Mortgage Advice Bureau : Rightmove House Price Index October 2018

Brian Murphy, Head of Lending for Mortgage Advice Bureau Comments on the Rightmove House Price Index;

'The monthly Rightmove House Price Index provides us with data drawn from estate agencies across the country at the point of marketing properties for sale. It therefore provides us with an up to date snapshot of the UK housing market in terms of consumer sentiment and activity, rather than historical data using completed transaction figures.

'Today's report indicates that overall, asking prices have seen the slowest rise over the last month since 2010. One might suggest that this modest rise could, in part, be due to motivated vendors at all levels marketing their property at a realistic price in order to secure a buyer in the lead up to Christmas. However, the Rightmove data also points to an increase in availability at the entry level of the market which appears to be creating a slight downwards pressure on one and two bedroom properties in some areas, which is exerting a slight drag on the overall rate of growth.

'The reasoning behind this is that some investors are taking their foot off the gas in terms of purchasing further Buy To Let properties due to Section 24 legislation, which will lead to an increase in tax payable by those investors with mortgages from the start of 2019. Obviously, the introduction of the reduction in mortgage interest rate relief, which is a phased process, doesn't affect those landlords who aren't leveraged. However, for those who do have borrowings against investment properties and who haven't as yet taken measures to mitigate their tax position, the additional tax that they will be paying from the next year may make it less viable for them to stay in the sector. This being the case, one and two bed properties are usually the sort of units favoured by investors, meaning that a reduction in landlords purchasing in advance of the new tax measures coming into effect appears to have created more availability in some areas of these types of homes, which are also likely to be appealing to first-time buyers.

'Many in the industry have long held the view that the introduction of increased taxation on landlords was partly designed to create this very situation, and help to enable more First-Time Buyers to purchase their own property due to lack of competition with landlords for the same properties. So to that end, more stock at entry level with prices softening may assist that strategy. Certainly product rates, particularly for low deposit mortgages, remain very competitively priced, meaning that those first time purchasers who are able to agree borrowing, may find themselves with a window of opportunity where market circumstances work in their favour.'