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”. 

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Marsh & Parsons:

Record January for the Prime London Property Market

 Image 

  • Almost half (48%) of Prime London property sold for, or in excess of, the asking price
  • Over a third (34%) of property in January sold within two weeks of being put on the market
  • Ratio of supply and demand rose to a four-year high with 23 registered buyers for each available property
  • Strong demand is pushing prices higher, with the average price of two-bedroom properties in Outer Prime London increasing by 17% in 2013, an increase of almost £100,000

 

The Prime London market experienced a bumper January in 2014, with properties selling in record time and for closer to the asking price than ever before, according to new data from estate agent Marsh & Parsons.

 

Over a third (34%) of property in January was sold within two weeks of being put on the market – twice as many properties in this timeframe compared to January 2013.

 

In addition, almost half (48%) of all property in January sold for, or in excess of, the asking price. This meant that, on average across all property sold, 99% of the asking price is currently being achieved – an increase from 98% during the past two years.

 

Peter Rollings, CEO at Marsh & Parsons, commented: “Now is the time to get a jackpot price on property thanks to a surge of potential buyers entering the market in the New Year. These extraordinary conditions have created a strong seller’s market and one of the best opportunities to sell property in recent years.

 

“But conditions like this won’t last. Many people believe that the best time to market property is during the busier months of the spring. But these sellers could be missing a trick – the increasing levels of property supply at that time of year will dissipate current levels of demand, and bring about a return to more normal market conditions in the spring.”

 

Supply and Demand

 

In January, there were 23 registered buyers competing for each available property on Marsh & Parsons’ books. This was the highest level since 2010, and represents a dramatic increase from the ratio of 14 registered buyers per property in January 2013.  Compared to the same point last year, 19% more buyers entered the market in competition for 28% fewer properties – making this a strong seller’s market.

 

But for the last four years, an average of 10% more property has become available between the months of January and April.  This percentage jumped considerably between 2012 and 2013 as the property market recovered, and if this trend continues, 18% more property could hit the market by spring 2014.

 

Peter Rollings continued: “London’s rising population, together with a perfect combination of low interest rates and competitive mortgage finance has created a surge of potential buyers. But the supply of housing stock has remained more subdued. Our more astute sellers are putting their properties on the market now because they know that the imbalance of supply and demand will help them to get a great price.

 

“In a seller’s market, property regularly goes for over the asking price, so buyers need to be realistic when viewing property and placing bids. When they find their chosen property, they must not delay. Being decisive is key to successful negotiations.”

 

Impact on Prices

 

The average value of two-bedroom properties in Outer Prime London increased by nearly £100,000 during 2013 following a 17% annual growth, according to Marsh & Parsons’ latest London Property Monitor.

The average value of two-bedroom properties in Outer Prime London increased by nearly £100,000 during 2013 following a 17% annual growth, according to Marsh & Parsons’ latest London Property Monitor.

 

The average price of a two-bedroom property in Outer Prime London – comprising non-central areas such as Brook Green, Fulham and Barnes – now stands at £673,812. This is an increase of £98,214 since Q4 2012, when the average price of a two-bed in these areas was £575,597.

 

The average price of a two-bedroom property in Outer Prime London – comprising non-central areas such as Brook Green, Fulham and Barnes – now stands at £673,812. This is an increase of £98,214 since Q4 2012, when the average price of a two-bed in these areas was £575,597.

 

Property Type Breakdown

   

All Prime London

Prime Central London

Outer Prime London

1 Bed

 £     520,076

 £        599,131

 £        470,668

2 Bed

 £     939,839

 £     1,365,482

 £        673,812

3 Bed

 £  1,577,109

 £     2,362,956

 £     1,004,493

4 Bed

 £  2,024,000

 £     2,979,556

 £     1,426,778

 

 

Looking at average values across all property types, growth in Outer Prime London outpaced Prime Central London by 50% during 2013, with annual growth of 15%, compared to annual growth of 10% in the Prime Central areas of Chelsea, Kensington, Notting Hill, Holland Park and Pimlico.

 

The top five Outer Prime ‘hotspots’, where the highest levels of growth were recorded during 2013 were: Barnes (average annual price growth of 19%), Balham, Clapham, Fulham (all 18% annual growth), and Battersea (15% annual growth). 

 

Peter Rollings continued: “Last year the biggest price increases were to be found in the Outer Prime London ‘villages’. These areas are all popular with UK buyers and are favoured for their community feel and local atmospheres. Slightly lower property prices in these areas also attract those who may have been priced out of more central areas.

 

“But early indications in January point to a turnaround. While parts of Outer Prime London sped ahead in 2013, our data suggests that Prime Central areas are due for a growth spurt in 2014. This was beginning to happen in the third quarter of last year and looks set to surge forward later this year.”

 

Prime London Property Price Movements

 

Average value

Quarterly Change

Annual Change

Prime London

£ 1,477,699

3.0%

12.3%

Prime Central London

£ 2,108,717

2.3%

10.0%

Outer Prime London

£ 1,083,313

4.0%

15.1%

 

 

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.”

