Property Market Pulse

By Stuart Boughey

 It’s been a hectic few months at Arnold & Baldwin! Not only are we involved in the development of a new app that is sure to shake up the industry, but we have been expanding with no fewer than 9 new team members. It is also with great pleasure that we announce our team have been qualifying as MRICS and AssocRICS surveyors in record time!

Arnold & Baldwin has been working alongside industry leaders and the RICS to develop the newly released Home Survey Standard which is designed to make Homebuyer Reports more accessible and consistent across the profession. We have also launched FREE seminars for estate agents and other property professionals to provide a great insight into how a RICS Survey can be the difference between a smooth transaction and a nightmare. 

With all this change, we have decided to breathe a new lease of life into our renowned Market Insight with a fresh new look and features. We want to keep you, the busy professional, on the pulse of the property market news, regulations and guidance in one place.
 
Now, without further ado, here is our new-look, “Property Market Pulse” report. We will be aiming to deliver this on a regular basis, so please keep an eye on our social media pages and please remember to send your feedback & comments to help us improve the quality of information we provide to you. This is your report too, so if you have anything you would like to see, be sure to send your suggestions!
 
 
 

The Property Market in 60 seconds

  • October UK Average House Price Index (Nationwide, Seasonally Adjusted):  £215,368
  • October Average House Price Index (Halifax, Non Seasonally Adjusted) £232,249
  • UK National average (all property types) asking price: £302,808
  • Number of sales registered at HMRC: 101,740**
  • Number of mortgage approvals from Bank of England: 66,000**

London & South East: 

  • Strongest Market in London* : Tower Hamlets
  • Weakest Market in London* : Richmond upon Thames
  • Listing to Finding a Buyer in London 69.2 days

*Based on Asking Prices, Rightmove November 2019

 

Headlines

  • We take a look at what the party leaders have in store for housing.
  • A big shake-up to Shared Ownership - Housing Association and Shared Ownership to be permitted to buy a minimum 10% stake. 
*Based on asking prices only
**Based on most recently available figures (September 2019)
 

Statistics & Commentary 

RICS Residential Market Survey (October 2019)
 
Buyers & Sellers remain cautious in light of continued uncertainty...
 
  • Indicators new buyer sales and new instructions still downbeat.
     
  • Expectations point to a more stable trend emerging over the next three months.
     
  • Prices broadly flat at the headline level for a third straight report.
     
  • Across the UK as a whole, new buyer enquiries reportedly fell for the second month in succession, with a net balance of -16% of respondents citing a decline (compared to a net balance of -17% in September).
     
  • Alongside this, newly agreed sales continued to slip, albeit the pace of decline (in net balance terms) appeared to ease somewhat as the latest balance moved to -19% from -27% previously.
     
  • In the lettings market, the quarterly (seasonally adjusted) figures on tenant demand point to another slight acceleration in growth in the three months to October.
     
  • The net balance picked up to +22%, which is the firmest reading since the end of 2016.  At the same time, new landlord instructions slipped once again, with the pace of decline seemingly gathering momentum over the quarter (in net balance terms).
     
  •  On the back of this, rental growth expectations for the near term strengthened further, with every UK region/country projected to see an increase in rents over the coming three months.
 
Simon Rubinsohn, RICS Chief Economist, said:
 
 "The latest survey feedback continues to suggest that both buyer and seller activity remains in a holding pattern, hampered by political and economic uncertainty. Given the upcoming general election next month, it appears unlikely that these trends will pick-up to any meaningful extent over the remainder of this year. The picture remains very different on the lettings with tenant demand gathering momentum over recent months. This is running against an increasingly tight supply backdrop for rental properties and seems set to squeeze the pace of rental growth higher going forward."
 
*Based on October 2019 figures - Source: RICS Market Survey 
 
 
  • Annual house price growth remained subdued at 0.8%
  • 0.5% rise month-on-month, after taking account of seasonal factors

*​Seasonally adjusted figure (note that monthly % changes are revised when seasonal adjustment factors are re-estimated)

 

Robert Gardner, Nationwide's Chief Economist
 
“Annual house price growth remained below 1% for the 11th month in a row in October, at 0.4%. Average prices rose by around £800 over the last 12 months, a significant slowing compared with recent years – for example, in the same period October 2016, prices increased by £9,100.
 
