Weekly Round-Up: 14th December 2018
According to the latest UK Residential Housing Survey by the Royal Institute for Chartered Surveyors (RICS), ongoing uncertainties surrounding how the Brexit process plays out is taking its toll on the housing market. Highlighting little choice for new buyers and fewer people interested in moving, RICS have suggested that Brexit is impacting sentiment in almost all areas of the UK.
It is evident that both buyers and sellers are playing a cautious game, and, where deals are being done, they are taking longer to reach completion. RICS shares the resounding sentiment of frustration from their surveyors who complete the research and are not surprised by this month’s outcome. Brexit was identified early as having a very politically charged debate, but it is felt that the current style of politics and continuing level of political uncertainty is significantly impacting the housing market and build environment.
Prior to the referendum, RICS research indicated that Brexit would only impact the higher end of the residential market, as the lower and middle market areas are domestically driven. Now, however, it appears that those looking to buy and sell homes across the price spectrum, as well as those looking to invest in the UK’s residential sector, are putting off decisions until there is more certainty.
Off the SVR
In their latest analysis of the mortgage market, UK Finance, the trade body representing major high street lenders in the UK, have said that remortgaging has reached its highest level in almost a decade, as homeowners take advantage of a competitive market and lock into attractive deals. This also reflects the large number of fixed rate mortgages coming to an end, which is expected to continue into 2019.
There has also been relatively strong growth in the number of first-time buyers, with schemes such as Help to Buy providing vital support to those getting a foot on the housing ladder. Meanwhile the buy-to-let market has seen a continued increase in remortgaging and a softening in home purchase activity, in line with ongoing trends in recent months.
There were 50,500 new homeowner remortgages completed in the month, some 23.2 per cent more than in the same month a year earlier. That’s £9.2bn of remortgaging in the month which was 22.7 per cent more year-on-year. And in Buy to Let, There were 15,700 new remortgages completed in the month, some 5.4 per cent more than in the same month a year earlier. By value this was £2.5bn of lending in the month, 4.2 per cent more year-on-year.
Festive thieves are gearing up for a busy festive period of easy pickings warns the Association of British Insurers (ABI). Last December, insurers dealt with the equivalent of 435 domestic burglary claims every day, paying £30 million to customers who were the victims of Christmas crime. That worked out at nearly £2,250 for every domestic burglary.
Easy seasonal pickings for criminals include Christmas gifts left in unattended vehicles, and presents under the Christmas tree invitingly in full view from the outside. The ABI’s advice to beat the Christmas criminals include avoid leaving presents in full view in unattended vehicles, if you cannot take them with you, put them in a locked boot. When putting presents under the Christmas tree, make sure that they are not easily visible from the outside and think twice about what you post on social media. Avoid details of expensive presents like jewellery, and do not advertise if you are going away of the festive period, so leaving your home unoccupied.
If you are going away over the period, make sure your home is left secure. If possible, ask a trusted neighbour or friend to keep an eye out for anything suspicious. Even if only popping round to the neighbours for a festive tipple, always lock your front door and secure any outbuildings or sheds, especially as they may store implements that can be used to break into your home. And remember when out Christmas shopping, be aware of pickpockets, as they love crowds.
New research from Barclays has revealed the British Christmas present run-down, and it’s bad news for grandparents who are set to receive fewer presents than four-legged members of the family. In fact, family pets can expect four per cent more presents that the nation’s grandfathers this year. Over a third (34 per cent) of pet owners admitted they will splash out on Christmas presents for their furry friends, compared to 11 per cent saying they will be buying for grandparents.
While the youngest child is often accused of being the most spoiled in the family, the research shows that it is in fact the eldest child who can expect to do the best out of Christmas this year. Not only will they receive more gifts than any other family member, but they will have the most spent on them – an average of £70.13.
Barclay’s research indicates that the average Brit will purchase 27 presents for their family and friends, typically spending £37 per gift. 65 per cent of Brits say they enjoy buying presents for their loved ones but nearly a third (32 per cent) admit to getting carried away at Christmas. As a result, a huge 68 per cent admit to worrying about their finances around the festive period – unsurprising when research has predicted that Brits will spend £17 billion on presents this Christmas.
The research also revealed that the top five worst presents to receive at Christmas were batteries, underwear, socks, a tie and soap. Nearly a quarter (24 per cent) of Brits have returned an unwanted gift
And 78 per cent of the Baby Boomer generation say children today get far more presents than they did when they were young.
Weekly Round-Up: 7th December 2018
House prices in UK national parks are on average £121,383 more expensive than similar properties in surrounding counties, according to new research from Lloyds Bank. All 12 national parks surveyed have higher house prices than the average for their county. Topping the list is the New Forest – known for its heathland, forest trails and native ponies – with a premium in excess of £300,000. This is followed by the South Downs – the newest national park and often referred to as the lungs of South East England – with a premium of more than £200,000.
The average house price in a national park is now £379,437, meaning homebuyers face paying an extra 47% compared to similar properties in surrounding counties. This is also significantly higher than the average England and Wales house price of £286,336. In the New Forest, the price leaps to £661,957, more than double the county average (an extra 107% or £342,830). At the other end of the scale, homes in Snowdonia – famous for its mountains and rugged landscape – cost on average £189,616, or a premium of just 2% (£4,374).
The average cost of a home in a national park is 11.6 times higher than local average gross annual earnings. The comparable ratio for England and Wales as a whole is 7.8 times average earnings. The New Forest is the least affordable national park, where the average house price is 15.9 times local earnings, while Snowdonia is the most affordable, with the average price 6.7 times local earnings.
