Property Market Monitor: January 2020

Chart of the month: In 2019, Northern Ireland continued to outperform all UK regions

Source: Nationwide House Price Index

Market Commentary

• Average annual UK house price growth edged up as 2019 drew to a close. December saw average UK house prices grow by 1.4%, the largest increase since November 2018. Sentiment improved on the back of the election and MPs vote to pass Boris Johnson’s EU withdrawal bill as political deadlock over Brexit was finally resolved.
• As a result, Q4 was the strongest quarter of 2019, with average UK house prices up by 0.8% compared to Q4 2018. Three regions saw particularly strong growth in Q4: Scotland, West Midlands and the north. They saw 2.8%, 2.7% and 2.6% year-on-year growth respectively. The north of the UK had its strongest quarter since Q1 2018.
• However, 2019 overall saw a modest 0.5% UK house price growth, down from a 2% growth in 2018 as Brexit uncertainties took a turn for the worst prior to the election. There was a wide regional divergence in growth, with Northern Ireland once again outperforming every other UK region by a far margin and London underperforming sharply. In 2019, average houses prices in Northern Ireland grew by 3.2% while in London prices were down by 2%. Our chart of the month reflects this divergence.
• Looking ahead, as recently discussed in our ‘Two property trends in 2020’ newsletter, we expect the London and Southeast of the UK property market to continue to underperform in 2020 and are bullish on HMO’s and serviced accommodations in the right locations (i.e. near large employment hubs, universities, transport links).

Figure 1: Monthly UK house price  

Source: Nationwide House Price Index

Figure 2: UK house price YoY growth

Source: Nationwide House Price Index

At Blend Network, we continue to see a healthy deal flow coming from across the UK regions. In the Midlands, where we often fund Houses of Multiple Occupancy (HMOs), we recently funded the Charterhouse loan, a £182,000 loan to finance the acquisition and conversion of a two-bedroom, two story terraced house into a 5-bedroom HMO in Coventry. This brought the number of loans we’ve funded in Coventry over the past 6 months to four, three with the same experienced developer who has already repaid one of the loans. We have also issued terms on a number of deals in Scotland and Northern Ireland recently, two regions we like to lend to. We are seeing good appetite from lenders to fund deals in the regions, with the average return for loans in the area around 8-12% p.a.

We have got an exciting pipeline of loans in the Midlands that are currently in due diligence phase and we are working with our regular borrowers in the region to source more deals. Make sure you’ve got yourself on AutoLend and have your e-wallet topped up so that you don’t miss the chance to lend on the  new loans coming up as soon as they are listed.