is a lot of other regulation making its way through Parliament next year, which will more positively affect the rental market however –  including regulation of the industry, housing courts and longer-term tenancies. While these policies will be developed rather than implemented, they should start to affect the market as agents adapt their businesses in anticipation.

In terms of the supply of rental properties, which agents largely expect to fall, we need to remember that the minimum energy efficiency standards coming into effect in the New Year could see up to 300,000 properties being taken off the market because they don’t reach the minimum requirements. This will also – in turn – push rent costs up.

Overall, the industry is going through a seismic change and the lettings market we know today will be radically altered over the next five years. This change will be painful for agents, but we firmly believe that the industry will come out of the other end stronger, more professional and with a robust reputation among consumers.”

NAEA Propertymark’s predictions and hopes for 2018, from Mark Hayward, Chief Executive:

1: 43% of estate agents expect house prices to fall next year

2: 44% expect supply to remain the same in 2018 and 29 per cent think it will decrease. 32% per cent think demand will decrease in line with this, 46% expect it to stay the same

3: 34% expect incidences of gazumping to decrease in the New Year too, while the trend of renovating rather than moving is expected to continue as 60 per cent think more homeowners will do this.

Mark Hayward, Chief Executive, NAEA Propertymark said: “It’s been a big year for the housing market, with the Government pledging to improve the house-buying process, and stamp duty relief for FTBs coming into effect. However, looking ahead to next year, more than half of our members don’t think the FTB tax relief will have a real impact on the number of sales being made to the group.

Further, agents expect supply to remain the same but demand to grow which sounds like bad news, but if we can improve the process of buying a property, we’ll be making vast improvements to the sector which will ultimately make it easier and provide more certainty for FTBs. Our members want to see stamp duty relief rolled out nationally to all buyers, and hold out hope that housing stock will increase. This will be a case of ‘wait and see’ – the Government has made many such promises in the past which we’ve never seen translated into reality.”

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Mike Smuts December 9, 2017 Uncategorized no responses

Latest data and analysis from Halifax, house prices in the last three months (September-November) were 2.4% higher than in the previous quarter (June-August). This is the fastest price growth, on this measure, since January.

Other Key findings

  • Prices in the three months to November were 3.9% higher than in the same three months a year earlier.
  • House prices rose by 0.5% between October and November, following a 0.3% increase in October marking the fifth consecutive monthly rise.
  • The average price of £226,821 is 3.2% higher than in January (£219,741)

Russell Galley, Managing Director, Halifax Community Bank, said: “Whilst the annual rate of growth eased in November, with the first decline in this measure since July, when looking at quarterly change prices in the three months to November were marginally higher than in the preceding three months; the fourth consecutive quarterly increase..

The imbalance between supply and demand continues to support house prices, which doesn’t look like changing in the near future. Further ahead, increasing affordability issues, as price increases continue to outstrip wage growth, are likely to curb housing demand and cause price growth to ease. We do expect the Government’s first-time buyer Stamp Duty changes to provide some stimulus to demand, particularly in London and the South East where the impact is greatest.”

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Mike Smuts December 5, 2017 Uncategorized no responses

NAEA and ARLA Propertymark have analysed their sales and lettings data to reveal trends and expectations for 2018.

Sales Data Findings

  • Demand spiked in January and February at 425 house-buyers registered per branch. Demand was higher this year than in 2016, with an average of 380 prospective buyers registered per branch, compared to 365 on average over the course of last year.
  • Supply of housing peaked in February with 44 properties available to buy per branch.
  • Year on year, supply has not shifted, averaging at 39 properties available per branch in 2016 and 2017.
  • February and June saw the highest number of sales agreed, with an average of 11 per branch. In 2016, with an average of nine per branch every month, compared to eight in 2016.
  • The proportion of total sales made to first-time buyers (FTBs) on average over the year hit the lowest seen since 2013.
  • In 2017, properties were sold for less than asking price on average 77 per cent of the time – only four per cent were sold for more than the original asking price.

Mark Hayward, Chief Executive, NAEA Propertymark comments on the findings: “2017 has been a busy year for the property market, and the Budget announcement to abolish stamp duty for FTBs has given them some optimism. This year saw an average of 25 per cent of sales to FTBs, the lowest in four years. Looking to next year it will be interesting to see what impact the stamp duty change had on the market, and if it really does help FTBs get on the ladder. We still only have a limited supply of housing available and policymakers need to think about how to help others in the chain, such as second steppers and those that would downsize in order to free up more larger homes suitable for families.”

Data findings private rented sector:

  • Supply of rental properties were at their highest in January, when it stood at 193. On average in the number of properties available per branch was  188 from January – October 2017.
  • This year, the number of buy-to-let (BTL) landlords selling their properties peaked in March and April when agents reported a 33 per cent spike in the number of landlords selling up
  • In August, the number of tenants experiencing rent hikes peaked at 35 per cent, overall in 2017, 27 per cent of tenants had their rents increased compared to 26 per cent in 2016

David Cox, Chief Executive, ARLA Propertymark comments on the findings: “It was always going to be an interesting year, following the announcement of the letting agent fee ban in last November’s Autumn Statement. I think we’re starting to see a consolidation of some agencies in the industry as the fee ban looms, which could explain why the number of properties under management has increased. Landlords are becoming more selective about their property investments in light of last year’s Stamp Duty Land Tax (SDLT) changes.

Mortgage Interest Relief (MIR) is starting to bite which is why we saw an increased number of landlords selling up. It’s likely that as we move into 2018, tenants will continue to see rent increases as supply starts to reduce, demand continues apace, and legislative changes increase costs for landlords.”

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Mike Smuts November 18, 2017 Uncategorized no responses

The number of homes being created in England is still below its pre-crisis peak according to the latest government data.

Just 217,3502 more homes were created last year compared with 223,530 in 2007/8

  • Key Findings
  • New build completions were up 12% in 2016/17 on the previous year to 183,570, still way off the 200,300 seen in 2007/8.
  • Meanwhile, new homes from change of use rose 22% to 37,190, a figure that had already risen by 48% in 2015/16.
  • There were 4,927 more office-to-residential conversions in 2016/17 (up 38.4% to 17,751)
  • 600 fewer demolitions (down 5.8% to 9,820).

It was a decade ago this year that the sub-prime crisis took hold, causing the rate at which the country added new homes to tumble by 18% and 21% in 2008/9 and 2009/10 respectively, falling as low as 124,720 in 2012/13.

It wasn’t until 2013 that we started to see the rate of home creation grow with rises as high at 25% in 2014/15. Average house prices in England rose 22.9% between March 2008 and March 2017 to £231,801.

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Mike Smuts November 16, 2017 Uncategorized no responses

The research, conducted on behalf of London estate agents Keatons, ranked 40 of the UK’s biggest cities in order of house price increases since 1995

Findings

  • Prices in Inner London have increased the most 645%
  • Brighton & Hove hot 627% Average values in this seaside city currently top £350,000.
  • Bristol ranks third with a price leap of 478% – from an average of around £45,000 to more than £250,000 today.
  • Outer London ranks in fourth place (475% rise), closely followed by commuter towns Reading and Luton.

Areas with good transport links into the capital continue to be highly sought after, with Reading and Luton among the largest areas from which workers commute into London.

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