All posts by Holley Samuel

House Prices Rise Steadily

According to the latest House Price Index for August, house prices are steadily rising against the backdrop of the Coronovirus pandemic.

UK average house prices increased by 2.5% during the year to August, up from 2.1% in July. On a monthly basis, this was a rise of 0.7 per cent, and an improvement on the 0.3 per cent monthly increase seen in August 2019.

According to the latest Rightmove House Price Index, the national average of a property coming to market is 1.1% higher than the previous month and 5.5% higher in September than a year ago with prices predicted to rise by 7% by December. It also reported that the average time to sell a property was 31 days in Scotland and 50 days across the UK and the number of active buyers is 66% higher than a year ago.

These figures show that prices are rising steadily due to a return to the market after the housing market ground to a halt in April. Following the reopening late June, the level of activity has been nothing short of exceptional.

ONS said house price growth had generally slowed down since 2016 but noted activity seemed to pick up again this year once the property market reopened in May.

Not only did we see a backlog of people who were in the early stages of a move but following lockdown there has been a re-evaluation of buyers’ priorities as many people are now working home full or part time and require additional inside space. With lockdown restrictions in place, the only part of our homes we can currently socialize in is our gardens and so this has led to a flurry of interest in three and four bedroom homes with gardens and less demand for apartments with no outside space.

There has also been a shortage of suitable housing stock coming on to the market leading to greater demand which drives up prices, combined with the effect of the stamp duty holiday for properties up to the value of £250,000.

It is predicted that September will see an even sharper upswing once the figures are all in and that the impact of the stamp duty will start to be seen.

Mortgage rates are at an all time low which means there are some great mortgage deals available at present – further driving people to consider a house move.

Talk to us at The Mortgage Hub if you would like to find out about available mortgage deals suitable for your circumstances.

COVID-19 Property Market Update 

Many existing and potential homeowners are wondering whether to move now or delay their plans until they have a clearer picture of how long the pandemic will last. 

Since the market reopened here in Scotland in June, people have flocked to estate agents to purchase a new home. Properties are going to closing date, achieving record offers overs and competition is fierce as pent up demand combined with government incentives and a re-evaluation of our priorities has resulted in a mini property boom. 

The recent tax break announcement created a flurry of interest from buyers and gave an immediate boost to the housing market – according to The Telegraph, the lockdown resulted in £27bn of lost sales and buyers and sellers have been making up for this ever since.

The prime rural market has benefitted the most as people search for more space and better value. Buyers appear to be prioritising larger properties with more outside space, and they have re-evaluated the importance of proximity to transport links, local amenities and the ability the work from home. 

According to Zoopla, agreed sales fell by 92% during lockdown. Buyer demand, which is measured by the number of property enquiries, has jumped to 46% above pre-lockdown levels with a significant rate of recovery.

The prime rural market has benefitted the most as people search for more space and better value. In July, asking prices reached a new high of £320,265 – a rise of £7,640 (Rightmove) and Zoopla has forecast price growth of between 2% and 3% by the end of the year. Here in Glasgow house prices were 2.3% higher in August compared to 2% in August 2019.

 What is the outlook?

 With few distressed sellers just now – which is usually what drives house prices down in a crisis – it appears that the property market is holding strong. This is due to job and payment retention schemes and the availability of mortgage holidays. In addition, the eviction ban is protecting tenants who can’t pay their rent. 

At its peak, there were 1.9 million homeowners that took a mortgage repayment break – a sixth of all mortgaged homeowners. However, lenders have reported that only a small number of these requested an extension. If these people were to become forced sellers at the end of their mortgage break, but this would still not top pre pandemic property transactions. In addition, Hansen Lu, of Capital Economics, said that when the mortgage break scheme ends, regulatory changes mean that lenders’ own internal forbearance procedures will be more generous than they were ten years ago, and the impact will be reduced.

What’s more, according to the Bank of England, mortgage approvals reached a 13-year high in August as the rush to buy homes continued. The number of mortgages approved hit their highest level since October 2007 with a total of 84,700 mortgages  approved in August, a 28% increase on the previous month’s total.

It’s a seller’s market, so the advice is to sell now and for buyers, there are still some exceptional mortgage deals available. Even with the strict guidelines surrounding house sales, people are still encouraged to go on house viewings especially as initially it can be done virtually as agents increasingly embrace technology. Although many buyers tried to negotiate discounts when the market reopened, agents instead are seeing competitive bidding. Estate Agency is still subjected to social distancing measures and a change in the way they conduct themselves with restrictions on viewings to one member of a household, a ban on open houses and vendors vacating the property during the measuring, photography and viewings. However, this doesn’t appear to have dampened appetite.

