Furthermore, the annual price reduction may not apply to all areas. The national average property price masks considerable regional variances, with the northwest, Yorkshire and Humberside, and Wales continuing to lead the way in house-price rise. This isn’t surprising given that these areas are not only more inexpensive than London and the southeast, but they also have more green space, which ties in with shifting customer mood and the demand for the greater area both inside and out.

Halifax’s findings were backed up by Nationwide Building Society’s house-price survey, which found that, despite the end of the complete stamp duty break, prices did not fall off a cliff in July, as many had predicted.

Low-cost borrowing

House prices are expected to continue growing as economic confidence grows, thanks to a lack of available properties for sale and low financing costs. They won’t rise as quickly as they have in the past, but they won’t sink any time soon either. We expect the strong housing market to continue even when the furlough plan is phased out, with borrowing at its lowest level ever.

In June, the Bank of England reported a jump in net mortgage borrowing, which reached new highs, as buyers attempted to take advantage of the stamp duty holiday before it ended at the end of the month. However, while this deadline drew buyers’ attention, individuals who missed the June 30 deadline have continued to complete purchases, knowing that they can still save money on stamp duty before the end of September.

As we approach August, the market is significantly calmer as many people take much-needed vacations. When people return from holidays and children return to school in September, observing how things take up again will be interesting. Will the last-ditch effort to take advantage of the stamp duty break result in a surge in transactions, keeping prices high?

How can Funding11 assist you?

According to the latest Bridging Trends data, the nearing end of the stamp duty holiday has fueled demand for bridging loans, as property owners and landlords take advantage of tenant demand to increase their portfolios in the second quarter. A short-term loan may be the best option for someone who needs money quickly.

We can bridging finance from £30,000 to £250 million at up to 75% loan-to-value with terms ranging from 1 to 36 months at Funding11. We can lend on residential, commercial or semi-commercial properties, and we can agree to loan in principle in as little as 4 hours. Please get in touch with us at ineedcash@funding11.com or 02034759299 for further details.

An office building to the right of the station exit is being gutted from the inside out to emphasise the shift. It is the former headquarters of Thomson Reuters, with its iconic news ticker that runs along the exterior, dating back to the estate’s first revitalisation in 1991.

Newfoundland, a diamond-latticed glass tower that is the UK’s tallest private rental building, is now the first thing you see. It has a prominent position on the central dock. “We wanted it there so people would come out of the station and think, ‘I want to live there,'” says Alastair Mullens, the head of Vertus, Canary Wharf’s rental agency.

One Canada Square, the flashing pyramid that was once the icon of Canary Wharf, is now battling for space on a skyline packed with residential glass towers.

Over the last two decades, the Canary Wharf Group, a public company that owns more than eight million square feet of riverside real estate in east London, has built more office space in the capital than any other developer. Still, it has spent years trying to persuade people that Canary Wharf has a life outside of work.

Almost every major homebuilder in the country has a signature residential skyscraper on the outside of the estate. The competition was already strong, but after the epidemic, Canary Wharf’s ability to pitch itself as a place to live is critical to its future.

Companies may want to minimise or eliminate their office space if working from home. Even part-time becomes the standard. In March, for example, the newspaper publisher Reach made homeworking permanent for the bulk of its employees, closed its City of London headquarters, and reduced from two floors to one in One Canada Square. Others may decide to follow. According to Knight Frank’s newest London office market study, prime office rentals have decreased 5% in the last year — 4% in the West End and 3% in the City — and corporations are searching for 69% less space.

Canary Wharf Group has also submitted designs for further houses, including Park Place, a tower next to Newfoundland on the middle dock, and North Quay, which is near to the now-open Crossrail station. However, the exact number of flats is still to be determined.

Newfoundland, 8 Water Street, and 10 George Street are the three buildings for private tenants, and One Park Drive, 10 Park Drive, and 20 Water Street are the three towers for private homeowners.

“This isn’t a spur-of-the-moment decision; it’s what we’ve always desired. The shopping centre turned it into a retail destination, and the intention was always for people to live on the estate,” explains Brian Death, the Canary Wharf Group’s head of residential.

