One third of tenants in the UK are planning to buy in 2014

ONE third (32%) of private tenants in the UK are planning to buy their first home in 2014, Rightmove reported this morning.

Nearly a quarter (24%) of those say they are looking to buy as a direct result of phase two of Help to Buy or have brought forward their plans to buy because of it.

One in five people (18%) currently living with their parents but planning to make the move to home ownership have also been influenced by the scheme.

But, said Rightmove, the shortages underpinning the housing market will not fundamentally change because of “a few months of Help to Buy”. The scheme is due to have a shelf life of three years, or 36 months.

The Rightmove report is published as new data from the ONS shows that the number of households in rented accommodation is now 34% of the total, up from 29%.

According to Rightmove, tenants in London and the south-east are keenest to buy, while those in the north-east and Scotland are the least likely, according to today’s Rightmove Consumer Confidence Survey, which questioned nearly 17,500 people.

Of those renting, over half (58%) are ‘trapped renters’ who would like to buy but cannot afford to. Only a small number (13%) are renting for lifestyle reasons, saying that it suits them, while 28% would like to buy eventually.

The increased number of tenants hoping to get their first step on the housing ladder could see rental prices staying flat next year, Rightmove predicts.

Miles Shipside, Rightmove director and housing market analyst, said: “More tenants look set to buy in 2014, but saving a deposit still requires time and commitment, meaning that overall tenant demand is unlikely to change much.

“It could ease a little in 2015, but the reality is that many first-time buyers will still be priced out of buying, especially with increased competition from buy-to-let investors attracted by solid rental returns and the possibility of increasing capital values.

“With there being an increase in supply of property to rent, it’s important that landlords improve the standard of their stock to attract the best tenants as there is more choice of property to rent in some parts of the country.

“In the past three years rental prices have increased by a total of 7.6%, and the fact it has slowed to 1.4% within the past year is an indication that landlords will have to try harder to get the best returns.

“More landlords and the increase in supply due to buy-to-let mortgage availability is likely to keep rental price growth in check in 2014.

“However, it could be that we see buoyant rental and sales markets at the same time as a result of the housing shortage of the last ten years, which won’t be solved by a few months of Help to Buy.”

The latest ONS data shows a sharp increase in the number of households in the private rented sector.

Matt Hutchinson, director of SpareRoom.co.uk, said: “The number of households renting has risen from 29% to 34%. While other household spend has stayed the same or increased, for most people rent is their biggest monthly outgoing. The ONS data tallies with our findings that not only are more people renting, but more are returning to shared accommodation, including couples and the over 40s. Flat and house sharing is no longer the preserve of young professionals and students.

“Soaring living costs means it’s a struggle for many renting households just to keep their heads above water, let along have enough spare cash to put aside towards deposits. It’s clear that the aspiration to own our own homes one day is fast becoming out of reach for British households.”

Rightmove Infographic for November

Rightmove’s November House Price Index reported that the average asking price of property coming to market fell by 2.4% (-£6,181) in November, in line with the usual pre-Christmas slowdown.

Their infographic provides a breakdown of how prices are performing across each region and property type.

House prices rise in every region of England

House prices in every region of England rose in September, according to official data published on Monday which reignited the debate about the prospects of a new house price bubble.

The Land Registry data showed that even before the government accelerated the second phase of its Help to Buy mortgage guarantee scheme, prices had increased 3.4% in a year on average, and were higher than in September 2012 in all English regions. However, prices in Wales were down by 1.7% year on year and fell by 0.4% in September.

Howard Archer, chief UK economist at IHS Global Insight, said: "There is a mounting danger that house prices could really take off over the coming months, especially if already significantly improving housing  market activity and rising buyer interest is lifted appreciably further by the Help to Buy mortgage guarantee scheme, which will take full effect in January."

Overall house prices in England and Wales continued to rise in September, increasing by 1.5% over the month to an average of £167,063, according to the Land Registry. This remained below the peak reached in November 2007, when average prices hit £181,839. There was also a jump in the number of homes sold for more than £1m.

The data, which does not include newbuild homes or those which have not changed hands since 1995 – but unlike other indices does include cash sales – covers the period before the launch of the second part of the government's controversial Help to Buy scheme earlier this month. The scheme gives a taxpayer-backed guarantee to lenders offering 95% mortgages that are open to first-time buyers and home movers on newbuild homes worth up to £600,000. Critics have argued it will further fuel an already rising market.

