11
Oct 19

We could be leaving the EU at the end of the month. I say 'could' because let's face it, anything is possible on the Brexit merry-go-round. However, one thing is certain and that is that there has been a negative effect on the property market.

Estate agent comparison site, GetAgent.co.uk, has looked at where UK home sellers have been forced to take the biggest property price reality check when it comes to the asking and selling price of their home.

Pulling data from all of the major portals then cross-referencing with the Land Registry, the firm used proprietary algorithms to create a comprehensive record of what is selling, where, for how much and how long it’s taking.

When it comes to the asking price sought by UK home sellers, the market has remained firm as a whole, up 7% across the UK since the Brexit vote, with actual sold prices up 7.6%.

However, while the resilience and diversity of the UK market means many areas have remained impervious to the Brexit blues, there has been a notable chill in both asking prices and sold prices in a lot of areas.

Here are the worst when it comes to both.

Asking Prices

The biggest asking price drop since the vote has been in Bradford with home sellers having to re-evaluate their price expectations by a huge -35.9% to drum up buyer interest. Waveney in Suffolk has also seen a notable decline, down -22.4%, while the London borough of Islington takes the third spot with asking prices down -21.3%.

Chichester, Wigtownshire, Vale of White Horse, Aberdeen, East Hampshire, Horsham and Bolsover are also amongst the largest declines.

Sold Prices

While home sellers will list at a higher asking price to chance their arm in any market conditions, often resulting in a decline, sold prices have also come tumbling down in a number of areas since the Brexit vote.

It’s bad news for those in Bradford as the area not only tops the largest asking price declines but also the largest sold price declines, down -30.6%. Another Suffolk district ranks for the second largest decline in sold prices, but this time it’s Babergh with a decline of -24.8%, while Hertsmere places third, down -20.3%.

Wellingborough, Harlow, Chesterfield, Blackburn with Darwen, Oxford, Ripon and North West Leicestershire join the rest as the worst areas for sold price decline since the Brexit vote.

Colby Short, Founder and CEO of GetAgent.co.uk, commented: “There’s no doubt that Brexit uncertainty has produced perhaps the most erratic property landscape we’ve seen in some years and while there is light at the end of the tunnel, it’s hard to say just how long the tunnel is and if there is indeed an end in sight or not.

It’s certainly not accurate to say the UK market is down and out and for the vast majority, property prices continue to creep up, albeit at a slower rate than previous years. However, there are certainly a notable number of areas in which Brexit has delivered a bit of a knock-out punch for property prices and a real lack of buyer demand is seeing sellers list for a lower sum and sell for even less.

The proof of UK property is most definitely in the pudding though and once Brexit is behind us, we should see a reversal in fortunes for those feeling the brunt of our current European limbo.”

9
Oct 19

Newly released data from estate agency, Springbok Properties, has found that first-time buyers in and around London have seen some of the biggest jumps in average house prices since the Help to Buy schemes were introduced.

Help to Buy is characterised by three schemes.

The Help to Buy Equity Loan was launched in 2013 and has buyers contribute a 5% deposit towards a new build, with the government providing a 20% equity loan on the property, or 40% within London, which is interest-free for the first five years.

This is available on new builds under £600,000 in England and £300,000 in Wales. The scheme is running until 2023, though after 2021 it will only be available for first-time buyers and there will be caps on the value of homes people can buy.

This is the most well-known of the Help to Buy schemes.

The second scheme is the Help to Buy Mortgage Guarantee, which also launched in 2013. This had the government act as guarantors against loans, while it wasn’t restricted to new build. It was discontinued at the end of 2016.

The Help to Buy ISA was launched in 2015, which saw savers pay money into an ISA and then get a cash bonus form the government. The scheme closed for new entrants in November 2019, while the bonus must be claimed by 2030.

Springbok Properties looked at the average cost of a first-time buyer property across the UK and where has seen the largest uplift in price growth since Help to Buy was introduced. While Help to Buy has given many a leg up when it comes to climbing the property ladder, the influx of additional demand has also, perhaps ironically, pushed the cost of Help to Buy homes up considerably.

Across Great Britain, the average cost of a first-time buyer property has increased by 32.8% since 2013, almost on par with the regular market. The typical price first-time buyers paid for a property in Barking and Dagenham was £281,396 in 2019, an alarming 70.8% increase from 2013.

This isn’t the only East London region to see huge increases the average first-time buyer price, as they rose by 60.7% in Newham to £349,874 and 60.1% in Havering to £307,874.

Other areas to see a strong uplift are Waltham Forest in North East London, rising by 68.7% to £408,233; Thurrock in Essex, increasing by 59.2% to £237,635; and Stevenage in Hertfordshire, rising by 58.7% to £250,086.

Scotland and the North East more subdued

The City of Aberdeen, which has been hit hard by falling oil prices in the past few years, is the only area of the UK where first-time buyers are paying less than in 2013. The price they paid has fallen by -10.9% to £126,794 in 2019.

