Property Market Pulse

By Stuart Boughey

The figures reveal a surging market and no-sign of let up in asking prices or the release of pent-up demand as the buzz surrounding the market begins to translate into real results. As we see a decreased baseline interest rate come into effect, could this give further fuel to the price rises and the availability of cheaper mortgages giving a renewed vigour , particularly among the first time buyer and investor market?

Time will tell as Brexit uncertainty gives way to other market forces...

All the upward momentum on prices has naturally led to an exceptional number of sales being agreed with Rightmove reporting the figure at close to a 26% jump in London and around 12 % year on year at the national level - which is sensational news and gives a reason to continue to have faith in the market.

However, it is impossible to ignore the growing concerns over the Covid-19 novel virus as major industry events are cancelled and investors are either spooked or completely restricted in movement to view properties and by extension, make deals.

It is speculated that this may start to have an impact on the residential market too, according to some market pundits as developers are less able to showcase their properties to those overseas. Property is a social industry, but in times such as these we may need to consider adopting a more pragmatic approach using technology to fill in the gaps. Of course, the impact is being felt elsewhere too and the economy as a whole may seem a tad shaky as the Bank of England slashed interest rates on Wednesday morning (11th March 2020)  from 0.75% to 0.25% , while quantitative easing may potentially be used to prop up other sectors as workforces self-isolate or are less encouraged to be out and about.

RBS, NatWest, and TSB  have also announced mortgage breaks for those suffering from the virus. Not only that of course but the escalating contention on Oil prices will have far reaching consequences.

Fear, it seems, is a powerful influencer, but the nation has been through worse and come out the other side. We are fortunate to have a robust economy, property industry , a pro-active central bank and spirit. Suffice to say; the circumstances surrounding today’s somewhat gloomy outlook is very different to that in 2008.

In other news of seismic shifts in practice, March has seen the launch of the first ‘Boris Budget’ since he gained power in July 2019 and the first for (new) Chancellor Rishi Sunak  - in case you missed it there was some sizeable actions made and we have summarised the key property points in our special Arnold & Baldwin Budget Alert. Of particular interest to market players everywhere is the impact of the new 2% surcharge for Non-UK Residents applicable from 1st April 2021. 

Speaking of the winners taking it all, we are delighted to reveal our very own MD Joe Arnold has been selected as a finalist in the prestigious Business Leader of the Year at the Specialist Lending Awards due to take place in May 2020.  Good luck Joe!  

Alongside the key industry headlines, we will also take a look at the darker side of the house price increase, new lender products aimed at giving a green boost and our usual overview of movers and shakers in the market, and the latest available statististics & commentary, correct as of March 11th 2020.

THE PROPERTY MARKET IN 60 SECONDS

February  2020 UK Average House Price Index (Nationwide, Seasonally Adjusted):  £216,092

February  2020 UK Average House Price Index (Halifax, Non-Seasonally Adjusted): £240,677

UK National average (all property types) asking price (Rightmove, February  2020) :£309,399

Number of Mortgage approvals ( Bank of England data) **  : 70,900

Number of sales registered at HMRC provisional figures**: 102,810
 

London & South East

Strongest Market in London***:  Lambeth

Weakest Market in London***:  Havering

Listing to Finding a Buyer in London: 80  days

South East Average Asking Price:  £404,114

**Based on most recently available figures (January 2020) 

***Based on Annual Asking Price Changes, Rightmove February 2020 (Three Monthly Rolling Average)

 

HEADLINES

  • The Budget for 2020 is dominated by drastic measures to tackle Covid-19 and prop up business, alongside only a short insight into the property and housing market. 

Article:  Arnold & Baldwin Budget Alert
 

  • Bank of England slashes interest rate from 0.75% to 0.25% in an effort to prop up the economy following the outbreak of Covid-19 and it’s potential impact.

Source: Bank of England
 

  •  The escalating contention over Oil prices may well have an effect on the global stage with financial markets being jittery enough on the backdrop of Covid-19.

    Source:  Financial Times

  • Nationwide - Green Lending Incentive

Existing Nationwide customers can now borrow additional funds at more favourable rates providing a minimum 50% share in the additional funds  is funnelled into ‘green’ incentives aimed at improving sustainability in existing stock. 

Source: Mortgage Solutions

  • NatWest & RBS - Mortgage Breaks for CoronaVirus (Covid-19)  sufferers.  As of 10th March 2020, NatWest & RBS are among the first banks to announce mortgage breaks and suspension of savings withdrawal charges for those suffering from the virus.

Source: Mortgage Solutions

  • DeFRA announces plans to ban use of House - Coal and Wet Wood in Homes with solid-fuel burners, taking aim at pollutants generated by this fuel type with the phasing out over the two years 2021-2023.  

