House Prices in Britain Hit Slowest Growth Period Since 2012

New figures published by the Office for National Statistics (ONS) have painted a somewhat bleak picture of the UK housing market. As Brexit uncertainty continues to affect demand, national house-price growth in Britain fell to just 0.7% for July, a significant fall from the 1.4% in June. This is the slowest recorded growth rate since 2012, according to the ONS.

Four of nine English regions experienced significant falls in average house prices, concentrated primarily in the north-east. Year-on-year, the average UK property price increased by a disappointing £2,000 to hit £233,000 in July. Average house prices remain at their lowest in the north-east, where a typical home now costs £127,000. This is also Britain’s only region where average property prices are still below those recorded before the 2008 financial crisis.

Much of the slowdown has been blamed on Brexit uncertainty, with both buyers and sellers showing reluctance to make important decisions. Some economists have stated that falling house prices could play into the hands of first-time buyers, though there is still an enormous disparity between average earnings and typical UK property prices.

Unsurprisingly, London is still the most expensive place to purchase a property in the UK, with average property prices having fallen 1.4% to hit £478,000.

Speaking on behalf of Zoopla, research and insight director Richard Donnell warned that the current trend was likely to continue well into next year.

“The reality is that buyers are simply being more cautious, and this has reduced the impetus for house price growth,” he said.

“Weaker levels of house-price growth are set to be a feature of the market for the rest of this year and the first half of 2020 at least.”

Significant declines in the south-east

Following in the footsteps of London, the south-east of England now seems to be headed for an ongoing market correction. Founder and director of independent estate agents James Pendleton, Lucy Pendleton, commented on the ‘dramatic’ situation in the region.

“Until now, it was London undergoing a bit of a reality check, but the south-east has stolen the capital’s crown as the biggest loser in dramatic fashion,” she said.

“The property market across the whole of the south of England has seen annual falls of late, and funnily, that’s a good thing.”

“It is encouraging sellers to be more realistic, particularly those who are selling in London and buying elsewhere.”

PwC economist Jamie Durham highlighted how, despite 17 consecutive months of property value declines, London’s property market remains almost completely inaccessible for most.

“Nonetheless, the capital remains the most unaffordable in the country at an average price of £478,000,” he said.

“Among other factors, the capital and surrounding areas are particularly affected by Brexit uncertainty, and price growth is likely to remain weak or negative until this uncertainty subsides.”

The Brexit effect

One of the few things on which most economists agree is the extent to which the so-called ‘Brexit effect’ is maintaining a stranglehold over the UK property market. Particularly from the buyer’s side of the equation, it’s understandable that consumers and investors simply don’t have the assurances they need to make such enormous decisions.

Irrespective of whether the UK crashes out of the European Union on October 31, experts aren’t expecting to see a radical turnaround in the near future, at least.

Could Buy to Let Investors Rescue Plymouth’s Empty Student Homes?

There’s a growing housing issue in several major UK cities, which, contrary to the usual trend, concerns supply outstripping demand. Regions with sizeable student populations are typically goldmines. For around 75% of the year, tens of thousands of properties are needed to accommodate learners. All of which adds up to a guaranteed income for building owners and landlords in normal circumstances.

Unfortunately, things appear to have taken a turn for the worse in Plymouth. This autumn, it’s estimated that up to 2,000 student bedrooms across the city could be vacant. all at a time when demand for quality student properties should be outstripping supply by a significant margin.

According to a local student letting expert, far too many flats have been built across the city at a time when student numbers are actually in a state of decline. The result of this is a crisis in the making, wherein any number of major developments risk standing vacant during peak student season.

This is a particularly severe issue for the city of Plymouth, which relies heavily on a sizeable year-round economic contribution from its student population.

 “I’m seriously concerned,” said Henry Hutchins, chief executive of Clever Student Lets.

 “I can see between 1,500 and 2,000 empty units in Plymouth.”

He also reported dealing with at least one landlord who now faces going out of business, which has been unheard of for student property owners over recent years.