The capital is currently challenging to sell; buyers are looking for space and greenery in traditional London towns and the boroughs outside the City. At the same time, according to Nationwide, housing prices in Canary Wharf have increased by barely half of what they have in the rest of the country this year.

Before the pandemic, 80% of the units at Ten Park Drive, the company’s first residential development, were sold, and roughly 15 people are moving in a week. It’s part of Wood Wharf, a new neighbourhood set to open in 2028 with 3,600 new houses.

One Park Drive, a sleeker, upscale hotel-like skyscraper designed by Herzog & de Meuron that resembles a nibbled corn cob with bites pulled out for balconies, sits nearby. However, the swimming pool and gym are located on the first floor rather than the basement, allowing inhabitants to practise downward dog while taking in the beauty of the Thames. Serenity isn’t cheap; a studio at Ten Park Drive costs £715,000, while a one-bedroom property at One Park Drive costs £840,000.

International customers, in particular, value the estate’s private security because their children frequently reside in the property while studying in London. According to Death, about 45 per cent of customers are from outside the United States, but many have been hesitant to buy at this price point without seeing it first because they haven’t been able to travel.

Some people have chosen to rent. For example, international renters account for about 30% of tenants in Newfoundland, where a studio starts at £1,928 per month. To live there, the tenant would require a gross annual income of £57,840, according to rentright.co.uk.

Service charges for the gym, top terrace, and lounge, an automatic wine dispensing machine, are included in the rent. There are also guest suites that can be reserved. It’s great for corporate tenants — employees who are deployed overseas for a few years on the company’s dime — but the majority of them fled and flew home or moved back in with relatives during the first lockdown, according to Chestertons’ Canary Wharf division.

This, combined with the abolition of short-term rentals like Airbnbs, resulted in a 125 per cent surge in rental homes on the market between June and December of last year. But, according to Chestertons, oversupply caused average rents to drop by much as 30%. Its Canary Wharf office recently let a two-bedroom flat for £2,050 PCM, 23% less than in 2019.

According to Richard Davies, head of lettings at Chestertons Canary Wharf, “there were people who were living in zones 3 or 4 thinking now I can go and live in Canary Wharf and get an excellent bargain.” “Landlords have been unwilling to agree to a three- or four-year tenancy because rents have plummeted so much. They want them for a year, and then they’re out.”

This indicates that investors believe rents will eventually revert to earlier levels. Davies has witnessed a “big rise” in international student interest in the last three weeks, while at Vertus, Mullins believes inquiries are back to February 2020 levels.

The agency will negotiate lengthier tenancy agreements as the sole landlord, but it will not reduce rents during the pandemic. Despite rumours that 10 George Street is only 60% full, Mullins adds, “We didn’t want to get into a race to the bottom merely to get full occupancy.”

One building stands out around the corner from One Park Drive: a mid-rise, industrial warehouse-style structure that appears to have been custom-built for brick-loving British customers.

Eight Harbord Square, an 11-story building, is set to put on the market this autumn. There are 82 open-plan flats with no walls, except those around the toilet, with a lower service charge and fewer flashy amenities.

These large, loft-style flats, modelled after fashionable former textile factories in Spitalfields and Shoreditch, are for “people who prefer the notion of living in a warehouse conversion” but could do without the leaking roofs and single-glazing, according to Death. Crittall has even been engaged to build the windows.

Canary Wharf’s transformation continues, and it may even be stylish in its next incarnation.

Source: The Times

Although the rest of the United Kingdom experienced a housing boom during the pandemic, central London saw it as sliding rents weigh prices.

The best deals are found in the heart of the national government, the City of Westminster. There were 37 per cent falling prices compared to the previous year – the sharpest fall in the capital.

As residents moved to greener areas with more space and thousands of migrants left London, rents in some of the wealthiest districts have plummeted, causing investors to steer straightforward central city deals. This resulted in price increases even as several support measures were introduced by the government, extending a home buyer tax holiday last week and announcing a low-deposit mortgage scheme.

“Regions have benefited because urban residents chose to work from home with far fewer transportation,” said Richard Sexton, E.surv’s director. “Changes in lifestyle and changes in the stamp duty worked together to support last year’s price rises.”