House prices in biggest month-on-month rise for six years

HOUSE prices in England and Wales posted their biggest month-on-month gain in more than six years in September, but talk of a price bubble is overdone, property analysis firm Hometrack said in a survey on Monday.

House prices rose 0.5 percent from August, the biggest increase since May 2007, Hometrack said. Prices were up 2.4 percent from the same month last year, the biggest annual increase since December 2007.

British house prices have picked up over the past 12 months, and some are concerned about an unsustainable price boom. But Richard Donnell, director of research at Hometrack, played down these fears.

"Prices are rising off a low base and talk of a housing bubble in relation to the national market is overdone," he said.

"We are seeing continued house price growth in London combining with modest gains across other regions and creating a picture of a broadening market recovery," he added.

Hometrack said it expected prices to continue to rise in the short term but cautioned that the market remained very sensitive to changes in demand and especially changing expectations over the outlook for mortgage rates.

Separate data from lender Nationwide released on Friday showed that British house prices shot up at their fastest annual pace in more than three years in September

South West London house prices surge

Prime central London house prices continue to show steady year on year growth, while the predominantly domestic markets of southwest London have recorded double digit rises as a wave of equity pushes out from the core central zone, says international real estate adviser, Savills.
 
Values in prime central London rose by 1.9 per cent in the three months to the end of September, according to the Savills prime central London index.  This takes annual growth to a relatively modest  5.6 per cent, but continues a record-breaking period of steady, single digit annual price growth.   
 
There are now clear signs of outer prime London playing catch-up, with average prices across the wider markets of prime London rising 3.3 per cent in the quarter and 9.2 per cent year on year.
 
The standout performer is prime southwest London – a largely domestic market that stretches from Fulham to Wimbledon – where prices rose 4.0 per cent in the last quarter and 11.8 per cent year on year.    These markets are now on average 28.1 per cent above their 2007 peak, just behind prime central London at 30.1 per cent. 
 
Less accentuated but nonetheless robust price growth  has also been seen in other locations that have historically lagged central London, such as Islington and Wapping.
 
Properties valued up to £1million have performed particularly strongly, while year on year growth in the £10million+ central London sub-market is just 1.8 per cent as prices appearing to have broadly plateaued at 38 per cent above their 2007 levels.

See which university cities are the top for buy-to-let investors

UNIVERSITY cities Glasgow, Hull and Manchester have been named as the country’s top buy-to-let hot spots for landlords looking to invest in student properties.
Low house prices in Glasgow combined with an average rent of more than £1,000 a month on a typical four-bedroom student property mean that landlords there can expect the best rental yields in the UK at around 4.95%, according to property search website Zoopla, which used its own database for the findings.
The rental yield on a property is the annual return an investor can expect to make. It is worked out by calculating a year’s rental income as a percentage of how much the rental property cost in the first place. Zoopla’s findings were for made for gross yields, before the deduction of tax and expenses.Hull had the second best rental yield at 4.80%, followed by Manchester at 4.59%.
Many of the cities offering better potential returns for landlords are outside the more expensive areas of the South where property prices are relatively high. The size of the profit a landlord can expect to make also depends on the strength of demand from potential tenants.
Despite having the largest student population in the UK, London was only the 10th most attractive place to invest in student accommodation. 
Zoopla said this is because London house prices are rising faster than rents, which is reducing the potential returns for landlords. .
The average yield on a student property in London was found to be 4.20%, putting the English capital behind places including Cheltenham, Cambridge, Bristol and Luton.
Oxford did not make the top 10, despite its worldwide reputation. Ranked at number 14, with a typical potential rental yield of 4.02%, Oxford came behind Sunderland and Coventry.
Belfast was in 18th place with a potential yield of 3.96%, while Swansea was in 24th and Cardiff was at 30.
Carlisle, Middlesbrough and Bournemouth were found to offer the lowest potential returns to landlords. The typical potential rental yield in Carlisle was found to be 2.58%, putting it well below the UK average of 3.79%.In terms of the best value for students, Middlesbrough was found to have the cheapest digs. The average rent for a four-bedroom property in Middlesbrough was £562 a month.
At the other end of the scale, the average rent on a four-bedroom property in London costs more than six times that of Middlesbrough, at £3,485 a month.
Lawrence Hall, Zoopla.co.uk spokesman, said: "The largest number of students or the most prestigious university clearly isn’t necessarily best for investment returns.
"Landlords need to do their research and take into account the student demand, property supply, average property values and average monthly rents.
"There is no apparent North/South divide when it comes to student buy-to-let investments and a number of towns in the North are showing higher gross yields than the South as a result of property values having remained lower over the past few years whilst rental demand has increased."Best-performing student buy-to-let cities and towns for landlords, according to Zoopla, with the average monthly rent on a four-bedroom house, the average house price and the gross yield:1. Glasgow, £1,083, £262,888, 4.95%
2. Hull, £737, £184,440, 4.80%
3. Manchester, £1,053, £275,132, 4.59%
4. Cheltenham, £1,631, £429,585, 4.56%
5. Cambridge, £1,628, £429,976, 4.54%
6. Buckingham, £1,502, £405,017, 4.45%
7. Luton, £1,076, £291,454, 4.43%
8. Bristol, £1,224, £342,699, 4.29%
9. Lincoln, £877, £248,980, 4.23%
10. London, £3,485, £995,104, 4.20%

