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Are Property Price Rises Slowing?

Are Property Price Rises Slowing?

Is The UK Property Market Just Experiencing
A Seasonal Slowdown Or Is It Something Worse?

There are a lot of reports in the media attempting to suggest that the UK property market is doomed to failure, with the latest House Price Indices (HPI) published by mortgage lenders suggesting that the UK property market is slowing, however there are fears that it might be in more serious trouble.

Halifax latest figures show that property prices in the three months prior to September 2014 were 2.7% higher than in the preceding quarter but there was an average 0.6% property price rise across the UK during September, resulting in an average property price of £187,188 (GBP).

Halifax say that this is the second successive decline in the quarterly rate and predict that the annual house price growth rate has already peaked at 10% and future growth will be at a considerably slower pace. 

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UK Rental Market Remains Healthy Despite PRS Rent Falls

UK Rental Market Remains Healthy Despite PRS Rent Falls

UK Rental Market Remains Healthy Despite PRS Rent Falls

Rental price increases in many UK regions have slowed according to the latest data gathered by the latest Buy-To-Let Index conducted by LSL Property Services group.

The data showed that UK PRS rents increased by 1.5% in the 12 months to December 2013, less than half the 3.2% growth observed in 2012 and on the whole, UK PRS rents fell by 1% in December 2013, (around £8), reducing the average private rental sector rent to £745 (GBP) per calendar month.

The largest drop in PRS rental prices was observed in the South East, with rents down 2% since November 2013, rents also fell 1.9% in both London and Wales.

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2nd Consecutive monthly fall in residential property mortgage approvals

2nd Consecutive fall in residential property mortgage approvals

Mortgage approvals for UK residential property

purchases dropped in February

The Bank of England (BoE) has confirmed that residential mortgage lending fell for a second successive month in February 2013 reinforcing previously released data from the Council of Mortgage Lenders (CML) and the British Bankers Association (BBA).

The Bank of England figures show that 51,653 residential property mortgages were approved in February, the lowest number since September 2012.

The overall figure was down on the Bank’s revised figure of 54,187 mortgage approvals expected for January, and the amount of mortgage approvals for the purchase of residential properties were less than was originally predicted for February.

Economists had forecast a fall in mortgage approvals, down to 53,700, according to a panel of estimates by Bloomberg. However, the Bank of England have said that remortgage lending in February had increased by 3.8% to 26,771.

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Latest UK Residential Property News From The Royal Institute of Chartered Surveyors

Latest UK Residential Property News From The Royal Institute of Chartered Surveyors

Interest from potential buyers in UK residential property dropped off slightly during June 2012, with 10% more surveyors reporting a fall in new enquiries, according to the latest RICS survey.

This was also compounded by an insignificant proportion of new build residential homes hitting the market as new instructions dropped for a second successive month.

Overall activity in the UK residential property market has struggled to see any noticeable improvement since the end of the stamp duty holiday in March.

According to the latest Royal Institute of Chartered Surveyors (RICS) report, residential property supply and demand failed to turn a corner in June with newly agreed sales slowing for three consecutive months.

12% more chartered surveyors who responded to the survey across the UK reported falls rather than rises in newly agreed sales, while the average number of completed sales per surveyor over the previous three months fell fractionally to 15.5.

Residential property prices across the UK continued to fall last month, with 22% more surveyors reporting price falls rather than raises, the weakest reading since October 2011.

Regionally, London was once again the only part of the UK to report rising prices, although the pace of increase has slowed significantly since the start of the year.

Expectations for future residential property prices showed little change as a net balance of 19% more surveyors expect prices to continue to fall. However, there is optimism surrounding property transaction levels, with 11% of respondents predicting property sales to increase rather than decline.

Simon Rubinsohn, RICS Chief Economist said: “The housing market didn’t manage to turn a corner last month and activity remained in the doldrums. Fewer vendors looked to test the market and levels of buyer interest seem to have fallen back since the expiry of the stamp duty deadline earlier in the year. Although there is some positivity that the amount of sales going through is going to see an increase, it is unlikely that we will see any real movement until purchasing a property is more affordable and accessible for the likes of first time buyers.”

Online property portal, Rightmove states that it has recorded a drop in the average asking price for residential property this month, the first significant fall since January 2012.