However, it may slow down to more green pastures. In the three months from December to February, the overalls of Greater London and neighbouring parts of eastern and southwestern London enjoyed the lowest regional annual growth rates despite continued demand in the city’s Greener Boroughs.

This “probably indicates that the movement from central and central London to the suburbs of the capital has largely gone on.”

London has a relatively small number of housing units, so a tiny amount of sales can skew the price falls. The Docklands area around Canary Wharf, on the other hand, has seen a construction boom in the last five years, with luxury apartment towers aimed at young finance workers.

Source: Bloomberg

After the number of high loan-to-value (LTV) deals available fell to five, chancellor Rishi Sunak pledged to support banks so that they can offer more of the 405 shows to choose from a year ago for those who put down a 5% deposit.

It is now expected that sales will increase and interest rates will be lowered. By the time the initiative ended in 2016, a nearly identical scheme to Sunak’s new Help to Buy mortgage guarantee had increased the number of purchases by those with a deposit of less than 10% from 61 per day to 289 per day.

While no rates have been announced, Lloyds, NatWest, Santander, Barclays, and HSBC have announced that they will offer 95% loans starting in April, with Virgin Money to follow. Nationwide, the UK’s largest building society has stated that it will not participate.

The government will underwrite 20% of any home loan offered at 95% LTV under guarantee. In theory, this means that banks could offer nearly as low rates as those offered to borrowers who only require loans of up to 75% of the value of their home.

If you have a 5% deposit, you can get a two-year fixed rate of 4.14 per cent, while if you have a 25% deposit, you can get a 1.54% rate.

Banks will be charged an undisclosed fee to use the government guarantee, but it is expected that they will still offer lower-cost loans than are currently available. According to one analyst, first-time buyers could pay around 3%.

Any loans backed by the mortgage guarantee will not have the exact stringent requirements as the five 95% loans currently available. For example, Family Building Society requires family members to co-sign the mortgage, whereas Furness Building Society only lends on properties in specific postcodes. Saffron and Penrith building societies and Barclays are the other three lenders, with rates ranging from 3.45 per cent to 4.17 per cent.

The new loans will be available until December 2022 on homes costing up to £600,000 and open to both first-time buyers and home movers. Fixed rates for five years will be available.

The scheme will run alongside the Help to Buy equity loan scheme in England and Wales, which is limited to first-time buyers, new-build properties, and regional price caps. According to experts, it will only work if it lowers rates, though more competition should lower prices anyway.

“The mortgage guarantee must result in a significant reduction in mortgage rates for those with low deposits, or it will be worthless,” said Anthony Codling, the founder of Twindig, a property data website.

“It has to assist those it was designed to assist, generation rent, who are struggling to get on the housing ladder.”

Lenders are still apprehensive. When the furlough scheme ends, one high street bank predicted a drop in property prices as the pandemic’s true impact becomes clear. It also expressed concern that it would be unable to meet demand from first-time buyers.

The program has the potential to reduce mortgage payments significantly. Lower interest rates could save a first-time buyer of a typical £210,000 home £165 per month, according to Hamptons, assuming they pay a rate of 1.75 per cent instead of 4.07 per cent. On a 25-year term, monthly payments would drop from £880 to £715 per month. The required joint income to secure a deal will drop from nearly £40,000 to just over £30,000.

In Wales, where the average first home costs £159,106, monthly payments would be reduced by £188 to £540.

The monthly payment in Yorkshire and Humberside, where the average first-time home costs £156,387, would be £531 — £184 less. “When it was introduced after the last financial crisis, the guarantee worked well,” said David Hollingworth of mortgage broker London & Country. “It makes sense to dust off a model that has previously been shown to work.”

Source:  The Times

Over the last year, interventions such as a tax break, an extension of the Help to Buy subsidy scheme, and keeping construction sites and estate agents open when many other businesses were closed have supported prices, tying economic sentiment ever closer to the property market. According to Greg Fitzgerald, chief executive of Vistry Group, this makes more market intervention more likely.

