Asking Prices in the U.K. Reach Record High
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Asking Prices in the U.K. Reach Record High

But growth is slowing despite the new high average listing price.

By V. L Hendrickson
Wed, Sep 22, 2021 11:19amGrey Clock 2 min

U.K. home sellers have been asking for more for their properties than ever before, but that may be starting to turn around, according to a report Monday from Rightmove.

The average listing price for a property rose to £338,462 (AU$​​637,287) in September, ticking up 0.3% compared to August and 5.8% compared to the same time in 2020, the data showed.

However, this month’s record price is only £15 more than the previous high, set in July, which is “a sign that prices are now stabilizing,” the report said.

Competition among potential buyers remains fierce, however, and has doubled from 2019 levels, according to Tim Bannister, Rightmove’s director of property data.

“While the holiday-starved took their break over summer, the high ratio of buyer demand to properties for sale means that the property market remains stock-starved despite the summer lull lessening overall activity,” he said in the report.

That means home seekers need to have cash in hand or financing secured before they even come to the table to try to land a property.

“In the most competitive market ever, today’s ‘power buyers’ also need to have already found a buyer for their own property, or to have no need to sell at all,” Mr. Bannister continued. “Agents report that buyers who have yet to sell are being out-muscled by buyers who have already sold subject to contract. Proof that you are mortgage-ready or can splash the cash without needing a mortgage will also help you to get the pick of the housing crop.”

South West England saw the biggest annual gain in house prices—9.5% to £353,213—followed by Wales, which saw a 9.4% year-over-year jump to £232,440, the report found. The East Midlands followed with a 9.1% rise in prices to £264,554.

Price growth was slower in London, which registered a 0.8% increase in prices in September, compared to the same time the previous year, the data showed.

Rightmove also reported a 14% rise in new listings in the first two weeks of September compared to the last two weeks of August, a sign of the market starting to normalize.

“This 14% increase in the number of new sellers coming to market in the first half of September is only an early snapshot, but autumn is traditionally a busy period, as those owners who have hesitated thus far during the year see the few months before Christmas as an opportunity to belatedly get their moving plans underway,” Mr. Bannister noted.

Reprinted by permission of Mansion Global. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication:  September 20.



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How much income is required to service a mortgage? It depends on where you live

New research suggests spending 40 percent of household income on loan repayments is the new normal

By Bronwyn Allen
Thu, Apr 25, 2024 3 min

Requiring more than 30 percent of household income to service a home loan has long been considered the benchmark for ‘housing stress’. Yet research shows it is becoming the new normal. The 2024 ANZ CoreLogic Housing Affordability Report reveals home loans on only 17 percent of homes are ‘serviceable’ if serviceability is limited to 30 percent of the median national household income.

Based on 40 percent of household income, just 37 percent of properties would be serviceable on a mortgage covering 80 percent of the purchase price. ANZ CoreLogic suggest 40 may be the new 30 when it comes to home loan serviceability. “Looking ahead, there is little prospect for the mortgage serviceability indicator to move back into the 30 percent range any time soon,” says the report.

“This is because the cash rate is not expected to be cut until late 2024, and home values have continued to rise, even amid relatively high interest rate settings.” ANZ CoreLogic estimate that home loan rates would have to fall to about 4.7 percent to bring serviceability under 40 percent.

CoreLogic has broken down the actual household income required to service a home loan on a 6.27 percent interest rate for an 80 percent loan based on current median house and unit values in each capital city. As expected, affordability is worst in the most expensive property market, Sydney.

Sydney

Sydney’s median house price is $1,414,229 and the median unit price is $839,344.

Based on 40 percent serviceability, households need a total income of $211,456 to afford a home loan for a house and $125,499 for a unit. The city’s actual median household income is $120,554.

Melbourne

Melbourne’s median house price is $935,049 and the median apartment price is $612,906.

Based on 40 percent serviceability, households need a total income of $139,809 to afford a home loan for a house and $91,642 for a unit. The city’s actual median household income is $110,324.

Brisbane

Brisbane’s median house price is $909,988 and the median unit price is $587,793.

Based on 40 percent serviceability, households need a total income of $136,062 to afford a home loan for a house and $87,887 for a unit. The city’s actual median household income is $107,243.

Adelaide

Adelaide’s median house price is $785,971 and the median apartment price is $504,799.

Based on 40 percent serviceability, households need a total income of $117,519 to afford a home loan for a house and $75,478 for a unit. The city’s actual median household income is $89,806.

Perth

Perth’s median house price is $735,276 and the median unit price is $495,360.

Based on 40 percent serviceability, households need a total income of $109,939 to afford a home loan for a house and $74,066 for a unit. The city’s actual median household income is $108,057.

Hobart

Hobart’s median house price is $692,951 and the median apartment price is $522,258.

Based on 40 percent serviceability, households need a total income of $103,610 to afford a home loan for a house and $78,088 for a unit. The city’s actual median household income is $89,515.

Darwin

Darwin’s median house price is $573,498 and the median unit price is $367,716.

Based on 40 percent serviceability, households need a total income of $85,750 to afford a home loan for a house and $54,981 for a unit. The city’s actual median household income is $126,193.

Canberra

Canberra’s median house price is $964,136 and the median apartment price is $585,057.

Based on 40 percent serviceability, households need a total income of $144,158 to afford a home loan for a house and $87,478 for a unit. The city’s actual median household income is $137,760.

 

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