Some other areas of Scotland have only seen modest rises, as Inverclyde prices have risen by just 6.55% to £83,995, while South Ayrshire prices have seen a 6.9% uplift to £102,992.

In England, the worst climber is County Durham in the North East, where prices rose by 3.5% to £88,790. This is followed by Redcar and Cleveland, where prices climbed by 4.5% to £105,156; while behind that is Middlesbrough with an increase of 5.0% to £110,304.

It seems Help to Buy hasn’t been enough to kick-start some of these markets into action.

Shepherd Ncube, Founder and CEO of Springbok Properties, commented: “Help to Buy was introduced by the previous government with good intentions – to assist would-be home-buyers in their first step onto the property ladder.

However, it seems that whilst around 200,000 buyers have indeed been supported, the unintended consequence in most areas has seen an above average hike in prices driven by the demand that Help to Buy has created.

First rung homes are supposed to be more affordable, but we’ve seen the average price paid by a first-time buyer accelerate to similar levels as the wider market. Not only has this made it more difficult for today’s aspirational homeowner, but perhaps some tax-payers might question the wisdom of using their money to fuel house prices even further?”

26
Sep 19

UK based residential chartered surveyors, e.surv, have reported that a prolonged period of low rates coupled with flat house price growth has helped boost the number of mortgages approved to buyers with small deposits.

According to the data, there were 66,059 residential mortgages approved during August 2019 - 1.9% lower than last month but marginally up compared to August 2018, rising 0.1% year-on-year.

While some parts of the market have slowed, the number of first-time buyers has remained buoyant in the last 12 months. Low mortgage interest rates and more affordable house prices have also helped a greater number of first-time buyers onto the ladder than previously. Correspondingly, small deposit borrowers grew their market share from 27.9% in July to 28.3% this month. This share is also ahead of the 27.7% recorded in May and June.

It is not just first-time buyers who have been able to take advantage of low mortgage rates. Existing homeowners have also used this opportunity to remortgage and find a cheaper deal.

Mortgage lenders have been cutting rates and easing criteria in a bid to bring more existing customers to market.

Richard Sexton, Director at e.surv, comments: “While mortgage rates have ticked up in the last couple of years, more recently deals have started to become cheaper.

Swap rates, which are used by lenders to help price mortgage rates, have fallen, with lenders passing on these lower funding costs to consumers. The outcome has been a new wave of cut-price deals, which have tempted homeowners and first-time buyers to market.”

Swap rates help keep mortgage rates low in August

The falling rates on offer in the mortgage market are partly down to lower swap rates, which are the rates at which banks can borrow funds over a long-term. Although they are not the only factor used by banks to determine mortgage rates, they play a crucial role in how lenders price their loans. Low rates helped the proportion of approvals given to large deposit borrowers stay at 26.6% of the overall market this month.Elsewhere, the percentage of small deposit customers grew from 27.9% to 28.3% between July and August.

These changes meant that the mid-market shrank slightly, falling to 45.1%.

On an absolute basis, the number of small deposit borrowers grew to 19,091 in August. This compares to the 18,350 recorded a month ago.

Richard comments: “The rise in the number of small deposit customers shows the property market is starting to tilt in favour of first-time buyers and others unable to pull together large deposits. The number of mortgage schemes to help first- time buyers has also given then a timely boost.”

Three main UK hotspots for small deposit buyers

Yorkshire remained the best place to buy for people with small deposits, although other regions proved almost as attractive for these buyers.

The region has topped the charts for seven of the eight months in 2019 so far - only being beaten by Northern Ireland in July - but now faces a challenge to keep its crown. This month 35.4% of all loans in Yorkshire were to those with small deposits. This is marginally ahead of the North West, where this figure is 34.5%, and Northern Ireland, were the ratio recorded was 33.2%.

In all three regions over a third of lending went to borrowers with a loan to value (LTV) of more than 85%.

The Midlands also offered fertile ground for small deposit buyers, with 31.2% of all loans going to those customers during the month of August.

Predictably, London borrowers continued to have the most difficult time, with just 19.4% of all loans in the capital being given to small deposit applicants.

The city also had the highest proportion of loans approved to large deposit borrowers, recording 34.6% in August.

This was ahead of the South East region, which saw 31% of loans to this market segment.

Further behind were the Eastern England and South and South Wales regions, which both saw 29.3% of mortgages given to those with large amounts of cash.

Richard concludes: “While Yorkshire has continued to lead the way as the small deposit borrower hotspot, other
regions are proving equally attractive to first-time buyers.

The North West and Northern Ireland have both proven to be excellent places for people to buy if they have little cash to spare. Those in London and the South East have less opportunity, but with prices slowing the most in these areas, there are still great chances for first-time buyers to get onto the ladder.”