House prices in national parks across England and Wales increased by £56,063 (17%) over the past 10 years, up from £323,373 in 2008 to £379,437 in 2018 (17%). The biggest percentage increase has been in the South Downs where prices have risen by 36% (£146,264) over the last decade. In contrast, Exmoor is the only national park where the average price fell over the last 10 years, down 2% (-£6,470) from £337,445 in 2008 to £330,975 in 2018. However, the £56,063 increase is £12,566 lower than the average house price rise since 2008 across the whole of England and Wales.
Spot the cracks
More than 10,000 households made claims worth a total of £64 million to deal with the impact of subsidence in just three months of this year, the Association of British Insurers (ABI) has revealed this week. The figures for July, August and September are the highest level of subsidence claims since the record-breaking heatwaves of 2006 and 2003. The hot weather of 2018 saw some UK regions experience the driest months on record, particularly in the South East which is also well-known for building on subsidence-prone clay soil.
From the previous quarter, the number of claims jumped from 2,500 to 10,000 – rising in value from £14 million to £64 million. This increase of 350% is the highest quarter-on-quarter jump since records began more than 25 years ago. Subsidence usually occurs when the ground beneath a building loses moisture and shrinks. This can be caused by a number of things including prolonged dry spells which cause soil to lose water and trees and shrubs which can absorb significant volumes of water from the soil.
Subsidence cracks usually appear very suddenly, rather than gradually and tend to be diagonal and wider at the top than the bottom. Thicker than a 10p coin, they are often found around doors and windows, and can cause dry wallpaper to rip or crinkle. Subsidence is routinely covered by buildings insurance. Each claim is unique depending on the building, circumstance and severity involved so there is no typical approach to repairs. In some extreme cases the home may need to be monitored for a period of time, and, if the home is uninhabitable during this process – the insurer can cover the cost of alternative accommodation until the homeowner is able to move back in.
Two in three (67%) of people in Britain are set to reduce overall spending this Christmas as the cost of living begins to eat into their ability to spend, a Nationwide Building Society poll has revealed. Nationwide conducted the research as part of its quarterly Spending Report to better understand the impact of Christmas on household finances, at a time finances are under increasing pressure due to rising living costs.
The seasonal poll of over 2,000 UK adults shows that some 67 per cent of people are aiming to rein in yuletide spending this year, with more than one in three (34%) cutting back due to reduced disposable income or tight finances (34%), while around one in six (15%) are concerned about their financial situation next year. Despite efforts to cut back, the cost of Christmas is expected to come to £741 when tallied up – including spending on gifts for family members (£347) and other festive spending (£394) such as parties, drinking out, eating out, decorations, cards, wrapping and clothes shopping. However, when it comes to gender, nearly three quarters (73%) of women aim to curb spending compared to around half (56%) of men.
The poll shows that despite 85 per cent of Brits setting a budget for Christmas, they underestimate the cost of it by around £300, with the average Brit expecting to spend £461 this year – far short of the overall figure of £741. This is supported by the fact that seven in ten (71%) admit to ignoring their budget, with close to three quarters (73%) admitting to getting carried away with spending compared to other times of the year. Brits expect to save money at Christmas by spending less, or nothing at all in some cases, on family and friends. Around half (48%) of those polled plan to spend nothing on their boyfriend or girlfriend, while 28 per cent plan to spend nothing on their husband or wife. Some 16 per cent are refusing to buy for any adult in the family, while one in ten (10%) are doing a family Secret Santa to cut the costs. Just six per cent are willing to cut out giving presents all together.
Children remain unaffected by this year’s planned festive cutbacks, with respondents planning to spend £153 on their kids, which makes up almost half of the present budget for family members, while almost one in five (18%) parents are planning to spend more than £300.
Cost of education
According to the latest research by Unipol into the accommodation for students in the UK, they found that in 2018/19 the overall average weekly rent stands at £147, an increase of five per cent since last year, of 8.9 per cent on 2015/16 and 31.3 per cent since 2011/12. The average for the private sector is £153, 9.3 per cent higher than the university mean of £140. Rent rise rates have exceeded RPI throughout the timeline and have become increasingly detached from the index.
There is no evidence of providers directly pegging rent increases to inflation, even though a significant number cite it as a key point of reference in rent setting. Proportionally, the gap between London and the rest of the UK is in line with earlier survey findings. The overall average weekly rent outside the capital is two thirds (68 per cent) of the average London level.
Unipol highlight the cost of not wanting to share facilities. For en-suite rooms, the 2018/19 weekly price for universities is £145 and for private providers £3 more at £148 per week. Standard stock in universities is markedly cheaper than in the private sector, £117 as opposed to £126. Weekly rents for standard self-catered accommodation have risen strongly in London in both the educational and commercial sectors between 2012/13 – 2018/19, by 44 and 30 per cent respectively. Weekly rents for institutional studios are slightly higher (£197) than for private providers (£193), although they are offered on shorter contract lengths on average. The most expensive rents are in London, the South East, South West and East of England, directly reflecting high land values. Among institutions, Wales, Scotland and the North West are the most affordable markets.
The average annual rent for 2018/19 is £6,366, up six per cent on the previous year and by a third on 2012/13. In London the average is £8,875 and for the rest of the UK £5,928. Since 2011/12, headline rents have gone up 4.8 per cent a year on a compound basis. On average, a student tenant signing up for a full contract term in 2018/19 will have paid £376 more than for equivalent accommodation in the previous year.