So here we are at the height of the Spring market, following a roller coaster ride, triggered by the Stamp Duty Land Tax deadline that prompted so many investors and second-home buyers to act before the additional 3% tax kicked in. It is interesting to note the short term effect this has had on the market.

For example, April saw an otherwise unexpected rise of 62% in transaction volumes – that’s about 60,000 more transactions. The knock-on effect in terms of property value has been profound, with lower-end investment and first-time buyer properties rising by 6.2% over the past four weeks alone, against a much smaller (0.4%) rise in the price of property entering the market in the last four weeks generally (excluding London).

In fact, the top end of the London market, which has so often skewed the view of the market when included in national figures, has certainly lost its froth, with some prime postcodes in the capital falling by up to 12% over the past year. No doubt the falling price of oil or uncertainties over Europe have had their part to play in this, or perhaps, with average prices of nearly £2million in some areas, enough was enough in terms of how much could realistically be achieved. According to the latest figures from The Land Registry, the average price for a home in the capital is around £534,785, nearly three times the national average of national average of £189,901.

Legal and General research suggests that the Bank of Mum and Dad is now one of the UK’s Top Ten Lenders – on track to lend £5bn in 2016. Family and friends are now involved in over a quarter of all purchases involving a mortgage with an average contribution of £17,500, or 7% of the purchase price. Fifty seven percent of these are gifts as opposed to loans, enabling the money to fall within easier lending parameters.

Maybe the rise in the cost of renting has spurred on parents to help their offspring, especially when, according to Homelet, in the three months to April, rents overall have risen by 5.1% with 7.7% in London and a whopping 11.4% in Scotland. According to Countrywide the average UK rent is now £932 pm but rent growth is generally half what it was in 2015.

The Halifax tells us that annual house price growth eased from 10.1% in March to 9.2% in April. Weakening property market sentiment, the Brexit issue and a slight dip in consumer confidence suggest that house price growth may be set to ease further, although according to Rightmove, demand for one and two bedroom properties has risen by 47% since the same time last year although supply in this sector is down 1.5%. Maybe the increasing cost of renting, better availability of mortgages and family gifted monies becoming more common are all fuelling the demand in this sector.

Neil Newstead, FARLA MNAEA
CEO – Oakfield Estate Agents