National Average
Average Price (not seasonally adjusted) £215,368
Monthly Change: 0.2%
Annual Change 0.4%
 
 
Russell Galley, Managing Director, Halifax 
 
“Average house prices continued to slow in October, with a modest rise of 0.9% over the past year. While this is the lowest growth seen in 2019, it again extends the largely flat trend which has taken hold over recent months.

A number of underlying factors such as mortgage affordability and wage growth continue to support prices, however there is evidence of consumers erring on the side of caution.
We remain unchanged from our view that activity levels and price growth will remain subdued while the UK navigates political and economic uncertainty”
 
 
National Average
Average Price (Non-Seasonally Adjusted) 
October: £232,249
Monthly Change -0.1%
Quarterly Change: 0.2%
Annual Change +0.9%
 
 
 
  • In October, there was a Smaller than usual Autumn price bounce. With the price of property coming to market seeing its lowest monthly rise at this time of year since October 2008 (up by just 0.6% (+£1,942)) and now into November, The price of property coming to market falls by 1.3% (-£3,904)
     
  • While drops are at this time of year are to be expected it suggests opportunities for buyers to find a winter bargain.
     
  • 14.9% fewer new sellers than in the same period a year ago, deterred by price growth and political uncertainty, the largest year-on-year slump in any month since August 2009.
     
  • In contrast, the number of sales agreed falls by just 2.9% compared to this time last year.
     
  • Larger properties (four bedrooms or more) are the most active sector, with just 1.4% fewer sales 2018, as buyers benefit from prices 1.2% cheaper than last year
 
Miles Shipside, Rightmove Director and Housing Market Analyst:
 
”Would-be sellers are not only faced with the usual lower asking prices in the run-up to Christmas, but also a unique autumn combination of a Brexit deadline followed by a looming general election. 
These circumstances have proved to be a negative factor for thousands of prospective sellers, who have postponed their marketing plans. 
 
In contrast, there is positive news for buyers with new seller asking prices 1.3% cheaper than last month and virtually flat year-on-year, a portent of winter bargain-hunting opportunities. 
The number of sales agreed remains resilient, just 2.9% lower than a year ago, suggesting that there are still many buyers in the market to take advantage of those opportunities. “ 
 
 
Rightmove National Average Asking Prices
November 2019: £302,808
Monthly Change-1.3% 
Annual Change:    0.3%
 
 
  • September saw 101,740 home sales up 5% from August.  
  • UK residential transactions in September 2019 were ~2.3% higher than September 2018.

 

Bank of England

Mortgages approved for house purchases were 66,000 in September– this represents a 0.6% uptick from August.
 
Quarterly Figures published 10 September 2019
 
Key findings
 
  • The outstanding value of all residential mortgage loans was £1,461 billion in 2019 Q2, 3.1% higher than a year earlier.
     
  • The value of gross mortgage advances was £66.1 billion in 2019 Q2, 1.0% lower than a year ago.
     
  • The value of new mortgage commitments (lending agreed to be advanced in the coming months) was broadly unchanged compared to a year earlier, at £73.4 billion as at 10 September 2019.
     
  • The share of mortgages advanced in Q2 with loan to value (LTV) ratios exceeding 90% was 5.5%, the highest since 2008.
     
  • The proportion of lending at high loan to income (LTI) ratios (loans greater than four times the value of for a single borrower or greater than three times annual income for joint borrowers) was 46.1% in 2019 Q2, 0.7 percentage points (pp) higher than a year earlier.
     
  • The share of gross mortgage lending for buy-to-let purposes (covering house purchase, remortgage and further advance) 13.1%, in line with a year earlier. 
     
  • Lending to owner-occupiers for house purchase accounted for 50.5% of total gross mortgage advances in Q2. Of this, 21.3% was first-time buyers, which is consistent with a year earlier. The share of lending to home movers increased marginally in the year to 29.2%.
 
In September
 
  • Net mortgage borrowing by households was little changed at £3.8 billion in September, close to the average of the past three years.
     
  • The stability in the monthly flows has left the annual growth rate unchanged at 3.2%. Growth rates have now remained close to this figure for the past three years.
     
