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NATIONAL HOUSING MARKET OUTLOOK DECEMBER 2017

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NORTH EAST

LATEST PRICE MOVEMENTS OF THE PREMIUM AND SUPER-PREMIUM REGIONAL MARKETS

TOP 1%

TOP 5%

£355,000

£705,000

average price

average price

ANNUAL CHANGE

ANNUAL CHANGE

3%

34%

NORTH WEST

YORKSHIRE AND THE HUMBER

TOP 5%

TOP 1%

£435,000 average price

£700,000

ANNUAL CHANGE

ANNUAL CHANGE

12%

15%

average price

TOP 1%

TOP 5%

£420,000

£735,000

average price

average price

ANNUAL CHANGE

ANNUAL CHANGE

6%

17%

EAST MIDLANDS WEST MIDLANDS

TOP 1%

TOP 5%

£425,000

TOP 5%

TOP 1%

£465,000 average price

£722,000 average price

ANNUAL CHANGE

ANNUAL CHANGE

1%

4%

average price

£650,000

average price

ANNUAL CHANGE

ANNUAL CHANGE

4%

2%

WALES TOP 1%

TOP 5%

£366,000

£615,000

average price

average price

ANNUAL CHANGE

ANNUAL CHANGE

5%

9%

EAST OF ENGLAND

SOUTH EAST TOP 5%

£860,000 SOUTH WEST

TOP 1% average price

£1,480,000

TOP 5%

TOP 1%

£700,000 average price

£1,110,000 average price

ANNUAL CHANGE

ANNUAL CHANGE

4%

1%

average price

ANNUAL CHANGE

ANNUAL CHANGE

11%

13%

LONDON TOP 1%

TOP 5% TOP 5%

£618,000

£1,595,000

TOP 1% average price

£950,000

average price

ANNUAL CHANGE

ANNUAL CHANGE

12%

10%

average price

£3,255,000

average price

ANNUAL CHANGE

ANNUAL CHANGE

29%

22%

These premium price points are found by listing all residential transactions within a region and ordering them from lowest to highest price. We look at transactions which happened in the most recent month for which HM Land Registry we has a complete data set. The ‘top 5%’ figure is the price of the sold property which sits exactly 95 per cent of the way up from bottom to top, otherwise known as the 95th percentile. The ‘top 1%’ sits 99 per cent of the way up the distribution and is the 99th percentile. We aim to avoid big month-to-month variability by using a big sample size (i.e. an entire region) but some volatility is inevitable, owing to the fact that we are only looking at a small subset of the whole market. NB: Average price August 2017. Annual change August 2017 vs August 2016

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Source: ResiAnalytics

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WHY THE BUDGET IS GOOD NEWS FOR PREMIUM UK HOUSING MARKETS The big headline from the Chancellor’s 2017 Budget was that stamp duty will be abolished for first-time buyers purchasing homes worth up to £300,000. To account for more expensive areas like London, properties worth up to £500,000 will be exempt from the duty for the first £300,000 of its value, paying an effective rate of around five per cent on the rest. Whilst it will of course impact the first-time buyer market immediately, this policy change will also have an impact on the prime housing market in the medium and long-term. First-time buyers are the lifeblood of the property market. Increased sales activity at the entry level filters all the way up to the top of the housing ladder. So young people can now buy a small house which allows the occupiers to move to a medium size house which the owners vacate in favour of a large home. The counter-point is that the budget also pledged to build lots of homes which could increase supply and suppress prices - but we’ve heard this many times before and demand always far outstrips supply. With everything you read in the papers about the dangers faced by the UK economy, it’s easy to lose sight of what’s actually happening to the prime UK housing market. The reality is that every metric we look at shows UK property market, including prime, returning to its long-term equilibrium. Obviously, the major prime market in the UK is London. It’s very easy to forget that it’s not always been the global metropolis it is now. There was a time when it was merely the nation’s capital and property prices were principally set by the domestic supply/demand dynamic. Yet over the course of the last 30 years, London has become increasingly subject to the flows of global capital and the needs of the footloose global elite. In the ten years up to the credit crunch, prime central London property values increased at a faster and faster rate. Immediately after the credit crunch, prices grew even faster as international investors sought to protect their money in prime London real estate as the safest possible place in a world where value was being wiped out of intangible investments over night. So that’s the context in which we have to view the cooling of house prices in central London at the end of 2017 and the start of 2018. It’s true prices currently stand at about 15% below their 2014 peak, but 2014 was not normal; it was exceptional. While it’s true that prices of real estate will almost always go up over the long term, it’s a mistake to equate moving back to reality with the market fundamentally weakening. The prime markets outside of London, particularly in the south and east of the country have strengthened tremendously of late, particularly compared with the capital. This, again, is a signal that London might be rejoining the UK domestic housing market, having completed its conversion into a global city. Of course, this line of thinking may well be proved null and void if Britain becomes a tax haven following our departure from the European Union in 2019. But even if that transpires, it’s unlikely that we’ll experience again the tectonic refashioning of the London and prime regional markets that followed the ‘big bang’ of the 1980’s.

