Average prices up £1,384 in January, setting a new record high

LSL Property / Acadata England & Wales HPI 

• Monthly sales set to reach 73,000 – the highest in a January since 2007
• Sales only 4% below January average in the decade before the credit crunch
• 90% of Unitary Local Authorities now experiencing house price growth

House Price	Index	Monthly Change %	Annual Change %
£241,101	245.5	0.6	5.2

 David Newnes, director of Reeds Rains and Your Move estate agents, owned by LSL Property Services plc, comments: “The UK housing market is roaring further back to life in 2014 as the recovery weighs in across the board.  Prices are now up 5.2% annually, driving the price tag for the average home to a new high. Mostly this is due to much increased activity, with increased demand for property buoyed by low interest rates and Help to Buy, combined with hot competition for homes. This boost in sales has seen an air of optimism encapsulate the market. While 2013 was a turning point in the recovery, 2014 is set to be a watershed year if the next few months continue in the same vein.

“Last month saw the largest rise in sales over the past year, up 67% annually, with transaction levels crucially only 4% below the January average seen in the decade before the credit crunch. This astounding turnaround can largely be pinned down to the resurgence of the first-time buyer. The wide range of attractive mortgage deals on offer, cheaper rates and wider product choice has been pivotal. Such rises in new buyers has spurred on activity further up the ladder and inspired movement among second steppers, which will prove vital in sustaining a healthy rate of sales activity.

“The recovery has now been rolled out far and wide, with the good news coming in from more and more Your Move and Reeds Rains branches up and down the country. Price rises have now spread to 90% of unitary local authorities – the greatest number since August 2010. With mortgages still historically cheap and interest rates set to remain stable for the time being, we’ll continue to see new buyers will rush to the market nationwide. However, even so, price growth and sales levels are still behind their pre-crisis peaks so we’re still some way from the ill-fated ‘bubble zone’.

“Regionally, we’re seeing a ripple effect emerging from London. Heat from the capital is emanating out further with traditional hotspots being the first to reap the benefits of recovery; particularly southern England and East Anglia before moving north through the Midlands. Although we’re still seeing a North-South divide, this is gradually being eroded. The West Midlands has this month broken the mould as growth has surged past the rate seen in the South West region, with Reeds Rains branches across the region reporting a large jump in prices in January compared to the preceding month.

“With greater economic prosperity, confidence between banks and lenders has been cemented further which will no doubt fuel the engine of recovery in the months ahead. While similarly first-time buyers are set to swim further across the sea of adversity to secure a home. But it is crucial both aren’t scuppered and that the Government’s housing plans come to fore with a continued focus on supply. This will ensure the recovery reaches the finish line and a generation doesn’t get priced out of the market”. 

Scottish house prices up by £2,146 in November – highest monthly rise since June 2007

LSL / ACADATA SCOTLAND HPI

• Over three quarters of Scottish regions see price rises in November
• Average prices in Aberdeen set another record high

 

House Price	Index	Monthly Change %	Annual Change %
£146,238	198.3	1.5	2.6

Donald MacLellan, Chairman of Walker Fraser Steele Chartered Surveyors, part of LSL Property Services, comments: “The property market in Scotland is powering on ahead like a freight train. Price rises of £2,146 in November reflect the largest increase in a single month, since June 2007 when prices were up by 1.7%. This is down to the vast influx of first-time buyers, who have stirred up activity from the lower realms of the housing market – accelerating the rate of recovery. Such momentum means there’s cause for renewed optimism in 2014, as the Scottish property market shows it’s making solid progress on all fronts. Prices have picked up at a healthy pace across the country and sales are rising swiftly, as mortgage conditions continue to improve. 

“Strong demand has been pivotal in improving the outlook for the Scottish housing market as confidence has been growing exponentially in the past six months. With lending levels following suit, there are sure signs the Scottish property market is on the fast track to full health. More than three quarters of the country saw price rises in November, showing the recovery has now become nationwide.

“In particular the journey for first time buyers is drastically better than a year ago, reinforced by Government schemes such as Help to Buy. While an enticing circle of mortgage products, low interest rates and higher LTV mortgages have propelled the market to another level, with sale volumes from June to November 2013 up by 22%. The rise in first time buyers has been key as activity from this end of the market has reverberated higher up.

