The recent government released Housing White Paper fortified the  truth that supply deficiencies have been the real influencing factor of rising house prices.

The Land Registry the ONS have been doing the math and have uncovered that house prices in the UK grew by 7.2% in the year to December 2016, a 6.1% increase in the year to November 2016.

Key Findings (in the year to December 2016)

• Average UK house price in December 2016 was £220,000 – £15,000 higher than in December 2015 and £3,000 higher than the previous month.
• In the UK house prices rose the highest in England by 7.7% over the year to December 2016 (Average price in England being £236,000.
• Wales saw a 4.7% increase (average price at £148,000) and Scotland saw an price increase of 3.5% (average price at £142,000) over the last 12 months
• The East of England had the highest annual growth of 11.3%
• The second highest was the South East at 8.3%
• The third highest was London at 7.5%

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Treasury takings show stamp duty hike hasn’t stopped investors

The latest figures from the Treasury announcing the amount raised through stamp duty tax since the three per cent increase last year have instilled confidence in the buy-to-let property market, with the results suggesting that investors haven’t been deterred.

Key Findings

• The Treasury has revealed that it collected 18 per cent more stamp duty from the sale of residential property than in 2015 with
• One in five of all homes bought in the second half of 2016 being an additional property. 
• The amount of tax raised through stamp duty on second homes from June to December was £962 million, or 21 per cent of the entire stamp duty tax takings, demonstrating the proportion of the property market still influenced by buy-to-let investors.

Investors have weathered the changes, adopting approaches such as forming limited companies, acting early and buying before the increase, or simply paying the higher stamp duty rate because there was still a strong rental yield and profit to be made.

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Data released yesterday by the Office for National Statistics means that for the first time it is possible to analyse a full six months of property price data since the United Kingdom’s referendum on European Union membership.

The HomeOwners Alliance has analysed the data to see how house prices have performed in different regions of the country since the vote. Comparing changes in property values with the results of the referendum reveals some interesting patterns, and suggests there is a clear ‘Brexit effect’, with property prices performing better in areas that voted most strongly to leave the EU.

Key Findings

• The five regions which voted most strongly to leave the EU have all seen property price increases in excess of 3% compared to June 2016, with the East of England the fastest-growing region at 4.25%.
• Conversely, the only three regions which voted to remain have seen slower growth. In Scotland, the most pro-remain region, prices have dropped by 1.2% over the last six months, while London and Northern Ireland have also seen more modest growth.

Commenting on the data, Paula Higgins, Chief Executive of the HomeOwners Alliance said:

“There is a clear pattern here; areas that voted more strongly to leave the EU have seen property prices grow faster over the past six months than areas that were pro-remain. Of course, house prices are dictated by a myriad of economic, political and social factors, but confidence – the all-important ‘feel-good factor’ – is vital.

“It seems that people in regions that voted to leave are now more optimistic about their future prospects, and that this impacting on the housing market. Conversely, areas that have fared less well, such as Northern Ireland, Scotland and London, may be less certain of their economic futures.”

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A new report from the Council of Mortgage Lenders has revealed that the number of properties taken into possession last year declined by almost 25%.

According to the data, last year’s total of 7,700 cases of possession compared with 10,200 in 2015, and was the lowest number since 1982. Over the course of 2016, the number of mortgages in arrears also fell by 7%. 

Other Key Findings

• CML reported that the number of possession cases declined in the fourth quarter of 2016, as well as over the year as a whole.
• In the final three months of the year, 1,800 properties were taken into possession, down from 1,900 in the preceding quarter and 2,200 in the final quarter of 2015.
• At the end of last year, there were 94,100 mortgages with arrears of 2.5% or more of the outstanding balance, a slight increase on the total of 93,300 at the end of the third quarter. But that compared to a total of 101,700 at the end of 2015.
• In the buy-to-let sector, the number of mortgages in arrears was unchanged in the fourth quarter of last year, at 5,000, but 11% lower than at the end of 2015 (5,600).
• The number of owner-occupier mortgages in arrears edged upwards in the final quarter of last year, from 88,300 to 89,200, but was lower than the total at the end of the previous year (96,200).
• The number of buy-to-let properties taken into possession in the final quarter of last year was unchanged, at 600, but lower than in the last three months of 2015 (700).
• In the final quarter of 2016, a total of 1,200 owner-occupied properties were taken into possession, down from 1,300 in the preceding quarter and 1,500 in the final three months of 2015.

Paul Smee, Commenting on the data, CML director general  said: “It is encouraging to see another improvement in arrears and possessions during a year in which borrowers were clearly helped by the downward trend in mortgage rates. But customers do need to be ready for a time when the outlook may not be so benign, with pressure on real incomes increasing and as interest rates begin to move upwards again. As ever, borrowers who fear they may miss a payment should speak to their lender. Lenders remain committed to helping borrowers work through any period of temporary payment difficulty and remain in their home wherever possible.”

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New forecasting from economists at Lancaster University Management School indicates the UK housing market will remain stable as house price inflation slows to 3.5%.