The speed at which new student properties have been built across Plymouth has resulted in far more vacant inventory than the city needs. Over the past year alone, an additional 5,243 student bed spaces have appeared across Plymouth. many of which accommodate imposing skyscrapers and former commercial properties.

Far from accommodating a swelling student population, all this is happening at a time when student numbers in Plymouth are on the decline. According to official figures from the University of Plymouth, the city’s approximate student population has plummeted from 32,000 in 2010/11 to 21,000 in 2017/18.

Experts have also commented on the declining numbers of international students choosing to study in Plymouth.

Mr. Hutchins highlighted the economic impact of approximately 11,000 fewer students living and studying in the city.

 “Students are spending £300 million a year in Plymouth, so if you take out 30 per cent fewer students, that’s about £90 million less being spent in the city centre,” he said.

 “I’m worried about that spend and the effect it will have on retail and employment.”

 “The whole market is under pressure. I’ve been stating this for two years and no one has taken notice, and now it is going to have a real effect in Plymouth.”

He and other experts are predicting a slow but gradual increase in student numbers over the years to come, but they can also see a number of student flats and buildings being repurposed into conventional flats.

 “They might have to re-jig the market,” he said.

It’s therefore possible that the issue could play directly into the hands of the savvy buy-to-let investor. On one hand, it’s often true to say that purpose-built student flats aren’t of the same quality standard as more conventional city-centre flats. They also tend to be smaller and of a somewhat non-standard configuration. all of which could add up to significant redevelopment costs for investors.

At the same time, however, desperation and urgency on the part of vacant property owners could lead to significant price reductions. The money saved on the initial purpose of the property could therefore be used for renovations and/or repurposing before being let out at a profit.

There’s also talk of some vacant student inventory being acquired by social housing groups, though none have commented on the issue so far.

You’ll Need Some Rest this Weekend: Are You Ready for Telephone Tuesday?

Here’s a fact to ruin your afternoon: The upcoming bank holiday is the only remaining bank holiday between now and Christmas! It is almost impossible to imagine, given how it feels like 2019 has only really just gotten underway.

In any case, it’s the truth: the August bank holiday arrives next Monday, and then it’s the countdown to the festive season. Prior to this, however, you might want to ensure it’s an ‘all hands on deck’ situation next Tuesday. This is because you could be in for one of the busiest days, if not the busiest day of the entire year.

Telephone Tuesday

According to Moneypenny, one of the UK’s leading outsource communication firms, call volumes to estate agents almost always increase by around 10% the day after a bank holiday. The vast majority of these additional calls come in between 9:00 a.m. and 11:00 a.m., often serving as a rude awakening for the unprepared.

Moneypenny discovered the trend by analysing data collected around several bank holidays that have come and gone, which in all instances led to a spike in call volumes the next day.

 “When people are away from the stresses of work, they’re given time and space to think about their personal lives and take care of some ‘life admin’,” commented Joanne Tatum, business relationship manager at Moneypenny.

 “As a result, it’s extremely common for the days following holidays to be used to contact professionals such as estate agents to help take care of matters like looking for their next home or putting an existing property on the market.”

According to the firm’s research, the two bank holidays in May are followed by the biggest spikes in phone calls to estate agents. Tuesday, May 3, saw a huge 34% increase in calls compared to the week before, while the later May bank holiday brought about a further 13% increase. That would account for 47% more calls on this later telephone Tuesday, compared to the week before the May 3 bank holiday.

The question is: what does this mean for telephone Tuesday in August?

Expect the unexpected.

Ms. Tatum went on to explain that the spike in telephone calls following a bank holiday is far more than just a temporary inconvenience for the estate agent. It’s also an opportunity to capitalise on a day of elevated interest in your services. Not to mention, you have the perfect chance to frustrate, irritate, and drive your customers directly into the arms of your competitors if you get it wrong.

“Poor client communication is a cause of great frustration among consumers, and businesses should do all they can to avoid this occurring,” she warned.

