House prices: how much will your child pay for their first property?

A baby born today faces the prospect of paying £3.4m for their first property, new research has suggested.

20.08.14 Baby

The alarming statistic comes on the back of recent double digit house price rises that have forced first time buyers to turn to the Bank of Mum and Dad to help with a deposit.

The calculation is based on the average house rising in value by 8.6 per cent during the past 60 years.

If this pattern continues, a typical house worth just over £200,000 today is expected to reach £3,391,474 in the year 2048, the year when a child born today reaches a typical first time buyer age of 35.

The research by online estate agents eMoov also suggested that even a child who is 10 years old today faces paying more than £1.6m for a property, requiring a deposit of more than £320,000.

And if you have a child who is currently 4 years old, they will most likely need £2.4m.

By 2032, the average deposit of 20 per cent will be the equivalent of the price of the average price of a property today.

Russell Quirk, eMoov’s chief executive, said: “Our research shows the staggering truth about the rise of property prices within Britain in recent times. Property prices are always on the move, but viewed over decades our research shows an annual rise of 8.6 per cent since 1954.

“If the trend continues then the bank of Mum and Dad will become even more important for the next generation of home owners”

Mortgage experts agree that parents will play a more pivotal role in helping their children onto the property ladder.

Mark HarrisMark Harris, of mortgage brokers SPF Private Clients, said: “Already the Bank of Mum and Dad has become essential in helping first-time buyers onto the housing ladder and this research suggests that their role will become even more crucial.

“With wages failing to keep pace with property prices, home ownership is only going to become more unaffordable unless Mum and Dad come to the rescue with a hefty deposit.”

August 20, 2014 at 1:54 PM Leave a comment

UPDATED: Highest amount of mortgage cash issued in six years

Mortgage lending jumped to a six-year high in July as the market remained resilient in the face of regulatory change, figures showed today.

Mortgage 4

A total of £19.1bn was advanced during the month, 7 per cent more than in June and the highest figure since August 2008, according to the Council of Mortgage Lenders.

The group said mortgage activity appeared to have remained robust, despite the tough new affordability criteria introduced under the Mortgage Market Review earlier this year.

But it cautioned that the eventual impact of the regulatory change remained uncertain.

July was the third consecutive month during which lending levels have increased, following a slight dip in March ahead of the introduction of the MMR.

Caroline Offord, CML market and data analyst, said: “Property transactions in the first half of the year showed a 25 per cent increase compared to the same period a year ago, but we expect that intensifying affordability pressures could start to dampen this upwards trend.”

The figures came as minutes from the Bank of England’s Monetary Policy Committee suggested a hike in interest rates could be closer than previously expected.

The minutes showed that two members of the committee vote to raise the Bank Rate from its current record low of 0.5 per cent to 0.75 per cent in August.

It was the first time that the MPC has been split on what the official cost of borrowing should be since July 2011.

External MPC members Martin Weale and Ian McCafferty argued that although wage growth remained weak, it was a lagging indicator of the amount of slack there was in the economy, and rates should begin rising before that slack had been used up.

News of the vote prompted speculation that interest rates could start rising before the end of the year.

But Samuel Tombs, senior UK economist at Capital Economics, pointed out that data released since the MPC’s meeting showing a fall in inflation to 1.6 per cent in July and slower growth in employment, eased the pressure on the Committee to raise rates quickly.

He said: “We still expect the first hike to come in February 2015.

“But, even if the Committee decides to get on the front foot and raise interest rates before the end of the year, low inflation should ensure that the pace at which they rise is extremely gradual by historical standards.”

A 0.25 per cent increase in interest rates would add just over £20 a month to repayments on a £150,000 variable rate mortgage, which moves up and down in line with changes to the Bank Rate.

Meanwhile, the Bank of England’s Agent’s Summary of Business Conditions, also released today, built on previous indications that the housing market is beginning to slow down.

The report said housing transactions had eased in recent months due to a shortage of homes on the market and the introduction of the MMR, which had lengthened the mortgage application process.

It added that there were also signs of an easing in house price inflation, concentrated in the South, with some prices lower than they had been a year earlier, while there were also fewer cases of sealed bids and offers being made over the asking price.

