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February Property Market Report

INTRODUCTION


As inflation hit record levels, the Bank Of England finally raised interest rates by 25 basis points at the beginning of February as a measure to cool price rises. Some lenders have already responded to this by raising rates on their variable products. This is all on the backdrop of a housing market that is still showing no signs of slowing down.


HOUSE PRICES - UK House Price Index


The UK HPI is based on completed housing transactions. Typically, a house purchase can take 6 to 8 weeks to reach completion. Therefore, the price data feeding into this 2021 UK HPI will reflect sales agreed in April.


UK


- Average Price UK £274,712 - December 2021

- Annual Price Change 10.8% - December 2021

- Monthly Price Change 0.8% - December 2021


London


- London Average Price = £521,146 - December 2021

- London Annual Price Change = 5.5% - December 2021

- London Monthly Price Change = 0.2% - December - 2021


HOUSE PRICES - HALIFAX HPI


The Halifax uses its own database of approximately 300,000 mortgage approvals per annum (ca. 25% of all mortgages) as a basis for its monthly house price reports. Because it uses approved loans rather than completed mortgages, the Halifax can obtain data earlier than the Land Registry


UK


- Average Price: £276,759 - January 2022

- Annual Price Change: +9.7% - January 2022

- Monthly Price Change +0.3% - January 2022


TRANSACTIONS (December 2021)


The provisional non-seasonally adjusted estimate of UK residential transactions in December 2021 is 113,470, 14.6% lower than December 2020 and 11.8% higher than November 2021



RENTAL INDEX MARKET (October 2021)


Data is gathered from our tenant referencing service, and our rental amounts are based on actual achieved rental prices with accurate tenancy start dates in a reported month, rather than advertised costs (HomeLet)


- Average rent in UK = £1,064

- Annual Variation for the UK = +8.5% (year on year)

- Average rent in London = £1,760

- Annual Variation for London = +12.6% (year on year)

- Household Rent To Income Ratio UK: 35% (single earner)


“Whilst there’s no doubt that it’s been a challenging year for many landlords, the increase in house prices has only increased the appeal of property investment. We expect to see more focus from the Government on the rental sector in 2022, through legislation like the Renter’s Reform Bill.” - Homelet


News


  • A new study using Companies House data has revealed that 5,618 new estate agency businesses were founded in 2021. The research by Yell Business found that 15% of all new businesses launched during 2021 were in real estate.


  • Inflation as measured by the consumer price index (CPI) slightly in January, up from 5.4% in December 2021 to 5.5%. This set a record high 12-month inflation rate since records began in 1997 for the second time in a row and, extrapolating backwards from then, is the highest reading since March 1992, when inflation hit 7.1%


  • More borrowers are turning to second charge borrowing as the cost of living rises, according to the latest criteria tracker from Knowledge Bank. ‘Capital raising for debt consolidation’ featured prominently in brokers’ searches in the second charge sector in January, along with searches for ‘mortgage or secured loan arrears or defaults’.


  • Analysis by London lettings and estate agent, Benham and Reeves, revealed that the average price premium for homes located close to a top private school in London is 29%, although in some cases this is as high as 121%


  • Rent prices marched upwards by 2% on an annual basis in January, shows new data from the Office for National Statistics (ONS). Excluding London, rents increased by 3%. This is the fastest pace of growth seen since February 2017, the ONS details, and means that, since January 2015, rents have gone up by 12.3%.



Mortgage Market News


  • Over half – 52% – of remortgages in 2021 were on a five-year fix, shows LMS’ annual remortgage report. Meanwhile, 37% of remortgages taken out were of the two-year variety, and only 2% were on a 10-year fixed rate.


  • Figures from the UK Finance show there were a total of 79,620 homeowner mortgages in arrears at the end of December 2021. This is 750 fewer mortgages when compared to the previous quarter’s figures.


  • The final quarter of last year saw brokers process more cases than they ever have before, says the Intermediary Mortgage Lenders Association (Imla). In the 12 months to Q4 2021, the average broker dealt with 103 cases, a 32% increase on the yearly average as of Q4 2020.


  • Nationwide Building Society is increasing the maximum LTV on its Helping Hand mortgage, allowing borrowers to apply with just a 5% deposit. Nationwide’s Helping Hand offers first-time buyers the ability to borrow up to 5.5 times their income, when taking out either a five- or 10-year fixed rate. Previously this product was only available up to 90% LTV.


  • A record 47,400 UK buy-to-let firms were established last year, a 14% jump on 2020, according to data from Hamptons.


  • Gross short-term lending by contributors to Bridging Trends data rose by 38% on an annual basis in 2021. The 12 specialist finance packagers reported £626.7bn in lending last year, compared to £455m in 2020.

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