“Does the housing market have too much power to fail? Can prices fall, especially after a pandemic and with so much public debt? “I can’t even think about it,” he said.

The temporary reduction in stamp duty property purchase tax that has been in place since July was extended by another six months in the UK budget on Wednesday. Buyers can now save up to £15,000 on their purchase until June 30 and up to £2,500 from June 30 to September 30.

The chancellor also announced a mortgage guarantee scheme, which will help lenders provide mortgages to buyers with deposits as low as 5% of the property’s value.

These actions are being billed as part of the government’s efforts to convert “generation rent” into “generation buy,” but property analyst Neal Hudson believes they will primarily boost the housing market and support prices.

“The housing market is so important to our economy, consumer spending, and, in some cases, our sense of worth. “A house price crash would be politically very, very difficult for any government, particularly a Conservative government,” he said.

There’s also evidence that sales would have been strong even if the government’s additional support hadn’t been announced on Wednesday.

Vistry Group sales have been at historically high levels over the past four weeks, the company said, despite the fact that anyone buying during that time would have expected to miss out on the stamp duty holiday.

The company expects pre-tax profits to more than double this year, and its stock has risen 9% in the last two days.

Property sales were also up before the stamp duty holiday was announced in July of last year, partly due to increased demand during the period when the market was effectively closed between March and May of last year.

However, according to Fitzgerald, the impact of coronavirus on real estate sales is more profound. “The pandemic has created a market: the divorce rate is up; people are debating whether they want to live in the city, in a high-rise, or in an office. Who willy a house with all of this going on, I said at the end of one of our board meetings in March 2020? Who isn’t?” has turned out to be the case.

Source: Financial Times

Rents fell in Greater London by 8.3 per cent last year. Rents also fell in Manchester, Birmingham, Edinburgh and Aberdeen.

Zoopla indicated that demand for the city-centre property had fallen during the first lockdown because of travel restrictions. The rising cost of living and shift to homeworking saw employees move to bigger houses with yard space.

“Rents in central London have decreased because this is densely built up.”Rents in the City of London and Kensington & Chelsea fell last year by 17.3% and 12.3%.

While in outlying boroughs it identified a “halo” effect of rising demand and rents. In central Birmingham, rents dropped by 3.4% in 2020 but rose by an average of 5.3% in the neighbouring boroughs of Bromsgrove, Sandwell and Wolverhampton.

Rent increases in the UK, excluding London, have been 2.3% over the past year, with a 1.4% increase over the last three months.

The main message of the report was that space is still a “hot” market. In London, flats took 20% longer to rent out in the fourth quarter of 2020 than in the same period in 2019; while house rents fell by 10% in the same period. Homes in the UK found it took an average of 30% less time to secure a mortgage in the 4th quarter of 2020 than in the 3rd quarter of 2019.

Rics predicts rents will increase across the UK over the next three months. The balance of rent surveyors and estate agents reported this week shows rents are likely to rise by 12%.

In London, however, more than half of respondents expect rental rates to continue falling. Second-quarter instructions by landlords fell, in contrast to a tougher tax and regulatory climate for property investors.

Source: Financial Times

According to the Nationwide Building Society, UK house prices rose in November at the fastest annual rate in almost six years despite the lockdown, as buyers rushed to take advantage of the stamp duty holiday.

In November, the average price of residential property rose to £230,000, up 6.5 per cent compared to the same month last year—the fastest growth rate since January 2015. Prices were 0.9 per cent higher every month than in October, the fifth monthly consecutive expansion, Nationwide said.

The annual rate was well above the 5.5 per cent forecast by economists polled by Reuters. They expected the effects of the national lockdown in England and restrictions elsewhere to reflect a cooling from the 5.8 per cent annual growth in October.

David Westgate, group chief executive of estate agent Andrews Property Group, said a “near frenzied property market” had been created by pent-up demand and savings from the stamp duty holiday, which runs until the end of March.

As a result of a shift towards more homework, ultra-low interest rates and individuals deciding to move home have also boosted demand.

Knight Frank Finance’s managing partner, Simon Gammon, said: “The nation is engaged in a mass rethink of where to live after two lockdowns. ” In rural markets, activity has been solid, as buyers seek better access to green space.

