The UK housing market has seen a slow start to 2018 across the whole country, but especially for high value homes in London. The market saw a drop in the number of properties coming onto the market, as well as a reduction in the number of buyers and the total number of sales. The drop in new buyer enquiries also indicates that the situation is unlikely to improve in the near future.
The market received mixed messages from lenders and housing market surveys, with the Halifax showing house price drops and Nationwide showing slight gains. The Royal Institute of Chartered Surveyors’ regular survey of estate agents found that there had been a moderate increase in prices across the board.
House Prices – Mixed Messages
The Halifax reported that house prices fell 0.6% in January to £223,285. The lender said that the fall came despite increasing employment levels and because consumer prices continue to grow faster than wage rates. They also said that it was too soon to notice any impact from stamp duty changes introduced by the government.
In contrast to these figures, however, the country’s 2nd largest lender, The Nationwide, said that they had experienced slight increases in prices. The average price of a home, according to the building society, rose 0.6% to reach £211,756. They suggested that the number of new properties being added to their books had been a trickle and that the lacklustre supply was probably what was helping to support housing prices.
The RICS Survey
The Royal Institute of Chartered Surveyors conduct a regular survey of lenders. The survey has shown that the number of sales, the number of new buyers, and the number of properties that have come onto the market have all dropped. The figures suggest that there will not be any signs of improvement in the coming weeks or months.
New Buyer Enquiries
The number of new buyer enquiries is used as an indication of near-term movements in the housing market. Fewer new buyer enquiries means that there will be less interest in houses at the lower end of the price range. It also means fewer new buyers, so existing homeowners will have less opportunity to sell their property.
The RICS survey said that new buyer enquiries fell for a 10th consecutive month, whereas figures from UK Finance state that the number of first time buyers rose to a 10-year high. The number of buy-to-let mortgages also dropped, following tax changes introduced by the government and faced by landlords, in recent months.
Stamp Duty Changes
Another major change, announced in the November budget, was the scrapping of stamp duty for all properties valued up to £300,000 for first time buyers. This has helped increase the number of first time buyers and therefore the number of buyers in general. It is estimated that this change will save 80% of first time buyers as much as £5,000 on their purchases. Buyers of property valued up to £500,000 will only be expected to pay stamp duty on the property value above £300,000. The changes came into immediate effect following the November budget. On making the announcement, the Chancellor estimated that the changes would primarily benefit first time buyers, saving them an average of £1,660.
Despite the changes, which occurred in November, there was a slowdown in the number of first homes bought in December 2017, with lower figures when compared to December 2016.
London Prices Decreasing Most
Owners in London, with properties valued at £1m or more, are finding it the most challenging to find buyers. Two thirds of respondents to the RICS survey said that properties valued at £1m or more came in under the asking price, while 56% of respondents with properties between £500,000 and £1m said that prices came in lower. The biggest price drops came in London, while, in contrast, the North West saw the strongest price growth.
Respondents said that they expect prices to remain flat in the coming three months; backed up by the lack of first time buyer enquiries.
With fewer people buying houses, there is likely to be an increase in demand for good quality, rented property. Now is the time for HMO and property landlords to benefit. Higher valued properties are currently selling for less, and fewer people are looking to buy which means that there will be an increase in demand for rented accommodation. With fewer buy-to-let mortgages arranged in the past month, this is also a good sign that there will be less competition in the marketplace.
PDF Estates Property Management Services
PDF Estates regularly helps HMO landlords profit from their ventures. We can identify some of the best locations for houses of multiple occupancy. We can source properties, find and manage tenants, and offer 3 free months’ full property management to our new landlords. We also offer letting only and letting and rent collection products, as well as a full management service. We customise services according to landlord requirements, so can incorporate property portfolio management, safety checks, and we can arrange furnishings for the property that you are letting, as well as meeting other requirements for your portfolio.
Call us today on 020 3815 7952 or email email@example.com to discuss your property portfolio and see how we can help optimise your profits.