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Price of starter homes rises to two year high

The average property price paid by first time buyers hit a two-year high in September, as starter homes outperformed the rest of the market, research showed today.

First time buyer 3

The typical cost of a first home soared by 4.1 per cent during the month to stand at £160,218, according to estate agent haart.

But house prices eased across the wider property market as the supply of homes for sale increased, but demand fell.

There were 2.8 per cent more homes put on the market during September than in the same month of 2013, the fourth consecutive month during which supply has increased on an annual basis.

At the same time, the number of new buyers registering with estate agents fell by 6.6 per cent, also the fourth month in a row in which demand has eased year-on-year.

The change in market dynamics led to the average cost of a British home dipping by 1.1 per cent to £203,135, while in London prices dropped by 3.3 per cent to stand at £507,967.

But house price gains remained robust on an annual basis, with prices 6.9 per cent higher than they were a year ago across Britain as a whole, while in London they were a massive 19.8 per cent up.

Despite the easing in the mismatch between supply and demand, competition for homes remained intense, with an average of 10 buyers chasing every home for sale, rising to 16 potential buyers per property in London.

Paul Smith, chief executive of haart, said: “Although our data shows a small slowdown in house price growth on a monthly basis, this must be taken in the wider market context.

“Good mortgage deals are still very much on the table and interest rates aren’t going up for the foreseeable future.

“We have 10 buyers chasing every new property instruction UK-wide, so sellers shouldn’t start sneezing yet. The run up to Christmas has already begun and the market remains strong.”

Property sales increased by 1.8 per cent during the month, to stand 7.2 per cent higher than in September 2013.

But the number of first time buyers registering with estate agents fell by 6.4 per cent compared with a year ago.

People taking their first step on the property ladder put down average deposits of £34,550 during the month, while they borrowed an average of £125,668.

On a brighter note, this group accounted for 44.7 per cent of all mortgages advanced in September, slightly up on 41.1 per cent 12 months earlier.

Today’s figures add to growing evidence that the booming property market is beginning to cool.

Nationwide Building Society said house prices dipped by 0.2 per cent in September, while Halifax said annual house price inflation may have peaked at 10 per cent.

The average home in Britain currently costs £266,976, according to Zoopla.

 

October 16, 2014 at 9:00 AM Leave a comment

New build of the month: The Ram Quarter, Wandsworth, south west London

If you’re looking for a new build home, try this scheme in Wandsworth ranging from studios to four bedroom duplexes.

15.10.14 Ram 1

Where exactly is it? On the site of the former Ram Brewery which closed in 2006. It is just south of the River Thames, between Putney to west and Battersea to the east.

Monster housing estate or tiny boutique development?  Monster. This £600m scheme by Chinese company, Greenland Holdings Group, will eventually include 661 homes, plus shops, cafes and restaurants. As a nod to the site’s history there will also be a brewing museum and a microbrewery.

How much will it cost me? The scheme is being sold jointly by JLL and Savills and the first phase of the scheme includes 338 flats, from studios to four bedroom duplexes, priced from around £300,000 for a studio flat. A full price list will be announced later in the month, and the phase should be built and ready in 2017.

What is so great about it? This is a high end, high spec scheme, alongside the River Wandle, and within easy reach of stacks of local cafes, pubs and bars. Alex Finch, a director of JLL, pointed out that the scheme will also include its own shops and places to eat. “It is really going to create a new destination, for local people as well as those who live there,” she said. “It also has some listed buildings on the site which are going to be retained, like the original stables and brewery building, so it will not just be your standard new build.”

Surely its not completely perfect? Prices are stiff, although par for the course for the area, and early adopters will have to accept years of building works going on around them. The surrounding area is rather industrial at present (although rapidly being redeveloped). Motorists will have to endure the horrors of the Wandsworth one way system if they want to drive into town. Finch, however, points out that it is less expensive than many new build options coming out of nearby Nine Elms or east London. “And there are plans to redo the gyratory system,” she said. “This is something which Transport for London is doing so we do not have a definitive plan or date but they are looking at making parts of it two way, and traffic calming, which should really improve the area.” TFL plans to begin public consultation on its ideas to improve the area this winter.

Who will my neighbours be? Finch expects a “young audience” to move into the Ram Quarter – first time buyers assisted by the Bank of Mum and Dad, young couples and perhaps families with a small child since some of the flats have four bedrooms. There will clearly be some investment purchases, as with all new London schemes, and it is also inevitable that many of the residents will be commuting to work in the West End or City.

