July Newsletter - Buyer and seller demand increases

In this month's edition, there's good news across the property market, with average property prices rising across UK cities coupled with an increase in buyer and seller activity. 

Elsewhere, we detail why Buy to Let remains such a great investment opportunity for landlords and vendors, we offer our guidance to self-employed workers looking to purchase a home, we reveal the top reasons for moving home and finally, if you're looking to spruce up your property, why not read our top design ideas for 2019?

Average property prices in key UK cities up 2.1% year on year

UK cities saw an average property price rise of 2.1% in the year to May 2019, but the values vary wildly depending on location, according to figures in the latest Hometrack Cities Index.

Liverpool is the biggest beneficiary, with a 5% rise reported closely followed by Belfast with 4.6% and Nottingham tied with Leicester at 4.5%. Manchester, Edinburgh, Glasgow and Birmingham all recorded a 4% increase, suggesting that majority of the biggest increases lie North of the Midlands.

To counter that, Aberdeen recorded the biggest average loss with a 4% decrease, with the rate of growth in Southern England meaning that prices across London and Cambridge fell 0.4% and 0.5% respectively.

Beyond prices, the Index also delved into the development of affordability for first time buyers, which is especially prescient given that this demographic accounted for 36% of sales in the period in the year to May 2019. Research has discovered that household income to purchase a home in a typical city has increased by 9% to an average of £54,400.

Again, this will vary from city to city, with the price of an average city home in Liverpool and Glasgow sitting at £26,000, and a home in London sitting at over three times that amount with £84,000.

“There is a clear link between the income to buy and recent developments in house price inflation,” offered Zoopla’s research and insight director Richard Donnell. “In simple terms, the higher prices rise, the greater the income to buy and this reduces the number of potential buyers. The net result is weaker demand, fewer sales, lower price growth and, in some areas, price falls.

“It is no surprise that housing sales have declined across southern England and price growth has weakened. Price falls are concentrated in the highest value markets across South Eastern England,’ he added.

Buy to Let remains a great investment opportunity

Since 2016, there have been several changes to the property market across the United Kingdom – predominantly to the lettings sector. Despite these alterations to taxation, stamp duty and bureaucracy around rental properties, most buy-to-let investors are still finding the market to be lucrative, with stable returns.

With a number of landlords departing the market when initial government changes took place in 2016, competition in the marketplace is greatly reduced and the professionalism of the sector has blossomed.

Chris Baguley, Commercial Director at buy-to-let lender Together, said: “As casual owners exit the sector, buy-to-let is becoming ever more professionalised, as individuals and companies adopt a more rigorous approach to acquiring the right properties in the right areas, and getting them ready to rent within a limited time frame on a tight budget. Perhaps most notably in the housing sector, the balance of today, there is therefore notably less competition than there was before.

“Even if we don’t see the capital growth which has been evident over the past two decades, the income available from property investment can still be attractive compared to other asset classes.”

With rental incomes increasing – the Office of National Statistics announced this month that private rents rose 1.3% on an annual basis in May, increasing once more from April – the opportunities for buy-to-let investors are evident. Additionally, financing your properties has become easier with specific buy-to-let mortgages now offered by a plethora of lenders, who are fiercely competing with one another to keep their market share, providing investors with an opportunity to obtain extremely attractive rates.

A recent survey of more than 5,000 investors found that almost three-quarters of those surveyed considered buy-to-let to be the best, least volatile long-term investment. Indeed, some 83% of buy-to-let investors who were questioned stated that it was either unlikely or very unlikely that they would sell their property over the next year, with almost 60% going on to state that they had no intentions of selling for the next five years.

If you would like to discuss your rental investment options, then please feel free to contact us and we can advise you of the best local areas to invest your money in, as well as which property types and audiences are likely to provide you with the best possible rental yield.

Demand from buyers and sellers has increased

In what appears to be a reaction to the most recent Brexit delay, the housing market is experiencing a pronounced period of activity, according to figures provided by NAEA Propertymark.