Talk to us at The Mortgage Hub on 01698 200050 if you would like to discuss your mortgage options and for general advice about the property market here in Scotland.

Homes Selling at Fastest Rate in 10 Years

According to Rightmove (4 September) one in seven properties are under offer within a week of going to the market following what can only be described as a buying frenzy.

The number of homes selling within one week has hit a 10-year high and since the threshold change for Stamp Duty (LBTT) was announced across the UK in July, the number of sales agreed is up 125% on the same period last year and 28% up on February 2018, Rightmove’s previous high. The stamp duty holiday has accelerated the moves of second steppers seeking larger family homes with space to enable more home working. In addition, the lockdown has highlighted the importance of outside space.

Whilst Scotland has the UK’s fastest selling market, London is the slowest with only one in nine homes sold within the first week that it went to market.

In the 10 years in which Rightmove has been tracking data, they have discovered that more properties are selling now than at any time. The fastest selling properties are three-bedroom semi-detached houses. In London the share is a fifth of agreed sales but in Scotland it’s a third of all sales.

It is believed that the current property boom is being driven by transactions of larger three and four-bedroom family homes as buyers rush to save on LBTT.

Chancellor Rishi Sunak’s decision to raise the nil-rate band from £125,000 to £500,000 for homes across England and Northern Ireland means that buyers are able to save as much as £15,000 when purchasing their home before the March 31st 2021 deadline. The move was followed by similar measures in Scotland and Wales.

However, at entry level, buyers are finding it increasingly difficult to get onto the property ladder as larger deposits are required compared to pre-lockdown.  Lenders have withdrawn several low deposit mortgage deals due to fears of falling house prices and the limit on surveyors being able to conduct physical property valuations. However, these are slowly being introduced back into the market by lenders. High loan-to-value mortgages are still available but have more restrictions.

The good news is that first time buyers can still take advantage of the First Home Fund and Help to Buy (Scotland) to get onto the property ladder with just a 5% deposit, making buying a first home a reality for many.

If you are considering moving, it’s important to act now as there are currently some delays following lockdown – so even if a sale is agreed quickly the sale could take longer to complete.

If you are seeking a mortgage or would like advice on mortgage availability for first time buyers talk to us at The Mortgage Hub and we will endeavour to help.

What’s Driving The Property Mini-Boom?

Despite the country slipping into recession, house prices currently are at their highest level. What has driven this mini-boom and how long will it last?

On Monday Rightmove reported that the portal has had its busiest week in 10 years. Since June 29th when the property market in Scotland reopened, estate agents have reported a surge in enquiries, house prices have been steadily rising, mortgage applications have rebounded, properties are achieving record numbers of viewings and the offers over are far exceeding the pre lockdown levels.

According to The Halifax, the average UK house price has hit the highest level on record in July following months of pent up demand from house hunters. What’s more, the announcement that the LBTT threshold has been increased has provided a further boost to the market.

Reports suggest that we are facing a looming unemployment crisis when the Furlough scheme comes to an end at the end of the year. However, the sharp decline in GDP currently is not matched by the property market and there is little evidence to suggest that this mini-boom will end any time soon.

Pre Covid, the property market was strong and RICS data showed that there was a ‘Boris Bounce’ in February following the election and mortgage approvals for homebuyers were at their highest levels in four years at the start of the year. Lockdown meant that these property transactions were delayed and completed as soon as the lockdown was eased.

What’s more, since March there has been an increase in people’s desire to move home. They have possibly spent more time outdoors and appreciated the importance of access to a garden or green space and have come to realise the importance of having space to work from home. Being in lockdown for the best part of four months will also have made people assess what they do and don’t like about where they currently live.

Those who were most affected Covid are less likely to be homebuyers – and those hit the hardest are the people on a lower income. The lower the pay the more likely they are to lose their job in the recent round of redundancies. The average first-time buyer is in their early 30s and it is those in their early to mid 20s who have been most likely to have been furloughed.

The LBTT threshold change to £250,000 has also had an impact. The Institute for Fiscal Studies warned that this could result in an increase in house prices, making first time buyers worse off.

There is no doubt we are in a mini-boom, but we believe that this will level out later in the year into 2021 but this will be dependent on unemployment levels, the availability of high LTV mortgages and demand for rental property. A recent report from global bank ING says that prices will level out later on in the year.

Should You Continue With Your House Purchase?

