Property news this week
By Will Leyland, 27 September 2017
As autumn kicks off the final four months of the year we’re going to be taking a look at news that’s affecting landlords and things that landlords may need to prepare for as we approach the final stretch of 2017.
Landlords in the north of England are benefiting much more than their southern counterparts as London house prices have fallen sharply this month. The figures for price growth, released by Rightmove in their latest house price index, have pointed to the worst performance for the capital in a decade.
Nationally, the rise was record as 1.2%, but in London the monthly drop was -2.9%, its worst performance for ten years. The London drop is being driven by its continued readjustment particularly in the higher-end boroughs, with falls in five out of the six most expensive boroughs this month.
Surprisingly, wage growth has been reported to be outstripping house price growth in London, with the ONS reporting the average annual wage increase running at +2.1% for both the second quarter of this year and the month of July, while the price of property coming to market is now growing at just +1.1%. This is the lowest annual rate of house price increase since February 2012 when it stood at +0.7%.
Miles Shipside, Rightmove director and housing market analyst, said: “There were Autumn price bounces nationally in 2014, 2015 and 2016, but the south of the country has turned this month into a bit of a damp squib, whilst some northern regions are still showing marginal signs of upwards price pressure. Estate agents are clearly advising many sellers that they have to lower their price expectations to fit in with buyers’ stretched financial resources, with that price compromise hopefully generating extra buyer interest.”
He continued, “It’s unavoidable that prices will eventually reach a limit, and having gone up every year for the last six years, the pace of price rises for newly-marketed property is now dawdling at just +1.1%. Interest rates cannot realistically drop any further to help buyer affordability, but the potentially good news for buyers’ finances, which have been under attack for years, is that there is some relief from the wage-rise cavalry.
“Average wage rises are now running at nearly double the annual rate of property price rises and the longer any meaningful differential is maintained then the greater the improvement in buyer affordability. Having finally turned the tables to potentially improve their buying power, buyers will now be hoping that it is not eroded again by an interest rate rise or rampant consumer price inflation.”
There was more positive news for landlords across the UK; rent price increases were 2.4% in August as reported by HomeLet who conducted the research.
This represents the highest rise (in monthly terms) this year. The average rent agreed on a new tenancy signed last month was £939 according to the August figures, compared to £916 in the same month last year.
London was also struggling on this front, too, as with London excluded from the figures were increased, with 10 out of the 11 remaining regions beyond the capital seeing rents increasing last month. The average rent on a new tenancy outside London was £776, up 2.3% compared to the same period in 2016.
Martin Totty, HomeLet’s Chief Executive Officer, was quoted by Sky News as saying: “Whilst we’ve often observed a seasonal uplift in average rents at this time of year, there’s evidence of a trend now emerging which points to a reversal of the declines seen over the early part of this year. This will be welcome relief to Landlords who have been battered by the perfect storm of tax changes and post-Brexit uncertainties. Whether the trend continues or represents only temporary relief from the headwinds faced by property owners, the remaining months of 2017 should provide the answer.
With mixed fortunes this year, it will come as welcome news to landlords that things are picking up steam across most regions as we head towards the end of the year.
House prices continue to increase in the UK, defying gloomy predictions
Proposed minimum three-year-long tenancies for housing rentals are a cause for debate
Many people are looking to downsize, but it appears there simply isn't enough available stock
Where are the UK's best performing housing markets?
An increase in rents is resulting in a greater need for UK guarantors