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  The housing market has generated plenty of headlines this autumn. The latest statistics from Rightmove show that asking prices fell by 1.2% in September. It’s the first time prices have seen a reduction at this time of year since 2013. London saw the biggest falls, with central areas down by 5.3% and Greater London down by 2.9%.

Miles Shipside, Rightmove director and housing market analyst comments:

“As we enter the autumn selling season it is usual to see estate agents advising new-to-the-market sellers to push up their asking prices. But this year all four southern regions have seen new sellers on average asking less than those of a month ago, reducing the national rate of increase. There were Autumn price bounces nationally in 2014, 2015 and 2016, but the south of the country has turned this month into a bit of a damp squib, whilst some northern regions are still showing marginal signs of upwards price pressure. Estate agents are clearly advising many sellers that they have to lower their price expectations to fit in with buyers’ stretched financial resources, with that price compromise hopefully generating extra buyer interest.”

It’s no cause for alarm, as Rightmove themselves point out - house prices eventually reach an upper limit and after six years of continuous growth, it’s not unreasonable for them to slow for a while. And it’s good news for buyers, especially since, on an annual basis, wage growth (+2.1%) has finally overtaken house price growth (+1.1%). There is no doubt, affordability is a key component of a healthy housing market and it is interesting to note that despite falling asking prices, transaction volumes were up by 4.8% when compared to the same period last year.

Autumn could also see the first rise in the base rate since 2008. It’s been widely tipped to take place in November, but its effect on the housing market is expected to be minimal as the rise is only likely to be a reversal of the 0.25% reduction in the immediate aftermath of the EU referendum. According to Nationwide, one of the country’s biggest lenders, the number of borrowers on variable rates has fallen substantially in recent years, down from a high of 70% in 2001 to 40% today. Even for those who do have variable rate loans, a quarter per cent rise only equates to £15 extra a month for the average sized loan.

Autumn is also peak conference season and both the left and the right have come up with an array of solutions for Britain’s ‘Broken Housing Market,’ some more practical than others.

Labour has pledged to introduce rent controls and prevent ‘social cleansing’ during regeneration programmes. The Conservatives have promised another £10bn for the Help to Buy scheme, a top to bottom review of social housing and an extra £2bn to build 25,000 new council houses. For the rental market there are plans for tighter regulation – see ‘BUY-TO-LET’ section below.

HOUSE PRICES AND STATISTICS
Despite the downbeat headlines, the indices are still showing positive growth on both an annual and monthly basis, the only exception being Rightmove’s September figures.

Nationwide: Sept: Avge. price £210,116. Monthly change +0.2%. Annual change +2.0%
Halifax: Aug. Avge. price £222,293. Monthly change +1.1%. Annual change +2.6%
Land Registry: July: Avge. price £226,185. Monthly change +1.07%. Annual change +5.14%
Hometrack UK City Index: Aug: Avge. price £249,900. Quarterly change +1.3%. Annual change +4.9%
Rightmove: Sept: Avge. price £310,003. Monthly change -1.2%. Annual change +1.1% (asking prices on Rightmove)

BUY-TO-LET
The latest stats from Homelet’s Rental Index show rents rose at their fastest rate in August this year, up by an average of 1.5% and by 2.4% annually. The biggest rise was in London, up 2.9%, although rents fell by 0.5% in East Midlands.

Commenting on the research, HomeLet’s Chief Executive Officer, Martin Totty said:

“Whether the recent strengthening in rents achieved, seen generally across all regions of the country, is driven by more robust demand or by some restriction of supply is hard to judge. Either way, landlords will only be encouraged to invest in property over other assets if they’re convinced they can achieve reasonable returns. If not, then the supply of rental properties could become constrained. Many landlords still face further increases in their costs and so will need to find a new equilibrium between their legitimate required returns and affordability for tenants. It seems the elements in solving that particular equation become ever more complex.”

In other news, at the Conservative Party Conference in Manchester, Communities Secretary Sajid Javid has announced a raft of new legislation aimed at curbing rogue landlords and increasing the security of tenants. All landlords will soon have to sign up to an ombudsman redress scheme (a type of housing court), which he claims will give tenants more power to challenge bad landlords. At the same time, all lettings agents will have to join a professional body. He also pledged that in his next budget he would launch an incentive package to ensure landlords offered tenancies of at least 12 months with a mandatory three months notice period.

Article by Simon Cairnes

     
 


 

 

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