Mystery of House Prices | 16.11.2009
What on earth is happening in the housing market? Of the many economic puzzles thrown up by the recession, this is the most mind-boggling – for homeowners, first-time buyers and the wider economy. The conundrum is this. Unemployment is close to 2.5 million and will go higher. Pay rises are rare. People fear debt. The credit crunch has hardly gone away, meaning that mortgage finance, especially for first-time buyers with slim deposits, and movers with little equity, is expensive, if available at all. Mortgage approvals may be up on last year, but the new money going into the market isn’t sufficient to secure rising prices. Values are steep by long-term historical standards in relation to earnings, especially in London.
So prices ought to be tanking. And yet … the Royal Institution of Chartered Surveyors sees a gathering wave of optimism among surveyors watching their local property scenes, and the Nationwide has just reported rising prices for the sixth month in a row. Prices are stabilising, even rising – 0.4 per cent during October, up 2 per cent on last year (though prices are still about a fifth off their peaks).
Why? And can it last?
Some Much-Needed Cheer | 25.09.2009
Recent house price surveys have homeowners some much-needed cheer – yet a major economic survey this week claimed that the recovery in the UK property market may be five years off. Find out whether your home is set to retain its value in the months and years to come Homeowners received conflicting signals about the health of the housing market this week. Official figures from the Department of Communities and Local Government (DCLG) show that house prices rose by 1.4% in September – although they remain 8.3% lower than in July 2008.
At the same time the Royal Institution of Chartered Surveyors (RICS) reported that more estate agents are saying that prices are now rising rather than falling for the first time since the start of the credit crunch.
Both reports provide evidence that the property market may have finally turned. Other indicators include a modest increase in the number of mortgage products coming on to the market and an increase in the number of mortgages being granted.
Figures from industry body the Council of Mortgage Lenders (CML) show that the number of loans approved in July was 24% higher than in June and 19% higher than this time last year.
Busiest Ever Month At Rightmove | 27.08.2009
Prices fell by an average of £5,102 in the past month, however with August being a seasonally slow month should this be a concern? A busiest ever month at Rightmove suggests there is strong demand for housing, so what’s preventing a more steady housing recovery?
According to Rightmove’s commercial director Miles Shipside access to mortgages is playing a key factor: “After several months of activity and prices revving upwards from last winter’s low point, both will start to hit the limiter without more mortgage finance. In spite of pent up demand, the market and pricing is boxed in by restrictive lending criteria put in place to ration mortgages given the lack of funds available to lenders”.
Confidence Returning for Mortgage Brokers | 16.07.2009
Mortgage Advisors are predicting a significant rise in the mortgage business through intermediaries in the 3rd quarter of 2009, according to Paragon’s Financial Advisor Confidence Tracking Index.
The predicted rise of 8% on the previous quarter would mean an increase in mortgage business for the second quarter running and is certainly a good improvement from the negative results of 2008.
58% of respondents predicted the 8% rise with nearly a third (31%) expecting this to be at least 10%. Only 7% of brokers expect levels of business to fall – a most favourable comparison when compared to Law2Law’s March 2009 survey (19% expected levels to fall) and December 2008 was worse with 39% of brokers expecting the decline.
It seems the green shoots of recovery stories of new mortgages and new lending are indeed factual – a welcome change from the doom and gloom of recent months.
By Samantha Jones, Law2Law.
Mortgage Approvals Highest For 13 Months | 28.06.2009
Mortgage approvals by the main high-street banks rose by an annual rate of almost 16 per cent last month, touching a 13-month high, according to the British Bankers’ Association.
The BBA said a total of 31,162 loans were approved for house purchases, suggesting a more stable outlook for the depressed housing market. The average value of the loans, although below the levels seen last year, has also risen steadily over the last six months.
The market remains subdued, however. Despite rising approvals, net new mortgage lending grew by £2.3bn – the weakest monthly rate of growth since early 2001. The figure, which tempers the picture painted by the data on approvals, compares with a £2.5bn rise in April, and an average rise of £3.2bn over the previous six months. Gross mortgage lending, at £7.7bn, dropped to its lowest level since February 2001.
