Slow start to UK housing market expected in 2017 due to lack of supply

Sales activity in the UK residential property market is increasing but a slow start to 2017 is expected due to a lack of stock, according to the latest index report.

Interest from new buyers increased marginally in November 2016 for the third consecutive month but the figure remains historically low with 13% more surveyors reporting a rise in new buyer enquiries rather than a fall, says the report from the Royal Institution of Chartered Surveyors (RICS).

However, demand has increased in most parts of the UK leading to a further rise in agreed sales. Some 9% more respondents across the country reported a growth in activity over the month, but while this is the highest reading since February, caution remains, according to feedback.

RICS points out that it is a stark fact that more homes are needed as supply shortages remain a constraining feature and the growth in sales activity, albeit only modest, alongside a lack of new instructions, has led to a further decline in homes for sale. Anecdotal comments suggest that many respondents expect the beginning of 2017 to be quiet reflecting the lack of fresh properties coming to market.

As stock continues to dwindle, the headline RICS price balance has risen to 30%, which is the highest reading since April and most of the UK is seeing an increase in prices. For the second consecutive month, the strongest growth was reported in the West Midlands and North West of England.

The report explains that near term expectations continue to point to rising prices over the coming three months with 14% more surveyors anticipating an increase rather than a decline.

Furthermore, prices are projected to rise, to a greater or lesser degree, across most parts of the UK. The outlook over the year to come is positive in all areas with a net balance of 40% of respondents forecasting house price growth.

However, contributors are less confident in the prospects for London prices relative to other areas over the year to come with larger properties in the capital expected to show the slowest growth. Comments from respondents suggested that tax changes are still weighing heavily on this part of the market.

‘A key issue for the housing market is the slowdown in transaction activity since the spring, which is clearly being reflected in the RICS agreed sales data as well as in official figures,’ said Simon Rubinsohn, RICS chief economist.

‘Although there are some signs that the numbers may begin to edge upwards in the new year, the combination of macro uncertainty, the ongoing supply shortfall, with stock levels around historic lows, and the myriad of tax changes impacting on buyers suggest that any pick-up in activity will be relatively modest,’ he pointed out.

‘This is significant, not just for the housing market itself, but also for the wider economy given how much of consumer spending is tied in with home purchases,’ he added.

When it comes to the lettings market the report shows that tenant demand rose only marginally, as is usual around this time of year, with 15% more contributors reporting a rise rather than a fall. Meanwhile, new landlord instructions fell slightly at the headline level with 6% more contributors seeing a decline rather than a rise. Tenant demand continues to outpace supply across most areas and rents are expected to continue to rise.

The London rental market remains somewhat different with surveyors continuing to report a decline in tenant demand, a trend that has been visible for most of the last year, and rent expectations in negative territory for the fifth consecutive month.

The report concludes that tenant demand continues to outpace supply across most areas and rent expectations remain firmly in positive territory, with 17% more respondents forecasting further growth rather than a fall.

According to Robert Grigg, managing director of property finance at Hampshire Trust Bank, the cooling of property prices is not surprising. ‘While the rise in house prices remains modest, in order to help more people onto the property ladder we need to make home ownership more affordable, increasing the supply of houses to meet the growing demand,’ he said.


New home sales and approvals falling in Australia

New home sales in Australia fell by 8.5% in October to a two year low but the slum is not unexpected as the housing market is coming to the end of its longest and strongest building upturn.

The figures from the Housing Industry Association (HIA) report show that detached house sales fell by 8.2% and apartment sales were down by 9.2%.

‘The new home sales results are consistent with HIA’s latest forecasts for new home building starts which foresee a reasonably marked reduction in activity over the next couple of years,’ said remarked HIA senior economist, Shane Garrett..

‘Even so, activity is projected to fall to a low point of around 172,000 new dwellings starts during 2018/2019, about the same as the average of the past decade,’ he added.

(more…)


Mayor of London announces new planning rules to speed up affordable home building

The Mayor of London has announced new planning rules to speed up the building of more affordable housing in the city which has a shortage of homes at the lower end of the market.

Sadiq Khan also announced plans for how the record breaking investment funding of £3.15 billion announced in last week’s autumn statement will be used to support 90,000 new affordable homes over the next five years.

He explained that previous national rules on affordable housing investment were rigid, including no investment at all for mainstream low cost rented housing. Following negotiations with the Government, new rules mean investment in London can now be spent on a mix of homes for low cost rent and affordable home ownership.

He said that it is not a ‘one size fits all’ approach to affordable housing in London as the city needs a balanced mix of homes to rent and buy. The 90,000 affordable homes will be a mix of low cost rent, shared ownership and London Living Rent, which is based on a third of average household incomes in each borough.

Most homes in the Mayor’s programme will be delivered by housing associations, with the condition that their plans must include a minimum 50% affordable housing with some partners enabled to deliver at least 60%.

(more…)


Research suggest first time buyers still need the bank of mum and dad

Almost half of first time buyers in the UK still need financial help to get onto the property ladder, new research has found.

Some 18% are given money from their parents to help with the deposit for their first home an 18% also get a loan from their family, according to the latest research from Clydesdale and Yorkshire banks.

It suggests that despite help programmes from the Government aimed specifically at making home buying more affordable the so called bank of mum and dad is still needed by a substantial number of first time buyers.

The findings also shows that slightly more first time buyers need help from family than last year when it was 48% but it is considerably less than in 2012 and 2013 when 63% and 78% required help.

A breakdown of the findings show that more first time buyers in Wales need help with 64% relying on parents, followed by 57% in London and 56% in Yorkshire. In contrast only 38% in the South East and 43% in Scotland turned to their parents when buying their first property.