Homeowners expect UK house prices to rise

Households expect the sharpest increase in prices over next 12 months than at any time since January 2010

Households perceive that the value of their property rose over the last month at the fastest rate since the index began in early 2009

Price expectations rise to record in London, while households in Wales and North East expect the most modest rise in prices

Those aged between 45 and 54 are most optimistic that prices will rise over the year

Change in current house prices

Households perceived that the value of their homes rose in September, for the sixth consecutive month, according to the House Price Sentiment Index (HPSI) from Knight Frank and Markit.

More than 21% of the 1,500 households surveyed across the UK said that the value of their home had risen over the last month, while 5.7% said the value had fallen, giving a HPSI reading of 57.9 (see figure 1).

Any figure over 50 indicates that prices are rising. The higher the figure, the stronger the increase. Any figure under 50 indicates that prices are falling.

This is up from August’s reading of 55.3, and marks the highest reading since the index began in early 2009. On the smoother three-month rolling average, the reading has risen to 56.7 in the three months to September, up from 52 in the previous quarter.

A lead indicator

Since the inception of the HPSI, the index has been a clear lead indicator for house price trends. Figure 3 shows that the index moves ahead of mainstream house price indices, confirming the advantage of an opinion‐based survey which provides a current view on household sentiment, rather than historic evidence from transactions or mortgage market evidence.

While households in every region perceived that the value of their home had increased, the rate of the increases varied. Households in the North East, who in August reported that the value of their home had fallen, are now reporting only modest rises (53.9). In contrast, households in London (67.0) and the South East (61.0) reported the biggest increases.

Outlook for house prices

The future HPSI, which measures what households think will happen to the value of their property over the next year, rose again in September to a its highest since January 2010, reversing the slight dip seen in August.
On the smoother three-month average basis, the future HPSI reading was 68.2, the highest level since the index began, up from 63.1 in the previous three-month period.

Regional outlook

Respondents in all regions expect the value of their property to rise over the next 12 months, but there are significant differences between many regions in the North and South. Those in London (80.1) and the South East (71.4) expect the biggest rise in prices, while households in Wales (64.3) and the North East (64.4) anticipate the most modest increase in values.

Mortgage borrowers are the most confident that prices will rise over the next year (75.8), followed by those who own their home outright (74.6). Those who are renting are the more downbeat about the future movement in house prices (55.6).

Those aged between 45 and 54 (75.7) expect the biggest increase in the value of their home over the next year, followed by those aged over 55 (73.1). In contrast, those aged 18-24 (59.1) are expecting more moderate price rises.

This ‘age-gap’ is also mirrored in earnings data, with the highest earners (earning more than £57,800 a year) expecting the largest increases in prices over the next 12 months, with a reading of 79.9, although this is down from the record high of 81.1 seen in July.

Supply of homes in regional housing markets

To fully understand the nature of the UK property market, it is important to recognise that there are significant variations in supply dynamics across mainland UK.

In fact, it should come as no surprise that the balance of supply and demand for property in each region is fundamentally correlated with price performance.

Although the regional disparities in price recovery have been widely reported, regional supply dynamics, whilst equally important, have not garnered sufficient attention. 

The current volume of vendors entering the market (around 100,000 per month across the UK) is less than half of what it was during the property boom year of 2007. It may be argued that restricted supply of property for sale has been instrumental in both preventing a greater crash and facilitating a much more rapid recovery. The same thesis applies at a regional level.

The consequences of low supply and high demand are all too apparent in the overheating London property market, where supply is down 19% and prices are up 10.5% (year-on-year). 

Contrastingly, the North East is the real contrarian in the country's supply crisis. In this region, the supply of new and resale property has actually risen by 16% over the last 12 months while pricing is essentially stagnant (+0.5% but falling in real terms).

