House prices in the latest three months (March 2014 May 2014) were 2.0% higher than in the preceding three months (December February2014).

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1 PROPERTY REPORT JULY 2014 House Prices Rightmove Not a huge jump this month according to Rightmove. Key points New seller asking prices at virtual standstill, up by just 0.1% (+ 272) this month More regions fall than rise, with London s 0.5% drop a combination of buyer reluctance and surge of over 20% more sellers rushing to market this month Early signs of belated return to balance between supply and demand: - New seller numbers up 9.6% year- to- date on Many committed and motivated buyers have already bought, releasing some pent- up demand and contributing to a slowdown in buyer activity - Prices in some areas especially in London may have hit an affordability cap - Clumsy implementation of Mortgage Market Review (MMR) is a factor in the drop in mortgage approvals, causing headache and heartache Relief for the Bank of England as market shows signs of cooling Source: Rightmove House Prices Halifax It looks like Halifax are finally catching up with what Rightmove was telling us two months ago, which is about right when you think about it. Rightmove bases its figures on what value properties are on the market at, Halifax is based upon what properties have sold for, so stands to reason its figures should follow about two months after the other. Key facts House prices in the latest three months (March 2014 May 2014) were 2.0% higher than in the preceding three months (December February2014).

2 House price change on this measure has now remained steady in a narrow range of 1.9% - 2.3%since June Prices in the three months to May were 8.7% higher than in the same three months a year earlier. This was marginally higher than in April (8.5%). After falling in the previous two months, average price increased by 3.9% in May this was the third monthly price rise since January. Monthly movements, however, can be volatile and the quarter on quarter change is a more reliable indicator of the underlying trend. Home sales edged down by 1% in April to 103,690, however, transactions are still a third higher than in April Annually, transactions grew to million in the year to March a rise of 23% from the same period a year earlier (Source: HMRC, seasonally- adjusted figures.) The growing difference between housing demand and supply continues to be a key driver of house price increases. Growth in new buyer enquiries have remained steady so far this year while the number of home owners providing instructions to put their property on the market for sale declined for the fourth consecutive month.(source: RICS) However, latest house building figures show signs of improvement which could help to bring demand and supply into better balance. The number of private housing starts in England in the year to March 2014 increased by 34% to 108,400 from a year earlier. (Source: CLG) Stephen Noakes, Mortgages Director at Halifax commented: "House prices in the three months to May were 2.0% higher than in the three months to February. The quarter on quarter price change is a more reliable indicator of the underlying trend compared to the monthly price movement. Annually prices were 8.7% higher in the three months to May than in the same three months last year. "On an annual basis housing demand is still strong and continues to be supported by a strengthening economic recovery. Consumer confidence is being boosted by a rapidly improving labour market and low interest rates, although growth in average earnings still remains weak. "However, there are signs of a revival in house building which should bring supply and demand into better balance and curb upwards pressure on prices over the medium and longer term." Source: Halifax

3 Ratio A big jump in the ratio this month to 4.96, driven by the big rise in house price. Can we tip the 5 mark next month? Source: Halifax Interest Rates and Inflation Interest Rates. No changes this month. Source: WhichWayToPay.com Monetary Policy Committee (MPC): The Bank of England s Monetary Policy Committee met on the 5th June 2014 voted to maintain Bank Rate at 0.5%. The Committee also voted to maintain the stock of purchased assets financed by the issuance of central bank reserves at 375 billion. mpc1406.pdf Source: Bank of England Inflation Lower fares for flights and ferries helped to push the rate of inflation down in May, to 1.5%, its lowest level in four- and- a- half years. The Consumer Prices Index, fell to 1.5% in May from 1.8% in April, according to the Office for National Statistics. A fall in food prices also helped drive down the rate of inflation. The rate of Retail Prices Index (RPI) inflation, which is calculated differently, was down slightly from 2.5% to 2.4%. Source: BBC

