Island Housing Market News Round Up

Despite the current lockdown restrictions, the Government has made clear it's intention to keep the housing market open, with Covid safe practices being followed by all market participants.

January is usually a very busy month after the Christmas and New Year breaks and while lockdown has put a dampner on market activity, we are still seeing good levels of sales being agreed.  What we have seen from the evidence of previous lockdowns, is that being 'confined to quarters' and working from home, makes many people determined to move as soon as circumstances allow.  There is no reason to think this time around things will be different - especially given its winter time and we are unable to get outside as we would like.

We therefore believe that the market will be strong when lockdown is eased and we will see more currently housebound vendors and buyers enter the fray.  The 'expert' predictions that house prices will fall in 2021 make no sense to us.

Whilst the current stamp duty holiday is due to end on 31st March, and has undoubtedly pepped up the market (especially at the top end), we see plenty of action ahead.

We usually see small falls in average new listing prices in December as less new properties, especially the larger, properties come to market and those that do are often 'priced to sell'.

Against this backdrop, here is a round up of the latest housing news, of which there has been plenty:


Rightmove:

^{Activity surge by new buyers, despite slim chance of beating tax deadlines} 

• Average price of property coming to market falls by 0.9% (-£2,887) this month, with some new sellers still hoping to tempt buyers and squeeze in a sale before the stamp duty holiday ends
• New buyers unlikely to beat the deadline as average time to complete a purchase is now over four months
• Logjam update: mammoth 613,000 sold subject to contract properties still awaiting legal completion, with Rightmove projecting around 100,000 will face an unexpected tax bill as they miss the 31^st March cut-off
• Nevertheless, visits to Rightmove are up by 33%, the number of buyers contacting agents is up by 12% and the number of sales agreed is up by 9% for January so far compared to the prior year
• Despite temporary market closures in 2020, people’s housing needs meant the number of sales agreed was up by 10% for the whole year versus 2019

Nationwide:

Annual house price growth rose to a six-year high of 7.3% at the end of 2020

• Prices up 0.8% month-on-month, after taking account of seasonal factors
• All regions saw a pickup in house price growth rates in Q4, with East Midlands the strongest region.

The Stamp Duty Petition:

• The petition to extend the stamp duty holiday for a further six months from 31 March will be debated in Parliament.
• The petition has collected almost 40,000 signatures in under a week taking it past the 100,000-barrier required to secure the House of Commons debate.

More problems for flats with Cladding:

Fortunately this is not a major issue for Island flat owners, but is emerging as a serious national problem following the Grenfell Tower disaster.

Latest monthly data from Land Registry shows flat sales nearly halved during September compared to last year.

• Sales of apartments in the UK halved during September, latest figures from the Land Registry reveal, as confidence in the flats market tanks as many lenders reject mortgage applications to buy apartments within blocks.
• The data reveals that during September sales of apartments reduce by 46% or from 11,500 during the same month in 2019 to 5,600

Mortgages:

There are some great rates out there, especially for buyers with larger deposits.  There has also been a welcome return of 90% mortgages from mainstream lenders albeit at higher interest rates.  However, the pandemic is strating to show up signs of a tightening of credit policy by the banks.  The imminent changes you need to be aware of, apply to Self Employed Customers and the impact of Covid. They will impact among others-

Sole Traders

Ltd Company Directors (owning more than 20% of company)

Partnerships or LLP

It may also impact upon an Employed Persons using Self Employed Income for a mortgage.

Due to the various means of support from the Government during the past 12 months it has made it very difficult for lenders to assess sustainable levels of income for these customers.

The support albeit superb, masks it by maintaining the cash flow. Sustainability is the major factor when deciding to lend to individuals for many years to come.

Some companies have accepted grants or bounce back loans as precautionary measures because they could, because it was “free”, and others out of necessity.

Therefore it has proved unfair for lenders to apply a broad brush approach to their lending policies. However it is agreed that Covid has had some impact on most businesses and a change in lending attitude was inevitable.

Lenders have come at this using two main methods.
 

1. Reduction of income multiples

Normally mortgage applications have a multiplier of around 5x income for most hungry high street lenders. This is  being reduced by some of these lenders to as low as 4.2x income in some cases. Others are sat around 4.5x but we think it is almost inevitable that almost all lenders will be seriously looking to follow suit in the next few days / weeks. Interest rates have not been affected.

2. Loan to Value

Over the past couple of weeks strong lenders are beginning to return to 90% lending. Thank goodness as this really helps First Time Buyers. However some of the same lenders are restricting these levels for Self Employed applications. In some cases we can see this being reduced as low as 60% LTV. Other lenders are at 75% and some are allowing 90%. Again we expect to see more lenders follow suit. Rates again are unaffected.

Trigg & Co can offer you access to our mortgage services with independent specialist advice available without the need for a face to face appointment.  Whether you are buying, re-mortgaging, investing or just considering your options - give us a call.