Clearly, in the current market, homeowners in areas where prices are growing at a reasonable rate are reluctant to sell. Concerns about the lack of suitable properties are discouraging many would-be vendors. Another considerable influence is the strong rental market. 

As sales prices continue to rise, property owners are choosing to bide their time and enjoy the high rental yields and income generated from a strong lettings market, hence the growing number of 'double renters'.

Even in London, where the average property price has risen 10.5% in the last 12 months, the strong rental market can offer landlords an average monthly rent of £2,369 for a flat and £3,636 for a house.

On the other hand, we are also witnessing increases in the number of vendors in the poorly performing northern regions. This is an alarming trend for areas such as the North East and the North West where price growth is already negligible. 

Increasing supply looks set to keep prices in such regions in check, at least for the rest of the year. Hence, in contrast to the South, the North remains, for the time being, a buyer's market.

Doug Shephard, director at Home.co.uk, commented:

"These regional supply dynamics suggest that the bipolar nature of the UK property market is only going to get worse. Starved of new and resale stock, pricing in the London and South East property markets looks set to go ballistic. 

"Prices in the capital are already increasing too fast and further restrictions in supply can only serve to make matters worse. Meanwhile, increases in supply in the sluggish northern markets can only exacerbate their problems of slow sales and price stagnation."

London house prices rise nearly 10% in a year

House prices in London have risen by nearly 10% in the last year, adding to signs of a sharp north-south divide in the market.

A 9.7% increase in prices in London over the year to July helped to push the value of homes across England to a new high of £255,000 on average, the Office for National Statistics (ONS) said.

House prices in London and the South East both raced past their 2008 peaks and stood at an average of £438,000 and £303,000 respectively, while prices in the East of England and the South West also edged close to their previous highs.

But the UK market was still patchy and while house prices were up by 3.7% year-on-year in England they dropped by 2% in Scotland and 0.7% in Wales. 

Prices in Northern Ireland were up by 1.8% year-on-year as the market showed signs of starting a slow recovery after some sharp falls following the economic downturn.

The annual pace of house price inflation picked up across the UK in July to its fastest rate recorded in 2013 so far at 3.3%, taking values to £245,000 on average. Prices rose by 0.3% month-on-month.

Peter Rollings, CEO at Marsh & Parsons, comments: “A strong recovery is evident across much of the UK as house prices continue to rise at their fastest rate in many years.  The market is helped by an improving economy, low interest rates, and government-backed schemes such as Help to Buy. But while the market buoyancy is clear, any talk of a housing bubble is wide of the mark. 

"Prices in most parts of the country are still well below the market highs of 2007, and the recovery in many parts of the UK is relatively muted. Ultimately, house prices can only increase at a rate that people can afford – so while wages remain low, and lending continues to be checked, there is a limit to how high house prices can rise.

 “However the London property market tells a different story, with price increases that dwarf those in the rest of the UK.  In the Prime London property market, an imbalance of supply and demand means that prices rise faster than in other areas.  

"The huge demand for property in the most desirable parts of the capital, from both UK and overseas buyers, is helping to push prices higher. In the three months to June, we recorded 11% more buyers entering the market in competition for 14% fewer properties. Property is changing hands in record time and for close to the asking price, with 98% of the asking price for Prime London property regularly being achieved.”

Limit UK house price inflation to 5% say RICS

The Royal Institution of Chartered Surveyors has called on the Bank of England to limit annual house price inflation to 5% to prevent another property bubble.

RICS said the Bank should police its proposed cap in house price inflation through its Financial Policy Committee (FPC). If prices pushed above the limit, the FPC could enforce lower loan-to-value or loan-to-income ratios, shorten mortgage terms, or restrict lending to prevent them spiralling higher.

Property prices are already rising at more than 5% a year according to mortgage lender Halifax, and the RICS has joined a chorus of voices warning that such rises could become unsustainable.

Figures from LSL/Acadametrics on Friday showed a 30% rise in the number of first-time buyers.

"Sending a clear and simple statement to the public that the Bank will not tolerate house price rises above five percent would help restrict excessive price expectations across the country," the RICS report said.

"This policy would discourage households from taking on excessive debt out of fear of missing out on a price boom, and discourage lenders from rushing to relax their lending standards as they compete for market share."

The industry group notes that limits on property price inflation have been used by a variety of countries, including Canada between 2008 and 2012, when Bank Governor Mark Carney headed the country's central bank.