Asking Prices Rise In May | 22.06.2009
Asking prices in England & Wales have risen by another 2.4% this month, as consumer confidence shows signs of returning and new sellers attach optimistic prices to their properties.
However, the annual change in asking prices has eased and now stands at -6.2%, from -7.3% last month.
The fourth consecutive rise this year, the increase could be due to a lack of new sellers coming to the market, which, at 60,928 this month, is the lowest number of new sellers in May for six years. To put this into context, prospective sellers should bear in mind that in the same period, 59,072 properties were reduced by 2% or more, with an average reduction of 6.8%.
Though improving consumer confidence is a key element to aid the recovery of the housing market, mortgage funding still remains difficult for the masses to obtain and new sellers need to price realistically or risk wasting those all-important first weeks on the market. There are home hunters out there!!
Article from Rightmove, May 09.
HIP changes - April 2009 | 06.03.2009
Margaret Beckett, The Housing Minister has announced changes to the Home Information Pack (HIP) Scheme.
As of 6 April 2009, part of the HIP must be in place before marketing of your property can commence. The following documents will be needed:
- The Index
- Title Documents
- Sale Statement
- Energy Performance Certificate
Where as searches will no longer need to be in place prior to marketing the property.
You will also see the addition of a “Property Information Questionnaire (PIQ)” which will give a potential buyer further information that will enable them to make an informed decision about whether to buy the property eg it will include service charges, structural damage, flood risk etc.
Searches will be improved which should reduce the risk of buyers having to pay for additional searches; however we may see an increase in the cost of searches and of HIPs in the future.
Leasehold: The only additional document required in the HIP for leasehold properties is the lease which is already currently included in the HIP. Originally the government had wanted to include full replies to leasehold enquiries and management information, but this was temporarily waived. It has now been indefinitely waived and will not need to be included. The PIQ will contain some questions on the lease and management information but these will be questions aimed at the point of view of the seller and they will be able to answer these.
No action is required at the moment, but everyone should be aware of the changes that will take effect as of 6 April 2009.
Will your house Sell in 2009 | 05.01.2009
Santa Claus bought a timely Christmas present for the housing market, because, for the first time in more than two years, buyer interest has risen.
This reflects the drop in asking prices and the recent cuts in interest rates, according to a survey by the National Institution of Chartered Surveyors.
The report said: “Interest in the market nationally turned positive for the first time since October 2006, while expectations that sales volumes will also pick up remained positive. The biggest increase in interest occurred in the West Midlands.
However, the average number of transactions per surveyor fell again in November as a lack of mortgage finance continued to limit the ability of buyers to access the market.
Sales are proving ever more difficult to achieve in the housing market seeing about a 10 to15 per cent drop in sales prices.
Interest in our auctions, however, has been very positive and can only hope that these will turn into actual sales.
There is some evidence that finance is becoming more readily available and may help kick start the market now that Christmas is out of the way.
Alongside this, many potential buyers and investors are starting to see the current market as an opportunity to purchase a previously unaffordable property despite the worsening economic picture.
“January is traditionally a busier time of year, with potential springtime movers buying up their future homes and will be a good chance to test the market’s temperature as to activity levels going into 2009.”
Home Information Packs - New Changes | 10.12.2008
The Government has announced further changes to the Home Information Pack (HIP) regime by introducing the necessity for a ‘Property Information Questionnaire’ for all properties marketed for sale after 5 April 2009. The PIQ will provide basic, useful information about a property including a summary of the leasehold if any and will be contained within the HIP.
In addition, the current arrangement whereby a copy of the lease is the only additional requirement in the HIP for leasehold property sales is (from 1 January 2009) a permanent requirement.
The temporary ‘first day marketing’ exemption from having to have a HIP is being removed from 6 April 2009 . Thus a basic’ HIP must be in place before a property is marketed – providing certainty to consumers that a HIP will be available.
Agents will still be able to advise about properties they expect to come on the market, but not to market them until a HIP is prepared.
There are other changes to the HIPs regime of lesser significance.
First Time Buyers | 24.11.2008
The worldwide economic downturn that has swept the financial markets has led to a serious decline in UK house sales and many construction companies have halted existing builds and made widespread redundancies. – but what does it mean for the first time buyer?
