A rise in interest rates is just another element of a recovering, and sane property market. NORMALITY, SANITY AND STABIL
in association with
NATIONAL HOUSING MARKET OUTLOOK NOVEMBER 2017
Napoleon Wilcox FNAEA, CREA Director & Head of Webbers Fine & Country
[email protected] T: 01398 324666
NORTH EAST
LATEST PRICE MOVEMENTS OF THE PREMIUM AND SUPER-PREMIUM REGIONAL MARKETS
TOP 1%
TOP 5%
£365,000
£600,000
average price
average price
ANNUAL CHANGE
ANNUAL CHANGE
5.6%
4.3%
NORTH WEST YORKSHIRE AND THE HUMBER TOP 5%
TOP 1%
£417,250 average price
£695,000
ANNUAL CHANGE
ANNUAL CHANGE
2.28%
2.96%
average price
TOP 1%
TOP 5%
£390,000
£595,000
average price
average price
ANNUAL CHANGE
ANNUAL CHANGE
2.01%
-2.46%
EAST MIDLANDS WEST MIDLANDS
TOP 1%
TOP 5%
£660,000
TOP 1%
£425,000
£460,000 average price
£695,000 average price
ANNUAL CHANGE
ANNUAL CHANGE
ANNUAL CHANGE
ANNUAL CHANGE
5.2%
7.32%
6.79%
6.11%
TOP 5%
average price
average price
WALES TOP 1%
TOP 5%
£370,000
£595,000
average price
average price
ANNUAL CHANGE
ANNUAL CHANGE
7.89%
12.26%
EAST OF ENGLAND
SOUTH EAST
average price
£595,000
average price
£1,400,000
£1,250,000 average price
ANNUAL CHANGE
ANNUAL CHANGE
9.23%
19.85%
average price
ANNUAL CHANGE
ANNUAL CHANGE
4.40%
6.87% LONDON
SOUTH WEST TOP 5%
TOP 1%
£710,000 average price
TOP 1%
TOP 5%
£830,000
TOP 5%
TOP 1%
TOP 5%
£950,000
£1,450,000
average price
TOP 1% average price
£3,050,000
average price
ANNUAL CHANGE
ANNUAL CHANGE
ANNUAL CHANGE
ANNUAL CHANGE
7.21%
10.59%
11.54%
16.19%
NB: Average price July 2017. Annual change July 2017 vs July 2016
Source: ResiAnalytics
NORMALITY, SANITY AND STABILITY RULE SUPREME AS THE PRIME MARKETS REACH A TURNING POINT There is a growing body of evidence that the UK residential market is at a turning point, despite what the national press might have you think. While it’s true that something of a ‘cold front’ is moving across the UK, it seems like a growing number of pragmatic home sellers are adjusting their pricing expectations and taking advantage of the myriad opportunities for shrewd purchasers. What happens next is very much down to the Monetary Policy Committee (MPC) of the Bank of England which is charged with setting interest rates. On the 2nd November 2017 they raised interest rates from 0.25% to 0.5%, the first such increase since July 2007 when rates hit 5.75%. This comes after data from the Office for National Statistics showed that the UK’s economy had higher than expected growth in the three months to September. According to the figures, gross domestic product (GDP) for the quarter rose by 0.4%, compared with 0.3% in each of 2017’s first two quarters. The only question that remains is; will rates keep on rising? But what does that mean for the premium market we concern ourselves with? The most obvious impact of a rate rise on the housing market as a whole would be on mortgages, which would become more expensive. Prime markets are more equity driven, so the impact is less on this segment but will nonetheless affect a large proportion of prime homeowners. Yet it’s important to remember that current interest rates are historically low, and a rise in rates should be considered just part of the property market returning to normality after the seismic shocks felt throughout the last market cycle in the wake of the credit crunch. While Brexit is certainly affecting sentiment in the market, the fundamentals of the market are strong and dwelling too much on the ‘Brexit effect’ can be something of a distraction. The key to winning in the prime UK property market at the moment is embracing a pragmatic attitude to pricing. A mindset is required which appreciates we’re in a new reality now the effects of the credit crunch have settled. After the global credit crunch, global capital flooded into the prime central London attracted by the security of residential assets in a mature market free from political and economic uncertainty. Prices rocketed by as much as 20% as the exchange rate affect made it a massive gamble for investors in South East Asia NOT to invest in London. However, that was a short lived phenomenon and now things have settled down, growth has been sluggish. Understanding that there’s nothing on the horizon which is likely to return us to the heady days of 2010 is fundamental to any smart mover in the prime market. The employment market is very tight, but price inflation has repeatedly outstripped wage growth, which is putting household finances under strain. A rise in interest rates won’t help this at all, but some are of the view that it’s better to cause pain and trim borrowing now than later when it will be even worse. The economy is still suffering from the uncertainty caused by the wake of Brexit, and the national press is fixated on its political implications. However, there is a lot of evidence that economic life is simply returning to normal. A rise in interest rates is just another element of a recovering, and sane property market.