  • Remortgage Approvals strengthened slightly to 49,000. 
 

How Has The Residential Property Market Performed Since January?

We were curious to plot the course of Residential property since our last newsletter in January 2019 and we have compared the national average asking prices to the average HPI (House Price Index) recorded by Nationwide & Halifax and also compared the number of sales reported by HMRC (overall) to the number of mortgage approvals.
 
 

 
A Look at London 
Source: Rightmove Asking Prices (November 2019 figures) 
 
Fast Facts November 2019
 
  • The average price of property coming to market in London falls by 1.4% (-£8,926) 
  • The number of new sellers falls by 26.9% compared to this time last year  
  • While seasonal month-on-month price falls are usual at this time of year, the annual rate has improved from last month’s -1.1% to -0.8% as London shows further signs of recovery
Listing to Finding a Buyer  Average time taken to find a buyer down by 2.8% on the month to 69.2 days

 
Category
Avg MP
Monthly
Annual 

By TfL Zone

Zone 1

£1,318,376

-2.8%

1.0%

Zone 2

£736,282

- 0.8%

0.2%

Zone 3

£565,918

-4.6%

-2.8%

Zone 4

£471,935

-1.1%

-2.5%

Zone 5

£465,553

-2.0%

-0.9%

Zone 6

£487,648

0.2%

-1.3%

Category
Avg MP
Monthly
Annual 

By Area

Greater London

£609,506

-1.4%

-0.8%

Inner London

£755,250

-1.2%

-0.1%

Outer London

£503,932

-2.1%

-2.1%

South East

£395,027

-2.4%

-0.7%

Category
Avg MP
Monthly
Annual 

By Market Sector

First-Time Buyers

£481,801

0.3%

1.3%

Second - Steppers

£688,003

-0.4%

0.9%

Top of the Ladder

£1,322,963

-5.4%

-3.7%

Category
Avg MP
Monthly
Annual 

National Average for Comparison

National Average

£302,808

-1.3%

0.3%

First-time Buyers

£191,001

0.1%

1.3%

Second-steppers

£273,291

-1.2%

0.5%

Top of the Ladder

£525,633

-3.4%

-1.2%

 

 
How Individual Boroughs Have Performed
(most annual growth to least annual growth) 
 
Borough
Avg. NOVEMBER 2019
Monthly Change (%)
Annual Change

Tower Hamlets

£592,389

3.8

3.5%

Southwark

£659,973

0.9

1.6%

Havering

£409,678

0.2

1.1%

Sutton

£467,618

-0.3

1.0%

Waltham Forest

£486,268

-0.3

0.6%

Bexley

£411,276

0.4

0.3%

Hackney

£631,455

-2.1

0.1%

Hillingdon

£487,524

1.7

-0.1%

Newham

£413,010

-0.4

-0.2%

Bromley

£534,535

0.9

-0.2%

Barking & Dagenham

£314,691

-0.8

-0.3%

Barnet

£633,073

-0.5

-0.3%

Lewisham

£455,224

-1.4

-0.4%

Redbridge

£457,475

-0.3

-0.5%

Islington

£750,333

-0.8

-0.5%

Greenwich

£435,273

-1.9

-0.7%

Harrow

£550,275

0.3

-1.0%

Hounslow

£526,360

-0.7

-1.2%

Croydon

£429,503

-1.3

-1.2%

Merton

£623,219

-1.0

-1.6%

Ealing

£544,339

-1.4

-1.8%

Kensington & Chelsea

£1,570,219

-3.1

-1.8%

Haringey

£592,041

-3.3

-2.0%

Camden

£961,367

0.9

-2.1%

Hammersmith & Fulham

£921,297

1

-2.2%

Westminster

£1,412,920

2.2

-3.4%

Lambeth

£612,791

-1.5

-3.6%

Brent

£553,215

-2.6

-3.9%

Enfield

£440,987

-1.8

-3.9%

Wandsworth

£757,895

-1.9

-4.5%

Kingston Upon Thames

£579,250

-1.5

-5.9%

Richmond Upon Thames

£802,240

-1.7

-6.1%

 

News & Opinions

Affordable Housing in London - does it provide a Viable Solution for the Housing Crisis?
Rob Austen from Allsop asks a pressing question. Read More Here. 
 