What is Wandsworth like? Once a bit of a poor relation compared to its swishier neighbours, Wandsworth has been enjoying a ripple of regeneration and gentrification. There are cute independent shops and cafes in Old York Road, and stacks of chains at the nearby (and recently done up) Southside Shopping Centre. The nearby Wandsworth Park is small but perfectly formed, one of only a handful of Grade II listed parks in the capital, with views across to the Hurlingham Club on the north bank of the river at Fulham.

Is it any good for kids? Since this phase is all about flats the developer expects it to appeal to the child free. Families won’t love the local roads, which are busy, but there is plenty of green space within walking distance (Wandsworth and Clapham Commons). Teenagers will adore all the local shops and entertainment. Nearby schools include St Anne’s CofE Primary School, rated “good” by Ofsted, and Ashcroft Technology Academy (seniors) which the Government’s schools’ watchdog considers to be “outstanding”.

How are the public transport links? Fantastic. Wandsworth Town railway station is a five minute walk away, with services to Waterloo taking around 15 minutes.

Is it up and coming? Very much so. Average prices stand at £811,524, up a resounding 18.07 per cent in the last year.

I like the sound of Wandsworth, what else is on sale there?

1. SW18 is the focus of frenzied new building, including this three bedroom penthouse with great river views, on the market for £1.295m.

15.10.14 Ram 2

2. Alternatively pick up a one bedroom flat in The Schoolyard development, on the market for £480,000.

15.10.14 Ram 3

3. Of course Wandsworth isn’t all modern – there are streets of lovely Victorian houses too. This two bedroom flat in a corner building is on the market at £695,000.

15.10.14 Ram 4

October 15, 2014 at 11:50 AM Leave a comment

A third of tenants say they’ll never own a home

More than a third of people living in rented accommodation think they may never be able to buy their own home, research showed today.

Around 35 per cent of renters aged between 35 and 44, think homeownership may be beyond them, rising to 50 per cent among those in the 45 and 50 age bracket, according to insurer Aviva.

The group found that although 15 per cent of renters were saving for a deposit in the hope of getting on to the housing ladder in the future, 41 per cent of these people had already lived in a rented home for more than five years.

The number of households who rent a property through the private sector has increased by 889,000 since 2008/2009, including an additional 434,000 households in the 25 to 34 age range.

There has also been a 64 per cent increase in the number of families with children living in a rented property during the same period.

The main reason people gave for renting was that they could not afford to buy their own place, cited by 56 per cent of those questioned.

But 22 per cent said they were still renting because the property they were in had become their home and 8 per cent said the house was in a good area in which to raise a family.

The study also found that people in rented accommodation were less likely than homeowners to have certain financial products, such as life insurance, savings and pensions, making themselves financially vulnerable.

Only 23 per cent of renters had life insurance, compared with 51 per cent of homeowners, while just 3 per cent of renters had critical illness cover, compared with 19 per cent of owner-occupiers.

At the same time, 12 per cent of people who rented their home had a private pensions and only 28 per cent had an employer pension, compared with 27 per cent and 59 per cent respectively of homeowners.

People who had bought a property were also more likely to have a savings account at 70 per cent and an ISA at 52 per cent than their renting counterparts, only 53 per cent of whom had a savings account, while just 29 per cent had an ISA.

Louise Colley, protection director for Aviva, said: “Renting offers many benefits such as affordability and flexibility, but there’s a concern that many renters are being left financially exposed.

“When someone takes out a mortgage they are often asked to consider how they might pay it if they were seriously ill or if sadly an income-earner was to die. This can often prompt people to take out protection products like life insurance and critical illness cover.

“If a family rents, these conversations may not happen, so there’s a risk that if a renting family loses an income, they may not have the protection that could help to pay the rent and cover the bills.”

October 15, 2014 at 9:07 AM Leave a comment

House prices to rise by almost 20% in the next five years

House prices hit a new record high in August but the booming London market showed signs of slowing down, figures revealed today.

House prices 2

The average cost of a home in Britain rose by 0.6 per cent during the month to stand at £274,000, according to the Office for National Statistics.

The annual rate of growth was unchanged from the previous month at 11.7 per cent, as the housing market recovery continued to ripple out across the country.

London remained the key driver of growth, with prices in the capital soaring by 19.6 per cent year-on-year.

But property values in London dipped by 0.1 per cent during the month to stand at £514,000 or 39.5 per cent above their pre-crisis peak.