“However, beneath the surface it’s also clear the number of homes on sale falls far short of the level needed to meet demand, which is resulting in climbing house prices. The blatant imbalance between the lack of housing supply and the pent up demand needs to be tackled to allow the market to continue to recover at a sustainable rate.

“Many buyers are understandably unclear over which direction the economy will take over the coming twelve months, with some opting to sit tight in the meantime. The withdrawal of the Funding for Lending scheme is in part responsible for this air of uncertainty. While another obstacle may be the referendum this year on Scottish independence, which could cause a slowdown as potential buyers delay their home purchase in order to await the outcome.”

News Headlines – Sunday 22nd December

Property

The Royal Institution of Chartered Surveyors predicts average house prices will rise in Britain by 8% next year and last Thursday the Council for Mortgage Lending revealed that the amount of money lent to borrowers in November rose to £17bn, up by more than 30% on the same period last year. Andrew Bailey, deputy governor of the Bank of England warned homebuyers there will be a clampdown on house purchases if there is any evidence that rising prices are spiralling out of control. Mortgage lending is overseen by the Prudential Regulatory Authority (PRA) which has the power to make banks hold back more money on balance sheets for every mortgage offered and can reduce loan-to-value ratios, making products such as 95% mortgages more expensive for homebuyers. Mr Bailey said controls could include strengthening the tests buyers have to go through before acquiring a mortgage and increasing the amount of capital banks have to hold against household lending.

Economy

Advanced economies will get their ‘mojo’ back in 2014 as the UK wins back medal as the fastest growing major European economy next year according to recent headlines. PwC said Britains; brighter growth prospects could also move it in line to be the fastest growing economy in the G7. The UK economy is expected to grow by 3% next year which would move it closer in line with America for the title of the strongest growing advanced economy in the world. There’s an air of optimism, as improving consumer confidence is expected to result in higher business investment. Despite the long journey towards recovery, for the first time people feel things are really starting to pick up.

Personal Finance

Shoppers are expected to splash out more than £5 billion in just four days in a boost for flagging retailers. Last weekend was said to be the busiest of the year for the high street with 31 million visits over two days. Barclays predicts that £5.2 billion will be spent on credit cards between yesterday and Christmas Eve and more than £1.1 billion will be spent on Tuesday alone as a vast proportion of people have left their Christmas shopping late due to the fact Christmas falls midweek.

LSL / Acadata Scotland HPI News Release

Scottish house prices up £1,368 since October 2012

• On a monthly basis prices fall marginally by £206
• House prices in Aberdeen set another record high
• Sales over the last three months are 23% higher than last year

 

House Price	Index	Monthly Change %	Annual Change %
£144,084	195.4	-0.1	1.0

Richard Sexton, director of e.surv chartered surveyors, part of LSL Property Services, comments: “It’s clear the Scottish housing market is being restored to health. Sales are substantially better and prices are entering a period of prosperity, fuelled by rising consumer confidence and demand. October is the second consecutive month in which the annual change in prices has been positive, a trend that has not been visible since early 2011. Average prices have risen £1,368 over the past year in Scotland, while lending levels are improving rapidly as economic conditions perk up as is being seen across the UK.

“With the easing of mortgage lending conditions, first-time buyers are having a much easier ride. There is now a better range of competitively priced products with lower deposit requirements, thanks in part to the backing from the government’s schemes. So far 2013 is seeing the greatest amount of sales recorded over the last five years. Record low interest rates have sent the market into another realm. Sales have shot up by 23% for the three months of August, September and October 2013 compared to the same period last year. At the bottom end, shoots of first-time buyer activity mean the market is blossoming, a factor that’s giving the whole market a lift.

“After a period of slow movement, it is reassuring to see home mover and remortgage lending is also showing a boost in levels. People are now more confident in their plans to sell their current homes and buy somewhere else as signs show the path ahead in 2014 looks stable. The Help to Buy scheme will take on more prominence early next year and will be the main driving force pushing up house price growth and buyer activity.

“The recent news that the Funding for Lending scheme will be axed has created an element of uncertainty. But the underlying fact is that the recovery has only just begun. Lending is still only slightly above half the levels seen at the peak of the market, so there is much space for growth. The referendum next year on independence from the UK could have an impact on Scotland’s housing market. But if investors hold on to see what the effect will be, it may unsettle the market and hamper its ability to create the much needed new housing supply in the meantime.”

