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| Housing market still reeling a decade after financial crisis, Savills says | Housing market still reeling a decade after financial crisis, Savills says |
| (6 months later) | |
| Report by estate agent finds ‘dramatic slump’ in spending and transactions, and ‘huge gap’ between London and rest of UK | |
| Rupert Jones | |
| Thu 27 Jul 2017 00.01 BST | |
| Last modified on Mon 27 Nov 2017 19.27 GMT | |
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| Ten years on the housing market is still feeling the after-effects of the credit crunch, with existing homeowners struggling to trade up, a doubling of typical first-time buyer deposits, and a “huge gap” between London and the rest of Britain, according to a new report. | Ten years on the housing market is still feeling the after-effects of the credit crunch, with existing homeowners struggling to trade up, a doubling of typical first-time buyer deposits, and a “huge gap” between London and the rest of Britain, according to a new report. |
| Property company Savills has found that the global financial crisis – which it considers to have started on 9 August 2007, when the French bank BNP Paribas froze three investment funds – is “still shaping the UK housing market” and will continue to cast its shadow over the sector for years to come. | Property company Savills has found that the global financial crisis – which it considers to have started on 9 August 2007, when the French bank BNP Paribas froze three investment funds – is “still shaping the UK housing market” and will continue to cast its shadow over the sector for years to come. |
| In the report, the firm says the property market is “more divided at a regional level than ever before”. Over the past decade, London price growth has been twice that of the south-east and at least four times that of all other regions. | In the report, the firm says the property market is “more divided at a regional level than ever before”. Over the past decade, London price growth has been twice that of the south-east and at least four times that of all other regions. |
| The average house price now stands at £478,142 in London, compared with the UK average of £209,971, the report says. By contrast, Wales, Yorkshire and Humberside, and the north-west have only just achieved positive price growth 10 years post-credit crunch, while values in the north-east are typically down 9%, according to the firm’s analysis of data from the Land Registry and other sources. | The average house price now stands at £478,142 in London, compared with the UK average of £209,971, the report says. By contrast, Wales, Yorkshire and Humberside, and the north-west have only just achieved positive price growth 10 years post-credit crunch, while values in the north-east are typically down 9%, according to the firm’s analysis of data from the Land Registry and other sources. |
| The report also identifies a “dramatic slump” in spending and transactions. A total of £312bn was spent on house purchases in the year to the end of March 2017 – £30bn less than the figure for 2007. Meanwhile, the amount of mortgage lending where the borrower is putting down a deposit of under 10% has reduced to less than one-fifth of the £52bn in 2007. This category of lending now represents only 3.9% of the total, whereas in 2007 it was more than 14%. | The report also identifies a “dramatic slump” in spending and transactions. A total of £312bn was spent on house purchases in the year to the end of March 2017 – £30bn less than the figure for 2007. Meanwhile, the amount of mortgage lending where the borrower is putting down a deposit of under 10% has reduced to less than one-fifth of the £52bn in 2007. This category of lending now represents only 3.9% of the total, whereas in 2007 it was more than 14%. |
| Homebuyers now need bigger deposits. The average deposit raised by a UK first-time buyer has more than doubled to £26,224, although in London it has more than quadrupled, rising from £21,196 a decade ago to £97,513 now. | Homebuyers now need bigger deposits. The average deposit raised by a UK first-time buyer has more than doubled to £26,224, although in London it has more than quadrupled, rising from £21,196 a decade ago to £97,513 now. |
| First-time buyer deposits totalled £10.2bn in the year to the end of March 2017 – up 85% on 10 years ago, the report says. Savills estimates that more than £4bn of this came from either “the bank of mum and dad” or government schemes such as help to buy. | First-time buyer deposits totalled £10.2bn in the year to the end of March 2017 – up 85% on 10 years ago, the report says. Savills estimates that more than £4bn of this came from either “the bank of mum and dad” or government schemes such as help to buy. |
| Fewer homeowners are able to climb the property ladder. In 2007, one in 15 existing homeowners moved house, a figure that has fallen to one in 27 in 2017. “Long gone are the days when interest-only borrowing would allow homeowners to make frequent moves up the ladder. Over one in three mortgages in 2007 were interest-only – some 343,200 – but they have now all but disappeared, down to just 8,000 in the past year,” Savills says. | Fewer homeowners are able to climb the property ladder. In 2007, one in 15 existing homeowners moved house, a figure that has fallen to one in 27 in 2017. “Long gone are the days when interest-only borrowing would allow homeowners to make frequent moves up the ladder. Over one in three mortgages in 2007 were interest-only – some 343,200 – but they have now all but disappeared, down to just 8,000 in the past year,” Savills says. |
| A separate report also released on Thursday claims that only 37% of homes put on the market in London are actually selling, providing further evidence of a slowdown in the property market. | A separate report also released on Thursday claims that only 37% of homes put on the market in London are actually selling, providing further evidence of a slowdown in the property market. |
| The HomeOwners Alliance analysed estate agents’ listings and housing transactions, finding that, in May 2017, 55% of all properties listed resulted in a successful sale, compared with 59% a year ago. The other 45% were either taken off the market by the seller or simply remained listed. | The HomeOwners Alliance analysed estate agents’ listings and housing transactions, finding that, in May 2017, 55% of all properties listed resulted in a successful sale, compared with 59% a year ago. The other 45% were either taken off the market by the seller or simply remained listed. |
| However, the picture in London is “even bleaker”, according to the alliance, as only 37.3% of listings resulted in a sale, compared with 48.3% in May last year. | However, the picture in London is “even bleaker”, according to the alliance, as only 37.3% of listings resulted in a sale, compared with 48.3% in May last year. |
| Properties that are selling are also taking longer to do so. A year ago, homes in the capital stayed on the market for an average of 56.6 days each, but now it takes agents an average of 72 days to agree a sale. And in May 2016, properties in London were achieving an average of 98.1% of their asking price, but a year later that figure had slipped to 95.8%. | Properties that are selling are also taking longer to do so. A year ago, homes in the capital stayed on the market for an average of 56.6 days each, but now it takes agents an average of 72 days to agree a sale. And in May 2016, properties in London were achieving an average of 98.1% of their asking price, but a year later that figure had slipped to 95.8%. |
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