In the South East and the East annual house price growth picked up slightly to 12.3 per cent and 11.6 per cent respectively, while it was 9.6 per cent in Northern Ireland and 9.3 per cent in the South West.

But growth was more subdued in other regions, with prices edging ahead by just 3.8 per cent year-on-year in the North East, while they were 4.7 per cent higher in Wales and 5.6 per cent up in the North West.

Property values are now above their pre-crisis peaks in London, the South East, East, South West, East Midlands and West Midlands.

David NewnesDavid Newnes, director of Reeds Rains and Your Move estate agents, said: “A north/south divide in the field remains evident in the race back from the debris of the financial crash.

“For six regions of the UK, average property prices achieved on completion are yet to match their pre-crisis score.”

Meanwhile, estate agent Knight Frank forecast that the cost of a home would rise by only 3.5 per cent in 2015, as the market pauses for breath.

In regional terms, the group expects house price gains in all areas of the country to be in the 3 per cent to 5 per cent range.

The South East is expected to see the strongest gains at 5 per cent, while growth will be slowest in the North East, North West, Yorkshire & the Humber and Wales at 3 per cent.

Despite the predicted slowdown in growth next year, the group still expects house prices to rise by a cumulative 18.2 per cent in the five years to the end of 2019, which would represent a 12 per cent gain in real terms.

The prediction comes amid growing evidence that the property market is beginning to cool as more homes come on to the market.

At the same time, survey evidence suggests demand is reducing as potential buyers are put off by the high house prices currently being demanded by sellers and the prospect of interest rate rises next year.

Mortgage lender Halifax last week said annual house price inflation may have peaked at 10 per cent, although it still reported a 0.6 per cent price gain for September.

Nationwide reported a 0.2 per cent fall in property values for the same month, with annual growth also slowing.

October 14, 2014 at 11:21 AM Leave a comment

Property is ‘more affordable’ than before the financial crisis

Property is significantly more affordable than at the start of the financial crisis in all areas of the country except London, research showed today.

29.07.14 House prices

Low interest rates have ensured it is easier for people to get on to the property ladder or trade up it in all regions outside of the capital, despite recent strong house price gains and stagnant wage growth, according to estate agent Hamptons International.

The group has created an affordability index, which not only looks at the house price to earnings ratio, but also factors in changes to the cost of living and mortgage rates.

The group said the amount of income families had left after paying for essential items, such as food and utilities, had fallen by 6 per cent or £60 a month since the start of the financial crisis in 2008.

This drop was largely due to the fact that post-tax income for a full-time working couple had increased by just 9 per cent in the past five years, but spending on essentials had soared by 28 per cent.

But despite recent house price rises, the average cost of a home is still 5 per cent below its pre-crisis peak, while low interest rates mean mortgage repayments account for a significantly lower proportion of people’s income than in 2008.

Fionnuala Earley, director of research at Hamptons International, said: “Our analysis shows that ability to buy across the country, but excluding London, has improved since the start of the recession when both house prices and interest rates began falling.

“London is the stand out exception. Here ability to buy is now worse than it was before the crash.”

Northern regions have seen the biggest improvement in the affordability of property since the financial crisis started.

Hamptons International estimates that affordability for first time buyers has increased by 305 per cent in Wales since 2008, while it is 212 per cent better in the West Midlands and 190 per cent better in Scotland.

But the group admits these figures do not take into account the large deposits people currently need in order to obtain a mortgage.

Other groups have not fared as well, with families with young children seeing the least benefit.

Although their ability to afford property has only deteriorated in London, the improvements seen in other regions have been far more muted, increasing by an average of just 27 per cent across Great Britain as a whole.

Looking ahead, as the economy improves, the group expects wages to rise in real terms, increasing people’s ability to buy a property, but it added that some of the improvement would be offset by higher interest rates.

Meanwhile, research carried out by the Daily Mail found that foreign buyers, particular Chinese and Russian investors, were turning their attention to properties outside of London as they looked to cash in on Britain’s strong housing market.

It said houses in South Wales and Weston-super-Mare, and flats in Manchester, Liverpool and Sheffield were being offered at foreign investment fairs and on estate agents’ websites in China and Russia.

The number of homes bought with cash had increased by over a fifth in the past year, according to estate agent Savills, and many of these purchasers are thought to be wealthy foreign buyers.

But there are fears that an influx of foreign investors will push up prices for first time buyers and families outside of the capital, which has recently seen strong growth in property values, largely due to demand from overseas buyers.

October 13, 2014 at 3:10 PM 1 comment

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