(more…)


Research shows housing associations could deliver 44,000 new homes a year in England

Housing associations across England could more than double the number of new homes up to 84,000 a year by 2020, according to new research.

In a new report, Releasing untapped potential for more housing, property advisor Savills say that associations have the financial capacity to deliver 44,000 extra homes a year in just over a decade.

This could be done through additional borrowing against existing assets and a greater partnership approach across the sector. It also says that the increased output would equate to more than a quarter of the total 300,000 new homes needed annually to tackle years of undersupply.

But, the report states, some form of subsidy is critical to deliver these homes across a range of tenures including affordable housing. In the absence of additional grant funding, housing associations would need to secure land at zero or low value in order to be able to build shared ownership homes or affordable rented housing.

Last week’s autumn statement made housing a top priority and provides greater support for new homes through the £23 billion National Productivity Investment Fund, which includes £1.4 billion grant funding to enable 40,000 new affordable rented homes by 2021.

(more…)


Existing home sales up year on year in the US for 56 months in a row

Existing home sales in the United States increased again in October to the highest annual pace for almost a decade, the latest real estate index shows.

All major regions saw monthly and annual sales increases with a national rise of 2% which means that transactions in this sector are now 5.9% above a year ago, the highest since February 2007.

The data from the National Association of Realtors also shows that the median existing home price for all housing types in October was $232,200, up 6% from October 2015 and the 56th month in row of price gains

According to Lawrence Yun, NAR chief economist, the current wave of sales activity represents a convincing autumn revival for the housing market. ‘October’s strong sales gain was widespread throughout the country and can be attributed to the release of the unrealised pent-up demand that held back many would-be buyers over the summer because of tight supply,’ he said.

(more…)


UK property industry disappointed over lack of stamp duty reform

There is disappointment in the UK property industry that Chancellor Philip Hammond did not take on board calls for a change to stamp duty, the tax paid when a property is bought.

In the run up to the autumn statement there had been hope that he might reverse the 3% additional stamp duty imposed earlier this year on additional homes which affected by to let landlords and second home buyers.

There had also been calls for reform of stamp duty at the upper end of the market with numerous analysis reports pointing out that higher rates to tax announced two years ago have adversely affected the prime property market, particularly in London, with prices and sales falling in many areas.

Instead he chose to announce billions in new funding for new homes, especially affordable homes, and a ban on letting agent fees and was accused of not understanding how the private rental sector works amid warnings that the fees will be passed on to landlords who will in turn pass it on to tenants in the form of higher rents.

The prime property market is disappointed, according to Robin Paterson, chief executive officer of United Kingdom Sotheby’s International Realty, who pointed out that the fee ban will have little impact on the top end of the market in central London and a significantly negative impact in the middle and bottom end.

‘Agents in prime central London charge smaller fees to tenants in comparison to the lower end. However, with the cost of investing in London property higher than the rest of the country, this will deter investment in the middle and lower markets as these fees will undoubtedly fall to the landlord, creating yet another factor to consider when determining return on investment,’ he explained.

‘This is unfortunately yet another blow to an already fragile market. What the Chancellor should have proposed was more regulation in this part of the industry, rather than simply passing the cost from one party to another,’ he added.

(more…)


Renting set to be more affordable in the US in 2017, new analysis suggests

Home ownership rates in the US are expected to bounce back in 2017 and renting will become more affordable but Trump could push up housing cost, says a new analysis.

The outlook report from real estate firm Zillow predicts that recent trends will reverse course as the housing market’s economic recovery enters a new stage. Renting will become more affordable, more Americans will drive to work, and the home ownership rate will bounce back from historical lows.

It also says that millennials will play a significant role in increasing the home ownership rate as nearly half of all buyers in 2016 were first time buyers and millennials made up over half of this group of buyers.

The firm expects that cities will focus on denser development of smaller homes close to public transit and urban centres but more American will drive in from suburbs where housing is affordable for work despite these kind of urban developments.

(more…)


Call for stamp duty change in UK to boost residential property market

It is almost certain that the UK Chancellor Philip Hammond will address issues in the property market in his autumn statement later this week with stamp duty and landlord tax being flagged as needing reform by the real estate industry.

The latest plea for change comes from estate agents Stirling Ackroyd. Head of residential development Nick Davies says that stamp duty must be cut to get the property market going again after a Brexit lull.

In particular agents believe that it is necessary to cut stamp duty at the higher end of the market which in London has been hard hit and seen prices and sales fall due to stamp duty change a couple of years ago rather than Brexit.

The analysis by Stirling Ackroyd suggests that the top 25% of London properties have seen their house prices cut by 5.4% since the second quarter of and house prices for the top 25% also fell by 1.5% on the previous quarter in the second quarter of 2016, directly following the introduction of the 3% stamp duty surcharge on second homes in April 2016.

(more…)


Hard hitting report says UK conveyancing system is not fit for purpose

The creation of a secure online portal for all communications needed during the home buying process in the UK would mean greater certainty far earlier in the moving process, it is claimed.

Such a move would be welcomed across the industry and by consumers as it would protect the conveyancer, estate agents, mortgage advisors, lenders and buyers and sellers, according to a white paper from the Conveyancing Association (CA) which says that the current way of operating is ‘not fit for purpose’.

It outlines how a future, more certain and transparent home buying process could operate and sets out its vision for a data sharing, collaborative, digital service and says that planning needs to take place now.

The paper suggests a number of ways in which this can be achieved including centralising the identity verification of all parties to reduce the risk of fraud and money laundering and collating the Property Information and Title Information on the marketing of a property.

(more…)