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House prices, asking prices, fixed-rate mortgage deals, rents on the increase, Welsh council to rent and other UK property news

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UK property news headlines continue to reflect some of the underlying economic trends of the moment – namely, the widespread inflation that is a harbinger of recession.

Nevertheless, the asking price of homes for sale continues to rise as does the final purchase price agreed upon. This is against the backdrop of increased interest rates on fixed-rate mortgages.

Meanwhile, rent levels continue to rise – and a council in Wales is thinking of entering the market as a tenant.

House prices climbing again and pass £667,000 in London

Despite inflation and the rising cost of living, house prices – in London at least – are on their march upwards once again, reported City AM on the 16th of January.

After what appears to have been a relative slump towards the end of last year, prices in the capital have picked up once again so that the average price of a home in London is currently more than £667,000 – a 0.2% increase on December’s prices and an overall increase in the past 12 months of 6.1%.

Nationwide, the fall in average house prices – 1.1% and 2.1% in November and December respectively – has also been reversed so that a current 0.9% monthly increase (6.3% annually) takes the national average to roughly £362,000.

Housing market buoyancy such as this runs contrary to the gloomier predictions of those analysts that had forecast plummeting prices in the wake of massive hikes in the mortgage lending rate.

Asking prices rise but sellers urged to be realistic

A story in Forbes Adviser magazine on the 16th of January noted that the strength of the housing market had also encouraged those selling their home to ask higher prices.

It cites figures from online listing sites that record a 0.9% increase in the average asking price of properties for sale – the equivalent of a £3,301 increase and the most marked increase in asking prices since 2020.

Reflecting the dip in the underlying housing market, asking prices also fell during November and December (by 1.1% and 2.1% respectively) – so, this month’s rise will be welcomed by those putting their homes up for sale.

Although the increase in asking prices, buyers do not seem to have been discouraged. Estate agents have reported a 4% increase in the number of enquiries from prospective buyers compared with the same month before the Covid pandemic. Compared with buyers’ caution during the two weeks before Christmas, interest has now bounced back by up to 55% more enquiries.

Nevertheless, in an uncertain market, commentators urge sellers to be realistic when setting the asking price of any home they want to sell.

Fixed-rate mortgage deals up for 1.4 million homeowners in 2023

All good things come to an end – as millions of homeowners with fixed-rate mortgage deals will soon rudely find out, explained the online listings website Zoopla on the 16th of January.

It estimates that for more than 1.4 million borrowers their current fixed-rate deals will end during the next 12 months. It also estimates that around 57% of those borrowers will need to remortgage when their current two-year fixed rate of 2% expires this year.

Those previous fixed-rate deals have been replaced by new two-year fixed-rate mortgages that come with an average interest rate of 6% - that is the equivalent of a £220 increase in monthly mortgage repayments if your mortgage is £100,000 or an increase of £661 a month if you have borrowed as much as £300,000.

Rents rising at fastest rate for seven years

Despite average house prices having risen by around 6% in the past 12 months, rents in the private sector have risen by a more modest 4% during the same period, according to a report by the BBC on the 9th of January.

During the current rise in the cost of living, tenants are more likely to feel the adverse effects of a 4% increase because renters spend a relatively higher proportion of their income on housing than homeowners. Tenants are estimated to spend an average of 24% of their weekly income on housing, compared with homeowners spending around 16% of their income on mortgage repayments.

The combination of higher tents, bigger energy bills, and the inflated costs of shopping for essentials will all disproportionately affect those in the private rented sector, say analysts.

Welsh council wants to lease private rental properties for 20 years

Pembrokeshire County Council in Wales has come up with a novel way of providing good quality affordable homes for its residents – it is planning to negotiate long-term 20-year leases on homes from private sector landlords in return for guaranteed monthly rental income, explains a story in Landlord Today on the 17th of January.

The council will be offering landlords a full management service so that the cost of any repairs or maintenance that is necessary at the end of a tenancy will be met by the council. The council will also offer up to £5,000 in grants to bring a property up to the required Energy Performance Certificate rating of C or above and will consider applications for grants of up to £25,000 for the renovation of long-term empty properties.