LSL / Acadata Wales HPI News Release

Welsh house prices rise by £1,125 in October

• Average house prices up £3,137 since start of 2013
• Sales at highest level since December 2007
• New record average price in Cardiff, up 7.4% annually

House Price	Index	Monthly Change %	Annual Change %
£154,696	240.0	0.7	1.4

Richard Sexton, director of e.surv chartered surveyors, part of LSL Property Services, comments: “The housing market in Wales has turned over a new leaf and is clearly entering a new phase, with pent up demand and strong competition driving house price growth and rising sales. The market is powering ahead, with prices increasing by £1,125 compared to September, representing the third monthly price rise, while prices are up by £3,137 since January 2013. New buyer enquiries, sales and price expectations are all above the three-month average illustrating the strong headway being made.

 “Sales in particular are now standing at the highest level since December 2007, and momentum is building further – thanks to the boost in consumer confidence and the improving economic picture. Now that mortgage rates have dropped to record lows, aspiring homeowners are starting to have more chance to put together the money required for a deposit. As a result there are bursts of first time buyers pouring into the market with much more zeal, with Wales has seen a higher loan-to-value ratio than elsewhere in the UK. While there’s an improvement in the home movers sector of the market too.

“First-time buyer homes are proving particularly popular in Cardiff. Prices in the capital are up 7.4% on the year, setting a new record price, while many other parts of Wales remain more subdued. Without doubt, Cardiff is a different kettle of fish from London and South Wales is no South East of England, but as a whole the housing market in Wales is making strong strides forward nonetheless. Regionally however, some areas do differ more than others in terms of performance due to their local economies. Wage growth is still slow, and across Wales this will prevent prices from rising too quickly.

“What’s key is that we see steady, house price growth to ensure sustainable growth. When it launches on 2^nd January, the Help to Buy Wales shared equity scheme will provide a new opportunity for first- time buyers and existing home owners on new-build properties. But as the scheme is geared up at new-build properties, which represent only a smaller proportion of total housing sales, we expect the scheme will not – by and large – drastically affect overall prices.

“However house-building in Wales is still below pre-recession levels and this supply remains an area that needs to be addressed in order to continue the positive growth. While, the UK Government’s decision to withdraw the Funding for Lending scheme indicates that the more recently announced Help to Buy schemes are offering significant support to the sector, more can be done. In the coming year much will be determined by the development of the jobs market in Wales.”

LSL / ACADATA ENGLAND & WALES HPI

House prices up £11,219 from a year ago, fastest rate in three years

• Prices rise by £1,400 in November, reaching new record
• On an annual basis prices increase in all regions for the second consecutive month
• By the end of 2013 sales set to be 16% higher than 2012

 

House Price	Index	Monthly Change %	Annual Change %
£238,839	243.2	0.6	4.9

David Newnes, director of LSL Property Services plc, owner of Your Move and Reeds Rains estate agents, comments: “The housing market is almost unrecognisable from twelve months ago. Not only have average prices climbed to a new record high – with an annual rise of £11,219 and a monthly increase of £1,400 – but we’ve seen an increase in every region for the second month running – a true sign that the nationwide recovery is really taking off. The LSL house price index incorporates all transactions including cash.

“Competition is strong through rising demand and supply of new instructions not growing , a factor that will continue to prop up prices in the long term. Confidence is higher throughout the market, with the Help to Buy scheme and record low interest rates contributing to the positivity. Over the second part of this year, consumer confidence has snowballed as the economic picture improves, leading to a significant rise in sales. The increased availability of mortgages, in part thanks to the government’s schemes, and the greater range of mortgage deals on offer has swung open the door to a new host of first-time buyers, making the distant dream of homeownership now a reality for thousands.

“Strong headway is finally being made towards a universal recovery. All ten regions in England & Wales experienced positive movement in prices on an annual basis for the second time in three years. Annually prices have increased in over 80% of local areas up and down the country – the highest percentage since September 2010. The trajectory is clearly upwards. Record high house prices have not only been recorded in the capital, but also in areas of the South East including Oxfordshire, Hertfordshire and Cardiff.

