April 2017

28/04/2017

General Election: less on Brexit, more on housing

Prime Minister Theresa May's announcement of a snap election has predictably had all the parties feverishly working on manifestos. But there have been few announcements on housing policy so far, despite the housing crisis turning into a devastating issue that just won't go away.

Most signs are that Article 50 having been triggered, and by a large majority in the House of Commons, Brexit is to be the direction of travel. Given that, every party should prioritise housing as among the most important ongoing matters and look to present policies designed to alleviate the malign symptoms affecting the vast majority of housing market players.

Sales volumes were up in England and Wales and London, both 4.1%, but this is the ninth month of a continual year-on-year decline. Little optimism can accompany the marginal 2.4% rise in sales volumes in England and Wales for 2016 vs 2015 - see the table/diagram below. This is because March 2016 was a 'blip' month when large numbers of Buy to Let investors sold properties to avoid paying the stamp duty increases affecting that market which came on stream in April.

Regarding prices in England & Wales, rises have increased steadily month-on-month - from 0.2% to 0.7% - and year-on-year - from 5.5% to 6.1%, but presently 75% of home sales are going through for less than market price (see further details from the National Association of Estate Agents' (NAEA) March Housing Market Report below). And London prices fell 0.9% month-on-month (prices have fallen in 4 of the last 7 months) and year-on-year, London's price level increases continue to fall in magnitude, to 3.7% in the last month (all data taken from the most recently available data from the Land Registry House Price Index).

Additionally, the housing supply, according to the NAEA is at its lowest level for March since records began.

The average house price in England & Wales is presently £229,158 and in London it is £474,704.

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Monthly Sales Volume Variances for England & Wales


Month Sales Volume
2015
Sales Volume
2016
Annual
Variance
Monthly
Variance
January 2016

60,900

63,751

+4.7%

-32.5%

February 2016

62,329

67,867

+8.9%

+6.1%

March 2016

70,924

117,255

+65.3%

+42.1%

April 2016

67,784

47,405

-30.1%

-147.3%

May 2016

78,582

52,391

-33.3%

+9.5%

June 2016

89,201

60,683

-32.0%

+13.7%

July 2016

97,643

70,395

-27.9%

+13.8%

August 2016

88,590

70,954 -19.9% +0.8%
September 2016

86,348

67,803 -21.5% -4.6%
October 2016
94,494

62,268

-34.1%
-8.9%
November 2016
83,325

66,064

-20.7%
+5.7%
December 2016
84,496

68,909

-18.4%
+4.1%
Year to Date 
Sales Volume
(December 2016)
796,795

815,745

+2.4%
(+18,950)


NAEA: housing supply at its lowest level ever for March

The NAEA's monthly Housing Market Report stated that, regarding the supply of houses, its estate agents on average had just 39 properties on their books compared to 44 in February - the lowest level for March since records began nearly 15 years ago in September 2002. The figure was 28% down year-on-year: last year, the average per estate agent was 54.

More signs of general disequilibrium came from figures for demand. The NAEA claimed that the average number of buyers registered per estate agent branch fell to 397 from February's 425: a 6.6% fall month-on-month and a 5% fall year-on-year from 417 last March.

First Time Buyers: grounds for cautious optimism

The NAEA reported that sales to first time buyers as a proportion of all sales rose to 25% from February's 22%, a step in the right direction, given that February's 22% was a large fall from January's 30%.

Small increase in proportion of properties sold under asking price

Some 75% of properties sold in March were sold under the asking price, a small increase from February's 74%, This remains an important fact when considering the overall property price increases in England & Wales.

Sales volumes hold steady

Sales volumes fell to 10 per branch in March, however last February's 11 per branch was the highest volume since September 2007.

Stamp Duty increases dampening Buy to Let and wider effects

Some 64% of estate agents has seen demand from Buy to Let investors decrease since the second home stamp duty surcharge came in last April, according to the NAEA. Additionally, 37% of the estate agents claimed that house prices have increased as a result of the measure.