This week it was announced that the UK is officially in recession. So, what does this mean for you if you’re planning to move?

During a recession when finances are tight job security is in question, many are cautious about buying a new home. However, this is a very unusual time for everyone in the UK – the likes of which we have never seen before.

The property market came to a standstill in March and went off with a bang when it reopened on June 29th . It was feared that house prices would crash but to date, the opposite has happened. The recession is a result of a public health crisis and not a financial one, so the financial system isn’t at a standstill as it has previously been. The government has taken unprecedented steps to protect jobs and prop up the housing market. Estate Agents have reported a huge upsurge in interest in properties and new seller enquiries and property portals have reported incredible visitor stats since the start of July.

What’s more, in July it was announced that LBTT would be waived for all properties up to £250,000 until March 2021 to further incentivise those considering moving and the Help to Buy scheme has been extended. There has been restored confidence in the market and transaction figures have rebounded – with a particular rise in the purchase of first homes and newly built properties.

The concern surrounding buying a home during a recession is that house prices may fall after a property purchase leaving buyers in negative equity. There’s also a fear that the Furlough scheme has delayed the number of job losses and that when the scheme ends there will be a raft of redundancies.

One thing is for sure – house prices are steadily rising and mortgage companies are bringing back products. House prices fell in 2018 due to a very specific lack of funding in the mortgage market. This isn’t the case this time so we believe that property will still be one of the strongest investments you can make. At present, there is an imbalance between demand and supply which is putting upward pressure on prices at the moment, and as a result we have seen the price growth for UK homes rise to 2.7% in June, up from 2.4% in May. We see this trend continuing for the foreseeable future.

If you’re buying a new home, you may prefer to delay your  purchase and wait to see how the recession plays out but the danger is that if your job is secure and you have the funds and meet the lending criteria, now is a great time to secure an attractive mortgage rate.

If you are thinking buying, make sure you have the right advice and don’t miss out on the LBTT break and low mortgage rates. Talk to us to discuss your circumstances before making a decision as we may able to help you decide what’s best for you.

Life In Lockdown Has Dramatically Changed Buyers’ Priorities

It appears that nearly four months in lockdown has changed home buyers priorities with outside space, large kitchens and high-speed broadband taking priority over location and links to public transport.

According to a survey commissioned by UK housebuilder Redrow, over 25% of prospective buyers have changed their minds over what aspects of their new homes are most important to them – and are seeking outside space with larger terraces and gardens, spacious kitchens and energy efficiency.

Since the COVID-19 pandemic hit the UK back in March, parents and those expecting children have been most likely to shift priorities. The survey found that 60% of respondents had access to private outdoor space, such as a garden, terrace area or balcony at the top of their property wish list – no doubt following months of home schooling and trying to keep children entertained. The importance of outside space during the lockdown with the great weather has made people reassess the importance of being able to access a garden or terrace.

Meanwhile, 40% of those surveyed were looking for a property with a larger kitchen and 29% were looking at the energy efficiency of the property which could have been prompted by those who are looking towards spending more time working from home going forward. People are also considering that there could either be a second wave or new pandemic and have now seen the reality of being in lockdown and feel that it’s happened once, it could well happen again.

High-speed broadband was also important to house hunters with 27% looking for a high-speed connection to enable efficient home working and home schooling.

Rather than looking at the proximity to public transport and road links, there was also a marked shift of people looking to live within walking or cycling distance of where they work – with 22% placing this as a priority. Access to green open spaces was also a priority for 35% of house hunters, proximity to small convenience stores was 33% and doctor’s surgery was 32%.

A quarter of those surveyed said that living in an area with a strong community was key, while 23% said they would make a concerted effort to get to know their neighbours when they move.

More time spent in the home has made us reconsider how we use the space that we have, and how our homes can adapt to more permanent change in the future.

If you are house hunting and would like to find out what you can afford which mortgage products are best for your circumstances, talk to us at The Mortgage Hub.

House Prices Set to Rise

According to Zoopla, the surge in demand for property following the easing of lockdown restrictions will carry strong house prices until the end of the year.

Even though the rebound in activity in the housing market is expected to subside in the coming weeks in England and after an expected spike here in Scotland, the elevated demand combined with stock levels 15% lower than in 2019 will create upward pressure on house prices.

Zoopla’s latest data and analysis shows that this surge may delay the fall in house prices until at least the end of this year.

The analysis of house prices comes from sales agreed before we went into lockdown. The data on pricing for new sales agreed in the last four weeks is starting to feed through already and this points to the continuing upward pressure on house prices that we saw from January to the beginning of March.