 

It remains to be seen if and to what extent the same trend plays out next Tuesday. Nevertheless, there’s a good chance it will, so the general advice is to expect the unexpected. Chances are, you will have a limited contingency of staff members available to answer calls during peak-demand hours. In this case, it’s worth revisiting a few basic telephone etiquette pointers for busy times.

Examples of these include:

  • Be mindful of your tone of voice, ensuring you don’t make it too obvious you’re rushed off your feet and struggling to cope when you pick up the phone.
  • giving each caller your full attention and not attempting to rush things in order to catch the next call.
  • Where possible, take the details of non-urgent callers and return their calls at a slightly less chaotic time later on.
  • We expect that some customers will be pretty irate at the time it took them to get through.
  • Listening to recorded voicemail messages as quickly as possible after they are left and getting back to those who couldn’t get through as promptly as you can

Above all else, it’s worth remembering that a day of excessive demand is far better than a day of disappointing demand. Just as long as you’re prepared for it, Telephone Tuesday could be pure gold for your estate agency.

London No Longer the Fastest UK City to Sell a Home

You’d be forgiven for assuming London would be the fastest city in the UK to find a buyer for your property. Until relatively recently, you’d have also been right on the money.

Five years ago, the average time needed to secure a buyer for property in London was just 36 days. According to Rightmove, average selling times had almost doubled by 2018, reaching approximately 60 days.

Interestingly, average property selling times in Scotland plummeted during the same period, from 66 days to just 41 days. This would suggest that sellers in Scotland are currently finding it much quicker and easier to shift their properties than equivalent sellers in the capital.

Beyond Brexit uncertainty

Various key areas of London’s property market have demonstrated signs of a rapid slowdown over recent years. The south-east of England in general has been struggling with a somewhat stagnant property market, though the most dramatic price plummets in the region have been in and around London.

In the meantime, general property prices across the rest of the UK are still on the rise.

A recent study carried out by Rightmove suggests that average property selling times in London are back where they were almost 10 years ago, in 2011. This would seem to suggest that demand is dwindling in London, which has been attributed to both Brexit and other pressing issues.

“While it would be easy to link that with the Brexit vote, there are other factors at play, especially increasingly stretched buyer affordability,” commented Rightmove’s housing market analyst, Miles Shipside.

One of the key factors affecting property sales in London is the growing reluctance among buy-to-let investors, who are discouraged from purchasing investment properties due to changes in taxation. In addition, more first-time buyers than ever before are turning to parents and grandparents to help them buy houses rather than flats.

Real estate experts have also cited Scotland’s more transparent fee structure for home buyers and sellers as a key driver of prompt property sales across the country. Hidden costs, in particular, are much less of an issue for Scottish buyers.

Advice for UK sellers

Across the board, experts are advising prospective property sellers in the UK to be both proactive and realistic, given current market conditions. It’s important to remember that, where older flats in particular are concerned, sellers face the prospect of competing with new-build developments, often with gyms, restaurants, shops, and other facilities right on their doorstep.

Rather than simply considering the value of the property as a standalone asset, it’s important to be realistic about its locality. Even if the interior of the property is pristine, it may not be an attractive prospect for first-time buyers who prioritise convenience and accessibility.

All the usual rules and guidelines continue to apply. Examples of this are to depersonalise and de-clutter your home as much as possible prior to inviting anyone over for an inspection. It needs to be presented as something of a blank canvas, allowing the prospective buyer to visualise how they would decorate the place themselves.

In addition, real estate experts are also warning sellers and buyers alike to expect a long and drawn-out process. Whereas the average conveyancing time (when buying a flat) in England and Wales was around 100 days in 2011, the figure for 2018 came out at 123 days. Hence, agreeing on a sale in the late summer could mean failing to fully close the deal before Christmas.

The patience of sellers is therefore likely to be tested in more ways than one, particularly those attempting to sell properties in and around London.

Housing Crisis: Spare a Thought for the Youngest In Society

The housing crisis in the United Kingdom means different things to different people. For some, skyrocketing property prices are playing directly into their hands and, indeed, their pockets. For others, it’s a case of accepting the stark reality that homeownership is unlikely at best.