Strong house price gains have left the typical British property costing £263,705, according to Zoopla.

But recent survey data has pointed to a slowdown in growth as more homes have been put on the market and buyers have started to bulk at high asking prices.

Nationwide Building Society said property values inched ahead by just 0.1 per cent in July, while surveyors questioned by the Royal Institution of Chartered Surveyors predicted prices in London, which has been the driving force of the market recovery, would rise by just 1.9 per cent during the coming 12 months.

 

August 20, 2014 at 10:37 AM Leave a comment

New build of the month: Hungate, York

If you’re looking for a new build home, try this mix of studios, one, two and three bedroom apartments in the heart of cultural York.

19.08.14 York 5

Where exactly is it? Just south east of the city centre, half a mile from York Minster, and within the ancient city walls.

Monster housing estate or tiny boutique development? By central York’s standards this is an absolute giant, covering a four hectare site. The current, second, phase of the scheme by developer Lend Lease includes 193 homes, which go on sale this month. It will, ultimately, have more than 700 homes.

How much will it cost me? Studios start at £115,000, one bedroom homes are priced from £140,000, two bedroom flats from £230,000 and three bedroom apartments start at £375,000.

What is so great about it? Location, location, location. You are 10 minutes’ walk from the city centre and all it has to offer. The site, beside the River Fosse, is pretty and the development has a private courtyard for residents, as well as landscaped gardens.  “It is very unusual to be able to live in a community like this within the city walls,” says Tania Coffey, association director of Savills and the selling agent.

Surely its not completely perfect? The homes are being sold off plan and won’t be ready until August 2016, and the prices are quite punchy. “This is a really prime development,” says Coffey. Buyers attracted to the development for its lock up and leavability will also need to factor in annual service charges ranging from £900 for a studio to £1,400 for a two bedroom flat.

Who will my neighbours be? Coffey expects the smaller homes to attract investors, while the larger properties will appeal to downsizers wanting an urban home. “We also get a lot of second home buyers in York,” she said. “They want to be in the city centre, but also to be close to the Yorkshire Moors and Dales.” Wealthy parents may also buy flats at Hungate for students studying at York University.”

What is York city centre like? A great place to live with the buzz that university cities tend to have and a fantastic choice of cafes, shops, restaurants, bars and theatres on the doorstep.

Is it any good for kids? Coffey suspects most Hungate residents will either be at a pre-parental phase of life or will have older children who have flown the nest. However, second home owners with teenagers will be perfectly at home with all of York’s shops, cafes and nightlife within walking distance.

How are the public transport links? The city centre is brilliantly walkable and the development is just under a mile from York Railway Station, with direct services to Leeds, Newcastle, Edinburgh, Peterborough and London.

Is it up and coming? North Yorkshire took a battering during the downturn, but York seems to be well on its way back up, with average prices up 3.87 per cent in the last year to an average £245,556.

“It has gone mad,” agrees Coffey. “There is a real shortage of stock and a lot of competition for the right properties. Homes near to good schools or near the station and the city centre are the real drivers.”

I like the sound of York what else is on sale there?

1. Take on a two bedroom wing of a very impressive Grade II listed mansion, which is two miles from the city centre, for £475,000.

19.08.14 York 1

2. York city centre has streets of quality period houses like this three bedroom end of terrace house, on the market for £395,000.

19.08.14 York 2

3. If you want to live beside one of the city’s waterways then how about this two bedroom warehouse conversion, on the market for £240,000.

19.08.14 York 3

4. Or slip beneath the £125,000 Stamp Duty threshold with a one bedroom flat above a shop right in the city centre, on the market at £119,950.

19.08.14 York 4

August 20, 2014 at 9:00 AM Leave a comment

Bank Holiday DIY plans suffer amid lack of skills among younger generation

Bank Holidays are traditionally a time to get out the hammer and nails to address some of those DIY projects that have been put on the back burner. But homeowners are being urged to take care as the number of accidental claims hits 30,000, with each claim costing £339, according to new research.

