UK house prices continue to move upwards – Nationwide

Updated / Wednesday, 1 Mar 2017 08:24

UK house price growth accelerated in February, with the average property value standing 4.5% higher than a year ago.

A 0.6% month-on-month price increase in February took the average UK property value to £205,846, new figures from the Nationwide Building Society show.

In January, UK annual house price growth had stood at 4.3% and house prices had increased by 0.2% month-on-month.

Robert Gardner, Nationwide’s chief economist, said a small rise in house prices of around 2% is more likely than a decline over the course of 2017, as low mortgage rates and a dearth of homes on the market continues to support prices.

“Recent data suggests that the UK economy has continued to perform relatively strongly,” he stated.

“The outlook is uncertain, but we, along with most other forecasters, expect the UK economy to slow through 2017 as heightened uncertainty weighs on business investment and hiring,” the economist said.

“Consumer spending, a key engine of growth in recent quarters, is also likely to be impacted by rising inflation in the months ahead as a result of the weaker pound,” he added.

Mr Gardner also said cash buyers are a more important driver of the housing market than they were a decade ago.

He said the share of cash transactions has increased significantly, from around 20% in 2005-2006 to around 35% in 2008, remaining fairly constant since then.

“The sharp increase in the share of cash purchases in 2007 and 2008 was a function of mortgage transactions declining sharply, rather than the amount of cash transactions increasing,” he explained.

“This reflects the impact of adverse labour market conditions and the tightening of credit conditions during the financial crisis, which limited the number of people able to buy with a mortgage, while fewer such constraints would have applied to cash purchasers,” he added.

UK cash sales rose to a peak of 38.9% of transactions in the first quarter of 2016, as buy-to-let investors rushed to beat a stamp duty hike imposed last April.

The ageing population in the UK is also prompting more cash sales, with people who are downsizing for example being more likely to buy their new home in cash, having paid off their mortgage years ago.

In London, the share of cash purchases tends to be lower than the UK generally, with house prices in the capital being more than double the UK average.

   By Andrea Wong, 21 February 2017

Top locations for property investors in 2017

Whilst the capital remains a popular choice for investors, many landlords have looked beyond London and to the North in anticipation. With rapid renovations to the Greater Manchester area and plans to develop the Liverpool city centre further, it is a great time to start looking further afield, especially with property prices soaring in London without an increase in the cost of rent. The gap between the average cost of property in London compared to the rest of the UK and Wales is becoming wider.

According to figures published by JLL, London underperformed in terms of rental yields compared to the rest of the country. With Brexit looming and causing uncertainty within the country, it has affected the capital the most. As a result of this, location is becoming an even more challenging aspect for landlords when looking to invest in property. With that in mind, we recommend that they look to invest in other cities. There are diverse and up-and-coming cities in the North that offer a range of impressive boutique student accommodation and residential properties.

Greater Manchester

Greater Manchester is expected to remain one of the UK’s most popular property investment destinations, with the balance between earning potential and property prices much more favourable than in the capital. One of the areas that has seen a remarkable transition in recent years is Salford’s MediaCityUK, which has become a creative hub for large corporations with both ITV and BBC relocating to the area from the South. According to JLL reports, Greater Manchester is outperforming the rest of the UK in terms of its GDP growth which is continuing to rise and is predicted to increase by approximately 5% annually until 2020.

Liverpool

A city at the heart of the government’s Northern Powerhouse initiative is Liverpool, with Chinese buyers particularly keen to invest in the area. Described as ‘one of the most pleasant cities in northern England’, Liverpool is home to some of Britain’s most ambitious developments and infrastructure schemes that have been valued at over £7 billion. Foreign investors have been tempted to invest in the city due to the weak pound after the EU referendum vote, high yields and a high demand in occupancy. With a total of four universities located in the area, and the University of Liverpool alone attracting many foreign students due to its partner university in China, there is a huge student population ensuring that there will always be potential tenants, especially with properties close to universities.

In addition, figures from Hometrack show that house prices in the city have grown by 2.6% in the past quarter, and with more development plans in the city this is the ideal time for landlords to take advantage of enormous investment potential.