Research suggests that approximately 90% of young people in Britain intend to own their own home at some point. Unfortunately, research from Santander suggests that only one in four young Britons (26%) will be on the property ladder by 2026.

This contrasts starkly with figures from 2006, at which time approximately half of young Britons (under the age of 34) owned their own home.

Of course, none of this will come as a real surprise to younger generations in the United Kingdom. The combination of astronomic property prices and stagnant wages has made the dream of homeownership an unlikely reality for most. Precisely why more than 70% of millennials believe that their chances of owning their own home are slim to none.

An escalating issue

With the state of the UK housing market as it is, fewer would-be first-time buyers than ever before are making concerted efforts to get on the property ladder. Research suggests that only 42% have anything put away to cover the deposit on a prospective property. Interestingly, of those who had earmarked savings for a deposit, men were found to have saved twice as much as women.

While the men polled who had deposit savings put away had an average of £11,600, the women polled had saved an average of £5,620. Across both gender groups, the average target amount for those saving towards a property purchase was £24,000.

Had they managed to hit this target, which the vast majority didn’t, they would still have fallen short of the required funds to buy a home. Today, taking out a mortgage on an average property in the United Kingdom means coming up with a deposit of £44,000. For most everyday earners, this is simply out of the question.

In 1996, approximately 65% of people on low to medium incomes (between £20,000 and £30,000) owned a home. By 2016, this had fallen to just 27%.

Today, it’s estimated that around 65% of homebuyers have incomes of more than £40,000—significantly higher than the national average. Salaries have been rising on average by a mere 18% over the past decade, failing to maintain pace with average house prices, which are all around 47% for the same period.

Speaking on behalf of Santander Mortgages, managing director Miguel Sard acknowledged the difficulty facing an entire generation of first-time buyers.

 “It’s clear that while the aspiration to own a home is just as strong as in previous generations, it’s a dream that is looking increasingly out of reach,” he said.

 “Without change, homeownership in the UK is at risk of becoming the preserve of only the wealthiest young buyers over the next decade. This report should be a wake-up call for industry and the government to think more creatively to keep the homeownership dream alive for the next generation of first-time buyers.”

With conventional purchase channels all but closed, more first-time buyers than ever before are turning to friends and family for help. In fact, the study from Santander suggests that almost 40% of all first-time buyers now rely on support from parents and grandparents to purchase their homes.

In the meantime, the number of British people taking on second homes as buy-to-let properties is reaching an all-time high, having doubled since 2001. As wealthier Brits continue to capitalise on sky-high property prices and accelerating rental yields, an entire generation risks being priced out of the market. All attempts by the government to address the issue (Help to Buy, lifetime ISAs, etc.) have so far been criticised as inadequate or simply not fit for purpose. Unless more drastic action is taken, the issue is only predicted to continue worsening over the years and decades to come.

Barratt Expects Annual Profit To Beat Market Forecasts

Despite the rather gloomy outlook from some industry watchers a short time ago, housebuilder Barratt Developments PLC is now expected to beat initial market forecasts. Having completed a record number of new home builds and significantly improved its margins, the organisation’s annual profit is set to comfortably beat expectations.

Barratt has published a new trading update for the year running up to June 30, in which it revealed that a record 17,856 homes have been constructed during this year. That’s up slightly from 17,579 last year, including an impressive 17,111 wholly-owned completions. This represented a 2.6% increase year-on-year, with joint venture completions down 17.1% to 745 homes.

Supported by the decision to purchase sites with higher margins, the company’s operating margin increased to 18.9% this year from a prior 17.7%. Barratt’s performance has also been bolstered by the reversal of inventory impairment provisions and the disposal of legacy commercial assets.

In a pre-Brexit era of uncertainty where the British housing market is all over the place, Barratt continues to perform above and beyond most realistic expectations.

Declining average home prices

Completions may have hit a new record high, but the average selling price for a new property for the year ending June 30 came out at £274,000, which is a sizeable decline from the previous average of £288,900. According to Barratt, this is the result of a change in the mix of completions.