“However, there is still uneven growth in property values across the country. London prices continue to race ahead in a different gear with 9.2% annual growth in the capital vastly outshining the rest of the UK. Between August and October sales in London were up 27% on the same three months in 2012, reflecting intense demand for properties in London, both from domestic and abroad.

“In his Autumn Statement the Chancellor unveiled plans to unleash a further £1 billion to unblock housing development to address the critical shortage in supply. This will play a role in preventing prices rising too far too fast. But this is only the beginning, and it’s vital that house building is given greater attention in 2014 and beyond, in order to ensure the recovery rolls forward at a sustainable level.” 

LSL / Acadata: Wales House Price Index News Release

Welsh house prices rise for first time in seven months

• Prices increased £1,563 in September
• Average price now £1,219 higher than start of 2013

House Price	Index	Monthly Change %	Annual Change %
£152,779	237.0	1.0	0.5

Richard Sexton, director of e.surv chartered surveyors, part of LSL Property Services, comments: “The economy is racing along and the rise in confidence, underpinned by better access to mortgages, is fuelling the property market in Wales. A shift in gear towards growth has become much more obvious: prices have moved into positive territory for the first time in seven months, with a rise of £1,563 in September compared to August.

“Hordes of first-time buyers are coming out of the wood work, providing renewed strength which will help the Welsh market gather momentum. Record low interest rates have meant mortgage payments for new borrowers are their most affordable for over a decade. As a result the mortgage market is bustling with potential buyers. Since the summer the increase in first-time buyers has helped unlock property chains higher up, allowing sales to soar. The slight drop in September is a reaction to the record high peak in August, reflecting a return to a more sustainable level on the barometer.

“The Government’s Help to Buy Cymru scheme has provided much needed support to people in search of affordable new build housing. It’s incredible to see that demand has leapt up and activity in Wales has become more even across all tiers of the property market. Prices have risen now that the distribution of sales is no longer primarily from the lower end of the market. However, there are concerns that interest rates may rise and a slowdown in wage growth could put pressure on aspiring buyers, eager to step on the ladder.

“On a smaller scale, the north and south divide is fading as the average price changes in north, south and central regions are almost identical in September reflecting the uniform recovery across the country. Cardiff is a hotspot having the largest total number of sales, and represents a substantial proportion of the Welsh property market. Often prosperous areas benefit from the upswing in buyer interest, as stronger local economies attract new buyers looking to settle down and find employment. Cardiff, boasts more green space per person than any other UK city, which is a key factor enticing more and more buyers into the region.

“With an influx of people into Wales, the market will hit a roadblock if the lack of housing supply in Wales is not addressed. The spotlight will be shone on the new Housing Bill to boost the supply of affordable homes. While the possibility of the Government’s New Buy mortgage guarantee scheme with builders and lenders will also provide a further foundation for growth.  These schemes will be crucial for the Welsh economy to stay on track and for the recovery to reach the finish line.”

LSL/ACADAMETRICS WALES HOUSE PRICE INDEX

Welsh house sales maintain the three-and-a-half year high

• Prices fall but this reflects increased activity by first-time buyers
• Prices down by £1,530 from the start of the year

House Price	Index	Monthly Change %	Annual Change %
£150,016	232.7	-0.2	-0.9

Oliver Blake, Managing Director of Reeds Rains estate agents, who has branches in Wales comments: “While the housing market across the UK makes a strong recovery, Wales continues to face an uphill struggle. House prices dropped in August and have fallen in nine out of the last twelve months. They fell by £373 in August and are £1,344 lower than twelve months ago.

“However there is cause for optimism as sales activity is growing and first-time buyer activity has bounced back bringing a whole new burst of energy.  House sales in Wales have continued to rise and for the second month running have reached a three and a half year high. It’s hugely positive to see the increase has been largely universal across all sectors of the market. First-time buyers have unlocked property chains, allowing sales to ripple higher up the ladder.

“First-time buyers now make up a larger part of the property market in Wales, which has caused the fall in average house prices. More first-time buyers mean more properties have been purchased at the lower end of the market, therefore lowering the average value. In the long term the rise in first-time buyer activity will make the market healthier, as sales from second-time buyers and home movers will boost levels and help drive prices upwards again.