Source: DeFRA

  • Finance and Property prepare for Covid-19  - Co-Star sheds light on how the industry can better shield itself against spreading Covid-19 as business continuity plans ramp up

Source: Co-Star News

  • The RICS summarise the recent Fire Safety Conference, amid the development of the International Fire Safety Standards (IFSS) and creation of the Building Safety Regulator in the Health & Safety Executive office. 

Source: The RICS

  • The Dark-side of the House-Price Rises - In a rising market , it is easy to forget that not everyone has the ability to afford their own home. The Guardian reports on why such a bullish market may not be sustainable for either the older generation or the up and coming. 

Source: The Guardian

  • The Government revealed the forthcoming planning changes, with permitted development rights to allow vacant commercial, industrial and residential buildings to be demolished and replaced with "well-designed homes that meet natural light requirements" and  allowing developers to extend residential blocks by up to two storeys among the “disappointing” lack of proposals.

Source: Co-Star  / MCHLG

 

 

STATISTICS & COMMENTARY

Nationwide (February 2020)

  • Annual house price growth edges up to 2.3%, the strongest rate for 18 months
  • 0.3% rise month-on-month, January to February after taking account of seasonal factors.
     

Robert Gardner, Nationwide's Chief Economist;

“The decisive election outcome may have provided a boost to buyer sentiment and the momentum in the market and most recent house prices are in line with that trend. Residential property transactions and mortgage approvals increased at the turn of the year and surveyors report an increase in new buyer enquiries. Looking ahead; economic developments will remain a key driver of the market against a challenging global economy with the Coronavirus outbreak expected to weigh on global activity in the coming quarters.”

 

National Average

Average Price (seasonally adjusted) £216,092

Monthly Change: 0.3%

Annual Change: 2.3%

 

Halifax (February 2020)

House prices in February were 2.8% higher than in the same month a year earlier

On a monthly basis, house prices rose by 0.3% 

In the latest quarter (December to February) house prices were 2.9% higher than in the preceding three months (September to November)

 

Russell Galley, Managing Director, Halifax:

“The UK housing market has remained steady heading into early spring. Much like we saw in January, the increases seen in February reflect the continued improvement of key market indicators. The sustained level of buyer and seller activity is strong compared to recent years, with positive employment conditions and competitive mortgage market supporting demand.

Looking ahead, there are a number of risks, including the potential impact of coronavirus, which continue to exert pressure on the economy and we wait to see how these will affect housing market sentiment later in the year.”

 

Average price: £240,677     

Quarterly change +2.9% 

Annual change+2.8%

Monthly change+0.3%

*Some comments have been edited for length and/or clarity.

The RICS - January Residential Market Survey

Sales

  •   Buyer enquiries, agreed sales and new instructions all rise over the month 
  •   Respondents remain upbeat on the outlook for sales in the coming year
  •   House prices rise at the national level, driven by a turnaround in London and the South East
  •   New Buyer enquiries see  a net balance of +23% of survey participants reporting an increase in demand during January.
  •   New instructions coming onto the market also increased during January, with a net balance of +19%
  •   Market Appraisals undertaken see a  net balance of +20% as respondents nationally reported that the level of  over the month was higher than a year ago, marking the first positive reading for this series since it was introduced back in 2017
  •   In a historical context, the average level of stock on estate agents books remains very low at 43 properties.
  •   Northern Ireland and Scotland currently display the strongest growth in house prices across the UK (in net balance terms)

Lettings

  • Tenant demand rose at a steady pace in the three months to January (seasonally adjusted quarterly series), with a net balance of +24%respondents noting an increase.
  •  At the same time, landlord instructions were reported to have fallen by a net balance of -13% of contributors.
  •  Given the imbalance,  rents are expected to increase over the coming three months,
  •  Twelve-month expectations continue to point to rents rising by a little over 2% in the year ahead.

Source: RICS Residential Market Survey January 2020
 

HMRC 

  • December saw 104,670 residential property transactions
  • An  uptick of 6.2% on the month and 6.8% on the year
  • The average price of a property stood at £234,742 
  • This is 2.2% above where it was a year prior 
  • On the month, this was up 1.7% from November 2019.
  • These are the confirmed numbers from HMRC for December 2019

Source: HMRC Details for Dec 2019

Bank of England

  • Mortgage approvals stood at 70,900  - a leap of +5.35% on the month December 2019 to January 2020.
  • Net Mortgage borrowing stood £4.0 billion in January
  • Approvals for remortgage also rose on the month, by 3.9%, to 52,100
  • Annual growth rate for mortgage borrowing stood at 3.4%

Source: Bank of England January 2020

Bank of England (Q4 2019)

  • The outstanding value of all residential mortgages loans was £1,499 billion at end-2019 Q4, 3.8% higher than a year earlier
  • The value of gross mortgage advances was £73.4 billion, broadly unchanged in comparison to Q4 of 2018
  • The value of new mortgage commitments (lending agreed to be advanced in the coming months) was 4.0% higher than a year earlier, at £70.6 billion
  • The share of gross mortgage lending for buy-to-let purposes (covering house purchase, remortgage and further advance) was 12.4%, consistent with Q4 of 2018.