For example, private home completions grew 0.7% to 13,533, while affordable home completions increased 10.4% to 3,578. In the affordable homes bracket, average prices increased from £123,700 to £131,000, but the average selling price of a private home fell from £328,000 to £312,000.

On the whole, the company stated that its joint ventures have delivered a higher overall profit than expected of £35 million, which is a significant improvement on last year’s £18.6 million. This was due largely to sizeable gains in land sales.

Total profits are better than expected

In terms of total pre-tax profits, Barratt now expects to comfortably exceed the estimates of analysts. The company now expects a total profit of £910 million, up from 2018’s £835 million.

Like many major housing companies, Barratt has responded to the Central London housing market slowdown by focusing more heavily on developments further afield. The company now has 18 private properties scheduled for completion within its Central London portfolio, a far cry from last year’s 145.

Going forward, Barratt intends to continue focusing on margin improvements.

“While there remains some economic and political uncertainty, the group is in a strong position,” Barratt said.

 “We have a substantial net cash balance, a well-capitalised balance sheet, a healthy forward sales position, a continued focus on the delivery of operational improvements across our business, and an ongoing commitment to deliver the highest quality homes across the country.”

 “We believe that this gives us the resilience and flexibility to react to potential changes in the operating environment in fiscal year 2020 and beyond.”

Despite its declaration of better-than-expected profits for 2019, the positive news didn’t have any real impact on Barratt’s share prices. Shares traded at 576.2p during morning trading, which was no real difference from the day before.

Nevertheless, experts at Peel Hunt spoke with great optimism regarding Barratt’s current performance and future outlook, increasing its target price to 630p.

“The group’s margin story has been a key differentiator over the last 6–12 months, especially as others have been hit by quality and leasehold concerns,” the broker said.

“While a chunk of the value gap has now been closed, Barratt remains a well-run business.”

How The Modern Workplace Has Transformed Itself

It’s easy to take the various conveniences and freedoms of the modern workplace for granted. Particularly if you’ve only recently joined the workforce, it can be hard to imagine the workplace of yesteryear.

But what have been the biggest changes to the modern workplace over the past 20 years or so? Prior to the turn of the new millennium, what kinds of conveniences we now take for granted were predominantly out of the equation?

Working remotely

 

For one thing, remote working, aka the virtual workplace, was practically unheard of just a few decades ago. Today, it’s estimated that around 30% of the entire work force has worked remotely at some point or another. Modern technology has transformed every device with a working Internet connection into a fully functional office suite.

Frequent job changes

The vast majority of employees are always on the lookout for a bigger and better deal. In times gone by, it was the norm for people to stay with the same company for 30 or 40 years before leaving with a gold-plated watch and a decent pension. These days, it’s the norm for people to stick with the company for no more than five years before searching for greener pastures.

Equality and diversity

Particularly in the United Kingdom and the United States, there’s been a gradual yet radical adoption of workplace equality and diversity policies. Rather than simply encouraging workplace diversity, official government policy has made it a legal requirement to champion diversity and equal opportunities. Discrimination in any form is no longer tolerated and is considered abhorrent.

Flexible dress codes

Some of the world’s biggest and most successful companies have acknowledged the fact that you don’t necessarily have to dress in a stiff power suit to do a good job. Enormous enterprises like Google encourage their workforce to express their personalities and individuality, wearing pretty much anything they want to wear to work. Piercings, tattoos, and gravity-defying hairstyles are all part and parcel of the modern office experience.

Employee input

It may be hard to believe that there was once a time when the prospect of any lower-level member of the workforce communicating directly with ‘the boss’ would have been out of the question. particularly if said employee wanted to make a rather outlandish suggestion or bring up a grievance of some kind. Today, employees at all levels are actively encouraged to share their thoughts and opinions with their superiors. Communication in general in the average workplace has transformed beyond recognition over recent years.