“On a regional level, Cardiff had the biggest rise in sales in August due to the boost in the sale of detached and semi-detached properties which is barely the preserve of first time buyers. Demand is rising across the board and it is good to see there has been a rise in sales across all buyer types. The Government’s Funding for Lending and Help to Buy schemes have stimulated the market significantly. An array of attractive mortgage products have entered the market left, right and centre thanks to increased mortgage supply and the rise in competition between lenders. The more progress made in the first-time buyer market, the more likely it is we will see green shoots of recovery and more buyers tempted to step back into the market.

“The Welsh market needs to focus on house building to give it the shot of adrenaline it needs to fuel growth and return to a full recovery.”

LSL/ACADAMETRICS WALES HOUSE PRICE INDEX

Welsh house sales hit a three and a half year high

• Prices decrease but this reflects increased activity by first-time buyers
• Prices fall by £1,750 from the start of the year

 

House Price	Index	Monthly Change %	Annual Change %
£149,769	232.3	-0.2	-1.5

Oliver Blake, Managing Director of Reeds Rains estate agents: “The housing market is recovering quickly across most parts of the UK, but not in Wales. House prices have fallen in nine out of the last twelve months. They fell by £250 in July and are £2,241 lower than twelve months previously.

“Things are starting to look up though. First-time buyer activity has had a major boost, providing some comfort amid the trials and tribulations. Sales in Wales reached a three and a half year high in July, thanks to the influence of first time buyers. The Government’s Funding for Lending and Help to Buy schemes have had a positive impact, and the Welsh housing market is slowly but surely moving forward on the road to recovery.  Increased mortgage supply and stronger competition between lenders, resulting in better pricing, have lifted the market.

“The fall in the average house price has been partly caused by the increase in first time buyer activity. Most of the properties being purchased are at the lower end of the price spectrum which drags down the overall average. The rise in first-time buyer activity will make the market more fluid as sales from second-time buyers and home movers will result in levels rising which will start to push prices back up again.

“On a smaller scale, it is clear, regional house price growth is directly linked with the way each area’s immediate economy operates. Employment rates and job expectations are key factors in determining the level of housing demand in the UK. Prices fell in 13 local authorities and rose in 9, and the region with the largest monthly fall (Merthyr Tydfill) had the second highest unemployment rate in Wales. Demand for properties is high, but many Welsh first time buyers are finding it tough to secure a mortgage. Many are still locked out of the market altogether and are having to stay in rental accommodation, which is putting pressure on their personal finances and making it tough to save for a deposit.

“The Government’s role is crucial in driving the rate of recovery forward, as the Welsh market is in need of a revival in new properties in order to promote a healthy housing market. The good news is the lending environment has warmed up and will continue to unlock the pent up demand from first-time buyers.”

LSL/ACADAMETRICS SCOTLAND HOUSE PRICE INDEX

 

 

 

Scottish house sales at highest level for five years

 

• Sales in July 27% higher than in June
• First-time buyers account for the majority of increase in sales
• Prices are up 0.3% in July – first increase in four months

 

House Price	Index	Monthly Change %	Annual Change %
£143,574	194.7	0.3	-1.1

 

Alan Penman, director of Walker Fraser Steele, the chartered surveyors who are part of LSL Property Services, comments:

 

“House prices haven’t been increasing in Scotland anything like as quickly as they have in England. But they did rise for the first time in four months in July, which could be the start of a prolonged period of house price increases. Sales have been increasing, and confidence is gradually seeping back in to the market. First-time buyer lending in Scotland was at its highest since 2007 in the second quarter of the year, which has driven sales up to their highest in five years. Sales are up 27% compared to June, and first-time buyers are accounting for a much higher proportion of sales than they have done previously. The improvement is down to a significant improvement in the availability of high loan-to-value mortgages. Banks are much more willing to extend an olive branch to borrowers with small deposits, which has opened the door to thousands of buyers who were previously locked out of the housing market.

 

“And the improvement looks like it should be long-lived. The economy is brightening by the day, and confidence is spreading quickly. Further growth in the market is expected to continue as new buyers are keen to enter the market and potential sellers will start to put their homes up for sale to benefit from rising prices. The surge in activity from the bottom end of the market has sparked a revival in the market. It’s up to the Scottish government to continue to help first time buyers as they are the key to healthy, long term recovery.”