Property demand from prospective buyers was at an eight month high during May, with the number of registered property hunters increasing by an average of 16% during the month from 265 to 307. This represents the highest level of registrations since September of last year, another significant statistic in a period where increased levels of public activity are being seen across the market.

The supply of available housing has also seen an increase in line with this increased activity, with an average increase from 35 properties per member branch on offer in April to 41 in May. This also represents a year-on-year increase of four properties from the same month last year. Average sales per branch also saw a brief increase, from 8 in April to 9 in May.

So, what’s caused the increased activity? Seasonal demand appears to have played a part, alongside the aforementioned Brexit delay which won’t see Britain exit the European Union before October 31st at the earliest. With that in mind, buyers and sellers appear keen to progress with their plans and transactions during this period of relative political calm.

“It is encouraging to see the housing market bouncing back, with supply and demand rising to the highest levels seen since last year,” noted Mark Hayward, Propertmark’s chief executive.

“It's evident that buyers and sellers are no longer waiting for the outcome of Brexit and want to get things moving, particularly as many sellers are realising that it's a buyers' market in certain areas of the country.”

How to purchase a home if you're self-employed

With 4.8 million people across the UK who are registered as self-employed, it may come as a surprise that many who run their own business or work freelance still view their chances of obtaining a mortgage as overly difficult. However, if you’re thinking of buying this year and you are self-employed, then there are a few things that you can do to maximise your chances of being approved for a mortgage.

Pre-2007, when the so-called 'credit crunch' hit the UK market, those who were self-employed and looking to obtain a mortgage would do so via a self-certification mortgage. These loans required very little paperwork in terms of proving income, however, and led to an abuse of the system with applicants over-stating their income in order to gain a larger loan amount. Due to this practice, these mortgage variants were banned and those looking for a mortgage application through the same routes as others who aren’t independently employed.

These days, if you are self-employed and looking for a mortgage, then the application process is the same as if you were employed externally, but there are some steps you can make to improve your chances:

An accountant will help you to get all of your finances together and will also be able to offer the best advice in terms of balancing the tax that you pay and the status of the business; some people who are self-employed pay themselves less in order to lessen their tax, but be advised that this may harm your mortgage application.

The structure of your business will also have a bearing upon the success of your mortgage application – so think about whether it will pay dividends in the long run to change from being a sole trader, to a partnership or limited company. Do keep in mind that the finance structure of your company will also be taken into account – for example, Director’s Loans (money that you have put into your business) will not be classed as income. The only considerations for a mortgage application are a declared salary and dividends paid out.

Being organised is, of course, tacit for anybody applying for a mortgage, but if you are self-employed then this becomes even more important. Depending on how long you have been self-employed for, you will have to be able to provide at least two years' worth of accounts. If you haven’t been in business for that long, then providing a strong previous employment history is an absolute must to prove that you are a safe place for a lender to give a mortgage to.

The fundamentals of mortgage application remain the same for whether you are self-employed or not. Maintain a strong credit history, and if you have blemishes on your record then work on improving these before you set about your application for a mortgage. Shopping around is also a must – different lenders will be able to offer you different mortgage structures, one of which may fit you best, so don’t be tempted to just say yes to your first mortgage approval. Finally, having a sizeable deposit will impact the rates which you end up paying on your mortgage, therefore waiting until you have a larger deposit to be able to put down on a property may be worthwhile in the long run.

The best design ideas for your home in 2019

Whether you want to add value to your home in preparation for sale or you just want to make your property a more appealing place to live, redecorating and incorporating the latest trends is a worthwhile endeavour. Take a look through some of our picks of the best home design ideas emerging through 2019…

Embrace the industrial
One of the key trends throughout the year so far has been the embracing of industrial materials in the home environment. Typically, steel beams in the ceiling space would be covered, with their utility overshadowing their relative beauty. In line with new trends, these beams would be left exposed; their harsh texture a welcome juxtaposition to the surrounding soft surfaces in the home. Similarly, materials such as concrete are being embraced this year; simply polished to a high shine and then left exposed for a striking floor covering. Rather than exposing interior workings as a sign of minimalism or modernism, this newest trend is about adding new textures and colours into your home.

