I think it is fair to say that the commentary on the UK housing market can at times be very South East biased, often with a particular emphasis on London. At Vida, we recognise the importance of regional lending trends and how vital it is that lenders listen and react to the views and needs of advisers and their clients up and down the country. The UK is a diverse market, with the regions often facing challenges and demand that London and the South East do not.
For this reason, we wanted to share insights from our key account managers on the ground with what they’ve been seeing in the north so far this year.
The North East
In the North East, the national trend of a growing first-time buyer market is very much in evidence. The Halifax First Time Buyer Review revealed that for the first time in 23 years the FTB sector made up the biggest part of the property market. In 2018, the number of these buyers in the North East totalled 48,300 coming second only to the South East.
The Bank of Mum and Dad has played an integral part in the FTB purchase market in the North East. According to Legal & General, the estimated value of the average contribution from BoMaD in the North East was £12,000 in 2018 and nearly a quarter (23 per cent) of homeowners in the region received financial help from family and friends. This trend is set to continue, as the research also showed that 24 per cent of future homeowners in the North East expect to receive financial help in order to afford their first home.
Propositions developed by lenders for those looking to take their first steps are critical in this region, as current and prospective FTBs offer brokers further business opportunities and a greater number of touch points throughout their mortgage lifetime. This includes lenders offering products to facilitate the demand for gifted deposits, as it continues to be a regular source of enquires to us from brokers and a popular way of parents helping children get onto the property ladder.
Many products have been developed as a direct result of the FTB sector’s growth, and the many challenges the younger generations face regarding deposits, credit blips, and strict credit scoring criteria.
Additionally, since 2008 many parts of the North East have seen much lower levels of market growth compared to the national average, causing a separate set of challenges as potential sellers are reluctant to put their homes on the market. This then results in a stagnated market, making moving home difficult and resulting in lower property stock levels.
The North West
In the North West of the country, houses in multiple occupation and multi-unit freehold blocks have long been a popular option for buy-to-let investors, mainly due to the attractive stronger yield compared to what they would receive with a single-family dwelling property. However, as a result of legislation that came into force in October 2018, investors have found themselves with stricter rules to abide by as more properties have fallen into HMO criteria. For this reason, more investors have started to look at diversifying their portfolios and consider alternative options.
From the conversations Vida has been having this year with local brokers, HMOs and multi unit freehold properties are still very much on the radar, but with investors much more open minded when considering larger freehold properties with the potential to convert into self-contained units.
The property market in Scotland has benefited hugely from recent investment and rejuvenation that has taken place across the country. Better transport across the region has improved the opportunities for commuting, meaning potential homeowners are now able to buy in desirable areas outside the major cities. Homeowners can enjoy the facilities, lifestyle and jobs these cities provide while still being able to get to and from work with ease. This also gives homeowners buying outside the likes of Edinburgh, Glasgow and Aberdeen the chances of making a better profit, when they eventually sell.
Dundee is an area for brokers to focus on this year, it has received more than £1bn of development funds to help rejuvenate the city, which is having a knock-on effect on the residential property market. Between 2016 and 2017, property values in Dundee decreased by 0.2 per cent, whereas since the regeneration started at the end of 2017, property values have increased by 5.9 per cent. Homes are selling at a fast pace and prices regularly benefit from closing dates, encouraging buyers to give their best offer the first time.
This positive impact is spreading much further afield, with the reverberations in the residential sector being felt as far away as Arbroath, Forfar and even the Angus towns where the property market has struggled for a number of years. With more and more people looking for opportunities away from the hotspots of the city, the market is beginning to grow once more.