Under Carney's watch, Canada's national regulator the amount buyers could borrow in relation to their deposit and imposed more stringent credit checks - measures that appeared successful in bringing price inflation back down.

House prices hit a record high in August

Key points from LSL house price index:

·         The number of sales exceed 70,000 for the second month in a row

·         House prices increased £7,275 in the past twelve months, reaching an average of £233,776

·         Number of first-time buyers up by more than 30% over the year

House Price	Index	Monthly Change %	Annual Change %
£233,776	238.0	0.4	3.2

David Newnes, director of LSL Property Services plc, owner of Your Move and Reeds Rains estate agents, comments: “House prices soared to a new record high in August – the fourth record high so far this year. The property market has turned over a new leaf after years of restrained activity following the financial crisis. 

"Prices are up £883 in the last month and are £7,275 higher than a year ago due to a substantial boost in mortgage lending to first-time buyers. 

"The UK’s economy is showing signs of sustained recovery which is pushing the housing market forward. Sales are rising rapidly; in May to August 2013 they have been higher than the equivalent period for the previous three years."

Mortgage lending

“The improving availability and pricing of mortgages is boosting demand for properties. Although prices are rising, competition among lenders has opened up the market for first-time buyers, with growing product choice and competitive rates. 

"There has been a concerted effort by lenders to boost mortgage lending. The Government has been pivotal in providing the aid that the market has been craving for many years. The number of first time buyer mortgages is at the highest it has been in five years. 

"The Funding for Lending Scheme has enabled banks to lend to a wider pool of borrowers thanks to cheaper funding, while the Help to Buy scheme is helping buyers overcome many hurdles such as high inflation and hefty deposit requirements. A vast number of aspiring homeowners have already signed up and many can finally afford to get on to the housing ladder.

“Higher loan-to-value (LTV) mortgages are much more readily available and at lower rates, which has been the catalyst behind the vast improvement in the housing market coupled with increasing consumer confidence. True, those with the largest deposits have access to the best rates, but overall they are falling and those with small deposits are able to grab cheap deals. LSL data shows that the average age of a first-time buyer is 30 and the average deposit is £30,109. 

"First-time buyer activity, proving particularly strong in London, as well as the rest of the UK, has been crucial in opening up many housing chains and in helping boost house prices further up the ladder. The road to recovery is a long way off from the levels of activity seen before the financial crisis, but the rise in first-time buyer activity is sending positive waves of confidence.

Growth across all regions

“As expected, London is fuelling the significant rise in house prices on a national level. But signs suggest price growth is happening across the board. All ten regions in the country showed an increase in the annual rate of house price inflation compared to a month ago showing prices will climb across the whole of England and Wales. 

"It is still too early to predict what impact the economy will have on prices, especially as the Bank’s Financial Policy Committee may apply downward pressure on prices through the controls over mortgage supply and pricing. Thus nothing can be set in stone yet. One thing is crystal clear: the market has become more fluid thanks to the increase in activity from the lower tier of the market.”

First time buyers up 41% on last year

Survey results published by the Council of Mortgage Lenders today show that this growth in July continued to be buoyed by home-owner house purchase lending, in particular by growth in first-time buyers.

The CML data (which, as of this month, includes buy-to-let) shows:

• Total home-owner house purchase lending continued to grow, up 9% on June and 21% on July last year.
• First-time buyers took out 25,300 loans in July, an increase of 5% on June and of 41% compared to July 2012.
• Home movers took out 32,000 loans, an increase of 12% compared to June and up 9% on July last year.
• Home-owner remortgage lending continued to pick up compared to July 2012 and recent months, although the £3.8bn advanced remains subdued compared to historical volumes.  
• Total buy-to-let loans advanced increased to 15,200 in July, up 12% compared to June.
• Within this, 7,600 buy-to-let loans in July were for house purchase, up by 7% compared to June.
• In contrast to the picture in the home-owner market, buy-to-let remortgage lending grew more strongly than house purchase, increasing by 24% compared to June to £1.1bn. 

Lending for home-owner house purchase

Total home-owner house purchase loans (both movers and first-time buyers) continued to show the resilience and growth seen throughout 2013. 57,400 house purchase loans were advanced in July, an increase of 9% on June and up by 21% on July last year. These loans had a total value of £9.1bn, which was an increase of 12% on June and 23% compared to July last year. 