Leeds

With a reputation as a cosmopolitan area, Leeds is truly an exciting place for both students and professionals to live in. The vibrant city boasts of the largest and fastest-growing workforce in the UK, making it a location where people tend to settle, so it is no surprise that investors are finding it the ideal city to invest in. The cost of living is over 20% lower than in the capital and with unwavering employment opportunities, the future is bright and would be a secure location to invest in.

Figures from Rightmove which show a 4% increase in house prices over the past year, and an increase of 10% since 2014, only underline the strength of the city’s housing market.

Chinese apartment buyers shift from Australia to UK

Regulators crack down on foreign lending amid fears of property price bubble

February 26, 2017

by: Jamie Smyth in Sydney and Yuan Yang in Beijing

Zhang Biao, a 32-year-old Chinese entrepreneur, has already thought about where his eight-year old will go to university. “We thought a flat overseas would be a good investment, and our son could use it for sixth form or university in Australia or the UK,” he says.

Mr Zhang and his wife put an offer down on a A$600,000 (US$460,000) flat in Melbourne in October, only to be told that they were no longer eligible for the 60 per cent loan-to-value mortgage they had applied for. Instead they decided to pay up front for a £120,000 flat in the English city of Liverpool. Mr Zhang is one of a growing number of Chinese property investors switching their focus from Australia to other markets as regulators — eager to moderate rapidly rising prices amid fears of a bubble — have increased pressure on banks to curb foreign lending.
This month, the Reserve Bank of Australia warned that residential building activity had been 50 per cent higher than long-term averages for two years and there was a risk that “newly completed apartments fail to settle”. A sharp correction in the property market could tip Australia into its first recession in a quarter of century, analysts warn. Gross domestic product contracted in the third quarter by 0.6 per cent, although most economists expect economic growth should resume in the fourth quarter. “We believe the [property market] correction will start with settlement problems for low quality apartments,” said broker CLSA in a recent report. “Our worst-case scenario would result in dwelling prices falling in all areas, eventually leading to a recession.”

The boom in foreign property investment has helped the Australian economy to continue growing despite sharp falls in mining investment. In 2014-15 Chinese investors were granted approval to spend A$24.3bn on property, more than three times the value of purchases from the US, the second largest group of foreign investors. The inflow of foreign capital helped push prices up in Sydney and Melbourne, the two biggest cities, by 67 per cent and 47 per cent respectively, over the past four and a half years. Foreign buyers account for one in five apartment sales. Now overseas demand is starting to weaken. Over the past two years the proportion of new property sales accounted for by foreign buyers in Australia has fallen from 16.8 per cent to 10.9 per cent. This drop is particularly felt in the apartment market. Building approvals for apartments fell by a fifth in the year to end-December. Unit prices have begun to moderate in Melbourne and Brisbane, edging up by only 1.7 per cent and 2.3 per cent respectively last year. “Chinese buyers are increasingly nervous about Australia because of recent instability in regulation, tax and bank lending rules,” says Esther Yong, co-founder of ACproperty, a Chinese language property portal. “A lot of Chinese who bought apartments off-plan three years ago are now finding it difficult to find finance as Australian banks have blocked lending to foreign buyers.”

The big four Australian banks — NAB, Commonwealth Bank of Australia, ANZ and Westpac — have all stopped issuing loans to non-resident borrowers with no domestic income. “We have essentially shut down mortgages to non-resident buyers,” Shayne Elliott, ANZ’s chief executive, told the Financial Times. He said the apartment market in Melbourne was “a little bit concerning” due to the proliferation in the city centre of small apartments, some under 50 square metres in size and with no bedroom windows. The withdrawal of bank financing has forced some property developers to ramp up vendor financing, which can leave buyers exposed if prices then fall. Meriton, Australia’s biggest apartment builder, offers buyers two-year loans, providing them with some breathing space to find alternative financing. “Our loan book has doubled over the last 12 months to about A$120m as the rule changes have left some foreign buyers in limbo,” said James Sialepis, sales director at Meriton, Australia’s biggest apartment builder. Other developers have begun offering discounts and rental guarantees on some properties. Increasingly, Chinese buyers are looking elsewhere. ACproperty recently teamed up with property listing company Listglobally, to launch a Mandarin language housing site called Sodichan.com focused on other international markets. “Our agents in China have been asking us to supply them with properties in other countries,” said Ms Yong. She said the UK had become popular after the Brexit vote because the fall in the value of sterling had made it cheaper for Chinese buyers. But Beijing’s tough new capital controls are making it more difficult to move large amounts of cash out of China. Foreign property investments by Chinese companies plunged by 84 per cent last month, according to the Chinese Ministry for Commerce. “For some Chinese buyers who have family connections in Australia, they will continue to buy there. But for others without these specific reasons, they will look at other opportunities,” said Ms Yong.