Bring the outdoors, indoors
In these modern days, we are constantly bombarded with new studies and surveys showing us the benefits of spending more time outdoors, and whilst these are of course to be heralded, it can be difficult to get the right amount of time alfresco. This desire for more outdoor space is being met head-on by designers who are incorporating more of the outdoors, indoors. The inclusion of bi-folding doors which concertina into themselves are being incorporated into modern homes in order to bridge this gap, and the additions of conservatories or orangeries are also ways to flood your home with light from the outdoors. A non-budget-busting method for incorporating more of the outdoors into your home’s design aesthetic would be to include more plants around your home and at different levels – on the floor, on tables or in very on-trend macramé hanging pots.

Let there be lights
Nobody starts out their interior design plans looking to create dark interiors with limited light; we all like natural light-sources to balance a room’s feel. Natural light and the inclusion thereof is a recurring theme no matter what year it is, but balancing the natural light with artificial light is high on the trend list for 2019. Hidden lighting and light-sources are a key inclination this year; with recessed lights, under stair lights and uplighters all proving very popular.

Au naturale
In years gone by, interior trends have revolved around overly designed rooms with “feature walls” and striking pieces, yet this year the natural finish is having something of a revival. The use of materials such as clay plaster offer a more interesting and textured finish, with no need to be covered once applied which creates an organic and natural feel to an interior.

Storage woes
A major concern for interior design this year is that of storage and how to incorporate the most innovative storage space into the home. Kitchens are key in this trend – with the inclusion of central islands adding storage, high cupboards drawing the eye further up the walls to create the feel of taller ceilings and the resurgence of pantries to hide away ingredients. Around the home, under stair storage is a massive trend as this space is often wasted, and similarly storage underneath baths is increasingly being utilised.

What are the most common reasons for moving home?

With the weather getting warmer, property market activity tends to see a rise as many look to get the home move done and dusted before their holiday or before the kids have to go back to school.

Whether you’re looking to upgrade, downsize, start a family or start a new career, a new survey has found that we Brits move home for a wide variety of reasons, but which is most common? The AA looks to answer this question after conducting a study to discover the most popular reasons for a change in location.

The research found that the most common reason for packing all of our stuff into boxes is due to a change of job, with almost 1 in 4 respondents (23%) stating that they were moving to a location closer to their new role.

As expected, the area in which the home is located holds great importance for homeowners, with 12% simply wanting to freshen things up with a change of scenery and another 11% looking to leave their current area as they’re not overly keen on their surroundings.

Some of the other top reasons for moving home was the 10% that wanted to live closer to their family and the same amount of survey participants that were looking for a quieter life in the countryside.

Also making the list was the 7% that felt they’d be better off in a smaller home, the 4% moving because of marriage or divorce and a further 3% that believed they could turn a profit from the transaction.

The survey also found that depending on the age group there are some differences. The younger demographic (18-24) had a strong focus on their careers and affordability, while the 25-34 year olds desired a larger home for family life. Those approaching retirement age (55+) were looking to fund their later years by downsizing, but also wanting to be as close to family as possible.

Director of Financial Services at AA – David Searle – commented “From a legacy of endless daytime TV shows, one can get the impression that buying and selling homes is just about making a quick profit on a property transaction. Our research puts this to rest as, beyond doubt, the reasons why and when people move are based on jobs, children, family connections and quality of life. A house is, after all, a home.

Whilst decisions about when to move are not really about money, the realities of running a family home often are. Our survey shows many people are concerned about how far their pay packet will stretch and being smart in making their disposable income go further.”

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