House prices are falling, and this will enable first time buyers to get more for their money than they did a year ago. Whilst some forecast a 30% fall long term this may well be a touch pessimistic. Estate agent windows are full of particulars decorated with ‘new price’ stickers – an invitation for the bargain hunter to look within.
True to form, there are bargains to be had, both in the form of new builds and older properties.
This means that there are empty new houses that need to be sold. Many builders are offering serious discounts – one development in the North of England saw prices slashed on a new three bedroom town house from £129,995 to just over £90,000 in the past month – and these big reductions in prices could be a prime target for the first time buyer who has secured a mortgage.
It is interesting that Housing associations are getting in on the act too, buying up empty homes en masse at knock down prices and offering first time buyers the option of part ownership schemes. These are deals are often worth investigating and are becoming increasingly popular in the current climate.
With regard to pre-owned properties, especially repossessions which it may seem distasteful to speak of and we do genuinely feel for the people in this position. However, there are bargains to be had from repossessions and the fact remains that this is happening at an increasingly fast pace. These properties need to be sold by the lender, often at a much reduced knock down price. Again this presents an opportunity for the first time buyer to target such sales.
If you are looking at buying a home which you envisage staying in for the next 2-4 years the current market correction we are experiencing should not put you off completely. It is unlikely within this time frame the prospective property will have lost value.
Property should be considered a long term investment and in current conditions this has never been so relevant. With the slowdown in the market come opportunities to negotiate and secure the property you want, which would of in the boom times have been snapped up before you would have received the particulars.
The first time buyer can capitalize on the current economic climate if they can secure a mortgage. With interest rates at the lowest rates for many years, maybe now will be looked back on retrospectively as a great time to enter the UK Property market.
Between A Rock And A Hard Place | 08.01.2008
Rolling Hips out to one and two-bed properties could find first-time buyers caught between a rock and a hard place as accessibility to the market could go off the scale.”
But the extension has been welcomed by the Association of Hip Providers (AHIPP).
“The independent research by Europe Economics dispels suggestions by RICS and NAEA that Hips are having a detrimental impact on the market place and “Hips are here to stay”
Home Information Packs | 14.12.2007
First time homebuyers will see their upfront costs drop and all home buyers will, for the first time, receive A-G green ratings for their properties which will help cut fuel bills and carbon emissions, with the roll out of Home Information Packs (HIPs) and Energy Performance Certificates (EPCs) announced today.
Buyers whose homes score poor energy ratings of F or G (currently around one-fifth of all homes) will receive an offer of a discount or free help with energy efficiency measures from the Green Homes Service which will be established, helping to save hundreds of pounds off fuel bills, as announced by the Prime Minister this week.
Sixty per cent of the market is already covered by HIPs. The Government has announced the rollout of HIPs and EPCs to the rest of the market from 14 December this year, as the criteria set out for roll out on 11 June have now been met.
House hunters will get detailed information about the energy efficiency of their home with a green rating of A-G, similar to consumer friendly fridge ratings, in an EPC.
The final stage of the roll out follows careful analysis of how HIPs and EPCs have been working in order to maintain their smooth introduction into the housing market.
The extension of HIPs to all properties will particularly benefit first time buyers through a reduction in their upfront costs by not having to pay for a pack, helping them in getting a foot on the housing ladder.
The packs are already beginning to bring benefits to consumers with average property search costs starting to fall with the new competition from HIPs – 85 local authorities have already reduced their charges by £30 on average.
Christmas no obstacle for moving house | 16.11.2007
The 12 weeks leading up to Christmas day have been revealed as some of the busiest of the year for those moving home in the UK.
While spring is usually regarded as the prime time to relocate, the run-up to the festive season has now been identified as a new boom period.
Some 22 per cent of all home moves take place during the period, with one in 12 homebuyers willing to move in December.
Those moving house over the period are also on top of their finances.
Some 53 per cent looking to move said it would not hinder their preparations for Christmas, while ten per cent had saved earlier in the year to prepare for the move.
Only one in ten said they had planned to cut back on spending to assist with moving house, while only two per cent said they would rely on credit cards to finance Christmas spending.
With so many people moving into their new homes during the run-up to Christmas it can feel like a rush to get the family settled and the new furniture ordered before December 25th.
