July 20, 2018
This week, we’re looking at the best time to sell a property, how the Midlands has recorded the highest rate of annual growth, how much research homeowners put into mortgage offers, a new digital assistant called ‘Tili’ and the impact the buy-to-let crackdown is having on both first-time buyers and landlords.
Rightmove reveal the best time to sell a property
Tim Bannister, director of data services at Rightmove recently revealed that the property portal could give an accurate prediction of when the best time to sell a property is, as well as when there may be a crash in the market.
With over 17m property records, Rightmove attracts over 1.6bn page views each month, which means it has a lot of data stored. But how can it analyse such masses of data to the point where we can see where a particular neighbourhood is heading?
In an interview with Estates Gazettes, Bannister discussed how RightMove uses the data it collects, stating that the portal can analyse this data down to a local level, subsequently being able to predict both house prices and transaction levels with accuracy.
At the moment it’s unclear whether Rightmove will make this service available to the public but if it did, it wouldn’t only help people know when the best time to sell their property is, but it would also benefit property investors as they’d be much more aware of any upcoming crash. Agents, conveyancers and surveyors would be able to detect trends and deploy resources where they’re most likely to see a return on investment if they’re exploited by the property sector.
While UK annual house prices slump, the Midlands stands out as top performer
The Office for National Statistics (ONS) has announced that UK house prices are rising at the slowest annual rate for nearly 5 years, and it’s mostly due to property values in the capital dragging down the rate of growth across the whole country.
The figures showed that annual house price growth fell to 3% in May, down from 3.5% the month before, and this marked the fourth consecutive month whereby London house prices had fallen.
However, this certainly isn’t the case in all areas of the country; every region outside of London was said to experience growth, and the highest annual growth rate was recorded in the East Midlands at 6.3% in the year to May, closely followed by 5% in the West Midlands. The slowest rate of growth was in the north-east of England, where prices rose by just 1.3%.
Experts suggest that the reasons behind the slow growth could be down to higher borrowing costs set by the Bank of England reducing demand, as well as homeowners being discouraged to move house in recent months. This could be caused by stretched affordability in London after years of rapid growth, sluggish wage rises and Brexit uncertainty. Economists at PwC expect house prices in London to continue falling for the next 2 years, predicting overall UK growth to be around 3% each year for the next decade.
First-time buyers could be in luck as buy-to-let market falls
According to figures from UK Finance, the number of first-time buyers rose in May, with 32,200 new mortgages completed, 8.1% more than in May last year. However, the number of people taking on buy-to-let mortgages fell to 5,500, which was 9.8% down from a year ago. Lending dropped by 22% compared to last year, standing at £700m.
The amount of people moving home also increased in May by 4.4% compared to the year before, with 31,100 new home-mover mortgages completed. UK Finance claim that the average home-mover is aged 39 years old, has a gross household income of £55,000 and a loan to value of 73.6%.
This data indicates that the housing market is being rebalanced by government policies and tax changes. For example, a lot of people who may not have been able to afford to get onto the property ladder have managed to with the help of government schemes such as help-to-buy and shared ownership. It’s said that the average UK first-time buyer is 30 years old, has a gross household income of £42,000 and takes on a loan of £142,452 at a loan to value of 85%.
The figures suggest that the changes made by the government in April 2016 to stamp duty are cooling on the buy-to-let market. If for any reason you’re buying a second home, you have to pay a higher rate of stamp duty compared to somebody buying a property that will be their main home.
Tili: the new ‘digital assistant’ that could make moving house easier
Spark, an agency sector energy supplier, has launched a digital home assistant called ‘Tili’, which is designed to help tenants switch utilities when moving house.
Estate and letting agents will be able to direct buyers/sellers/tenants to the Tili digital platform and earn some revenue from each service the user takes while they’re at it.
Spark boasts that in just 10 taps and 3 minutes, users will be able to input their moving date and inform their local authority and water provider.
In addition, Tili will allow users to switch to one of Spark’s tariffs, as well as shop around for broadband providers. It will also provide users with access to a range of home mover services including removals and post redirection, and it can even locate the nearest gym.
Figures show that over 25% of homeowners don’t research mortgage offers
According to research conducted by Noddle, 26% of homeowners confessed that when it comes to selecting a mortgage offer they go for the first one available without browsing around for the best deal first. The data also revealed that over a third of respondents admitted to knowing very little about how mortgages worked, and almost 20% said they were stuck in a financial contract they since regret choosing.
The results also found that on average, Brits spend just 3.6 days researching mortgages, despite the fact that buying a house is one of life’s biggest investments. This figure compares to 5 days’ worth of research spent before booking a holiday, and 6 days’ worth when buying a car.
So what’s the reason behind the lack of research? The figures suggest that Brits were put off looking around because they were concerned that it could affect their credit scores. 23% admitted that they accepted the first mortgage offered because they worried that applying for others would harm their credit score and put them in danger of not getting an offer at all.
Landlords set to raise rents due to buy-to-let crackdown, research suggests
Fear has arisen amongst the property market as a growing number of private landlords are planning to leave the buy-to-let market, and many worry that rent prices will shoot up due to fewer properties being available.
Online letting agent MakeUrMove has conducted research finding that up to 75% of existing landlords may be forced to sell their properties, and a number of them are no longer interested in buying new properties.
So why is this happening? It’s been found that landlords are under continued financial pressure, partly due to the rapid increase in online competitors. It could also be caused by new legislation being introduced by the government.
For example, the decision made in April 2016 to introduce a 3% buy-to-let surcharge on stamp duty and to phase out tax relief on buy-to-let mortgage interest are both contributing factors to buy-to-let landlords exiting the market. 41% of landlords state that the upcoming legislative changes in the buy-to-let market are forcing them to increase rent prices, and this will of course harm tenants.
However, despite the buy-to-let crackdown, 46% of landlords say they aim to keep rent prices the same. They’re prepared to face the consequences rather than inflict even higher prices on renters who simply can’t afford price rises.
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