Transparency

No longer can an organisation expect to get away with operating in a shroud of secrecy. Company policies, salaries, benefits, promotion opportunities, and organisational performance—extensive efforts are made to keep all employees in the loop. The idea is that by ensuring everyone is on the same page, everyone takes equal pride in their work and performs better accordingly.

Availability

Even as recently as the mid-1990s, it was comparatively rare for anyone other than an executive to carry a mobile phone. Today, it’s almost unheard of for anyone not to carry a mobile phone. The result of this is the near-constant availability of workers at all levels on a 24/7 basis. The ability to contact any person from any place in the world at any time has radically transformed the way the world does business.

General workplace culture

Last but not least, the culture of the modern workplace embraces motivation, satisfaction, and enjoyment at an unprecedented level. Businesses worldwide are acknowledging the fact that when employees are happy to come to work, they perform better. Flexible working hours, a relaxed working environment, stocked kitchens, pool tables, coffee machines, and so on—all have an enormous impact on employee motivation and retention. It’s taken some time, but it’s now acknowledged that the most effective way to motivate workers is to create an enjoyable working environment, not simply force them to do the job.

Gender Pay Gap in Finance: We Need to Work Together

It’s no secret that the gender pay gap remains an issue for almost every industry and sector in the United Kingdom. Nevertheless, evidence suggests some industries are performing far worse than others, as far as equal pay issues are concerned.

The worst offender of all is the financial services sector

According to the results of a recent joint study carried out by researchers at Queen Mary University of London and the University of Sussex, the gender pay gap in the UK finance sector has shown little to no real signs of improvement over the past 10 years. Despite ongoing pressures from within the sector and external forces, drastic measures may need to be taken to bring things under control.

Immediate and substantial changes are required

Despite moderate improvements to gender-related pay issues over the past decade, progress in the financial sector has been comparatively slow. What’s more, the study also found that female representation at executive levels throughout the industry remains far below the expected level as of 2019.

As a result, experts believe it may be in the interests of UK policymakers to target certain sectors more specifically, with appropriate legislation to tackle the issue. Should the sector be unable or unwilling to make the needed improvements internally, it may be necessary to enforce external measures.

The study noted that the gender pay discrepancy was most notable among the highest earners within the financial sector. At the lower end of the scale, the average gender pay gap from 2009 to 2017 was just under 14%. Right at the top of the pay table, the discrepancy reached almost 57% for the same time period.

On the whole, the researchers found that between 2009 and 2017, female workers in the financial sector earned on average 44% less than their male counterparts. Even when factoring in all additional variables, including experience, expertise, specialist skills, and so on, the study found that women continue to earn around 14% less than men in the financial services sector.

This despite the fact that the nationwide campaign to tackle gender pay issues in the financial sector has now been underway for more than a decade.

Higher pay, bigger pay gap

Speaking on behalf of Queen Mary’s School of Business and Management, Professor of Employment Relations Geraldine Healy highlighted how the gender pay gap grows as the respective female employee climbs the ranks:

“Our analysis shows that, when all other factors such as education, experience, and childcare responsibility are taken into consideration, women earning the highest wages in the sector are subject to more discrimination, and this has decreased only very marginally since before the credit crunch,” she said.

“The irony is that the more successful and better paid the woman, the greater the penalty in pay she suffers compared to her male comparator. In addition, lower-paid women have experienced year-on-year less pay than lower-paid men, with little change since the recession.”

“The sector continues to be seeped in discriminatory practices with respect to pay and unequal treatment favouring men and disincentivising women. The increasing intensity of working hours over the ten-year period has had a negative effect on the gender pay gap.”

“Financial services have undoubtedly introduced and promoted positive diversity initiatives, but these have been undermined at a strategic and operational level, including by discretionary bonuses and increasingly long working hours.”

Ms Healy also suggested that, despite continuous reassurances from financial service providers committed to positive change, external pressures may be the only viable solution.

“Change is unlikely without external pressures, whether from the unions, women’s networks, and pressure groups, but ultimately by the state introducing more stringent statutory regulations, she said.”