Tom Scarborough, chief executive of Movewise, a property selling company, said properties “have not participated in the price boom in major cities and those without gardens or outdoor space.” He added that before the end of the stamp duty holiday on March 31, there are increasing calls for an extension of the deadline” due to large volumes of transactions.

With only four months remaining before the end of the tax break on the first £500,000 of any purchase of residential property, “vacant and chain-free properties have become highly prized at both ends of the market,” said Nicky Stevenson, managing director at Fine & Country, the national estate agent group.

Since the stamp duty holiday was introduced in July, the housing market has experienced a boom. Given widespread job losses and the economic downturn expected to result from the coronavirus restrictions, the sector was expected to cool in the autumn.

However, as both prices and transactions have continued to grow as purchasers scramble to clinch deals, the property market has defied expectations.

Andrew Wishart, a property economist at the Capital Economics consultancy, said that the divergence between the economy, which is set for its largest contraction in 300 years this year and the rapid annual growth in house prices “was only possible because of extraordinary policy support.” When this is withdrawn in 2021, we expect the pandemic to take its toll,” he warned.”

“Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors, echoed, “These figures feel like the storm before the calm.

On Monday, the Bank of England said that in October, mortgage approvals rose to the highest level since September 2007.

Analysts say that a healthy property market is helping to boost construction sector activity and support retail sales related to housing. After a sharp contraction in the spring, both sectors have shown a strong recovery since the summer and into the autumn, partially mitigating the deterioration in other parts of the economy.

Source: Financial Times

But Halifax, which is part of the Lloyds Banking Group, cautioned that such strong price growth was unlikely to continue as unemployment was expected to continue to rise, and the Covid-19 pandemic had reduced household earnings.

A home’s average price rose from July to £245,747 in August by 1.6 per cent, Halifax in its monthly house price report. This is up 5.2 per cent from the previous year, the fastest annual rate since the end of 2016.

Russell Galley, Halifax’s managing director, said: “Through the post-lockdown summer period, a surge in market activity has driven house prices, fuelled by the release of pent-up demand, a strong desire among some buyers to move to larger properties, and of course a temporary cut in stamp duty.”

Estate agents have also reported that after a rise in home working, buyers are looking for bigger properties, and coastal and country homes are especially in demand.

Galley added: “Despite the various positive factors which support the market in the short term, this level of price inflation remains highly unlikely to be sustained. The macroeconomic picture in the United Kingdom should become clearer in the coming months as different government support measures come to an end and the true scale of the pandemic’s impact on the labour market becomes clear.

The pandemic has driven Britain into its deepest recession ever since records started. Household income suffered as many people lost or furloughed their jobs, and economists expect unemployment to rise sharply once the government’s furlough scheme ends on October 31. As a result, Galley said: “In the medium term we are expecting more downward pressure on house prices.”

The EY Item Club, a leading economic forecaster, estimates that by early 2021 house prices may drop by 3 per cent. Howard Archer, its chief economic advisor, said the group “would expect a gradual improvement in housing market activity from the beginning of 2021 as the labour market stabilises then begins to improve modestly and the economic recovery of the UK continues.”

The Halifax figures come after Nationwide Building Society also reported a record high in August, with house prices on its index rising 2 per cent to £224.123.

Other surveys also showed a pick-up in the housing market since it reopened in May, with prices boosted by pent-up demand and the stamp duty holiday for properties up to £ 500,000 in England and Northern Ireland for Rishi Sunak.

But first-time purchasers are struggling. According to a comparison site, there are only 76 low-deposit mortgage deals available, down from March’s 1,184, and fixed rates on them are rising. The average loan-to-value rate on a two-year fixed mortgage has risen from 2.57 per cent to 3.54 per cent over the past six months.

The average deposit for first-time buyers has risen to £47,059 by a quarter over the past decade – roughly a fifth of the average house price. Borrowers would need to save £780 per month to raise such a deposit for over five years. Barclays further restricted how much it would lend to homebuyers. The bank has limited loans, from 5.5 times to 4.49 times revenue.

Source: The Guardian