Source: ResiAnalytics
NUMBER OF HOUSES SOLD FOR OVER £1M
A
In the latest month for which we have data, London, the South East and the East of England accounted for 85.4% of all sales above £1m.
C
B
D E
F
J G H I
£1–1.5m
£1.5–2m
A
16 sales
7 sales
£2m + 9 sales
B
26 sales
14 sales
25 sales
C
26 sales
19 sales
21 sales
D
23 sales
15 sales
27 sales
E
29 sales
11 sales
17 sales
F
517 sales
197 sales
271 sales
G
525 sales
183 sales
274 sales
H
321 sales
91 sales
101 sales
I
64 sales
24 sales
39 sales
J
6 sales
1 sale
4 sales
SALES BY PRICE BAND (Latest month)
UK KEY PRICE POINTS
ALL
HOUSES
FLATS
MID MARKET £291,352 TOP 5% £688,000 TOP 1% £1,317,584
MID MARKET £294,866 TOP 5% £700,000 TOP 1% £1,325,000
MID MARKET £271,514 TOP 5% £660,000 TOP 1% £1,300,000
TERRACE
SEMI
DETACH
MID MARKET £240,167 TOP 5% £585,000 TOP 1% £1,254,000
MID MARKET £255,070 TOP 5% £560,000 TOP 1% £1,000,000
MID MARKET £410,508 TOP 5% £900,000 TOP 1% £1,625,000
Source: ResiAnalytics
LONDON
SOUTH & EAST
MIDLANDS & WALES
NORTH
-6 .4%
-5.4%
-3.1%
-2%
Since August 2015
Since August 2015
Since August 2015
Since August 2015
20 15 20 M0 15 8 20 M0 15 9 20 M1 15 0 20 M1 15 1 20 M1 16 2 20 M0 16 1 20 M0 16 2 20 M0 16 3 20 M0 16 4 20 M0 16 5 20 M0 16 6 20 M0 16 7 20 M0 16 8 20 M0 16 9 20 M1 16 0 20 M1 16 1 20 M1 17 2 20 M0 17 1 20 M0 17 2 20 M0 17 3 20 M0 17 4 20 M0 17 5 20 M0 17 6 M 07
INDEX OF TOP 5% PRICE MOVEMENTS BY REGION
20 15 20 M0 15 8 20 M0 15 9 20 M1 15 0 20 M1 15 1 20 M1 16 2 20 M0 16 1 20 M0 16 2 20 M0 16 3 20 M0 16 4 20 M0 16 5 20 M0 16 6 20 M0 16 7 20 M0 16 8 20 M0 16 9 20 M1 16 0 20 M1 16 1 20 M1 17 2 20 M0 17 1 20 M0 17 2 20 M0 17 3 20 M0 17 4 20 M0 17 5 20 M0 17 6 M 07
INDEX OF TOP 5% PRICE MOVEMENTS BY REGION
BY REGIONAL GROUPINGS
TOP 5%
PRICE MOVEMENTS FOR PREMIUM PROPERTIES (TOP 5%)
110
105
100
95
90
LONDON SOUTH & EAST MIDLANDS & WALES NORTH
+1.2% +5.7% +3.3% +0.9%
Since August 2015 Since August Since August Since August
2015 2015 2015
BY REGIONAL GROUPINGS
TOP 1%
PRICE MOVEMENTS FOR PREMIUM PROPERTIES (TOP 1%)
130
120
110
100
90
80
70
Source: ResiAnalytics
HOW HAVE UK PREMIUM PRICES CHANGED IN THE LAST 12 MONTHS FOR INTERNATIONAL BUYERS 105,876,823 2016 105,787,703 2017 0% change
1,190,000 2016 1,254,000 2017
1,569,039 2016 1,656,108 2017
5% change
6% change
1,405,188 2016 1,402,875 2017
5,884,729 2016 6,083,204 2017
10,421,571 2016 11,128,184 2017 7% change
6% change
0% change
12,177,032 2016 12,939,600 2017
5,884,729 2016 6,210,786 2017
ANNUAL PRICE CHANGE OF TOP 1% FOR MOST COMMON FOREIGN BUYERS
6% change
0% change
2,105,895 2016 2,250,453 2017
6,311,403 2016 7,098,041 2017
0% change
12% change
WHAT’S HAPPENING TO PRICES IN THE MID-MARKET Here we show how prices have changed over the last few months in the mid-market. It shows the mean average price over time in England and Wales split by the main four house types. The best performing house type is semi-detached homes for which prices have increased by 8.6% over the period shown.
