Archive for the ‘UK House Prices’ Category

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House buying costs increase

July 8th, 2009

The UK Land Registry has announced a 500% increase in the cost of updating the land register with new owner details.  It used to cost £10 for the cheapest properties, now it will cost from £50 for the cheapest property to £920 for the most expensive properties. 

How does this affect us?  Whenever anyone buys or sells a house or piece of land the ‘land register’ is updated with the new details.  Also when a new mortgage or secured loan is taken against a property the ‘land register’ details are updated to record this.  Every update to the land register incurs a charge.

Land Registry justification for the increase is that  they have not increased costs since 1993, a reasonable argument, but why increase costs whilst we are all in the midst of a recession and a housing market slump? They also state that their “income” from fees has fallen heavily due to the lower number of property sales which are currently 44% of the levels they were 2 years ago.  Does this mean that when property transaction increase and they start making huge profits they will consider cutting their fees?  I doubt it.

Whatever the Land Registry’s justification it does not seem very good timing to increase the cost of buying a home, but as they are a monopoly it seems then they can charge what they like, we have no choice but to pay up.

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Posted in UK Economy, UK House Prices

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BCC – Recession is not over yet

July 7th, 2009

The British Chamber of Commerce (BCC) reported that it is “far too early” to forecast the end of the recession in the UK.  In particular BCC noted that unemployment was expected to reach around 3.2 million  by mid 2010.  Perhaps more worryingly the BCC commented that without more measures to minimise effects of the  recession  the UK economy could “drop off” … I guess by this they mean enter into a depression (a prolonged and deep recession).

The BCC is a highly respected group, and its report is based on a survey of 5,000 businesses in the 3 months to June 2009, thus it is certainly a report that should not be ignored.

So what should the Government do to alleviate the concerns about the UK economy?  There is no magic bullet here, but key is building business and consumer confidence, financial liquidity, and perhaps reducing the burden on businesses to help with employment – such as cancelling the NI tax increase scheduled for 2011.

As reported in other posts on house4sale, such feedback from business experts suggests that we are far from the point of recovery in house prices.  Since starting this blog a month ago, and taking account of all of the reports studied, it would seem that we are at least 12 months away before we see any sustainable recovery in property prices.

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Posted in UK Economy, UK House Prices

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House prices rise again in June?

July 3rd, 2009

The Nationwide monthly update on house prices recorded a 0.9% rise in June, lower than their 1.2% figure for May, but it is still an increase for the third month in a row.

Should we (home owners)  get excited?  Well in short, not yet, but this is good news.  Some analysts are saying that the lack of properties for sale was creating the effect of increasing prices, the actual number of buyers is still well below normal levels for this time of the year.

From my perspective buying demand for houses is based on three factors:

1. Affordability – the property must be affordable, at the starter home end of the market it is a simple comparison largely based on the cost to rent versus the cost to buy.  If it is cheaper to buy than rent then there will be high demand from buyers.

2. Finance – there needs to be readily available mortgage finance so that buyers can buy.  Its not a question of whether you can afford the mortgage finance, currently it is often a case of whether you meet the lender’s criteria for a mortgage.

3. Confidence – as buyers we have to feel confident about house prices, it is a major purchase and we thus need to feel confident that prices are not going to drop off the cliff in a year or two from now.

So where are we on these 3 key factors?  Well, based on what I am reading from the many reports published:

Affordability – in many parts of the country it is still cheaper to rent than buy when you consider future expected mortgage rates (e.g. 5.5% to 6.5%) and the various ownership costs from insurance through to maintenance.

Finance – this is starting to improve, but we still have some way to go for first time buyers as the LTV (Loan to Valuation) often requires a very large deposit.  Credit ratings is still quite an issue for many would-be borrowers.

Confidence – this is starting to return with each positive report on house price increases, but for many there is still the uncertainty over increasing unemployment.

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Posted in Mortgages, UK House Prices

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Mayfair property & Monopoly

July 2nd, 2009

A report published in several leading newspapers today highlighted how the credit crunch has affected property prices in one of London’s most exclusive areas, Mayfair.

Many of us will know of the game Monopoly and be familiar with the huge rents you paid when “landing on Mayfair”, often enough to wipe you out of the game.  Well maybe things are about to change.

Mayfair had become the home of hedge fund managers, with their companies often making vast profits and paying out huge salaries, they could afford to pay high rents, and probably even helped to increase rents from their demand for prestigious properties. 

Now times have changed, some companies have closed, others relocating, and many fund managers no longer make the huge salaries and bonuses that had become the norm in recent years.  The upshot is rental demand has fallen, and of course this has fed into a huge drop in rents and property prices.  Mind you, for most of us Mayfair is still hugely expensive, but maybe it will get “relegated” in the game of Monopoly.

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Posted in UK House Prices

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UK economic outlook

June 30th, 2009

The UK Government Office of National Statistics (ONS) has reported the UK’s fastest rate of economic decline in over 50 years of reporting.  The statistics show the UK economy shrank by 2.4% in the first 3 months of 2009.  Perhaps more worryingly was the comment that these were far worse than expected by ONS who had previously forecasted a 1.9% decline.

Many are now starting to talk about a “double dip” recession, e.g. we will start to come out of recession later in 2009, then we will sink back into recession in 2010.  The double dip theory is based on the potential impact of high unemployment which is expected to reach over 3 million in 2010. 

No one seems yet to have reported on the regional effects of the projected 3 million unemployment in 2010, clearly there will be some parts of the UK worse hit than others, and no doubt it will be these areas that see the greatest negative impact on property prices.

For details of statistics published by the ONS please visit … http://www.statistics.gov.uk/hub/index.html

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Posted in UK Economy, UK House Prices

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Is there a shortage of houses?