Despite some economists predicting a price crash in 2017, the two main factors responsible for the positive forecasted growth in the housing market are (i) the sound domestic economic conditions (mainly a healthy growth rate of consumption), and (ii) the fall in the real mortgage rate (mainly due to the recent rise in inflation rate).

Key Predictions

• For the UK national market, the forecasting models predict a slowdown in the rate of house price inflation to 3.5% in 2017 (in 2016 it was 4.4%).
• According to the forecasting results, housing inflation in London will slow down in the first quarters of 2017,
• Growth in property prices is predicted to build up towards the end of the year.
• The forecasts indicate a 3.9% growth in London property prices in the course of 2017.
• Outer Metropolitan, Outer South East and South West. The property market of East Anglia, which is currently growing faster than any other regional market of the country, is predicted to slow down in 2017.
• The forecasts suggest that house prices in this region will grow by 5.7% over the year.
• The UK Housing Observatory is a project of the Economics Department at Lancaster University Management School (LUMS) aimed at improving our understanding of the UK national and regional housing markets.

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New infrastructure has always had an influence on property growth, the impact of Crossrail on the property market  is a solid reminder of how stations along the route have outperformed non-Crossrail locations over the past decade.

According to new research by property crowdfunding platform, Property Partner, average house prices have rocketed near stations along Crossrail since the South East infrastructure project was announced a decade ago.

Key Findings

• 60% of areas around stations on the new Elizabeth line have seen higher than average house price rises in the past ten years.
• 24 out of 40 locations near the Crossrail stations have benefitted from above average rises compared to property price increases in the rest of the South East of England since 2007 (an average of 41%)
• Reading –  which boasts the outermost station on the western part of the new line – is £425,804, an increase in price of more than a third (35.7%) over the past decade. Areas closer into London, areas like Hanwell (59.21%), West Ealing (56.82%), Ealing Broadway (57.48%) and Acton Mainline (57.70%) have experienced high property price growth.
• Over the past decade, all 40 stations along the new Elizabeth line have achieved nearly double the average house price rise (almost 25%) in England – the average property price increase is 48% over ten years, to a current value of more than £530,000.
• The areas around central London stations Tottenham Court Road and Bond Street have seen the biggest rises (of almost 66% each) with average property values now at more than £1.7 million.
• More affordable areas in South East London have also experienced massive increases – for example Abbey Wood saw a 61% rise to £289,468 over the past decade.

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According to the latest UK House Price Index from the ONS and Land Registry. House prices rose by 6.7% in the year to November 2016, up from 6.4% in the year to October 2016,

Other Key Findings

• The average UK house price was £218,000 in November 2016. This is £14,000 higher than in November 2015 and £2,000 higher than October.
• England saw house prices increasing by 7.2% over the year to November 2016, with the average price in England now £234,000.
• Wales saw house prices increase by 4.1% over the last 12 months to stand at £147,000.
• In Scotland, the average price increased by 3.3% over the year to stand at £143,000. The average price in Northern Ireland currently stands at £124,000.
• The East of England is the region which showed the highest annual growth, with prices increasing by 10.5% in the year to November 2016.
• Growth in the South East was second highest at 8.6%.
• Growth in London was 8.1%.
• The lowest annual growth was in the North East, where prices increased by 3.2% over the year.

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The latest Halifax house price index has revealed that over the last three months of 2016, the average price of a home in the UK was 2.5% higher than in the previous three months.

Other Key findings

• The quarterly rate of change in December was the highest seen since March 2016.
• Prices in the three months to December were 6.5% higher on an annual basis.
• Despite the increases in November and December, the annual rate remains below the 10.0% peak reached in March 2016.
• House prices increased by 1.7% between November and December – the fourth successive monthly rise and also the biggest since March 2016.

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Housebuilder, Persimmon, reported a rise in revenues and average selling prices saying demand has increased since Brexit. They had reported an 8% rise in full year revenues to £3.14bn and said average selling prices rose by 4% to £206,700. This is good news for investors as they can appreciate that demand for houses has actually increased since the EU referendum last June with the forward sales book up 12% on this point last year to £1.23bn. The group’s confidence was underlined by news that it has acquired a further 18,700 plots and opened 255 new development sites during the year.

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Where were the UK’s top house price performers of 2016?

A new report from Halifax looked at the UK’s top house price performers of 2016, to reveal the biggest percentage rises in house prices among major UK towns and cities over the past year.

Key Findings

• At the top of the list was Luton where the average house price in Luton was 19.4% higher than in the previous year, increasing from £214,934 to £256,636 in 2016.
• Barking and Dagenham experienced the second biggest rise in average house prices with an increase of 18.6%.
• Dunstable completes the top three with a 17.9% rise in the past year.
• All 10 top performers are in London and the South East. Basildon (17.2%), Chatham (17.1%), Tower Hamlets (15.8%), Watford (15.3%) and Basingstoke (15.1%)

These areas were more than two and a half times the 7.5% increase in the UK as a whole. With a key factor being that all were within easy commuting distance of Central London and has relatively low property prices.

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