Monthly Market Insight – November 2017

Hello and welcome to the first of our Monthly Market Insights, bringing you the latest residential market data and industry news in one place.

In a month which has seen the Bank of England increase interest rates for the first time since 2007 and the government release a consultation on the home buying and selling process, as we head invariably closer to the end of the year, how has the residential market been faring and what is the outlook?

A quick look at this months
UK-wide HPI releases

Nationwide Oct 2017 Sep 2017 Aug 2017
Annual +2.5% +2.0% +2.1%
Month* +0.2% +0.2% -0.1%
Avg Price £211,085 £210,116 £210,495


The Nationwide is the world's largest building society, and one of UK's largest mortgage providers.
*Seasonally adjusted.

Robert Gardner, Chief Economist, Nationwide:

  • The proportion of borrowers impacted by the recent rate rise will be smaller than in the past, in part because the majority of mortgages in recent years were extended on fixed interest rates. 
  • Household budgets are under pressure from the fact that wages have not been rising as fast as the cost of living. Indeed, in real terms wage rates are still at levels prevailing in 2005.
Halifax Oct 2017 Sep 2017 Aug 2017
Annual +4.5% +4.0% +2.6%
Quarter +2.3% +1.4% +0.1%
Month +0.3% +0.8% +1.1%
Avg Price £225,826 £225,109 £222,293


The Halifax House Price Index is the UK's longest running monthly house price series.

Russell Galley, Managing Director, Halifax Community Bank: 

  • The supply of properties for sale remains low, combined with historically low mortgage rates and a high employment rate, this continues to support house prices. 
  • Increasing pressure on household finances and continuing affordability concerns are some of the factors likely to dampen buyer demand. 
  • We do not anticipate the Base Rate rise will be a barrier to buying a house.

RICS Market Survey

  • National prices stagnant with London and the South East “downbeat”.
    • 63% of London based respondents report a fall in prices over October (the lowest level since 2009).
  • Softened sales trends reported across the UK as demand from buyers falls.
    • 20% of respondents saw a fall in new buyer enquiries and transactions.
    • HMRC figures suggest housing transactions were down 2% month on month in September at 100,850.
  • Respondents reporting sales prices below asking prices:
    • £1m+ level sees 70% achieve below asking (up from 67% in July 2017).
    • £0.5-£1m level sees 62% achieve below asking (up from 57% in July 2017).
    • RightMove say over ⅓ of homeowners currently trying to sell have had to reduce their asking price, the highest such level since 2012.
  • The lettings market  has held steady over the past 3 months to October, however, new landlord instructions are in decline.  Rental projections anticipate a 3.5% annual rise for the next 5 years.

Simon Rubinsohn, Chief Economist, RICS:

  • The increased cost of moving, a lack of fresh stock, uncertainty over the political climate and an interest rate hike appears to be taking its toll on activity in the housing market. 
  • Prices seem under pressure at the more expensive end of the market with a further rise in the number of properties transacting at below the asking price.  But it is important to not characterise the whole of the market by parts of London and the wider South-East.

NAEA Housing Report

  • 79% of agents state the home-buying process is outdated.
  • DCLG released consultation for “Improving the home buying and selling process” on 27/10/2017 to close on 17/12/2017 and to include:
    • Agency & conveyancing
    • Harnessing digital technology
    • Mortgage and the requirements of lenders
    • Educating buyers and sellers
    • Better information at point of sale
    • Sharing information and increasing commitments between buyers and sellers
    • Buying a leasehold property
    • Buying a new-build property
    • Any additional points

Mark Hayward, Chief Executive, NAEA:

  • The current prolonged process means that sales are stagnating despite the fact that the supply of housing is up, and there is growing demand.

Savills Residential Property Forecasts

  • House prices will fall in London until 2020:
    • 2018 - Brexit uncertainty softens market.
    • 2019 - Some certainty returns as Brexit terms established.
    • 2020 - Some recovery, but dampened by affordability restraints.
    • 2021 - Interest rates begin to rise and dampen borrowing.
    • 2022 - Interest rates continue to rise and further depress prices.
  • Prices in the capital will fall 3.5% until 2019, before rising 5% in 2020.
  • UK house price growth will rise 3% until 2019, before rising 5% in 2020.