June 29th, 2009

Tee Government published statistics at the end of 2008 identifying a population growth averaging 7% across the UK by the year 2017, which equates to roughly 4 million more people.  This is due to a combination of effects such as higher birth rates, longer life span and net migration into the UK.

So what does this mean of housing demand?

Well, if we assume 25 million houses / flats today, then this equates to another 1.75 million new homes by 2017, which is an average of around 220,000 new homes each year.

But, we have a short-medium term problem, the private sector new build has drastically reduced due to the credit crunch, so in 2 or 3 years we could start to see an acute shortage of homes. 

Today the Government also announced they would build 110,000 new affordable homes over the next 2 years, this equates to 55,000 homes per year and compares with a growing demand of 220,000 homes based on the Government statistics.  So we have to assume that the private sector needs to build 165,000 new homes each year to keep up with demand.

Lets hope the property market recovers soon and builders start to produce the new homes required!

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Posted in UK Economy, UK House Prices

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The truth about house prices

June 29th, 2009

There have been so many different organisations publishing data on UK house prices I though it would be good to capture a snapshot of what everyone is saying and then see what can be collectively concluded from the various reports.  So here is a summary of headlines published in June 2009:

Housetrack – Reported that prices held steady in June, only 3% of postcodes saw prices fall.

Standard & Poor – Reported that house prices could continue falling into the forth quarter 2009.

Council of Mortgage Lenders (CML) – Reported a 2% fall in lending for May 2009, but commented that this is partly due to a fall in the number of remortgages.

Nationwide – reported a 1.2% rise in house prices for May 2009.

Halifax – reported a 2.6% rise in house prices for May 2009.

Rightmove – reported a 0.4% fall in house asking prices for May 2009.

Land Registry – reported a 0.2% fall in house prices for May 2009. The Land Registry also state on their website that they provide “the most accurate independent house price index available”.

So, what can we conclude form all of this?  Firstly there are widely conflicting reports on what is happening with house prices, there a several reasons for this.  One is timing, e.g. are price changes recorded on purchase completion (Land Registry) or at some earlier point in the purchase process from advertiser asking price through to mortgage offered.  Another factor is data volatility, as there are lower volumes of transactions then data from some sources may be more prone to error. 

But perhaps the most interesting point is that we have moved from a point 6 months ago when everyone was reporting falls to today where we have mixed reports.  This could well suggest we are getting close to the bottom of the market,  although before getting too excited, beware of a possible ”second dip” in prices as we have yet to see the full effect of unemployment which is not expected until 2010.

Overall conclusion – we are getting near to the bottom of the market, when all of the data sources say prices are steady or increasing, we will be on the way up again … until the next  change in the property cycle, but hopefully not for a few years!  So if you need to sell your house fast then may be the market will soon turn in your favour.

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Posted in UK Economy, UK House Prices

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Did house prices fall or rise in May?

June 26th, 2009

The NationWide reported an overall price rise of 1.2% in May 2009, BUT the Land Registry (which records all UK house sales) recorded a fall of 0.2% in average property prices.  So who is right?

On the face of it I would go with Land Registry, simply because they are based on a higher volume of transactions, that said, depending on how intelligently Nationwide puts its stats together, then they could be more accurate.  For example a bank/building society could make more like-for-like comparisons to see changes in similar property types, whereas Land Registry relies on transactions in a given postcode area.  But if you were a sceptic you might say that the bank want to talk up prices to get us buying and taking out their mortgages?

The most surprising thing for me from the Land Registry May 2009 house price data is how it varies by area.  For example Wales recorded an average increase of 1.2%, whereas London recorded a fall of 1.5% and Yorkshire & Humberside a 2.3% fall; worse still the North East recorded a 4.3% fall in May, lets hope that was just a statistical error!

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Posted in UK House Prices

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Find out what your house is worth today

June 25th, 2009

I came across this useful house price calculator tool that some may find helpful … http://www.nationwide.co.uk/hpi/calculator.asp

As the starting point you need to know when your property was last valued and what that figure was … for example you can use your purchase price as the approximate valuation, or maybe when you last re-mortgaged.  The calculator will then give you an indication as to the value of your property in the most recent year-quarter.

However be aware, the figures are based on UK averages, your property may not follow the UK average (see the earlier post on property prices).  Another factor to consider is any improvements you have made to the property. 

Overall though the calculator is a useful tool based on historical changes to the average UK prices, if only we had a calculator that could look into the future!

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Posted in UK House Prices

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Where are we now with house prices?

June 25th, 2009

This is a tough one to answer.  Looking back the decline in UK residential property prices started around the end of 2007.  There has been much data published on prices falling month by month, although since March 2009 some have been suggesting price increases (Halifax reported an increase of 2.6% in May 2009), but for many of us it doesn’t feel like prices are increasing.

According to an article published in Telegraph.co.uk most towns and cities across the UK have fallen by over 20% from their peak in late 2007.   Some areas have seen dramatic falls in prices (figures based on February 2009)…

Blackpool: -28.2%

Kilmarnock: -26.5%

Hertford: -26.5%

Bridgend: -22.5%

Exmouth: -21.4%

Windsor: -21.1%

London: -21.4% (data from another source)

A useful source of data on house price changes in 12 months to April 2009 can be found on the UK Government Communities websites ..link http://www.communities.gov.uk/documents/statistics/pdf/1247222.pdf   The regional index highlights a fall of 15% in London and 14.8% in the South East.  But the largest falls by far have been in Northern Ireland where prices have fallen around 23% in the 12 months to April 2009.

Probably the key question for many is what about future house prices?  Well, there are many opinions on this, much will depend on the impact of unemployment, but from reading the many analyst reports our interpretation is we may have another 10% fall in average prices – but clearly this will vary by town / city.

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Posted in UK House Prices

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