For the first three months of the year prices were rising at 7% and in England over the first two weeks of June, they have returned to registering a similar growth. The majority of these sales are likely to complete between August and October this year in England and slightly later here in Scotland. Zoopla predicts that these should result in a sustained UK house price growth of between 2% and 3% over the next quarter.

There will be an initial rebound, but demand will weaken over the summer months as the economic impact of the coronavirus lockdown starts to become evident. Last week the ONS indicated an acceleration in unemployment resulting in caution amongst lenders and the limited availability of 90% loan to value (LTV) mortgages which will reduce demand particularly amongst first-time buyers who have driven the housing market.

Last year around 20% of all homebuyers purchased a property with a deposit of up to 10% and so a decrease in the availability of 90% mortgages could prevent first-time buyers entering the market and reducing demand.

Almost 20% of homeowners have taken a mortgage payment holiday and they can extend this up to the end of October this year which means support is extended for the rest of the mortgaged sector up until April next year.

UK house price growth is up 2.4% on the year and has increased from 1.6% at the start of 2020. This rebound in housing market activity has taken many in the industry by surprise but is welcome news.

Here in Scotland, where the market reopens on Monday 29th June has seen demand rise back to pre-COVID levels, but sales remain more than two thirds lower and are expected to rebound in the coming weeks.

Talk to us at The Mortgage Hub if you would like to discuss your next move.

Lowest Ever Mortgage Rates

The average interest rate for two-year and five-year fixed rate mortgages has dropped to the lowest levels since records began in 2007 according to the latest figures from Moneyfacts. That makes it a great time to remortgage.

We are currently averaging lower rates than last month’s record low rate following two emergency cuts made to the basic rate in response to COVID-19 – this is the interest rate that the bank sets for lending to other banks. The fall in the official cost of borrowing impacts swap rates upon which fixed-rates mortgages are based – and lenders have passed on the reduction in borrowing costs to their customers.

However, some banks and building societies have reviewed the level of risk they take in lending – this is due to the impact that COVID-19 is having on the UK economy.

With these record-breaking fixed rate deals, now is a great time to remortgage, especially if your deal is coming to the end. In addition, if you’re still sitting on your lenders’ SVR, you could save thousands per year by switching to an average two-year fixed rate deal. The gap between the cost of a two-year and a five-year fixed-rate deal has also narrowed so you could pay a lower premium for the peace of mind knowing what your mortgage repayment will be for the next five years.

However, the number of mortgage products to choose from has more than halved – from over 5,200 products to 2,500.

There are currently less products available to borrowers with a low amount of equity or small deposit – those with 5% can choose from 22 products compared to 279 previously available and the choice for those with a 10% has dropped from 563 to 50. That’s why it’s essential to talk to a mortgage broker to find the right deal.

Although lenders have increased rates on loans for people borrowing 95% of their home’s value, this is only a small rise of 0.04% for a five-year fixed rate and 0.1% for a two-year fixed rate and they are still open for business for this sector of the market.

Because lenders have cut rates for people borrowing 90% of their property’s value this shows that competition is still strong in this area even though there are fewer products available.

At The Mortgage Hub we can scour the whole market on your behalf and help you find the best deal and find out if your application will be accepted. Talk to us for advice – we are currently closed but still working remotely until it is safe to open.

 

Property Market in England Opens Back Up

The property market here in Scotland is set to stay on hold for another few weeks, despite restrictions being lifted in England.

How will the ease of restrictions in England affect the property market and could we learn lessons here in Scotland about how to proceed when we are able?

In England, employees who cannot work from home are being encouraged to return to workplaces albeit they need avoid public transport if possible. They are also allowed to spend more time outside (as are we here in Scotland) but are able to travel further afield from their homes in their cars. In addition, estate agents have been permitted to open up for business.

The immediate result was that on Wednesday morning between 7am and 8am Rightmove reported a 45% rise in online property viewings compared to the previous day. In addition, over 2,000 properties were listed for sale on the property portal.

At present, it remains unclear when viewings and new instructions will be able to start again in Scotland but there have been some potential benefits of the lock down to the property market over the last few months.

People have been allowed to spend time walking or cycling locally which has given them a feel for the area and to see streets and pockets that they may not be familiar with. Now that people can go out further afield in England, they have further opportunity to scope out areas of interest more easily. In addition, they can check out the outside of properties that they could previously only view online.

Under current government guidelines, people have been asked to delay property transactions until after social distancing measures have been lifted. However, if the property is empty there is no reason that you can’t continue with the purchase. Many buyers and sellers are renegotiating on timescales with the sale still set to go ahead.

