INTRODUCTION
Just like that, the first two months of the year are behind us, and we have already seen some pivotal changes to the market that will shape the year ahead
This update will go through some key data points and policy changes that will impact the market this year
KEY STATISTICS
The latest up to date official figures from The Office For National Statistics & HM Land Registry provide us with data from the last month of 2020 and show house price growth ending on a high.
HOUSE PRICES - Latest UK House Price Index (December 2020)
The UK HPI is based on completed housing transactions. Typically, a house purchase can take 6 to 8 weeks to reach completion. Therefore, the price data feeding into the December 2020 UK HPI will reflect sales agreed in October.
UK
- Average Price UK £251,500 - December 2020
- Annual Price Change 8.5% - December 2020
- Monthly Price Change 1.2% - December 2020
London
- London Average Price = £496,066 - December 2020
- London Annual Price Change = 3.5% - December 2020
- London Monthly Price Change = -1.1% - December 2020
HOUSE PRICES - HALIFAX HPI (February 2021)
The Halifax House Price Index is the UK's longest running monthly house price series with data covering the whole country going back to January 1983
The Halifax uses its own database of approximately 300,000 mortgage approvals per annum (ca. 25% of all mortgages) as a basis for its monthly house price reports. Because it uses approved loans rather than completed mortgages, the Halifax can obtain data earlier than the Land Registry
UK
- Average Price - £251,697 - February 2021
- Annual Price Change - 5.2% - February 2021
- Monthly Price Change 0.1% - February 2021
TRANSACTIONS (December 2020)
(Transactions involving the creation of a new register, such as new builds, are more complex and require more time to process)
- Estimated number of UK residential transactions, 129,400 - December 2020
- Annual Transaction Volume Change = 31.5% increase - December 2020
- Monthly Transaction Volume Change = 13.1% increase - December 2020
RENTAL MARKET (February 2021)
Data is gathered from our tenant referencing service, and our rental amounts are based on actual achieved rental prices with accurate tenancy start dates in a reported month, rather than advertised costs (HomeLet)
- Average rent in UK = £984
- Annual Variation for the UK = +3% (year on year)
- Average rent in London = £1572
- Annual Variation for London = -4.7% (year on year)
- Rental affordability (single earner in UK) = 31% (10 year average is 32.1%)
- Rental affordability (single earner in London) = 44% (5 year average is 48%)
- Time to rent = 16 days (20 days a year ago)
- Time to rent in London = 17 days
“We’ve seen the volume of UK landlords dip, whilst supply from tenants has continued to grow. Landlords have to charge more to cover their essential costs, including professional letting agents’ valued services. Ultimately this pushes increased rents back on to tenants, the same group who supposedly should have benefited from legislation like the Tenants Fees Act”
MORTGAGE MARKET
- Borrowers looking for a new mortgage deal now have the most number of deals to choose from since the pandemic began impacting the UK economy last March, as data shows that the number of deals is at an 11-month high.
- There are currently 3,215 mortgage deals available, which is the highest number since March when there were 5,222 deals in the market
- The biggest rise in deals over the last few months can be found on mortgages that need a 10% deposit - 90% loan-to-value (LTV) – which is good news for first-time buyers, as 90% LTV deals are predominantly aimed at this market
- Although the average rate on two and five year fixed mortgage at a 90% LTV fell month-on-month, down from 3.65% and 3.79% in January to 3.56% and 3.72% in February respectively, the average rates across all LTVs have increased
- From April 2021 onwards we can also expect to see the introduction of a new range of 95% mortgages following the announcement of the government backed 95% mortgage guarantee scheme announced in the March Budget
OTHER NEWS
The March 2021 Budget confirmed that the government will be incentivized banks to offer 95% mortgages with the likes of HSBC, Natwest & Barclays already confirmed to be taking part
The scheme will not be restricted to new build properties nor will it be restricted to first time buyers, but will come with a £600,000 price cap
The March 2021 Budget also confirmed an extension to the stamp duty holiday
This means that home buyers will pay no stamp duty on purchases up to £500,000, so long as they complete before the end of June
In an attempt to avoid a cliff edge end to the holiday, from the end of June, the government has announced that the threshold will be reduced to £250,000 until the beginning of October, when it returns to its original level of £125,000
Corporation tax is also set to increase from 19% to 25% from April 2023 onwards - landlords who invest through ltd company structures should be aware of this
The effect on house prices these policies will have is complex as they feed into a wider mix of both inflationary and deflationary forces currently influencing the market
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