Source: Bank of England Mortgage Lenders and Administrators Statistics (Q4 2019)

A LOOK AT LONDON

Source: Rightmove (Asking Prices) February 2020

Fast Facts February  2020

  • The average price of property coming to the Market in London in February rises a further 2.7%
  • The average price for a property in Greater London is £629,053
  • The number of sales agreed jumps 26.4% compared to the same time last year.
  • Listing to finding  a buyer time raises slightly to 80 days on average up 2 days from 78 days in January
  • Numbers of newly posted listings rise by 1.6%

 

Miles Shipside, Rightmove director and housing market analyst;

“There is a boom in buyer activity, with the additional boost of the typically busy spring market still to come. Buyers who have been hesitating until the greater political certainty following the election outcome will now be paying a higher price for that certainty, though compared to the height of the London boom nearly four years ago there are still some relative bargains to be had. The momentum also shows signs of building further. After three and a half years of Brexit uncertainty, dither, and delay, many now seem to feel that 2020 will be their year to move”

He further comments that

“Owners coming to market this spring face the best selling prospects for several years, with good demand for the right properties at the right prices. However, sellers should be careful not to get carried away with their pricing, as this is still a price-sensitive market with stretched buyer affordability”

 

 

BY AREA

 

Avg MP

Monthly

Annual 

Greater London

£629,953

+2.7%

+2.4%

Inner London

£782,964

+3.5%

+3.1%

Outer London

£518,638

+2.1%

+1.6%

South East

£404,114

+1.0%

+2.2%

BY MARKET SECTOR

 

Avg MP

Monthly

Annual 

First-Time Buyers

£486,383

+1.0%

+2.0%

Second - Steppers

£709,047

+2.6%

+2.5%

Top of the Ladder

£1,417,288

-0.1%

+4.0%

NATIONAL AVERAGE FOR COMPARISON

 

Avg MP

Monthly

Annual 

National Average

£309,399

+0.8%

+2.9%

First-time Buyers

£193,768

+0.3%

+2.3%

Second-steppers

£278,724

+1.0%

+2.5%

Top of the Ladder

£539,861

+0.3%

+3.5%

HOW INDIVIDUAL BOROUGHS HAVE PERFORMED;

(Organised by top annual growth to least annual growth)

Borough
Avg. price February
Monthly Change (%)
Annual Change

Lambeth

£647,908

3.1

7.7%

Sutton

£471,204

2.4

7.1%

Kingston Upon Thames

£625,836

5.1

4.6%

Merton

£621,493

3.5

4.6%

Waltham Forest

£491,444

2.2

3.4%

Brent

£578,060

3.7

3.2%

Greenwich

£444,307

3.0

3.1%

Hounslow

£533,288

0.3

3.0%

Kensington & Chelsea

£1,566,579

4.3

3.0%

Hammersmith & Fulham

£918,839

1.0

3.0%

Tower Hamlets

£581,988

-2.8

3.0%

Ealing

£547,151

1.3

2.4%

Barking & Dagenham

£314,155

0.7

2.2%

Barnet

£626,113

0.5

2.2%

Lewisham

£466,351

1.8

2.1%

Newham

£415,350

0.3

1.9%

Harrow

£550,928

0.4

1.9%

Richmond Upon Thames

£821,117

4.2

1.9%

Hackney

£625,624

0.4

1.6%

Bromley

£530,487

-0.6

1.2%

Haringey

£602,076

4.4

1.1%

Camden

£1,023,489

5.7

0.9%

Bexley

£404,239

0.4

0.4%

Islington

£748,575

-0.8

0.3%

Southwark

£622,249

-1.6

0.2%

Enfield

£450,392

1.6

0.1%

Croydon

£422,947

-0.1

0.0%

Redbridge

£449,740

0.3

-0.2%

Westminster

£1,465,108

1.2

-1.1%

Hillingdon

£471,760

-1.6

-1.7%

Wandsworth

£786,625

3.8

-1.9%

Havering

£401,493

-1.1

-3.1%

 

March and the coming months are undoubtedly going to be turbulent times, however a robust and decisive action plan by the government seems, at first glance, to be able to weather the storm and keep the positive movement going in a tough climate  and shaky global market at least in the short term.

We look forward to seeing you in April to see how all of this has impacted the behaviours of the market and the industry.

Stay safe out there!

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About the author

Stuart Boughey  avatar

Stuart Boughey

Being the forensic detailed driven Surveyor that he is, Stuart's analysis and interpretation of all things property market related make him the best person within the Arnold & Baldwin family to bring you all of the latest news and commentary. Having trained in London, his knowledge of the area is fantastic. If you would like to make suggestions on any improvements, or additional information for Stuart to focus on, his phone is always on!

Read more about Stuart Boughey

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