The UK property market has again today been given a clean bill of health, despite the doom-mongers. According to the Halifax House Price Index, prices have risen by 5.7% compared to the same quarter last year. Against the last quarter, they have risen 2.4%. Month-on-month, a slow-down has been seen of -0.9%. Today the price of the average UK house is £220,260.
General consensus of the UK property market is one of underlying strength. The UK has undergone major upheaval in the past twelve months; Stamp Duty changes, Brexit, the global economy but growth is still on an upward curve. The January ‘blip’ with a decrease in price is put down to, by many, simply the annual sluggishness of the market after Christmas.
UK Property Market Shortages
The underlying strength in the UK market appears to stem from the ongoing shortage of good housing supply. Low stock levels across the country are continuing to drive prices upwards.
Today, UK Government ministers have declared the housing market ‘broken‘. Communities Secretary Sajid Javid has set out a range of measures to help build over a quarter of a million new homes each year as part of a new housing white paper. As reported last August, the Government realistically holds the majority of the cards in terms of the UK property market. If the white paper measures (outlined below) do come to bare, more uncertainty could be brought to the market.
Housing white paper measures
- Make councils update local plans for housing demand
- Avoid low density housing where land is in short supply
- Cut the allowed period from planning permission to construction from three to two years
- £3bn fund to help smaller building firms, including support for off-site construction
- Introduce a lifetime ISA to help first-time buyers save for a deposit
- Allow building on green belt only in exceptional circumstances
First Time Buyers
Alongside the main index, Halifax also released it’s latest First Time Buyers Review. The number of first time buyers appears to have risen by 7% in 2016. Whilst a promising sign for the future sustainability of the housing market; it is still behind the pre-recession peak. The changes to the Government’s Help to Buy scheme will have also had an effect with new homeowners keen to lock in before the 31 December changes.
Between November and December 2016, mortgage approvals rose by 1%. Whilst the other measures of the market suggest a slight cooling, this rate is the highest observed since March 2016; just before the Stamp Duty changes were enacted. Typically, improvements within the level of mortgage approvals suggest that improved property sales will follow…
Impact on Property Management
Continued property cost inflation means that affordability remains the big question for investors. Property Management services need to remain cost-effective, with the best offering proactive asset management to maximise the Return on Investment. Some rental markets have seen a net decrease in rents achieved, placing further pressure on yield and ROI, emphasising the spotlight on property managers further.