Lucian Cook, Head of Residential Research, Savills:

  • Growth is currently constrained by rate rises and the ability to get mortgage debt, particularly in London and other higher value locations.
  • However, rents in the capital will rise faster than the rest of the UK. Despite falling 3% this year, figures suggest rents will rise 3% in 2018, outstripping the UK's 2.5% rise, and by 2022 they will have risen 17%, compared with the UK's 15.5%.

Housebuilding

  • The Prime Minister announces £10bn in further funding for the HTB scheme.
    • Critics say this will increase demand amongst First Time Buyers and artificially inflate prices.
  • A survey of property leaders by M3 Consulting found that 80% of respondents consider that Brexit will have a negative impact on development activity in London whilst 57% believe development will decrease over the next 5 years.
  • Meanwhile, shares in listed housebuilders grew 7.6% over Q3 2017 according to Building Value.

 

KPMG Prospects For London Housing Market (Forecasts)

Borough House price growth up to 2020
Hackney 5.31%
Westminster 4.27%
Lewisham 4.11%
Waltham Forest 4.03%
Newham 3.99%
Southwark 3.90%
Haringey 3.75%
Wandsworth 3.73%
Lambeth 3.63%
Islington 3.41%
City of London 3.36%
Barking and Dagenham 3.23%
Camden 3.18%
Tower Hamlets 3.17%
Brent 3.15%
Greenwich 2.90%
Hammersmith and Fulham 2.84%
Kensington & Chelsea 2.79%
Merton 2.63%
Barnet 2.60%
Redbridge 2.60%
Hillingdon 2.50%
Kingston upon Thames 2.46%
Enfield 2.46%
Bexley 2.43%
Croydon 2.43%
Havering 2.40%
Ealing 2.29%
Sutton 2.18%
Bromley 2.12%
Hounslow 2.00%
Harrow 1.93%
Richmond upon Thames 1.65%

 

In other news…

  • RightMove touts the opportunity to “Live In Britain’s Most Haunted House”:
  • The two-bedroom cottage known as “The Cage” located in Clacton-on-Sea, Essex, was formerly a prison in use since medieval times and as recently as 1908.  The building is thought to have been used to incarcerate infamous “witch” Ursula Kemp in the mid-1500s and has featured on television several times due to its haunting reputation.
  • Our perspective... never go to view alone!

We hope you find this market insight informative, however, should you have any queries or recommendations on this or any of our other articles, please contact us


Sources & Further Reading

Article Title Source Release Date Link
Halifax House Price Index Halifax 07/11/2017 Find out more
Nationwide House Price Index Nationwide October 2017 Find out more
UK Residential Market Survey October 2017 Royal Institution of Chartered Surveyors 09/11/2017 Find out more
Monthly UK Housing Report - September 2017 National Association of Estate Agents September 2017 Find out more
UK Finance Update on Lending October 2017 Council of Mortgage Lenders 25/10/2017 Find out more
Residential Property Forecasts -
Autumn 2017
Savills 02/11/2017 Find out more
UK Residential Market Update - October 2017 Knight Frank October 2017 Find out more
Prospects for London housing market KPMG 03/11/2017 Find out more
Market Connect - Autumn 2017 Legal & General 06/11/2017 Find out more
London house prices still under pressure from tax changes City AM (Helen Cahill) 09/11/2017 Find out more
London rents barely edged up from their lowest in three years last quarter City AM (Emma Haslett) 09/11/2017 Find out more
UK house prices just hit their highest on record (again) City AM (Emma Haslett) 07/11/2017 Find out more
Now a forecast says London house prices won't rise until 2020 City AM (Emma Haslett) 02/11/2017 Find out more
More than third of UK home sellers cut asking price, says Rightmove The Guardian (Miles Brignall) 13/11/2017 Find out more
Improving the home buying and selling process: call for evidence GOV.UK DCLG
Open Consultation
22/10/2017 Find out more
Live In Britain’s Most Haunted House RightMove Property Blog
(Tom Ayres)
31/10/2017 Find out more
Help to Buy boost is great for builders - but not for buyers Property Week
(Alastair Stewart)
13/10/2017 Find out more
Survey predicts fall in London development Property Week
(Richard Williams)
27/10/2017 Find out more
Five year house price growth likely to halve Property Week
(Samantha Partington)
03/11/2017 Find out more

 

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Steven Goovaerts

Steven is a Graduate Surveyor and versatile member of the team, currently undertaking an MSc in Real Estate Management at the University of the West of England and enrolled on the Assessment of Professional Competence.

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