The Manchester property market is expected to see capital value growth of 28.2% over the next five years, as a result of growing demand and low housing supply.

Summary

• North-west property price growth is outpacing the rest of the UK
• Manchester is predicted to see price growth of 28.2% by 2021
• Property advisor JLL expects Manchester to be among the first choice for international investors targeting the UK’s build-to-rent sector

North-west house prices will increase by 18.1 % over the next five years, according to research carried out by property advisor JLL. This data follows a strong year for Manchester’s residential sector in 2016 which saw a 16% growth in capital values.

Buoyed by high demand and low supply, growth in the region is currently outpacing the rest of the UK. JLL predicts that as a result of this undersupply, rents and capital values will continue to increase dramatically in the coming years.

Capital value in Manchester is expected to see growth of 28.2% in the next five years, while rents are forecast to increase as much as 20.5% by 2021.

While the EU referendum vote has seen a marginal slowdown in transaction levels and a mild easing in prices, research experts at JLL are optimistic that Brexit will not negatively impact the growth of north-west property prices.

Adam Challis, Head of UK Residential Research at JLL, said: “In markets where there’s still a significant undersupply we’re set to see growth over the next five years, and the north-west in particular is a prime example of this.”

Stephen Hogg, Head of North West Residential at JLL, said: “Our five-year forecast points to the continued strength of the residential sector in the Northern Powerhouse. Manchester now offers some of the best returns in the UK and is at the forefront of the build-to-rent market in the UK regions.”

According to JLL, Manchester requires 3,300 new homes each year in order to meet current demand and expects build-to-rent developments will soon be at the centre of new schemes in Manchester. With a large number of developments in the pipeline and a significant price growth forecast, the city is expected to be among the first choice for international investors targeting the UK’s build-to-rent sector.

15 February 2017

By Marc Da Silva

UK house prices may have ended last year around £15,000 higher on average than when the year started, but the signs are that prices will continue to rise, supported by a ‘critical shortage’ in housing supply and ‘ultra-cheap borrowing rates’.

House prices across the UK as a whole increased by 7.2% in the year to December, accelerating from a 6.1% rise recorded in the year to November, pushing the average price of home up to £220,000, according to the Office for National Statistics (ONS).

The average price of a residential property is now £236,000 in England, £148,000 in Wales and £142,000 in Scotland, according to the ONS.

The East of England was the region with the highest annual growth, according to the ONS, with prices increasing 11.3% in the year to December 2016. Growth in the South East of England was 8.5% for the year. London, which continued to be the region with the highest average house price, at £484,000, was the third fastest-growing region with prices rising by 7.5% in the year to December.

Property prices in all three regions have been pushed higher mainly by a widening supply-demand imbalance in the market, coupled with record-low mortgage borrowing rates, and this trend looks set to continue, not just in the London, the East and South East of England, but across the UK as a whole, according to Rob Weaver, director of investments at property crowdfunding platform Property Partner.

He said: “At the risk of sounding like a broken record, the critical shortage in supply, alongside ultra-cheap borrowing rates are supporting house prices and that looks set to continue.

“Until more properties are built for both buying and renting, the market for investors looks positive as prices continue to move upwards although overall at a gentler pace than before.”

Tax changes, stricter lending criteria and regulation appear to have been somewhat dampening buy-to-let demand, but Weaver points out that owner occupiers remain the “driving force behind prices”, particularly in the regions.

He added: “The housing market may have plateaued during last summer but for the final two months of 2016, prices regained momentum.