LSL PROPERTY SERVICES: SIX IN TEN LANDLORDS PREDICT GROWTH IN TENANT DEMAND NEXT YEAR

  •  58% of landlords predict tenant demand will grow in the next twelve months
  • Four in ten landlords reported growth in tenant demand in last six months
  • Nearly a fifth expect to expand their portfolios in 2014
  • Three quarters of landlords believe now is a good time to buy or sell rental properties

Prospects are bright for the rental sector in 2014, with growing tenant demand boosting confidence among landlords, and rising prices making properties attractive investment opportunities, according to a landlord sentiment survey conducted by LSL Property Services plc, which owns the UK’s largest lettings agent network, including national chains Your Move and Reeds Rains.

In the past six months, 41% of the 2,195 landlords polled reported a rise in tenant demand, with just one in sixteen seeing a fall.  Such growth in demand has been the driving force behind the series of rent rises seen during 2013. The majority of landlords (58%) predict demand will increase further in 2014, with just 10% expecting demand to shrink.

Nearly a fifth (18%) of landlords therefore anticipates growing their portfolio of properties over the coming twelve months, while 16% already expanded in 2013.

David Newnes, director of LSL Property Services, comments: “The rise in house prices is evidence of the underlying buoyancy in the property market and the stabilising of rent rises is an indication of the current healthy state of the rental sector. Landlords are therefore in a prime position to benefit from the strong yields on properties and aspiring buy-to-let investors can be encouraged by the climbing tenant demand, as not only does it signify the excellent long-term investment opportunity, but also demonstrates the continued appetite for rental homes.”

 

“Demand for rented accommodation is strong, exemplified by the fact that the number of lettings, new viewings and applicants are all rising. There are strong foundations for prosperity in the rental sector, fuelled by increased economic optimism and future job creation. Against the backdrop of growing economic stability, more confidence is driving people forward in search of the attractive deals on offer across the buy-to-let mortgage market, which will allow them to benefit from the attractive returns.”

 

Over three quarters of landlords (77%) believe now is a good time to buy or sell rental properties. Of those who think now is a good time to buy, 71% cited attractive property prices and half highlighted the better capital returns on offer compared to other forms of investment, while 47% pointed to strong tenant demand as a key investment driver.

 

MORTGAGE FINANCE REMAINS A STUMBLING BLOCK

Despite the stark improvements in the mortgage market recently, just one in six landlords believes the availability of cheap finance is a key reason for why now is a good time to invest – although this is up from one landlord in eleven in December 2012.  In fact 35% of landlords say that it is more difficult to raise mortgage finance compared to a year ago, highlighting that for some mortgage challenges remain a deeply embedded issue.

David Newnes concludes: “While the level of buy-to-let lending has been rejuvenated and is now climbing out of the doldrums, this is still short of historic levels. Securing mortgage finance is therefore not just a concern exclusive to first-time buyers, but remains a real and serious challenge for many landlords. Lending to first-time buyers and those without large deposits has itself seen a pick up but still has a long way to go, and the proportion of UK households is only increasing. It is the rental sector that will be continually needed to pick up the slack.

 

“Filling the chasm between supply and demand is also reliant on the rising number of buy-to-let investors accessing the affordable mortgages required, thus allowing them to further widen the pool of rental accommodation on offer.”

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 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.” 

News Headlines – Thursday 12th December 2013

Business/Economic
Lloyds Banking Group and RBS have been fined a total of £90m –the former for serious failings in its sales practices, and the latter to settle accusations that it breached US sanctions. The FCA was particularly critical of the structure of targets and bonus arrangements that involved sales people being potentially demoted with a cut in salary of up to 50% if they failed to hit targets.

Property
The number of first time buyers has surged by three quarters over the past year as a surge of activity in the housing market pushes prices even higher. Haart revealed that the number of the first time buyer registrations had risen 78.4% in November 2013 compared to the same month last year. Both Haart and Zoopla say that average house prices in the UK have risen over £10,000 during the year, soaring way head of growth in typical wages.

The energy minister has indicated that the Government could defy an official recommendation that it must meet its green energy targets for the 2020s. Michael Fallon described the report as merely ‘advice.’

Personal Finance
Families are having to spend almost £500 more a year on housing and energy bills than a decade ago, forcing cutbacks in other areas to make ends meet. The ONS found that last year families spent an average £68 a week on rent, energy bills, and other housing costs such and maintenance and repairs, up from £59.20 in 2002.

Recruitment
The treasury has confirmed maternity pay will be protected after it was revealed by David Cameron that it would be lumped in with the welfare spending due to be capped in next Spring’s Budget. Francis Elliott, Times, p10; Shadow childcare minister Lucy Powell is expected to say that employers wrongly see mothers as ‘scatty and clock watching,’ as they fail to understand that they have already done a day’s work before they leave home. Powell is to call for a revolution to overcome prejudices faced by working parents.