Table 1: Loans for house purchase and remortgage

	Number of house purchase loans	Value of house  purchase loans, £m	Number of  remortgage loans	Value of remortgage loans, £m
July 2013	57,400	9,100	27,000	3,800
Change from June 2013	8.9%	12.3%	5.5%	8.6%
Change from July 2012	21.1%	23.0%	7.6%	15.2%

Lending to first-time buyers

The strong growth in lending to first-time buyers since the beginning of the year has continued, with the number of loans advanced increasing by 5% compared to June. In July, 25,300 loans were advanced to first-time buyers, worth £3.5bn. By value, first-time buyer lending was 6% up on June and 46% up on July last year. 

The typical first-time buyer loan size stayed almost unchanged from June at £117,038, while average first-time buyer household income increased to £36,142 from £35,873 in June.

Affordability improved marginally in July compared to June reflecting the average loan size remaining largely unchanged but a higher income average, alongside a further fall in typical interest rates. Typically, first-time buyers in July borrowed 3.31 times their income in comparison to 3.33 in June and mortgage payments (capital and interest) accounted for 19.2% of income, down from 19.3% in June.

Lack of affordable housing puts pressure on parents

The lack of affordable housing in Britain is increasing the emotional and financial burden on parents as their grown-up children can no longer afford to move out, new research has revealed.

A ComRes poll of more than 1,100 parents with adult children aged 21 to 40, conducted on behalf of the National Housing Federation, found that:

• Three out of ten parents (27%) have at least one adult child aged between 21 and 40 living at home.
• Two-thirds (66%) of parents with at least one adult child living at home say they are doing so because they simply can’t afford to move out.
• Nine out of ten (89%) parents with grown-up children believe there is not enough housing in Britain that people can afford.

This is increasing pressure on family life. While a quarter (26%) say having grown-up children living at home had brought their family closer together, other parents were not so positive. A fifth (23%) say having a grown-up child living at home has caused them stress and a further fifth (18%) say it had caused family arguments. Worryingly, one in ten (8%) parents say having a grown-up child living at home has caused them to fall into debt.

 

Parents in higher income brackets are more likely to have at least one grown-up child living at home. More than a third (36%) of parents with grown-up children with a household income of more than £30,000 have at least one of their adult children living at home, compared to a fifth (21%) of parents with adult children with a total household income of £30,000 or less.

 

More than a third (41%) of parents with at least one adult child living at home say they are doing so because the cost of living away from home is too high, while a further fifth (22%) say they are living at home while they save up for a deposit. 

 

Unless more homes are built, the situation soon could become even bleaker for parents with children in their twenties and thirties. First-time buyer house prices are set to increase by 42% by 2020, while rents in 2020 will be 46% higher that they are today. That means parents could be forced to look after their grown-up children for even longer as they struggle to save up enough money to get a place of their own. 

Half of tenants expect to buy in next five years

In July, 98% of registered tenants wanted to become a homeowner, up 2% from April, and 9% higher than in December, but only 12% are expecting to buy before the end of the year. 

Almost half (49%) are expecting to buy in the next five years, a significant increase from the start of the year. In December, only a third (36%) of tenants expected to buy in the next five years.

And tenants currently unable to become first-time buyers named the inability to save for a deposit as the biggest stumbling block to homeownership. 

More than half (46%) are unable to buy as they can’t save for a deposit, and a growing number of potential first-time buyers (19%) are concerned that rising costs like stamp duty will get in the way – up by a third from just 13% in December 2012.

London & the South East VS the rest of the UK

The concerns over building a deposit are even more apparent in London and the South East. In this region, 55% of tenants who can’t afford to buy are prevented by high deposit requirements, 12% higher than in the rest of the UK. 

This is a result of prices in the capital rising more quickly than the rest of the UK. The latest England and Wales house price index from LSL shows that house prices in London have risen by 7.1% over the year to June, whilst prices in England and Wales as a whole rose by just 2.2%

Transaction costs such as legal fees and stamp duty are more of a concern to tenants in London and the South East, with over a quarter (27%) naming these costs as a key factor blocking them from purchasing property, compared to just 16% in the rest of the UK. 

Worries about having enough income for repayments played a lesser role than in the rest of the UK, concerning just 8% of potential first-time buyers.

David Newnes continues: “It remains a huge challenge for first-time buyers to purchase property in the capital. House prices are more expensive, and the size of deposit required dwarfs that in the rest of the country. It’s the reason why six out of tenants in London can’t afford to buy. 

"And there are further concerns for the London market. Higher legal fees and stamp duty costs are turning further first-timers off buying.”