£400,000
£350,000
£300,000
£50,000
SEMI-DETACHED
TERRACE
£200,000 20 15 20 M0 15 8 20 M0 15 9 20 M1 15 0 20 M1 15 1 20 M1 16 2 20 M0 16 1 20 M0 16 2 20 M0 16 3 20 M0 16 4 20 M0 16 5 20 M0 16 6 20 M0 16 7 20 M0 16 8 20 M0 16 9 20 M1 16 0 20 M1 16 1 20 M1 17 2 20 M0 17 1 20 M0 17 2 20 M0 17 3 20 M0 17 4 20 M0 17 5 20 M0 17 6 M 07
MID MARKET PRICE MOVEMENTS
DETACHED
FLAT
Source: ResiAnalytics
NUMBER OF PROPERTIES SOLD ACROSS THE WHOLE MARKET This chart shows the number of transactions which have taken place in the last 24 months. This relates to the entire housing market in England and Wales, not just the premium end of the market. The chart shows that transactions levels in the first half of the period shown were 11% higher than in the second half.
DETACHED
100000 SEMI-DETACHED
50000 TERRACE
15 20 M0 15 8 20 M0 15 9 20 M1 15 0 20 M1 15 1 20 M1 16 2 20 M0 16 1 20 M0 16 2 20 M0 16 3 20 M0 16 4 20 M0 16 5 20 M0 16 6 20 M0 16 7 20 M0 16 8 20 M0 16 9 20 M1 16 0 20 M1 16 1 20 M1 17 2 20 M0 17 1 20 M0 17 2 20 M0 17 3 20 M0 17 4 20 M0 17 5 20 M0 17 6 M 07
0 20
MONTHLY SALES BY TYPE OVER THE LAST 2 YEARS
150000
FLAT
In this chart, we display the level of transactions in the last 12 months. Instead of showing the absolute values, we show how the transactions in that period vary from the same month a year before. For example, the latest data shows us the transactions were 21.5% lower than 12 months prior.
20% 0% -20% -40%
07
06
20 17 M
05 7M 20 1
20 17 M
04 20 17 M
03 17 M 20
20
17 M
02
01 20 17 M
12 20 16 M
11 20 16 M
10 20 16 M
20
16 M
09
08
-60% 20 16 M
YEAR-ON-YEAR CHANGES IN TRANSACTIONS LEVEL
12 MONTHS OF TRANSACTION LEVELS
Source: ResiAnalytics
TIME ON THE MARKET The latest available data shows us that on average it takes 63 weeks to sell a property. Over the course of the last year, the average figure was 65.2 weeks, so the latest data is 2.2 days longer than the long run average.
63
weeks on average to sell a property
80
75
65
60
63 P
20
17
20 17
AU G
JU L
JU N
62
20 17
20 17 M AY
61
SE
60 17
59
20 17
AP R
M
FE
B
AR
20
20
60
20
65
17
17
71
20 17
79
JA N
D EC
O
72
20 16
16 CT
N O V
20
20 P SE
67
16
65
20
64
55
16
TIME TO SELL (WEEKS)
70
NUMBER OF PROPERTIES ON THE MARKET
62
60
58
56
54
52
61
20 1
7
60
SE P
20 17
60
AU G
20 L JU
N
Contact us now for a free valuation Tel: +44 (0)1398 324666 |
[email protected] | webbers.co.uk
17
20 17
60
JU
20 17 R
AP
M
AR
20 17
60 20 17
57 M AY
56 20 17
52
FE B
20 1 JA N
EC D
52 7
51 20 16
56 20 16
20 16 CT
O
P SE
59 N O V
60
50
20 16
AVERAGE PROPERTIES AVAILABLE PER ESTATE AGENT
The latest available data shows us that on average estate agents in the UK have 60 properties on their books. Over the course of the last year, the average figure was 57.2 weeks, so the latest data is -2.8 properties fewer than the long run average.