Monthly Property Price Variance for England & Wales


Month Sale Price
2015
Sale Price
2016
Annual
Variance
Monthly
Variance
February

£199,522

£216,083

+8.3%

+0.2%

March

£199,435

£217,901

+9.3%

+0.8%

April

£201,968

£219,187

+8.5%

+0.6%

May

£204,179

£223,037

+9.2%

+1.7%

June

£205,747

£226,115 +9.9%

+1.4%

July

£209,200

£227,081

+8.5%

+0.4%

August

£211,391

£226,593 +7.2% -0.2%
September

£211,916

£226,768

+7.0% +0.1%
October

£212,268

£225,951

+6.4% -0.4%
November

£213,973

£226,043

+5.6% 0.0%
December

£215,023

£227,063

+5.6% +0.4%
January

£215,638
(Sale Price 2016)
£227,536
(Sale Price 2017)

+5.5% +0.2%
February

£216,083
(Sale Price 2016)

£229,158
(Sale Price 2017)

+6.1%

+0.7%



General Election: few manifesto housing policy announcements yet

By press time, there had been very few announcements of housing measures forthcoming in the main parties' manifestos with the Conservatives and Labour offering the same thing in essence.

The Conservative Party promised to deliver 1,000,000 new homes with a focus on affordable rents as well as home ownership. This marks a shift away from David Cameron's emphasis on encouraging people to buy their own homes.

The Labour Party also pledged to built 1,000,000 new homes over 5 years if it wins power and that 50% would be council and housing association homes 'for rent and totally affordable'.

The Liberal Democrats have pledged to 'eradicate homelessness' and bring back housing benefit for those aged 18-21.

In making their announcement, Labour also referred to House of Commons' figures showing that its own councils have built on average 2,577 new homes between 2010 and this year, compared to Conservative councils building 1,679 with Liberal Democrats building 1,660.

Mayor of London Sadiq Khan recently launched an initiative to build masses of 'naked homes' in London, starting in Enfield as a pilot, which are to be very spartan, 'no-frills' homes, priced at between 25% to 50% of current London prices.

The Conservative Party claimed that Labour's policies were 'uncosted', in press reports.


Housing Industry responses: broadly pro-May but with requests

Housing industry figures have been broadly positive about May's snap election decision, with many commentators stating that, because of the sudden nature, there would be too little time for buyers and sellers currently in the cycle to respond chaotically, bringing uncertainty to the market.

This was borne out by one survey, by eMoov.co.uk, of current housing buyers and sellers, which suggested that these were going ahead regardless of the election.

Most of the experts in press reports indicated a preference towards the Conservative Party, not least because the current direction of travel towards Brexit would remain and perhaps be bolstered, notwithstanding that Brexit itself is a journey into uncharted waters.

However, many expressed a hope that any incoming government would scrap stamp duty on the first £125,000 for Buy to Let investors and bring back tax relief on these investors' mortgage payments, Some expressed a hope that the new government would provide more funds for local councils to build houses, something which the present Government has had no inclination to do.

A senior spokesman for Surrenden Invest stated a hope that an incoming government act to tackle 'the chronic undersupply of housing', in press reports.


House of Commons committee report damns Government inaction on housing

A cross-party House of Commons Committee slated the Department for Communities and Local Government for failing  to tackle 'fundamental flaws' in the housing market because of a lack of urgency from 'unambitious ministers', according to press reports.

Speaking of a spiralling 'human and financial cost', it said that Communities Secretary Sajid Javid's goal to build 200,000 homes per year fell well short of the 275,000 it claimed was required to alleviate the crisis.

It also reported that families caught in temporary accommodation increased 44% between 2010-2015.


ONS: house prices outstripping wage rises fourfold in 2 decades

House prices in England and Wales have risen 259% between 1997 and 2016, according to the Office for National Statistics, while average earnings have risen only 68%. Home ownership in England is at its lowest level since 1985

Mark Hayward, Chief Executive of the NAEA said: "The upcoming General Election is a good opportunity for each Party to outline their plans for tackling the housing crisis – we hope to see it prioritised so we can make the market a better place once and for all."

Andrew Boast, Co-founder of SAM Conveyancing said: "While the NAEA's sales figures for first time buyers are encouraging, the housing market continues to face multiple issues, which the Government is failing to address, the largest symptom being the continuing long term decline in sales volumes.

"Let's hope that in the coming weeks, all parties produce meaningful plans to tackle the housing crisis. A moratorium on stamp duty for all first time buyers for a few years would be one positive step - it was a popular move in previous years. However any incoming government must be brave and take a variety of actions if there is to be any lessening of the stress felt by so many frustrated people throughout the UK housing sector."

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