2020 proved to be a very strange year indeed with the pandemic capturing the headlines every day and the economic consequences of the lockdowns impinging on every aspect of daily life.

However following an initial hiatus in the Spring the housing market bounced back strongly – and somewhat surprisingly – as evidenced by the statistics provided by some agents, lenders, and the Land Registry.

It is worth taking a closer look at some of these statistics and what they might tell us about government policies in relation to the housing market and mortgage lending.

For example, it seems likely that in most parts of the country any savings purchasers made as a consequence of the Stamp Duty holiday were wiped out by the increased price they had to pay for the house.

Sources

The Land Registry recorded a 7.6% increase in average house prices (with all these statistics ‘houses’ include flats) with the average property price for the UK reaching £249,633 in November.

The Land Registry uses completed sales transactions so there is a time lag before its statistics are updated. The Nationwide index rose 7.3% to £230,920 in December. The Halifax index finished the year 6% up at £253,374.

The future.

So what has been going on? Conventional wisdom would suggest that in a period of economic uncertainly, rising unemployment, and eye-watering levels of government borrowing we would see a fall in property prices or at the very least a much-subdued market.

The Land Registry statistics are based on all completed sales many of which are cash sales that do not involve a mortgage.

The Halifax and Nationwide statistics are based only on transactions involving a mortgage. Typically about a third of sales are for cash and this proportion is even higher in retirement areas.

The Nationwide index is statistically weighted to compensate for this so we have the Land Registry said prices have risen 7.6% and Nationwide closely shadowing this saying 7.3%.

Halifax is much lower at 6% although the Halifax average price is higher than Nationwide’s.  What they all agree is that 2020 saw a significant increase in house prices.

Interest rates

The main factor driving the housing market is the current historically low level of interest rates and the fact that mortgage lenders were able to continue to support the market by lending throughout the pandemic.

These low interest rates will not last forever, but they do currently bolster affordability and borrowers who are fearful of an interest rate hike can currently opt for a fixed rate extending some years into the future.

 

Expat re-mortgaging levels have soared to an eight-year high as borrowers take advantage of lower monthly repayments, figures have revealed.

The number of expats re-mortgaging in December and January increased by more than a third year-on-year to almost 3,300 – the highest number since January 2011.

The value of re-mortgaging fell due to a drop in the average loan size, but with overall mortgage activity down it still accounted for two-fifths of total lending in December and January alone.

Expat borrowing activity has been fuelled by the lower rates on offer, rates currently are the lowest they have been for the last 7 years. However, there are fears the boom may not last, amid a fall in affordability and expectations of a rise in interest rates.

In January, the repayment as a percentage of total income rose month-on-month from 17% to 18%, while 54% of those surveyed in February expect a rate rise within the next year.

Expats who have not reviewed their current mortgage deal recently would be well advised to do so as rates are expected to rise later this year.

Help required?

If you would like to review your current mortgage please do make contact and one of our fully experienced advisers will be happy to assist.

Expats are in ever increasing numbers trying to either get on the ladder or increase their current UK property holding. The majority of expats see property in the UK as a “pension fund” or a way of laying financial security for the long-term future.

Bricks and mortar have always been a national obsession. The wisdom that property is fundamentally an exceptionally good long-term investment has been passed down from generation to generation.

Brexit

This is the one area that could affect the property market, if all the experts are correct it is unlikely to have any lasting long-term damage. Facts are whatever happens the UK property market is highly likely to remain strong and positive.

Applications

Expat mortgage applications are currently at an all-time high and the outlook for 2021/22 remains positive. It would seem that the high property prices do not deter the investor. Expats seem to have the attitude that investing in savings accounts are a lost cause and property offers far better returns in the long run.

According to recently released figures the UK property market has been the best performing in the whole of Western Europe. It is therefore not surprising that so many people want to invest in an ever-shrinking market.

Need assistance?

If you require help with your current or new mortgage please contact one of our experienced independent advisers who will be happy to assist.

 

As we enter 2021 and into national lockdown, many expats are speculating on what the coming year has in store for the property market.

The government has confirmed that the housing market will remain open during the new national lockdown.

For many homebuyers and sellers, this is positive news, with thousands of transactions currently underway.

While the news that home moves can still take place has been well received, there are strict guidelines to be followed. Viewings are still allowed to take place where relevant social distancing and PPE measures are adhered to.

Removal firms can still enter properties, but it is advised that those outside of an individual bubble do not help with the move. Guidelines are being updated regularly and it is advised to follow updates from the Ministry of Housing, Communities and Local Government if you have a move underway.

Calls to extend the stamp duty holiday are still being heard

The market continues to react to the news that there are no plans for an extension, or tapering, of the stamp duty holiday.

Following the statement issued by the Treasury, many homebuyers feel concerned about the progress of their transactions.

With reports that almost a third of buyers will pull out if they miss the deadline, the effect that this could have on the market is uncertain.

However, calls for an extension, or tapering, of the planned stamp duty deadline, are still being heard.

Many are looking to the Chancellor to allow more transactions to benefit from the tax savings, through either an extension or tapering of the deadline. These calls look set to continue into the new year as the 31 March deadline draws ever close.

It has been an extremely hard year for landlords up and down the UK and also those living abroad.

The good news is that, despite all the recent changes rewards for landlords can still be exceptionally good. Demand for good quality rental property continues to rise year on year due prospective first-time buyers not being able to get onto the so called “property ladder”.

Rents are at an all-time high and will be rising later this year if the experts are correct.

The Brexit deal has been done and at first sight seems to be in the Expats favour. The hope now is the pound will now strengthen to assist all round.

Expat landlords remain confident that the future is good, and they have every right to do so as property in the UK continues to increase in value consistently. Last year alone the property owner in the UK saw their investment rise between 2-4% and you simply cannot earn this if your money is invested in a high street bank.

If you are looking to enter the expat buy-to-let market consider these points:

• Target your tenant – Students, young professionals, or families.
• Purchase the right sized property – Vast majority of tenants want 1-2 bedrooms.
• Location – Key to any success, near schools, shops, and local businesses.
• Equip your property – Ask local agents, furnished or unfurnished.
• Property – Should be clean, well decorated and meets government regulations.

Following these very simple tips will ensure you have maximised your long-term potential profitability.

Expats buy-to-let mortgages.

If you require assistance in choosing your new or re-mortgage do give one of our fully qualified independent advisers a call and we will be happy to help.