It is very encouraging to see many people are planning ahead to budget for their moving costs and saving in advance to ensure it doesn’t have a big impact on their Christmas.
Clearly planning ahead, budgeting and saving are the key to a less stressful move.
The Slowdown in the growth of house prices | 11.10.2007
There seem to be property news stories about this virtually every week, and many of them are conflicting. One thing is certain – prices are not growing as fast as they have been in the last year.
There are lots of regional variations in the rate of house price growth. But it’s important to realise that house prices are still growing… it’s the rate of growth that is slowing. That’s a clear distinction. It would be a different situation if house prices were actually falling.
Some experts think we are due for a house price correction in the near future, but the long-term growth will still be there.
HIPs were introduced for four bedroomed homes in August and extended to three bedroomed homes in September. Some people believe they have reduced the number of people speculatively putting their home on the market, just to see what they could get for it. And others believe some people are holding their property back to see if any further changes will happen.
In the long-term, it’s likely that people will get used to HIPs and just treat them as another part of the property buying process. This means any impact they are having on house supply now will probably be short-lived.
Home Information Packs | 07.09.2007
From 10 September, all homes in England and Wales with 3 or more bedrooms will need a Home Information Pack (HIP), which includes a home energy rating. The Pack includes an Energy Performance Certificate (EPC), containing advice on how to cut carbon emissions and fuel bills. Also included are documents such as a sale statement, searches and evidence of title.
As a home buyer and seller you should take note of the arrival of HIPs and be careful about the supplier you choose to provide your pack.
Now is the time to talk with Myconveyancing.com about being prepared Call Alison Williams on 01744 730933 0r, 0800 007 66 11 to discuss how we can provide you with your HIP.
House price rises are slowing | 05.06.2007
The rate of house price growth slowed in May as the property market showed further signs of cooling following the recent spate of interest rate rises According to Nationwide, the UK’s largest building society, the average price of a house rose 0.5% during the month to £181,584, which is 10.3% higher than the same month in 2006. The Bank of England has raised interest rates twice this year to the current rate of 5.5%, which has helped slow the market down. But Nationwide said just the threat of further interest rate rises is deterring potential buyers.
Chief economist Fionnuala Earley said: ‘Higher interest rates, with the threat of more on the horizon, should signal caution to those thinking about stretching themselves to get a foot on the ladder. ‘This is not only because of the level of debt in the short term, but also because, in a low inflation world, the real value of the debt is not eroded as quickly. As a result, the burden of servicing that debt remains heavier for much longer.’
Further rises
Nationwide said there is a strong chance that there will be one further rate rise this year because there are still growing inflationary pressures. But it predicted a price slowdown rather than a crash. ‘Higher interest rates clearly present risks to the housing market, but providing the economy, and particularly the labour market, remain in good shape, we should still be able to expect a measured cooling.’
This was a view mirrored by Howard Archer, economist at City research firm Global Insight. He said: ‘The Nationwide data is consistent with our expectation that house prices will lose buoyancy gradually over the coming months as demand is increasingly pressurized by the rising affordability pressures stemming from higher interest rates, modest real disposable income growth and elevated house prices.
Source: Michael Clarke, Daily Mail
First-time buyers stretched again | 07.02.2007
The financial strain of buying a home is becoming even greater, according to the Council of Mortgage Lenders (CML).
In October, first-time buyers had to borrow a record 3.27 times their incomes to take out a mortgage. And people moving house had to borrow at near-record multiples of 2.98 times their incomes, the CML said. Recently, some lenders have said they could lend as much as five times salary to some borrowers, to cope with rapidly rising house prices.
“It is a reflection of the growing affordability problem of first time buyers,” said Bernard Clarke of the CML. “But it is offset by lower borrowing costs.”
Changing approach
Once upon a time, it was standard practice in the mortgage industry to lend, at most, 3.5 times a single person’s salary or 2.5 times the combined salary of a couple, on top of a deposit of at least 5% of the property price.
Increasingly lenders have started to take a more sophisticated approach and have been prepared to lend more to borrowers as a result. Banks and building societies look at each customer’s ability to pay by examining factors such as their disposable income and their credit score.
