The latest edition of our Cartus UK Market Watch is now available. It provides those involved in the UK relocation process with an up to date view on the current residential sales and lettings markets. As the UK’s economic outlook continues to improve, so too do housing market conditions. A September 2014 study by the Royal Institution of Chartered Surveyors stated that the “overall picture” shows a return to “a less volatile market.”
Six UK regions – the East, East Midlands, London, South East, South West and West Midlands – currently have average house prices that are higher than they were during the pre-financial crisis peak. London alone recorded an annual house price rise of over 19%. Nationwide Building Society indicates that property prices have risen by 11% year on year. Although it also reports a modest 0.8% monthly increase, this is the 16th successive monthly rise published by the building society.
Dip in Buyers
Despite reports that the number of buyers has marginally declined in recent months, they continue to outstrip sellers and as such, house price growth continues. The dip in the number of buyers may be attributed to April’s introduction of the Mortgage Market Review (MMR). Implemented by the Financial Services Authority, MMR is a new, stricter set of rules that ultimately ensures mortgage applicants will be able to afford loan repayments.
The good news is that consumer sentiment appears to remain positive, which may be due to the fact that, for those who can secure a mortgage, interest rates remain low. The even better news is that when interest rates finally do begin to increase, the Bank of England indicates that growth is likely to be gradual.
Mind the Gap!
I was interested to see a recent survey published by Nationwide that looked at whether a property’s price was impacted by its proximity to an underground tube or railway station. Carried out in three major cities, London, Manchester and Glasgow, the study found that buyers were willing to pay a premium to be close to a station. London properties located 500 metres from a station gained an extra 10.5% in value – the equivalent of £42,000 on an average London home! Similar findings were reported in Manchester (4.6%) and Glasgow (6%).
There have been a growing number of ‘trapped tenants’ who are unable to get on the property ladder. This is either because they do not pass the MMR check or they cannot afford the relatively large deposit needed to secure a mortgage loan. As tenants continue to push up rental prices, London’s average rent has now reached a record £1,429 per month. To put this into context, the average monthly rent for the rest of the UK (excluding London) is £723, nearly half that of the capital’s.
Due to demand, we recommend that assignees entering the UK rental market, especially those moving to London, remain as flexible as possible when it comes to search criteria. Once a property is found, they should act as quickly as possible to secure it, to avoid disappointment.