Shared Ownership Shake-up
Secretary of State for Housing, Communities and Local Government Robert Jenrick announces plans will go ahead to allow Social Housing tenants in new property to purchase a stake in their home for a 10% stake and then purchase in 1% increments. All shared ownership property minimum ownership to be reduced from 25% minimum stake to 10%.  The Full Story
 
Fraudulent Mortgage Applications on the rise
in fraudulent mortgage applications. 
 
Homeowners better off by £350k over 30 years than private renters.
 

GENERAL ELECTION 2019 - What Are They Promising?

With a forthcoming general election, we take an unbiased look at the Housing Pledges of the “Big Four” political parties.  
*Correct as of 23rd November 2019* 
 
The Manifestos
 
These are directly quoted from the party websites and only abridged where stated - the links to the raw documents are included at the bottom of each section 

Labour:

“ Social Transformation Fund. Half of Social Transformation Fund – around £75bn over five years – will be allocated to housing.
 
The homes will be design and green standards, with the new, award winning Goldsmith Street council development in -led Norwich as an example of what modern council housing could look like.
  • building so that we are building 100,000 council homes a year by the end of the parliament, a more than 3,500% increase.
     
  • 50,000 additional genuinely affordable homes a year through Housing Associations by the end of the parliament.
     
  • 150,000 new and social homes a year within five years, delivering the biggest council since the years immediately after the Second World War, and the biggest overall affordable since the 1960s.

Source: Website

 

Conservative Party

 
“The Conservatives are today setting out how a Conservative majority government would deliver more houses, help more people buy their own home and deliver a fairer deal for renters. One million new houses were delivered in the last five years, including a quarter of a million homes last year – the highest in almost 30 years.
 
Building on this achievement, the Conservatives will:
 
  • Deliver at least another million homes in the next five years, making further progress towards the target of 300,000 new houses a year by the mid-2020s.
     
  • Help renters buy. There are currently 2 million renters who could afford mortgage payments but struggle to save for a deposit. A new market in long-term fixed rate mortgages, requiring only 5% deposits, will make it easier for them to buy.
     
  • Provide discounts for local first-time buyers. Under a new First Home scheme, homes will be sold at a 30 per cent discount to local first-time buyers.
     
  • At the moment, renters can struggle to find money for the deposit on a new property while they still have money tied up in the deposit on their previous property.
     
  • Under the Conservatives, renters will be able to have Lifetime Rental Deposits which can be transferred from one rental property to another, making the process of moving home easier and cheaper.
     
  • This is in addition to a ban on so-called “no fault evictions”, which can cause anxiety for renters and leave them unable to challenge their eviction.”
 
A Conservative majority government will introduce a higher rate of stamp duty for those buying property who are not UK tax residents.
At present, foreign individuals and companies who are not tax resident in the UK are able to buy homes as easily as those who live here.
 
They are often bought by wealthy individuals or companies and kept as investments or rented out at inflated prices: a recent study showed that 13 per cent of new London homes were bought by non-residents in 2014 to 2016.
 
This adds significant amounts of demand to limited supply, inflating house prices and making it harder for people in Britain looking to get a foot on the property ladder.
 
In order to help tackle this, we will introduce a Stamp Duty Land Tax surcharge levied at 3% to apply to companies as well as individuals.
 
The measure will raise up to £120 million a year, and this money will be directed at to help tackle rough sleeping.”
 
 

Liberal Democrats

 
“Liberal Democrats are looking to the future and will oversee a substantial building to ensure that everybody has a safe and secure home. We will:
 
  • Build at least 100,000 homes for social rent each year and ensure that total increases to 300,000 each year.
  • Help finance the large increase in the building of social homes with investment from our £130 billion capital infrastructure budget.
  • Build new houses to zero-carbon standards and cut fuel bills through a ten-year to reduce energy consumption from all the UK’s buildings.
  • Devolve full control of Right to Buy to local councils.
To support people to find and keep homes of their own we will:
 
  • Help people who cannot afford a deposit by introducing a new Rent to Own model for social rent payments give tenants an increasing stake in the property, owning it outright after 30 years.
  • Allow local authorities to increase council tax by up to 500 per cent where homes are being bought as second homes with a stamp duty surcharge on overseas residents purchasing such properties.
 