19.08.14 DIY

DIY skills are particularly low among the younger generation, according to the survey by insurers Halifax. It suggested more than half of over 55 year olds are confident they can put up wallpaper, while only 28 per cent of 18 to 24 year olds feel confident about doing so.

At the same time, more than eight out of 10 older people said they can paint, while just over six out of 10 under 24 year olds feel able to use a decorating brush.

Martyn Foulds, senior claims manager at Halifax, said: “It seems that DIY skills are fading with each generation, which is a worry as home improvements can easily go wrong for those who don’t know what they are doing.

“We’d recommend homeowners check they have the right tools for the job, avoid taking on too much and call a qualified tradesman for gas and electrical work.”

Last year, Halifax recorded more than 32,000 accidental damage claims, while more than £1m was paid out in such claims in August alone. In total, the insurer paid out more than £11m for such claims last year, with each costing an average of £339.

The survey suggests almost a quarter of people asked their parents for help with home improvement jobs.

Top DIY tips from Halifax:

  • Preparation is key – make sure you have all the correct tools and equipment for the job before you start to avoid coming unstuck later
  • Plan a budget beforehand and stick to it
  • Call a professional for jobs involving gas, electrical or plumbing work. When choosing a tradesman, ask for references and certificates to demonstrate that they are competent
  • Contact your insurer if any work is being carried out which may alter the structure or layout of the home such as an  extension or garage, etc
  • For major building works, you may need to seek planning permission

August 19, 2014 at 2:32 PM 2 comments

UPDATED: Average house price rises £100 a day

Property values hit a new record high in June as prices jumped by £100 a day during the month, Government figures showed today.

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The typical cost of a British home rose to £265,000 during the month to stand 10.2 per cent higher than a year earlier, according to the Office for National Statistics.

People getting on to the property ladder faced the steepest house price inflation, with the cost of a typical first time buyer home rising by 12 per cent during the year to £204,000.

The increase, which was the biggest since April 2010, means someone taking out a 75 per cent loan-to-value mortgage would need to put down a £51,000 deposit and have household earnings of around £50,000.

But despite the strong year-on-year rise in house prices, there were further signs that the market is beginning to slow.

The average cost of a home rose by only 0.5 per cent during June itself, down from a jump of 0.8 per cent in May and a 2 per cent gain in April.

The annual rate of growth also slowed slightly to 10.2 per cent, down from 10.4 per cent in May.

London continued to drive the rest of the market, with the typical cost of a home in the capital soaring by 19.3 per cent in the 12 months to the end of June to stand at £499,000.

But no other region in Britain recorded double-digit growth, with the South East posting the next strongest gain at 9.7 per cent, followed by the East at 7.9 per cent.

Once London and the South East were stripped out, property values across Britain rose by only 6.3 per cent during the year.

London, the South East and the East remained the only regions in which house prices have passed their pre-correction peaks, with the typical home in the capital now 35.6 per cent above the previous high.

In Scotland prices are only 1.6 per cent below their 2008 peak, while in Wales they are 3.2 per cent lower.

But in Northern Ireland the average home still costs 47.4 per cent less than it did in August 2007.

Ray Boulger 2Ray Boulger, senior technical manager at mortgage broker John Charcol, said: “The rate at which property prices are increasing has stabilised.

“One thing that surprised me was that the annual figure for London increased slightly after dropping in the previous month.

“But the ONS figures are based on completions, so they reflect transactions agreed in March or April and lag other indexes such as Nationwide.”

There is growing evidence that the housing market is beginning to slow down following a period of strong price growth.

The Royal Institution of Chartered Surveyors said demand from potential buyers fell for the first time since mid-2013 during July, while the number of homes being put up for sale rose for the second consecutive month, easing the mismatch between supply and demand.

Meanwhile, Nationwide Building Society said property values inched ahead by just 0.1 per cent in July.

There is also anecdotal evidence from estate agents that house prices are falling in some of the prime areas of central London, while surveyors questioned by RICS predicted prices in the capital would rise by just 1.9 per cent during the coming 12 months.

But while the headline figure for house price inflation is easing, growth is starting to accelerate outside of London and the South East as the recovery ripples out across the country.

August 19, 2014 at 10:03 AM Leave a comment

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