What a great start to the year! Confidence is strong in what appear to be signs of an early spring market and all the talk of an early interest rate rise have been kicked into touch. A rise anytime during 2016 now looks very unlikely and a recent article in The Times gives an opinion that the next rate rise may not happen until 2019 and that markets are pricing in a 50pc chance of a rate CUT this year.
House price growth has hit a 17-month high, primarily due to a severe shortage of apparently available stock, which is at the lowest for over 11 years.
However prime central London continues to fall from its perch with properties in its most expensive borough, Kensington and Chelsea, falling over 14% (according to the Daily Mail!) So there is some balancing going on and elsewhere in the UK most areas are reporting strong trading. The Halifax reports annual house price growth for last year to January at 9.7% making the average house worth £212,430, although HM Land Registry puts this figure at £188,270 – a 6.4% annual increase and up 1.2% on the previous month. But irrespective of the actual figures the main thing here is the trend – which continues to be gently upward.
Affordability is increasingly becoming an issue with the average house price now representing 5.3 times average annual earnings (7.9 time earning in London) and this is possibly more likely to dampen buyers’ ardour than any threat of an interest rate rise. Having said that, Rightmove has just reported that it received 127 million visits last month – a 20% increase in visits over the same time last year! Whilst this may well be a good indicator of short-term buyer intention, it does little to encourage potential sellers that they will find a property once they have sold their own.
Our advice to these buyers is “don’t give up”, be proactive – there are sometimes properties available “off-market”, certainly more than the media and property portals would have you believe, so we would advise you to be proactive. Make sure you register your details with the local agents in your target area(s) and don’t solely rely on the “property alert” features available through the property portals. How many times do you try booking a viewing only to discover the property is already under offer?
If you’re thinking of selling and your personal circumstances require discretion then the “off-market” approach could be for you. As long as you choose a reputable and well established estate agent you can still make your move without the whole road knowing about it.
What of the Lettings market? – According to one of the mainstream tenant referencing companies, Greater London could be close to “an affordability ceiling”
As rents continue to move in an upward direction, albeit somewhat less aggressively, you have to wonder whether we are close to reaching a tipping point! Understandably, questions are being asked about the number of new homes being built and whether landlords are “getting the blame” for rising rents when the housing shortage could be more to do with the failings of multiple governments over a sustained period of time. The current housing shortage didn’t happen overnight and there’s little doubt the situation would have been a whole lot worse without the PRS (private rented sector), which has given an alternative option to those who couldn’t afford to buy.
Locally we are still experiencing a reasonably stable lettings market and if anything we have seen a small reduction in the number of tenant registrations. There is certainly a flurry of buy-to-let activity, fuelled somewhat by the fast approaching stamp duty changes, although many investors appear to be looking at the longer term view, remaining undeterred by these new measures.
Staying local we have come across some interesting stats from Waltham Forest council, who say that in January their Private Rented Property Licensing Action Days saw over 30 officers visit nearly 800 properties in Leyton identifying 61 properties which require further investigation. 46 full license inspections were carried out, 41 properties were found to be unlicensed, 30 front gardens were found to be “dirty” and 19 fixed penalty notices were issued. Landlords in other parts of the borough need to be prepared as these Action Days continue to take place.
No doubt this year will see more changes to the Lettings industry and homebuyers will continue their quest for a new home. As ever, please feel free to contact us if you feel that a move is in the air, or simply because you have a question to ask! We’d love to help.