The reason for the torpor has been lack
of sellers. Data released by the National
Association of Estate Agents reveals that there
were 31% fewer properties for sale in August
2015 compared to the previous year. On
average the numbers of properties available per
Estate Agents branch fell from 55 in July to 38
in August. The Royal Institution of Chartered
Surveyors reconfirms this, with their data
showing that the number of homes for sale is at
its lowest since 1978.
Part of the reduction in supply has been the
dramatic increase in SDLT for properties
over £1.1m. A year ago the amount of tax
on a £2m home was £100,000, today it is
£153,750 although some asking prices have
been adjusted to absorb the higher tax. Most
of the buyers disadvantaged by SDLT reforms
are in central London. Purchasers are wary of
moving unless they have to and they are more
inclined to invest in their existing property;
building extensions, digging out basements
or converting loft space. The central London
market has cooled from the top down, not just
as a result of SDLT, but also due to the strength
of the Pound, the availability of finance as a
result of the Mortgage Market Revenue in 2014
and the introduction of the new Capital Gains
Tax Rules for non-resident UK property Owners.
shows that 106,480 homes were sold, although
this remains well below the pre-downturn days
when monthly sales over 130,000 were typical.
This is re-enforced by the Council of Mortgage
Lenders saying that mortgage lending hit a
seven year high in July, showing there is plenty
of activity in the property market, especially
as this doesn’t take into consideration cash
purchasers. The number of new mortgage loan
approvals were up by more than 5% in July at
68,764 and re-mortgages were up by more
than 10% at 38,042 according to the Mortgage
Advice Bureau. Lenders will always be ahead
of the curve, increasing their rates before a
base rise so anyone who wants to buy or remortgage is urged to explore their options as
early as possible. The next 4 months may be
the last window of opportunity to get hold of a
record low rate.
So what is in store for the UK? The independent
forecasts from the Office for Budget
Responsibility suggests the economy will grow,
but that it will still be a bumpy ride with risks.
Whilst, the UK enjoyed the fastest economic
growth in the developed world last year, we
are directly affected by the world economy and
not just the local one. The on going troubles
in the Eurozone, China and Syria have added
a great deal more uncertainty to the pace of
future growth. These have led to the view that
interest rate increases are unlikely until well into
2016. Inflation remains lower than the Bank
of England’s target, and is likely to stay low as
recent improvements in real disposable incomes
and near record employment are not yet
leading to any increased inflationary pressures.
The cost of living, according to the official
Consumer Prices Index has not risen in the past
six months. This, coupled with crude oil being
the cheapest it has been for six years, keeping
petrol prices low, suggests that we should be
feeling wealthier, with more disposable income.
Continuing low interest rates should help the
British economy grow. These are positive signs
for the property market going forward despite
the austerity still to come.
The London Office has acted on behalf of high
calibre provincial agents for over 22 years.
Our role is to provide our members with an
extra dimension to the services they offer.
This enables their clients to receive the best
local expertise, supported by national and
We have also seen a rising number of first-time
buyers and investors buying property, with no
properties to sell. This is compounding to the
scarcity of property for sale. Only a recovery
in the number of moves among existing home
owners or an increase in new supply will ease
the current housing scarcity – which seems
unlikely in the near term. Meanwhile there are
no immediate signs that the problem is getting
any better, with house building activity only
marginally up on last year. According to the
National House Building Council, a total of just
106,887 new homes have been registered in
2015 to the end of August. This is up from
95,524 over the same period last year but a
long way short of the annual 250,000 experts
say we need to prevent spiralling house prices.
The closest we got to this target was 219,000
in 2006. Perhaps we need to be more creative
and move away from our traditional housing and
create different forms of accommodation. There
are proposals, in London, to demolish high-rise
low-density tower blocks and replace these with
low-rise high-density units. Very simply, we need
to build more houses. The Government is trying
to address the issues with a variety of schemes,
incentives and recently unveiled the ‘Fixing the
Foundations’ report. Only time will tell whether
these will work to encourage more supply. The
shortage of properties is the main factor behind
the rise in house prices and the affordability
crisis afflicting prospective homebuyers. At the
same time, economic recovery, real earnings
growth, population growth and low mortgage
rates are supporting housing demand.
Demand for property is strong; HMRC says
that more homes were sold in the UK in August
2015 than any month, since February 2014. It
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