New figures indicate that average British residential property rental values rose significantly within the year to July 2016.
Many Britons are finding it increasingly hard to step onto the property ladder. According to Letting Agent Today, Tony Williams of property consultancy Building Value recently noted that at present, “the house price to earnings ratio remains around 5.5 times against a long term average of 4.25 times.”
Previous research shows that despite Brexit, the UK’s housing market remained strong in June 2016. A new study from CBRE, a leading commercial property adviser, indicates that sturdy economic fundamentals will support British house price growth throughout 2016.
Encouraging price growth
Property Wire writes that CBRE sees current British house value growth of 5.1% as encouraging. The commercial property adviser added that UK residential property prices should expand by an average of 3% in 2016. In the second quarter of 2016, house price growth was strongest in the Outer Metropolitan area (12.4%) and London (9.9%), but weakest in the North (1%), year-on-year.
The UK’s house prices have now risen 15 quarters in a row and are now up some 36.6% since the height of the financial crisis in the spring of 2009, writes property developer Richard Carr.
Can house price increases ever be moderated?
During the second quarter of 2016 house prices in the United Kingdom increased by 1.8% on the previous three months and a massive 8.5% based on the same period a year earlier.
As a result, the typical house price of a standardised UK property rose to a record figure of £215,582 from £211,868.
Despite the country wide increase, there’s still huge disparity throughout the regions. For example, London house prices have increased more than double the UK average and nearly four times greater than in Northern Ireland.
New figures suggest that one out of every five homes in the UK’s capital city of London is worth at least £1m, writes property developer Richard Carr.
Expensive housing market
London is the UK’s most populous and crowded city. People from around the world flock to London because it is the heart of the UK’s economy, as well as a premier global financial and technology hub. There is an increasingly strong demand for a dwindling supply of living spaces in London, meaning that its average house prices have experienced extraordinary growth in the past few years.
The latest index from the Office for National Statistics (ONS) reports that the average London house price grew by 14.5% in the year to April 2016. The ONS has implemented a new formula to determine its average UK residential property values, so the average London house price is actually lower for April (£470,000) than it was in March under the old system (£552,000). Despite this change, average London residential real estate values continue to hover around the half million mark.
New figures from the Office for National Statistics (ONS) show that average UK house prices recorded “strong growth” in the year to April 2016. Interestingly, the ONS recently implemented a new method for calculating average British residential property values. This means that that value of a typical UK home technically decreased significantly from March to April 2016.
Robust housing market
House price rises
The UK housing market has been recording increasingly impressive growth for the last two and a half years. The ONS’ March 2016 House Price Index, for instance, illustrates that average UK house prices expanded by 9% in the year to March 2016, rising from a growth rate of 7.6% in the 12 months to February 2016. In March, the ONS put the typical British residential property value at £292,000.
Despite the EU referendum and a number of other factors, the UK’s residential property market continues to flourish and has outperformed the predictions that were set for the start of 2016, writes property developer Richard Carr.
The UK’s residential market has started 2016 at breakneck speed
According to analysis from Connells Group, the property market in the UK started 2016 at breakneck speed with more buoyant activity than the positive sentiment experienced during the final quarter of 2015.
Low interest rates and a number of economic factors has seen the number of active buyers entering the property market reach new heights. David Livesey of Connells explained to propertywire.com that the low interest rates has encouraged those on the fence to make their first move onto the property ladder.
Is development tax a reason for increasing house prices?
The average price of a home in England and Wales has now surpassed £300,000 for the first time ever and Richard believes there are two main factors for this:
Demand outweighing supply
On the first point, he doesn’t understand the government’s current process. Developers are charged large amounts of CIL and s106 by local planning authorities which means that the price of the finished product is increased.
The government has therefore had to introduce a number of Help to Buy schemes to help first time buyers, using money funded by development tax!
First time buyers are benefitting from the Help to Buy ISA
The initiative, launched in December 2015, has seen over a quarter of million people open up one of the financial products. Encouragingly, more than half of those signups were made my people aged 30 and under.
The scheme allows savers to be given a maximum of £3,000 by the government to help them purchase their first home. Savers can put away £200 a month into the dedicated ISA with the government topping it up by 25%; the first bonus was paid to savers this week who opened up an account in December.
For couples aiming to save for their first home, individual accounts can be opened which amounts to a potential boost of £6,000.
Other Help to Buy schemes such as the mortgage guarantee and equity loan have also proven popular with over 100,000 home buyers involved.
Housing supply in Britain remains a huge problem – and the outlook only looks worse, writes property developer Richard Carr.
First time buyers are suffering
In December last year (2015) the average number of properties available per estate agent branch was just 37. This is considerable drop compared to the same month in 2005 when 72 houses were on the market. 45 homes were available this time last year.
The National Association of Estate Agents research shows that the supply of available housing to buy in the UK has almost halved in the last ten years, which is heavily contributing to the problems first time buyers are finding getting onto the property ladder.