Over recent years the houseprice-to-earnings ratio has become unbalanced. The last 10 years has seen the proportion of the population in rented property increase from 30% to 37%. The start of 2018 saw the property market flatline, with prices seeming to stabilize. We also saw the removal of stamp duty for those buying a 1st home under £300,000, which has encouraged more buying activity among the group. However, the fact remains that house prices are still unaffordable for many.
The disproportionate ratio of income to property prices has resulted in market changes as shown by the below figures from UK Finance:
• The average first-time buyer is 30 and has an income of £41,000.
• There were 30,500 new homeowner remortgages completed in December 2017, some 7.4% more than in the same month a year earlier. The £5.2bn of remortgaging in the month was 8.3% more year-on-year.
• There were 30,700 new home mover mortgages completed in December2017, some 4.7% fewer than in the same month a year earlier.
• There were 9,900 new BTL remortgages completed in December 2017, some 11.6% fewer than in the same month a year earlier.
The government have tried to assist with realigning property prices by taxing buy-to-let investors and adding a 3% premium on stamp duty for those buying second homes. This has resulted in a 17% annual decline in buy-to-let investments in 2017. Those that have invested in the rental market saw the UK average monthly rent increase by 1.7%, likely as a result of the fact there are less available rental properties.
According to the recent data collected by estate agent Haart, house prices have dropped an average of 0.5% in January, with prices dropping by 3.4% over the year. This saw a jump in the number of viewings, which increased 5.3% from December 2017. The stamp duty cuts and lowing house prices seemed to have created a positive change in the property market, with buyers becoming more active in the early stages of 2018. Despite this, buyers are becoming increasingly price sensitive and properties ever slightly over-priced, are just not moving.