“With December, in particular, seeing a higher than expected rise in annual prices, property demonstrated itself to be a robust investment once again in 2016.”

By Bea Patel, TLE Property Editor and Director of Shop for an Agent – the estate agent comparison website

Figures released last week (30 January 2017) from Centre for Cities highlights the shape of the UK’s 63 biggest cities in the run-up to the triggering of Article 51.

The 2017 data reveals a clear divide between the North and South, with goods being exported mainly from the North and services from the South.

Centre for Cities emphasise the relevance of trade and exports in the run-up to Brexit. Property investment consultancy, Properties of the World stressed the importance of inward investment.

Jean Liggett, CEO of Properties of the World, said: “2017 is going to be a landmark year for the UK’s cities. Seven of them will be electing metro mayors in May, with the newly elected officials having to hit the ground running in terms of dealing with the fall-out from the government’s triggering of Article 51, which should take place by the end of March. Trade, exports and investment will require firm, decisive management for cities to thrive over the year ahead.”

Greater Manchester and Liverpool City Region are two cities that will be directly electing their own metro mayors in May.

Both cities stand out in terms of their ability to face Brexit head-on, according to Properties of the World. Not only will their metro mayors and reliance on the production of goods stand them in good stead, but the cities have unique attributes that should be of use.

Jean Liggett explains: “Manchester and Liverpool both enjoy property-related factors that will help to see them through the choppy waters of the Brexit process. The latest Hometrack data shows that Manchester’s property prices grew at the second-highest rate in the UK during 2016, while Liverpool topped the table for growth rate over the past three months. These dynamic urban areas are perfectly positioned to lead the UK’s cities into Brexit and out the other side.”

Manchester City Centre

The Hometrack UK Cities House Price Index reveals Manchester’s property market is growing at the fastest rate for more than a decade. It is second to Bristol in terms of its 2016 growth rate, and may be ready to overtake it during Q1 2017.

The 8.9 per cent year on year rise in prices experienced in Manchester is a result of a significant lack of supply – something which all UK cities are struggling with because of urbanisation and a rise in popularity of city centre living.

Liverpool, with 21.57 per cent of households renting privately (or living rent-free) according to Centre for Cities, is enjoying a property market boom. Prices rose by three per cent over the last three months – the highest rate of any UK city analysed by Hometrack.

Liverpool City Centre and Docks

Liverpool and Manchester are key UK locations for property investment from overseas buyers as well as domestic investors.

Rents rose by 1.2 per cent in the North West over the past year, according to the Office for National Statistics. But regional variations within the area’s cities resulted in much higher rises in urban locations.

According to Jones Lang LaSalle, rents in Manchester city centre rose by around 11 per cent in 2016. They project house prices will grow by 4.5 per cent per year for the next five years. HSBC has identified the city as one of the top four buy-to-let hotspots in the country, reporting rental yields of 7.6 per cent.

9 FEB, 2017 by Paulina Carl

The North West is the country’s third most populated region – after London and the South East – which means the need for housing is always huge for the Northerners.

The property market in England’s North West has seen a constant increase in interest from buyer as well as value in homes over the last couple of years. And with more and more people being pricedout of the London market and the Northern Powerhouse initiativepraising the area, more and more Southerners decide to make their way up north, too.

When it comes to availabilities in the North West, the area has got something on offer for any investor’s desire. With a broad range of population age and living situations as well as location, the market covers the whole property spectrum.

Liverpool and Manchester are the area’s biggest cities and they both offer great connections to for those interested in regular trips down to London as well as anywhere else on the island. Additionally, the arrival of the HS2 will only improve travel times and make the country grow closer together.

And the ever growing Manchester Airport, which has recently seen an investment of $100m, connects visitors to multiple locations within the UK as well as abroad.

They mean business

Although for most people England’s North will forever be connected with the textiles industry or the Industrial Revolution, these days it’s mainly IT, digital and financial services that can be found up north.

A variety of companies have recently decided to either relocate entirely to a northern city or at least open a second head quarter in the North. Especially with some Brexit uncertainty playing up, the North often gives the better options for business and investment.

Once you’ve made up your mind and you start looking around, make sure to not only check out the big cities. People are slowly moving further out, and so are the best investments.