The outcome, according to Darren Cook of Moneyfacts, is that more people can now borrow larger amounts than before. “We are going to see more lenders taking this approach,” he said. Among the big lenders both the Abbey and the Co-op bank have advertised mortgage deals at up to 5 times a borrower’s salary.
Booming prices
Despite this, rapidly rising prices have forced out many would-be home buyers, with others having to stretch themselves financially or borrow from friends and relatives to put down a large deposit. The house price boom of the past decade has seen property prices rising twice as fast as incomes. In five of the six years between 1997 and 2002 the number of first time buyers was well over 500,000 per year.
But in 2003, 2004 and 2005 their number has averaged just 365,000 a year, amounting to just under a third of all new mortgages. By contrast, 10 years ago, first time buyers made up nearly 50% of the home loan market.
House price growth 'still firm' | 02.11.2006
House price growth cooled slightly in October, the Nationwide has said, but the underlying trend “remains firm”. It found that UK house prices rose by an average 0.7% last month, compared with a 1.3% increase in September. However, the latest three-monthly trend showed prices up 2.6% compared with the previous quarter – the fastest pace since September 2004. The annual rate of increase dipped to 8% from 8.2% the month before. The average UK home now costs £169,623.
Slowing approvals?
Fionnuala Earley, Nationwide’s group economist, said that the housing market was looking firm, with little sign that the recent interest rate had curbed demand. But she added that many fewer estate agents were reporting an increase new buyer enquiries and net sales in September.
“While the relationship between these and house purchase approvals is far from perfect, it could suggest that we will see some slowing in approvals in the next few months,” she said. Bank of England data earlier this week showed that mortgage approvals – an indicator of future demand – have risen to their highest level since February 2004.
However, future mortgage lending could be hit by next month’s widely expected rise in interest rates. Analysts predict the Bank of England will increase rates from 4.75% to 5% in November.
Registry survey
Meanwhile, a new monthly survey from the government’s Land Registry supported the view of a buoyant UK housing market. During the month of September – the Registry survey has a time lag, as it is based on completed sales – prices grew by 1.3% on average. This compares to 0.4% growth in the same month last year. Year-on-year average house prices are 6.3% higher.
New method
The new monthly Land Registry survey uses a unique methodology. For the purposes of the survey, the Registry only tracks properties that have been sold on more than one occasion since 2000.
According to the Registry by using repeat transactions, differences in the quality of the homes comprised in any monthly sample are reduced. This ensures an “apples to apples” comparison, the Registry added.
Jump in number of property sales | 06.06.2006
The number of home sales in England and Wales jumped by 37% during January to March compared with the same period a year ago, the Land Registry has said. Prices in England and Wales rose 5.05% in the year to 31 March, the registry said, to an average of £192,745.
Wealthy City financiers and foreign buyers pushed London prices 6% higher to more than £300,000 on average. The biggest increases were seen in the north-east of England, while Conwy in Wales suffered the largest drop.
Million-pound market
Not surprisingly, London dominates the market for the most expensive houses which cost more than £1m each. A total of 1,032 £1m-plus homes were sold in England and Wales during the first three months of this year – 58% more than a year ago – with 652 of these properties in London.
Within London, the most expensive boroughs to buy a home were Kensington & Chelsea (average £827,553), Westminster (£637,954) and Camden (£498,702). The average cost of a home in the capital first breached the £100,000 mark in the second quarter of 1996, and it passed the £200,000 mark between April and June 2001.
Although the average London property has now passed the £300,000 mark, average prices are actually higher in Buckinghamshire (£307,451) and Surrey (£318,980) as the property market in the capital is heavily skewed towards cheaper properties such as flats and terraced houses.
There are relatively fewer of these in the home counties, so the average property price there is driven up by the relative preponderance of the more expensive detached houses.
Recovery
The latest Land Registry figures confirm recent trends from other property market observers, such as mortgage lenders and estate agents, who have also reported prices picking up across the country in the early months of 2006. In the last 12 months, the biggest increases have been seen in the North East of England.
Prices in Hartlepool have shot up by 32% to nearly £99,000 on average, prices in Middlesbrough by 23% and those in Kingston-upon-Hull by 17%. Despite the general upward trend, a few parts of the country still saw a dip in prices in the past year – including Bristol, Cornwall, Nottinghamshire and East Sussex.