4 Demand I may have reported this last month, but now we can see top 10 hotspots in a bit more detail. Top 10 buy- to- let hotspots The rental market is definitely booming. Surging property prices mean a lot of people find themselves turning to rented accommodation, while the likes of university cities add a whole other element of potential and the yields that can be achieved are highly attractive. Confidence in the sector only ever seems to be on the rise and it could be a great time to get on board, but if you're planning to get on the BTL bandwagon or are looking to expand your portfolio, it's worth knowing the areas that perform best. Luckily, HSBC has done the hard work for you. Their research has identified the top 10 rental hotspots across the UK, based on how much of a return you'll get from your investment, and the results are impressive. Let's take a look. 1. Southampton. Average house price = 143,011, average rent = 1,040 monthly/ 12,480 annually, resulting in a gross rental yield of 8.73%. 2. Manchester. Average house price = 104,244, average rent = 693 monthly/ 8,316 annually, resulting in a gross rental yield of 7.98%. 3. Nottingham. Average house price = 86,000, average rent = 550 monthly/ 6,600 annually, resulting in a gross rental yield of 7.67%. 4. Blackpool. Average house price = 77,899, average rent = 495 monthly/ 5,940 annually, resulting in a gross rental yield of 7.63%. 5. Kingston upon Hull. Average house price = 68,243, average rent = 425 monthly/ 5,100 annually, resulting in a gross rental yield of 7.47%. 6. Coventry. Average house price = 110,029, average rent = 650 monthly/ 7,800 annually, resulting in a gross rental yield of 7.09%. 7. Oxford. Average house price = 254,514, average rent = 1,489 monthly/ 17,868 annually, resulting in a gross rental yield of 7.02%. 8. Portsmouth. Average house price = 146,709, average rent = 795 monthly/ 9,540 annually, resulting in a gross rental yield of 6.50%.

5 9. Liverpool. Average house price = 91,175, average rent = 494 monthly/ 5,928 annually, resulting in a gross rental yield of 6.50%. 10.Cambridge. Average house price = 185,414, average rent = 1,001 monthly/ 12,012 annually, resulting in a gross rental yield of 6.48%. Source: HSBC (There are however better hotspots to be had, remember once the information becomes a matter of public record it is generally too late to get on the bus!) Scotland 'best for student housing investors' Demand for student housing has prompted a property investment boom, according to new research, and Scotland could drive the largest yields for investors over the coming year. The report from property group Savills shows that investment in the student housing market totalled 5bn over the past two years. This surge of activity continued into 2014, with the total value of student accommodation transactions topping 950m in the first four months of the year. This equates to 17,000 new student beds. Savills report, Spotlight: UK Student Housing, forecasts that with the ink drying on 1.4bn of student housing deals, the total value of market transactions will hit 2.5bn by the end of the year. The greatest opportunity for savvy investors lies in Scotland, according to Savills latest ranking of university towns. Of the five cities with the greatest potential for future student housing developments, Aberdeen and Glasgow could provide high yields, alongside Bournemouth, Newcastle and Kingston upon Thames. In last year s report, Savills said there was scope for 66,000 new student homes to be created across England and Wales. This year, it has identified a further opportunity for 11,000 purpose- built homes, mostly split across Glasgow (4,200) and Edinburgh (3,400), but with a significant number (1,900) in Aberdeen. Source: Savills Short term renting proving popular among UK home owners: As many as 3.2 million home owners in the UK are planning to rent out parts of their property or their whole property as a short term let, or take part in a house swap

6 during the next 12 months. According to new analysis by Direct Line insurance of home owners already taking part in short term lets some 63% swap houses and 69% rent out their whole property. More than half, 58%, already rent out a room in their property on a short term basis, as they seek to earn extra cash and holiday makers look for alternatives to traditional accommodation choices. On average, home owners expect to receive approximately 54 per room per night in rental income. During a week s holiday this could amount to around 758 for an owner of a two bedroom property. Under plans to remove a 40 year old rule that prevents Londoners from renting out their homes on a short term basis, something which doesn t apply elsewhere in the country, the Deregulation Bill will give home owners in the capital the freedom to rent out their homes on a temporary basis without having to pay for a council permit. Current laws state that private home owners in the capital must apply for planning permission if they wish to rent out their home for less than three months. The research found that London home owners expect to receive the highest rental income, with an average of 116 per room per night, which could earn two bedroomed property owners some 1,629 over seven nights as savvy home owners seek to capitalise on sporting events like Wimbledon in the capital. At the other end of the spectrum, Scottish based home owners expect to receive the lowest, at 31 per room per night. However, this could still earn owners of two bedroomed properties around 435 over the course of a week, which Glasgow based home owners may wish to take advantage of during the Commonwealth Games which get underway next month. Source: Direct Line Insurance Employment The UK jobs market continued to improve in the three months to April, although the rate of wage increases slowed sharply, official figures show. The number of people out of work fell by 161,000 to 2.16 million over the period, the Office for National Statistics (ONS) said.

7 This brings the unemployment rate down to 6.6%. The number of people in work rose by a record 345,000, to 30.5 million, most of which are in full- time employment. The number of people claiming Jobseeker's Allowance in May fell by 27,400 to 1.09 million, the ONS said. Source: Office for National Statistics FOOTNOTE: Readers are advised to verify the information contained in this report through their own research. The information provided in this report is for illustration only.