This week was all about creating a corridor for growth within which development could flourish. Areas that currently remain affordable to rent and buy were earmarked, which could hamper their position next year, and reflections continue over the size of 2024 house price discounts as buyer preferences changed. Welcome to another UK Property News Recap – 31.01.2025
Investec reveals home county house price discounts
Buyers’ belief that the world had irrevocably changed post pandemic and the call of the office would now permanently be remote, resulted in buyers, flock like, heading for the hills. This apparently boosted house price growth by roughly 50% in the UK’s “green” and pleasant lands, according to a Bank of England study. The pandemic airborne particles now settled; employees are being herded back to their desolate offices more frequently. The journey there; expensive and unreliable, deterring buyers. This coupled with higher interest rates and increased costs (stamp duty for second homeowners, council tax, water etc…) reversed home counties house price gains by an average of 9% last year for homes worth £1mn or more, according to Investec.
Government planning announcements
The Treasury and the Ministry for Housing, Communities & Local Government teamed up to announce what they described as a “major new growth push.” This meant developers submitting applications near transport would by default get a “green” light.
To kickstart this, later in the week Rachel Reeves announced the Oxford and Cambridge “growth corridor” was a go. The Environment Agency waived previous objections to a new development around Cambridge, unlocking potentially 4,500 new homes. To support this the government agreed for water companies to unlock £7.9bn investment for the next five years to improve our water infrastructure, which will include an additional nine new reservoirs. At the same time, funding was promised towards better transport links in the region including funding for East-West Rail, with new services between Oxford and Milton Keynes and upgrading the A428.
Furthermore, they are prioritising a new Cambridge Cancer Research Hospital, and creating a growth Commission for Oxford, overseen by Sir Patrick Vallance. All of this, they claim, will boost growth through property development and large infrastructure projects.
Delivery times though may vary.
Tri Fire EWS1 are deemed null and void, prolonging leaseholders pain
Fire engineer Mr. Kiziak from Tri Fire has been suspended due to his lack of “accuracy and vigour,” leaving hundreds of leaseholders, who thought they were free from the EWS1 shackles, restrained once again. As a result, Nationwide is refusing to lend on buildings signed off by a sanctioned fire engineer, causing further financial and mental distress for leaseholders.
Supply and demand swings asking rents in opposing directions.
Overstretched landlords with smaller yields abandon the Capital, while those still able to invest are favouring larger yields for less, outside London. This has boosted stock levels and in turn reduced rents, marginally, outside of London, but increased rents inside the capital.
In the final three months of 2024, average advertised rents outside the capital fell, for the first time since 2019 by £3 to £1,341 a month. However, according to Rightmove, in London they continued to rise, reaching a record £2,695 a month.
Planning officers fall short
Home Buyers Federation released “A Planning on Empty” survey which showed that 80% of Local Planning Authorities are operating below full capacity leaving them unable to keep up with housing application demand. They claim an estimated 2,200 planning officers are needed across England and Wales to address the gap. Labour’s target of 300 additional staff is falling somewhat short.
In addition, lack of resources are being blamed for “unspent developer contributions sitting idle resulting in an inability to ALLOCATE and MONITOR these funds effectively.
2024 lettings and first time buyer rush boost Foxtons’ profits
Boosted by an increase in sales towards the end of the year by first time buyers looking to beat the stamp duty increase; Foxtons’ unaudited 2024 trading update showed revenue was up 11% on the previous year to £163m, in turn increasing operating profit, by 33% to £19m.
The group’s letting revenue, which equates to 65% of the total group’s revenue, increased by 5% as it continued to acquire and conquer – adding over 2,900 tenancies to its lettings portfolio following the acquisitions of Haslams Estate Agents and Imagine Property Group in October 2024. At the same time they retained their position as London’s largest lettings agent.
The most and least affordable place to live
Barrow-in-Furness topped the Telegraph’s most affordable place to live due to the equilibrium stuck between house prices and salaries. At the bottom of the country, Penzance took the least due to second homeowners driving up house prices while local jobs, which are focused on tourism, remain low-paid.
Mind the discount gap
Lonres Q4 2024 London house price data showed that on average 49% of properties in each borough were reduced in Q4 and 78% were on the market for longer than three months. The biggest discounts were in Mayfair and St James’s, closely followed by Knightsbridge.
The biggest winner, however, was Richmond with the highest annual change in achieved price – a whooping 12% on last year.
Zoopla HPI December 2024
According to Zoopla’s latest HPI, the north/south house price growth divide remains, but all markets are showing improvement. By the end of 2024, stock levels had increased by 10%, which piqued buyers’ interest causing demand to rise by 13%. This resulted in 12% more sales being agreed compared to December 2023, largely due to first-time buyers’ determination to cross the threshold before April 2025 and avoid another AST.
Looking ahead, unless mortgage rates decrease, prices are expected to stabilise. Many sellers are hoping that a base rate cut in February will prompt buyers to “spring” into action.
Cut backs at the Bank of Mum and Dad
Withdrawals from the Bank of Mum and Dad reduced by 5% last year as inflation ate away at parental funds. As a result the total value of gifts fell by half a billion pounds in 2024.
Despite this, 40% of first time buyers still received on average £56,800, increasing their deposit pot to a level at which lenders would engage.
Andrew Bailey joins the relaxing mortgage limits debate
Andrew Bailey threw his two cents worth in, saying he welcomed an “open public debate” around easing rules around mortgage lending, but at the same time reminded MPs the reason they were first introduced – “to AVOID the creation of a large tail of mortgages, which, when we have the inevitable cyclical downturn or shocks that hit the economy, turn out to be a real problem of the sort we have seen in the past.”
Hull tops the list as the most affordable city to rent in
The city of Hull topped Righmove’s list of Great Britain’s most affordable cities to rent, with an average advertised rent in the city of £799 per calendar month, 48% below the national average. Average monthly rent here consumes only 26% of monthly earnings across Great Britain, compared with 50% nationally. At the other end of the affordability line was London, the average advertised rent of a home breaking another record at £2,695 pcm.
The award for the greatest annual rental price growth however, went to Salford, prices here rocketed by 30.5% further squeezing students and worker bees looking to commute into Manchester.
Nationwide HPI December 2024
The promised but undelivered New Year ‘rate’ sales hampered January house price growth, which slowed to 0.1%, causing the average home price to decrease from December levels to £268,213, according to lender Nationwide.
Politics dampens PCL prices
PCL buyers have an opportunity to get a slice of the capital at a discount as political choices dampen demand causing prices to free fall. Average prices in Prime Central London are down by 18% since the last peak in August 2015 according to estate agency, Knight Frank. Despite this dip, buyers remain disinterested – offers 11% below the five-year average.
In contrast, in prime outer London, prices rose by 1.4% in the year to January and the number of exchanges were 10% higher than the five-year average in the second-half of 2024.
And that concludes another UK Property News Recap – 31.01.2025. If you have any comments or suggestions, please get in touch.