Housing market overview Prepared 10 June 2016 This document provides the latest information available from various sources, with dates varying from March - May 2016

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Contents Market overview Summary of published price indices UK annual house prices – rate of change Regional all-dwellings annual house price – 12-month % change Annual house-price rates of change by types of buyer UK annual house-price rates of change: type of dwelling Number of housing transactions per month Monthly asking-price trend Median (typical) time on market Asking-price fluctuation percentage Sales volumes by price range (England & Wales) Home asking-price trend (England & Wales) UK house-price-to-earnings ratio Average properties for sale per estate agent

4 5 6 7 8 9 10 11 12 13 14 15 16 17

Market overview •

The majority of reported sources indicates a month-on-month increase in UK house prices, and all are unanimous on an increase in the underlying rate of annual house price growth



Halifax reports the volume of mortgage approvals for house purchases – a leading indicator of completed house sales – fell by 5.8% between March and April. Approvals were 2% lower than in April 2015.



The EU referendum is the cause for much uncertainty, with hometrack mulling the economic impact of ‘Brexit’ and consequences for interest rates, investment and incomes has direct implications for housing. They see the consensus appearing to suggest a short economic shock accompanied by a period of uncertainty for consumers and business.



LSL predicts the referendum may cause many homeowners to wait until after the EU vote before selling their homes, despite significant demand from buyers, extending the shortfall of sales seen after the rush of interest from landlords in March. With an additional 30,000 home sales made in the previous month and buyers snapping up most of the properties on the market, the current pause in transactions (an estimated 20,000 fewer in April) was to be expected.

Summary of published price indices Source website

Period covered

Monthly change (%)

Annual change (%)

Average house price

Official releases

Office for National Statistics (ONS)

Mar ’16

↑ 2.5

↑ 9.0

£291,820

17.05.2016

LSL Property Services

Apr ’16

↑ 1.0

↑ 8.9

£298,030

12.05.2016

Halifax

May ’16

↑ 0.6

↑ 9.2

£213,472

07.06.2016

Home.co.uk

May ’16

↑ 0.8

↑ 7.5

£296,480

12.05.2016

Hometrack

Apr ’16

N/A

↑ 10.4

£232,800

27.05.2016

Land Registry

Mar ’16

↓ 0.5

↑ 6.7

£189,901

28.04.2016

Nationwide

May ’16

↑ 0.2

↑ 4.7

£204,368

05.2016

Rightmove

May ’16

↑ 0.4

↑ 7.8

£308,151

16.05.2016

UK annual house prices – rate of change Homeowners have been basking in the spring sunshine this April, on the back of the fastest yearon-year growth in property prices since December 2014. The typical home in England and Wales is now worth £24,280 more than a year ago, with property prices rising 8.9% since April 2015 – meaning they now stand tantalisingly close to £300,000. This acceleration in home values comes when many had expected house prices to dip due to a natural decline in demand from buy-to-let and second home buyers.

Source: ONS price index

Source: LSL price index

Regional all-dwellings annual house prices – 12-month % change Eight years after the financial crisis, it would appear that the northern regions are finally showing genuine signs of recovery. Whilst some affluent enclaves in the North have been relatively buoyant, overall the North of England has, until now, posted rather disappointing results. However, much improved Typical Time on Market figures clearly indicate that momentum is on the rise and demand is clearing away the backlog of unsold stock that stifled the recovery for so long. The median Time on Market for the North East, North West and Yorkshire is now 113, 98 and 92 days respectively. The last time they looked this good was back in May 2008.

Source: home.co.uk price index

Source: ONS price index

Annual house-price rates of change by types of buyer

The anticipated slowdown in the wake of the Buy-to-Let buying frenzy seems not to have happened. Any sort of lull in demand from investors has been made up for by eager firstand next-time buyers. Demand is strong and strengthening everywhere but London where affordability is constraining the market.

Source: Home.co.uk price index

Source: ONS price index

UK annual house-price rates of change: type of dwelling

In the period between the November announcement of a stamp duty rise and its implementation at the end of March, the price of property coming to market in this first-time buyer/investor sector increased by 3.0%. In just four weeks it has now risen by 6.2%, the highest monthly rise recorded for this sector since February 2012.

Source: Rightmove price index

Source: ONS price index

Number of housing transactions per month In the months October 2015 to January 2016, sales volumes averaged 74,374 transactions per month. This is a increase from the same period a year earlier, when sales volumes averaged 73,744 per month.

Source: Land Registry price index

Source: Land Registry price index

Monthly asking-price trend

If you were expecting a long period of price doldrums at the lower end of the market following the mass exit of the buy-to-let brigade, this month’s 6.2% price rise will come as a big surprise. Properties at the lower end of the market were the most common target for the investor community, and the immediate aftermath of the tax deadline saw new seller asking prices drop in this sector for just one month.

Source: Rightmove price index

Average-time-on-market indicator – England & Wales

Whilst marketing times have improved across the country since the onset of the credit crunch, the total current number of properties for sale is around 40% less than in May 2007. Indeed, aside from cheaper mortgages, the scarcity of property for sale has been the key market driver, pushing up prices wherever there has been a perceived shortage of property.

Source: home.co.uk price index

Asking-price fluctuation percentage

Intense investor activity – with March transaction numbers up a massive 80% on last year – has exacerbated the property drought in this sector and is now causing upwards price pressure. The modest overall 0.4% rise (+£1,118) in the price of property coming to market in the last four weeks, to a new record of £308,151, masks a price surge of 6.2% (+£11,298) in the lower-end sector (properties of two bedrooms or fewer excluding Inner London).

Source: Rightmove price index

Sales volumes by price range (England & Wales) The number of properties sold in England and Wales for over £1 million in January 2016 increased by 2 per cent to 938 from 916 in January 2015.

Source: Land Registry price index

Source: Land Registry price index

Home asking-price trend for England & Wales

The anticipated slowdown following the stamp duty hike for Buyto-Let is already fading away. Buyer activity is up and prices continue to rise across the country, driving the mix-adjusted average home price to within an inch of the £300K mark. Overall, the property market is in better shape than last year. Significant improvements in marketing times in the North suggest that these formerly stagnant regions are experiencing uplift in demand. Supply in the North East, North West and Yorkshire remains subdued and we expect prices to rise steadily over the summer months.

Source: Home.co.uk price index

UK house-price-to-earnings ratio House purchase activity is likely to fall in the months ahead given the number of purchasers that brought forward transactions. The recovery thereafter may also be fairly gradual, especially in the BTL sector, where other policy changes, such as the reduction in tax relief for landlords from 2017, are likely to exert an ongoing drag. Nevertheless, healthy labour market conditions and low borrowing costs are expected to underpin a steady increase in housing market activity once stamp duty related volatility has passed, providing the economic recovery remains on track.

Source: Nationwide price index

Source: Nationwide price index

Average properties for sale per estate agent

The lack of properties for first-time buyers has been a feature of the market for some time, long before the buy-to-let rush which preceded the stamp duty changes in April, which has only exacerbated the shortage. We are seeing a severe shortage of one-bedroom apartments in all areas which has pushed prices up and they are continuing to rise.

Source: Rightmove price index

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