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Source: ResiAnalytics

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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 74.7 per cent of all sales above £1m.

C

B

D E

J

F

H

G

I

£1–1.5m

£1.5–2m

A

16 sales

5 sales

19 sales

£2m +

B

44 sales

21 sales

38 sales

C

26 sales

7 sales

21 sales

D

35 sales

10 sales

29 sales

E

52 sales

15 sales

34 sales

F

161 sales

36 sales

61 sales

G

546 sales

212 sales

234 sales

H

359 sales

118 sales

124 sales

I

120 sales

39 sales

54 sales

J

10 sales

4 sale

28 sales

SALES BY PRICE BAND (August 2017)

UK KEY PRICE POINTS*

ALL

HOUSES

FLATS

MID MARKET £298,000 TOP 5% £732,000 TOP 1% £1,400,000

MID MARKET £302,000 TOP 5% £745,000 TOP 1% £1,400,000

MID MARKET £274,000 TOP 5% £660,000 TOP 1% £1,400,000

TERRACE

SEMI

DETACH

MID MARKET £245,000 TOP 5% £637,500 TOP 1% £1,400,000

MID MARKET £260,000 TOP 5% £580,000 TOP 1% £970,000

MID MARKET £420,000 TOP 5% £925,000 TOP 1% £1,690,000

*August 2017.

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Source: ResiAnalytics

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TOP 5% BY REGIONAL GROUPINGS

PRICE MOVEMENTS FOR PREMIUM PROPERTIES (TOP 5%)

INDEX VALUE OF TOP 5% PRICE MOVEMENTS BY REGION

110

105

100

95

20

15 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 20 M07 17 M 08

90

SOUTH & EAST

LONDON

+9.4%

Since September 2015

+5.3%

Since September 2015

TOP 1%

INDEX VALUE OF TOP 1% PRICE MOVEMENTS BY REGION

130

BY REGIONAL GROUPINGS

MIDLANDS & WALES

+7.4%

Since September 2015

NORTH

+3.1%

Since September 2015

PRICE MOVEMENTS FOR PREMIUM PROPERTIES (TOP 1%)

120 110 100 90 80

20

15 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 20 M0 17 7 M 08

70

LONDON

+1.1%

Since September 2015

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SOUTH & EAST

+6.6%

Since September 2015

MIDLANDS & WALES

+2.8%

Since September 2015

NORTH

+3.2%

Since September 2015

Source: ResiAnalytics

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HOW HAVE UK PREMIUM PRICES CHANGED BETWEEN AUGUST 2016 AND AUGUST 2017 FOR INTERNATIONAL BUYERS? 99,091,555 August 2016 118,515,541 August 2017 +20% change