Virtual viewings

With many estate agents working from home and continuing to value properties and market existing homes, many have turned to virtual viewings to enable people to see homes during the lock down. Although they cannot visit homes to take photographs, conduct appraisals for new listings or show prospective buyers around a property they have been able to use the Internet to still promote property that are either currently online or coming soon.

Some agents use 3D cameras that allow browsers to take a self-guided tour of a property and others have used videos taken by the vendors – and with many people using high quality mobile phones with video capability, this has been made even more possible.

The ‘new normal’

Even when things ‘return to normal’, the property market and the way that agents conduct viewings could look quite different.

Buyers are likely to be more heavily vetted to minimise speculative viewings with only serious buyers permitted to enter homes. They will have to adhere to stringent hygiene guidelines and will be unable to open doors and cupboards as part of the viewing process to minimise touching surfaces. When they do view a house, they will have to remain 2m away from the estate agent at all times and children won’t be permitted to accompany parents on viewings. Owners will need to vacate the property and buyers will be encouraged to avoid second and third viewings before making an offer.

Stamp Duty (LBTT)

Although there is evidence that there has been pent up demand from buyers, The Royal Institution of Chartered Surveyors and The The National Association of Estate Agents have called for a stamp duty to kick start the market. This would boost confidence and encourage housing growth for the remainder of this year.

We will be closely watching how the property and mortgage markets perform in England. Contact us if you would like help with your mortgage needs – we are still working remotely.

Buying and Selling Property During COVID-19

Everyone in the property industry is working hard to keep things moving during the coronavirus pandemic.

Even though we are social distancing, working from home and home-schooling our children, it doesn’t mean you can’t look for a new property. With many properties still for sale since the lockdown lots of estate agents are still working remotely in order to give you advice, property information and even hold virtual viewings and appraisals.

According to the latest figures from Zoopla, property sales have continued since the lockdown began and although, as you would expect, the number of available properties is lower, many people have kept their home on the market. In fact, figures show that the number of homes currently for sale is only 1% lower than on March 7th.

This stock is essential in order for the market to bounce back.

People are still searching

There were 70% fewer property sales since the start of coronavirus restrictions but there was an increase in the number of people browsing online for property in the second week. People are using this time to socialise online, look towards the future and being at home, many have started to see their surroundings in a new light. According to Zoopla, browsing levels have increased by 16% week on week.

The market will be affected by first time buyers keen on having their own space after lockdown, families looking for more outside space as the restrictions have made them realise the importance of a garden and we may even see some couples either make the decision to move in together or part – as the lockdown will have made people reassess their personal relationships.

Don’t withdraw your home from the market

With the number of people in lockdown and relying heavily on Internet browsing for things to do, this could be a good time to have your home on the market. If you’re already on the market – there’s no reason to withdraw it. The government hasn’t stopped property transactions from proceeding and empty property purchases can progress as normal. What’s more, mortgage brokers, lenders, solicitors and estate agents are all still working, albeit remotely. If your home is already listed with an estate agency, they can continue to market your property even though buyers won’t be able to view it in person until the current social distancing measures are lifted.

If you receive an offer on your property, there is nothing to stop you negotiating and accepting it, but you will need to be aware that the process will take longer than usual. There will be delays with the process including surveys, exchanging contracts and getting a mortgage approval.

New listings

Estate agents are still working remotely even though the branches are temporarily closed. Although they cannot come to your home for photographs and measurements, they can still provide valuations and help prep your home for sale for when the restrictions are lifted. It’s a good idea to get ahead of the game and get in touch now before they do open up again and their diaries are full. They can also talk to potential buyers about your property before it is on the market and arrange viewings for when the lockdown is over.

Searching for a home

If you are looking to buy a property you can still do things during the lockdown to get ahead. Browse homes online and take virtual tours if possible. Talk to your local agents and tell them what you are looking for – they may know of properties that will be listed for sale once the lockdown is lifted.

Talk to a mortgage broker to find out what you can borrow and the products that are currently available.

If you do find a property you can put in an offer for it, although as mentioned above, the conveyancing process is likely to be slower than usual.

Get your home market-ready

Spend this time getting your property prepped for a sale. Declutter, make repairs, tidy up the garden (gardeners are still working) and consider whether there’s any furniture you could remove from rooms and store in the loft or garage to help make the space look bigger or more appealing.

We are still helping customers to find the right mortgage during this time here at The Mortgage Hub. Talk to us today – we are here to help.