To reform the private rental sector, we will:
 
  • Help young people into the rental market by establishing a new Help to Rent scheme to provide government-backed tenancy deposit loans for all first-time renters under 30.
  • Promote longer tenancies of three years or more with an inflation-linked annual rent increase built in, to give security and limit rent hikes.
  • Improve protections against rogue landlords through mandatory licensing.
 
To improve social renting, we will:
 
  • Set clearer standards for homes that are socially rented.
  • Require complaints to be dealt with in a timely manner.
  • Proactively enforce the regulations that are intended to protect social renters.
  • Fully tenant panels so that renters have a voice in landlord governance.”

Source: Liberal Democrats Party Website

Green Party

(Abridged) 
 
“Green New Deal investment in housing will simultaneously reduce climate emissions, poverty and provide affordable housing. 
 
We will improve the insulation of every home in the UK, making sure they are all warm in winter. 
 
This green homes revolution will make sure nobody is forced to choose between heating or eating. Everyone should have a safe, affordable and to call home. 
 
  • We will end the housing crisis by creating enough affordable homes – including 100,000 new council homes a year. Our plans will also ensure that all new and renovated homes meet the highest possible standards and meet social needs. Work our homes, businesses and public buildings will create quality jobs in every part of the UK as we shift to a net zero carbon economy. Our Green New Deal for housing will: 
     
  •  Empower local authorities to bring empty homes back into use and create a total of 100,000 new homes for social rent (council homes) a year, built to the Passivhaus or equivalent standard. This standard will see these new homes use 90% less energy for space heating than the average home, significantly reducing household bills.
     
  • Give communities the first chance to buy local land that comes up for sale by extending Scotland’s Community Right to Buy policy England and Wales. Communities will then be able to directly deliver new affordable homes on land, supported by the Community Housing Fund (which the Government plans to end in 2020, but we will maintain for at least another three years). 
     
  • Ending the Help to Buy which mainly served to drive developer profits. The funds will be redirected to the Green Party’s council home creation that will deliver attractive, affordable homes for all.”
 
 
In the interest of the links below for the other main political party manifestos/websites 
 
 
Hew Edgar MCIPR Head of UK Government Relations & City Strategy at the RICS commented on the forthcoming election
 
“Ultimately, the next government should look to embrace new approaches to the planning, development, delivery and maintenance of built and natural environment assets”
 
The RICS also launched its 2019 Election Manifesto calling on the (next) government to “move past Brexit, and to overhaul current domestic policies to build a more sustainable country that future generations can be proud of, and to fulfil aspirations to be carbon-neutral” 

 

You can read more on this story here: RICS

What’s been happening in the Professional World?

Keeping you up to date with the latest regulations and guidance. 
 
Legislative, Regulatory & Guidance Updates
 

Practise Statement for the valuation evidence gathering.

The latest professional guidance for performing home surveys - effective May 2020
Essential for Agents, Tenants & Landlords alike - the RICS’ comprehensive guide for fire safety.
RICS professional guidance for dealing with client money. 
 

Other Areas of the Property Market

Commercial Markets
 

The latest RICS Commercial Property Market Survey points towards a slow down in the the commercial markets which are perceived to be experiencing a downturn at the headline level with Q3 occupier demand slipping:

  • Retail  -60% (compared to -59% in Q2)
  • Office  -9% (compared to -4% in Q2)
  • Industrial saw slowed growth at +9% (down from +20% in Q2)
  • Foreign investment demand slipped by -18% on net.  
 
Source:  RICS
 
Commercial
 
The Q3 2019 Investment report reveals the following: 
 
“UK commercial property investment picked up a little in Q3 2019 as student accommodation deals and falling prices in the regions supported volumes, although foreign inflows continued to ease and it was still the third weakest quarterly figure in the past seven years.

At £10.1bn, volumes in Q3 2019 were up 12% from the previous quarter, but down 20% compared to Q3 2018 and 31% below the five year quarterly average as Brexit uncertainty continued to cast a shadow”.
Source - Co-Star Commercial (Requires Subscription) 
 

And that’s it for our latest round-up!  We hope you enjoyed it and found it useful. Until next time…

 

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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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