1,485,628 August 2016 1,848,927 August 2017

1,125,000 August 2016 1,400,000 August 2017 +24% change

+24% change

1,330,731 August 2016 1,565,295 August 2017

5,884,729 August 2016 6,083,204 August 2017 +6% change

9,865,508 August 2016 12,423,904 August 2017 +26% change

+18% change

11,527,191 August 2016 14,445,171 August 2017

5,571,106 August 2016 6,933,475 August 2017

ANNUAL PRICE CHANGE OF TOP 1% FOR MOST FOREIGN BUYERS

+6% change

+24% change

1,991,572 August 2016 2,511,047 August 2017

5,982,168 August 2016 7,923,524 August 2017

+26% change

+32% change

Accounting for changes both exchange rates and domestic prices.

WHAT’S HAPPENING TO PRICES IN THE MID-MARKET Here we show how prices have changed over the last few years 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 has been detached for which prices have increased by 10% between September 2015 and August 2017.

MID MARKET PRICE MOVEMENTS

£450,000

£400,000

DETACHED

£350,000 FLAT

£300,000 £250,000

TERRACE

20

15 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 20 M0 17 7 M 08

£200,000

SEMI-DETACHED

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Source: ResiAnalytics

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NUMBER OF PROPERTIES SOLD ACROSS THE WHOLE MARKET Here we show how sales volumes have fluctuated over the last few years across the whole market. It shows the number of sales over time in England and Wales split by the main four house types. Comparing August 2016 and August 2017, we can see transaction levels in the latter period were 19% lower than the former, although data from the Land Registry may still be trickling in. 150,000 DETACHED

100,000 SEMI-DETACHED

50,000 TERRACE

15 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 20 M07 17 M 08

0 FLAT

20

MONTHLY SALES BY TYPE OVER THE LAST 2 YEARS

12 MONTHS OF TRANSACTION LEVELS

20% 0% -20% -40%

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08 M 17

20

17 M

07

06 20

17 M

20

05 M 17

04

20

M 20 17

20

17

M

03

02 7M 20 1

01 M 17 20

12 M 16 20

11 M 16 20

16 M 20

M 16 20

10

-60% 09

YEAR-ON-YEAR CHANGES IN TRANSACTIONS LEVEL

In this chart, we display the level of transactions from September 2016 to August 2017. 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 August 2017 figure shows us that transactions were 19% lower than 12 months prior.

Source: ResiAnalytics

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TIME ON THE MARKET Data for October 2017 shows us that on average it takes 64 days to sell a property. Over the course of the last year, the average figure was 65.2 days, so the latest data is 1.2 days shorter than the long run average.

64

days on average to sell a property

80

TIME TO SELL (DAYS)

75 70 65 60

64 20

17

17

63 P

CT

20

17 20

O

SE

AU G

JU

JU

62

20 L

20 N

20 AY M

AP

61 17

60

17

17 R

AR

20

20

17 M

59

17

60

17

65

20 B FE

JA

D

71

20 N

20 EC

O V N

79

16

16 20

16 20 CT O

72

17

67

65

55

NUMBER OF PROPERTIES ON THE MARKET

62 60 58 56 54 52

60 60 O

17

CT

20

20 P SE

17 20

AU G

17

60

17 20 L JU

17 20 N

20 AY M

61

60

17

17

60

20 R

AR M

AP

20

17 20 B

57

JU

56 17

52

FE

17

52 20

16 EC

D

N

20

20 O V

20 CT O

51 JA N

56 16

59

50

16

AVERAGE PROPERTIES AVAILABLE PER ESTATE AGENT

The latest available data also 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 properties, so the latest data is 2.8 properties more than the long run average.

Source: Rightmove

Contact us now for a free valuation Tel: +44 (0)207 079 1515 | parklane@fineandcountry.com | fineandcountry.com

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F&C National Report - December  
F&C National Report - December