A super-fast internet connection can add £5,000 to the value of a property, according to more than 294 UK estate agents.

The comment came on the back of a survey which showed that a great broadband connection ie ‘full fibre’ is a main priority for many house buyers. To the extent that 34 per cent of buyers surveyed by Omdia said they wanted speeds of more than 300Mbps. Another 23 per cent are demanding 1 Gbps.

Broadband second only to property size

The main priority for house buyers, according to the survey was the size of their property (23 per cent), closely followed by 20 per cent stating that broadband quality was their number one. A further 18 per cent said they were more interested in the number of bedrooms, 10 per cent the age of the house or apartment was more important, while nine per cent said they would prioritise transport links.

“Poor wi-fi and a bad mobile signal can be a deal breaker,” admitted one estate agent, “while fibre broadband adds to the appeal.”

All homes to have full-fibre broadband by 2026

Telecoms regulator Ofcom say around 18.2 million homes (62 per cent) already have access to 300Mbps or faster, according to their research. The government meanwhile say they will fit out every home in the UK with full-fibre and gigabit-capable broadband by 2025.

A spokesman for London-based estate agent Foxtons admitted internet connections had increased in importance since the pandemic, in particular, but that buyers still valued schools and local amenities, as well as the size of a property.

Narrowing of the north-south property price divide

Meanwhile, predictions from another estate agent also made headlines this week in the property press. Upmarket Savills says it expects the north-south property price divide to narrow considerably over the next five years. 

Both areas will still see growth – albeit northern growth should be higher than southern – but overall house prices could have increased by 13 per cent by the time 2026 comes around, they say. This is broken down into 4.5 per cent for Yorkshire and the Humber and the north-west over the next year, two per cent for London and three per cent for the rest of the UK.

The north’s ‘affordability cushion’

A company spokesman said: “There remains more of an affordability cushion beyond London and the south. The government’s levelling-up agenda has the potential to accelerate a rebalancing of the market but only if it gains meaningful traction.”

Despite the bigger increases in the north, London prices will still remain far higher with forecasts of property averaging £713,987 in the capital by the end of 2026, compared to averages of £272,732 in the north-west and £266,417 in Yorkshire.

Rental growth even higher than capital increases

And it is not only capital growth that Savills predicts will rise into double digits by 2026 – rental price growth is also expected to be up. And analysts at Savills say that will outshine capital growth at 19.9 per cent by 2026.

House prices in England hit a new monthly record in September as they increased in value by 1.7% between August and last month. And that was the biggest monthly rise since just before the recession in 2007.

The figures were from the latest Halifax Price Index and were a reversal of the previous three months where property values had fallen month on month.

Property up £18,000 year-on-year in September

The 1.7% rise worked out at £4,425 added to the price of the average home in England, bringing that figure to £267,587 for September. It’s a jump of £18,000 on September 2020 when the property market reopened after the summer lockdown.

Other statistics, produced by the lender, show that the price of apartments have risen by 6.1% whereas both semi-detached homes and homes have gone up more – by 8.9% and 8.8% respectively. 

In terms of other areas of the UK, property inflation in Wales outdid all other areas, coming in at 11.5% last month. In Northern Ireland the figure was 9.3% and in Scotland prices rose by 8.3%.

South-west is England property price champ

In England, house price inflation is highest in the south-west, at 9.7%, bringing the cost of the average property there to £276,226. London, though, continues to lag behind the rest of the UK. Prices aren’t falling there anymore, but they aren’t rising as fast as the rest of the country at just 1% between August and September.

Estate agents say they are still more buyers than there are properties on the market. This brings property analysts to believe that prices, and the property market, will remain stable – despite the possibility of tax rises and inflation in the near future.

But Tom Bill, head of UK residential research at Knight Frank, refers to this property shortage as ‘an underlying weakness’ in the market. 

He said: “The imbalance between supply and demand is unsustainable and, in many cases, arises because prospective sellers are unable to find anywhere to buy themselves, creating a vicious circle of low supply. In some cases, they cannot even find properties to rent as a short-term option.”

Citing around 13 new buyers for every property listed in the UK last month, he said the last time there was such as short supply of properties was back at the beginning of 2020. In a bid to encourage house buyers now that the Stamp Duty Holiday has come to an end, mortgage lending is loosening too.

More mortgages coming onto the market

Certainly, the threat of rising inflation doesn’t seem to be having any effect on them. They offered lower interest rates in the third quarter of the year than the previous one. House deposits were lower too.

There is currently, what many in the industry would describe as a ‘mortgage war,’ taking place. Many High Street and online lenders are even vowing to introduce more mortgages until the end of next month. Most of the lending recently has been for re-mortgaging, rather than from those buying or first-time buyers (many of whom are still complaining of being priced-out of the market).

According to the Bank of England’s credit conditions survey mortgage lenders were encouraged by the improving economic outlook and rising house prices. Around 18% of them said they anticipated a further easing of credit conditions in the fourth quarter too. 

Even the prospect of what many believe will be a rise in the Bank of England’s base rate from 0.1% to 0.25%, around December, isn’t putting lenders off. Analysts say they will simply absorb the cost so that low interest mortgage deals will continue well into 2023.

The average property in the UK increased in value by £1000, last month – according to the most recent Halifax index. 

It brings the cost of the average house to £261,221. That’s £18,500 more expensive that the same time last year. July was the first month prices have been regarded since the ‘less generous’ Stamp Duty Holiday in England and Northern Ireland saw the £500,000 free tax threshold reduce by 50% to £250,000. In October it will revert to the usual £125,000 figure.

Annual house price rate falls for 2021

According to the High Street lender, the rate of increase for house prices last month was 0.4%, which was less of an increase than in July 2020. This means the annual house price increase for 2021 has fallen to 7.4%.

Russell Galley, Halifax’s managing director said he expected buyer activity to cool over the coming months, resulting in a steadier paced housing market by the end of the year. Despite this, fewer houses available compared to demand combined with continuing low interest rates means prices shouldn’t be falling any time soon – if at all.

Nicky Stevenson, managing director at the estate agents Fine & Country, said the Halifax figures showed that “the era of ballooning house prices is not over yet, even if a little air is now slowly starting to hiss out of the market.”

Greater mortgage availability and government schemes to help fund deposits were also helping to inflate prices. She added: “While annual growth has softened slightly since the frenzied heyday of the stamp duty holiday, there is still a great wall of money coming into the market despite the phasing out of this much celebrated tax break.”

This ‘great wall of money’ from affluent house owners who already have impressive amounts of equity in their existing homes, means many second steppers as well as first time buyers can’t afford to move home – certainly not at the present time. 

In fact, the price difference between a two-bedroom flat and three-bedroom house has doubled over the past decade. According to Zoopla’s figures the difference is £78,000, compared with £39,000 in 2010. 

North – South property divide widens

And, as people move towards greener spaces and bigger properties, the North and South divide continues to grow. Most popular destinations to move to judging by the rise in house prices from the Halifax survey, are the north-west and Yorkshire & Humberside. Wales also saw a large jump in house prices, with as much as 13.8%. London and the south-east, as well as the east of England witnessed far smaller house price jumps. Property in the capital was the lowest increase at just 2.5%.

House prices up 20% over five years says analyst 

Tom Bill, head of UK residential research at property agent Knight Frank expects prices to rise by as much as 20% over the next five years or so. This, he says, will be due to the fact more people will be working from home and looking for more space for their own office. He too sees continued migration to the countryside.