Prices in Conwy, Wales, experienced the biggest drop, falling almost 7% from last year’s levels. Meanwhile, the very cheapest houses continue to disappear from the market. In the first three months of this year, just 18 properties were sold for less than £10,000.
House prices 'pick up in January' | 31.01.2006
The UK housing market made a “strong start” in 2006, with prices rising 1.4% in January, the Nationwide has said. The increase – the biggest monthly rise since July 2004 – took the annual rate of house price growth to 4.4%. Over the November to January period, prices were up 1.8% compared with the previous three-month period. Nationwide said the rise was helped by increased confidence amongst buyers. However, it added that strong price rises were unlikely to persist in 2006.
‘Strengthening trend’
January’s increase meant that the average house now costs £158,478, Nationwide said. The building society said that the release of “pent-up demand” since August’s interest rate cut had also contributed to the pick-up in the market. “This is the strongest monthly rate of growth since July 2004 when it was 1.9% and the annual rate of house price inflation was more than 20%,” Nationwide group economist Fionnuala Earley.
“The annual rate of house price inflation in January 2006 is a more modest 4.4%. “Even so, this is a significant increase in price and confirms the strengthening trend we have seen since October.”
She added that three-quarters of the price rises experienced in the market over the past year had taken place in the past four months. However, looking ahead, factors such as pension fears, declining consumer appetite for debt and below-average economic growth are to set to restrain price rises in 2006, Ms Earley warned.
“It is unlikely that the market could absorb another strong rally of house price inflation,” Ms Earley added.
At the turn of the year, Nationwide predicted that house prices will rise by 3% during the course of 2006.
House prices 'to rise 3% in 2006' | 23.01.2006
Halifax, the UK’s biggest mortgage lender, has predicted that the housing market will be flat in 2006. House prices are set to rise by 3% during the year, barely enough to keep pace with inflation, the bank said. A crash would be avoided due to high levels of employment, wages rises and interest rate cuts, the group added. But at the same time,- well known market sceptics – Capital Economics warned that house prices could fall 5% in 2006.
Overvalued
Capital Economics, which had previously predicted house prices would fall by 20% over the next three years, said it still held the view the UK housing market was “fundamentally overvauled.” However, the group said it had adjusted its view of the likely scale and timing of the market adjustment. A combination of low interest rates and employment growth would prevent a sudden price correction. Instead house prices would fall slightly and wages would rise, making property more affordable.
Single digits
Halifax’s prediction of a small rise in house prices in 2006 ties-in with the view of the vast majority of housing market pundits. The Nationwide, Royal Institution of Chartered Surveyors and property website Hometrack have all said prices will rise in the low single digits. “The UK housing market is set for a period of broad stability… low single digit growth is expected to be the norm across most of the country,” Martin Ellis, Halifax chief economist, said.
North-south divide
Next year could see a further narrowing of the gap between property prices in the north and the south of the UK. During the past two years house prices in the north have increased far more rapidly than in the south. Scotland and Northern Ireland are set to see house prices rise the fastest by 7% and 5% respectively. At the other end of the scale, prices in south-west England and East Anglia could be set to stagnate, Halifax said.
UK house price growth 'quickens' | 23.01.2006
House price inflation across the UK has picked up pace in the year to November, according to a report from the Office of the Deputy Prime Minister (ODPM). The annual rate of house price growth was 2.5% in November, up from a revised 1.8% in the previous month.
The ODPM’s survey, based on a sample of 40,000 completed sales, found that average house prices rose in November. It said that the average home cost £186,431 in November compared with £185,398 in October.House price inflation varied throughout the UK.
In London average prices rose 2.2% during the year to November, compared with a 0.5% fall in October. Prices continued to move upwards in the north-west and north-east of England and in Northern Ireland. However, in Wales and Scotland the annual rate of price increase slowed sharply. In Wales the inflation rate in fell from 8.8% to 6.5% and in Scotland the rate fell from 9.3% to 8.9%.
The findings echo those of commercial surveys, such as the Halifax and Nationwide, which have indicated that the housing market has come off the boil in areas which enjoyed the strongest growth in the early part of last year. But annual house price inflation in these areas is still above the UK average, the ODPM said.