The profile of a first-time buyer

The average first-time buyer in July was 30 years old, with an annual salary of £36,299 per annum, 4% higher than in July 2012, when the average salary was £34,936.

The number of first-time buyers who were able to self-fund their purchase fell to 41% in July, from 51% in April. 36% of all first-time buyers in the UK received financial help to put together a deposit from parents or relatives, whilst 9% benefitted from an inheritance, and 2% received familial help with mortgage repayments. 4% received financial help from a government scheme such as Help to Buy, up from 1% in April.

Once again, Londoners need the most help to get onto the ladder, with 44% of all first-time buyers in London receiving help towards a deposit, compared to just 33%, and just 36% of buyers able to self-finance.

44% of all first-timers were looking for houses with three or more bedrooms, and the second most popular property type were two bedroom houses (31%). Flats continue to attract far fewer first-time buyers – with just a quarter of buyers looking for flats rather than houses.

Why buy now?

Four in ten (41%) first-time buyers said they were choosing to buy now as they had only recently been in  a position financially stable enough to purchase a property, while a quarter (26%) chose to buy to own a house with their partner, and a second quarter (25%) feel it is time for them to settle down. 

Only 8% bought for investment purposes,  expecting house prices to rise, down from 11% in April.

And first-time buyers are confident that the value of property is set to rise.

Almost half (46%) of UK first-time buyers think that house prices will rise by up to 5% in the next year, while a further two in ten (18%) believe prices will rise between 5% and 10%. Only three in ten (28%) first-time buyers believe prices will remain flat in the next year, while less than 4% believe prices are likely to fall.

Value of English country estates rise at faster rate than prime London

During the past six months the total value of a typical English country estate increased by an average of 2.4% and has outperformed the growth recorded for country houses and prime central London residential for the year ending June 2013, according to Savills Estates Index. 

This leaves values at just -0.3% behind the peak recorded during 2008.

Crispin Holborow Savills Country department comments, “Estate values have for some time benefited from the substantial rise in farmland values.

"Our research shows that average prime arable values rose by 6% across Great Britain during the first half of 2013 to over £8,000 per acre. Ten years ago, the same land would have cost around £2,250 per acre.”

This is supported by the fact that for the first time since the downturn in 2008, a higher proportion of the whole estate value is tied up in the farmland and farm buildings (35.4%) than in the principal house (34.9%)
There is now clear evidence of the beginnings of a recovery in the other elements of value; estate cottage values improved by an average of 3.7% and marriage value or the premium attached to the assets whdoen all in one parcel, rose by 3.9% during the first half of this year.

Holborow added: “This continuing improvement in marriage value is perhaps the clearest indicator of an improving sentiment in the estates sector.

“Analysis of the viewings from the last three estate sales where Savills was involved shows interest in these rare and often trophy properties remains truly international with potential buyers coming from eight countries.

“The benefits of land ownership are now widely known. What will be interesting to follow is the performance of these Estates as the residential elements come back into their own. There could be some exciting growth potential,” he concludes.

Hometrack say demand for homes continues to grow

• Housing market activity has not registered the traditional seasonal downturn over August. 
• Demand continued to grow, up 1.1%, on the back of improving market sentiment. Over each of the last 3 years demand has fallen during the month of August.
• Supply remains constrained, growing by just 0.8% over the month. 
• Over the last 3 months much of the growth in supply has been located in the regions outside London and the South East.  
• Improving market conditions and firmer pricing levels in the Midlands and Northern regions are bringing more sellers into the market.
• Rising demand and sales agreed means that the recent momentum in house price growth has been maintained. 
• Average house prices grew by 0.4% over the month, following a 0.3% increase in July.
• The strongest market conditions are London and the South East where there is the greatest mis-match between supply and demand. 
• Prices in London and the South East grew at an above average rate of 0.9% and 0.5% respectively.
• Across other regions the overall trend in demand is upwards but supply is also rising and keeping price rises in check. 
• House prices grew across a third of the country in August – the highest coverage of price growth since May 2007.
• The net balance of supply and demand form the survey is a lead indicator of house price growth. The current balance points to continued house price increases in the months ahead.

UK house prices rise again in August - Nationwide

UK house prices continued to rise in August, increasing by 0.6% compared with July, the Nationwide said.

The building society said that property prices were up by 3.5% compared with a year earlier, although August 2012 was a slow month.

The average home was valued at £170,514, it said.

Greater consumer confidence, owing to more employment and signs of economic recovery, helped push up prices.

The building society's chief economist, Robert Gardner, added that greater availability of cheaper mortgages had also increased activity in the market.

The three-month on three-month comparison in prices, regarded as a less volatile measure of property prices, recorded a 1.4% rise.

This was the biggest increase since mid-2010, the Nationwide said.

Robert Gardner, Nationwide's chief economist, said: "A number of factors appear to be contributing to the recent upturn in house price growth. Consumer confidence has increased significantly in recent months, thanks to further modest gains in employment and signs that the UK economy is finally gathering momentum.

"An improvement in the availability and a reduction in the cost of credit, partly as a result of policy measures such as the Funding for Lending and Help to Buy schemes, is also enabling more people to take their first steps into the property market."

Rightmove infographic gives quick insight into August house prices

Rightmove Ifographic provides a breakdown of how prices are performing across each region and property type.

Property asking price discounts falling in UK house market

•             Proportion of discounted properties for sale falls from 37% to 32% over past 12 months

•             Average asking price discount falls to 6.3%, down from 7.6% twelve months ago

•             North lags South with biggest discounts in Barnsley, Rotherham and Wakefield

•             London, Edinburgh and Wolverhampton have lowest level of property discounts

•             Poole has highest average discounts on offer to original asking prices

In another strong sign that the UK property market has entered recovery mode, research released today by property website Zoopla reveals that the number of properties available for sale that have been discounted and the amount of the discount offered from the original asking price have both fallen sharply over the past twelve months.

The proportion of properties on the market in the UK today with an asking price that has been reduced at least once has fallen from 37% one year ago to 32% today. And the average discount to the original asking price has come down from 7.6% last August to only 6.3% now. The North-South property divide remains clearly evident in the Zoopla research, showing all of the top ten areas with the highest proportion of discounted properties being in the North and nine of the top ten areas with the biggest discounts on offer also being in the North. 42.7% of properties currently for sale in Barnsley have had their asking price reduced at least once since being put on the market, with Rotherham (42.3%) and Wakefield (42.1%) not far behind. 

Lawrence Hall of Zoopla.co.uk comments: “A fall in the proportion and level of asking price discounts suggests sellers are feeling more confident and happy to wait it out to achieve their target asking price. First-time buyers are finally getting a look-in due to improved mortgage availability which in turn is lifting the whole market. Banks, sellers and buyers are all more bullish about the state of the economy, which bodes well for the months ahead. And the Bank of England’s forward guidance on interest rates has generated a greater sense of certainty about the future, which should lead to even more activity.”

Top 5 Areas with Highest Proportion of Asking Price Reductions

Rank	Area	% of Homes on Market Reduced	Avg. Price Reduction (%)	Avg. Price Reduction (£)
1	Barnsley	42.7%	8.1%	£11,663
2	Rotherham	42.3%	7.4%	£10,941
3	Wakefield	42.1%	7.2%	£14,029
4	Wigan	40.8%	7.5%	£11,969
5	Sunderland	40.2%	8.0%	£12,157

Source: Zoopla.co.uk (August 2013)

Top 5 Areas with Biggest Asking Price Reductions

Rank	Area	Avg. Price Reduction (%)	Avg. Price Reduction (£)	% of Homes on Market Reduced
1	Poole	9.9%	£51,835	29.3%
2	Liverpool	8.2%	£13,664	37.8%
3	Doncaster	8.2%	£14,186	39.1%
4	Barnsley	8.1%	£11,663	42.7%
5	Bolton	8.1%	£14,945	34.1%

Source: Zoopla.co.uk (August 2013)

Top 5 Areas with Lowest Proportion of Asking Price Reductions

Rank	Area	% of Homes on Market Reduced	Avg. Price Reduction (%)	Avg. Price Reduction (£)
1	London	22.8%	7.3%	£66,575
2	Edinburgh	27.7%	5.3%	£14,722
3	Wolverhampton	29.1%	5.4%	£12,064
4	Bournemouth	29.1%	7.5%	£27,754
5	Poole	29.3%	9.9%	£51,835

Source: Zoopla.co.uk (August 2013)

Top 5 Areas with Smallest Asking Price Reductions

Rank	Area	Avg. Price Reduction (%)	Avg. Price Reduction (£)	% of Homes on Market Reduced
1	Edinburgh	5.3%	£14,722	27.7%
2	Swindon	5.3%	£10,665	32.9%
3	Ipswich	5.4%	£13,677	37.7%
4	Wolverhampton	5.4%	£12,064	29.0%
5	Milton Keynes	5.5%	£14,935	30.0%

Source: Zoopla.co.uk (August 2013)