Average UK residential property prices have fallen by 1.7%, a drop of around £4,138 (GBP),

The demand for residential property has been low due to a number of factors:

  • Euro 2012
  • The weather, deterring potential buyers from viewing properties,
  • The Olympics, for distracting people’s focus away from moving.

Righmove said that there were twice as many people trying to sell a property than those trying to buy one, with each branch of the agency having an average of 75 residential properties that they were unable to sell.

The company warned property vendors that further asking price cuts could be necessary to secure a sale.

Director of Rightmove Miles Shipside, said: “The fact that we have not seen major price falls in the UK and that many areas are not awash with ‘For Sale’ boards may lead some sellers to be over-optimistic with their pricing. New seller numbers may be down some 30% on the period prior to credit-crunch, but the numbers achieving a successful sale are down by half and average unsold stock levels are creeping up.”

The West Midlands was the only region in England and Wales where prices increased in July compared with the previous month – with asking prices up 2% to £191,121.

In contrast, residential property prices dropped most in London, compared with the previous month, with a fall of 3.6% to £460,304.

According to UK property transaction figures, the number of private residential property sales fell by 11,000 during 2011, continuing the property slump that has now lasted for 3 years,.

Statistics released by HM Revenue and Customs show UK residential property sales dropped to one of the lowest totals recorded, with just 869,000 residential properties sold last year compared to the 880,000 homes sold in 2010.

The slowdown in the housing market in recent years was most evident in 2009, when only 848,000 houses were sold, (about half the number of transactions recorded in a year before the financial crisis began).

The Bank of England (BoE)  said recently that it believes even more lenders will tighten their credit criteria in 2012 and it will be even harder for would be purchasers and property investors to get a mortgage, heightening concerns UK residential property sales could hit another record low this year.

The first-time buyer sector of the industry made an ever so slight slight recovery in recent months after dropping to a three-year low last autumn.

However, the recovery may prove temporary with the stamp duty holiday for first-time buyers closing in spring 2012.

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The UK Land Registry have said that UK Property prices have dropped by 2.6% during 2011 bringing the average property value to just £162,109

The figures, which cover transactions in England and Wales over the last 9 months, show that London is the only region where prices have risen over the year, experiencing a 2.7% increase.

According to the latest figures, which cover the month of September, the typical London home is now worth £349,026,

Property pundits and industry commentators have said that the capital’s ability to attract overseas buyers as a world city has helped to keep the London market buoyant.

Across England and Wales, property prices dropped by 0.3% in September, another decrease in UK house prices following the 0.1% drop in August.

UK Property values had enjoyed a 1.3% increase between June and July this year.

Consumers squeezed purchasing power, the tightening fiscal policy, a weakening labour market and major concerns over the Eurozone economic crisis and global instability have all been cited as factors that currently limit potential buyers and are also said to be weighing down UK property prices.

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The threat of a double dip recession and the current Eurozone economic crisis have been cited as influencing factors scaring both UK property buyers and sellers.

With the reduction in disposable income and the increased cost of living, it appears that UK homeowners are aiming to sit tight and ride out the worst.

Squeezed purchasing power, tightening fiscal policy, a weakening labour market and concerns over the economic outlook limit the options for potential buyers and are factors for driving down property prices in the UK housing market.

Even though the UK has had record low interest rates of 0.5% since March 2009, it is not enough of an incentive for many homeowners.

Mortgage application fees are now higher than in previous years and there are the direct costs of moving house like stamp duty and people tend to spend money on a new home as well, so for many UK homeowners staying put is the obvious thing to do.

A recent survey discovered that in the UK…

  • 14 Million households can afford to move,
    (Would not struggle to get a mortgage)
  • 8 Million people own their home without a mortgage
  • 6 Million people have a mortgage of less than 50% loan to value.
    (But the cost of moving is prohibitive)

Property prices are down 19.3% from the summer of 2007, using the Halifax measure, and according to some economists, they have further to fall.

However, Halifax itself has reported that mortgage payments for new borrowers are at their most affordable level for nearly 15 years.

Predictions from some leading economists state that after a 3% fall this year, property prices will drop by up to 5% in 2012 and the same again in 2013.

When viewed over a long period, UK house prices tend to rise at an average of 1% above inflation. However, in the last 15 years, UK property prices have risen 5% per annum in real terms.

Prices in the UK will eventually have to revert back to trend, whether that is by a US or Irish-style property crash, or thanks to low interest rates, something similar to Japan where prices have fallen every year for the last 20 years.

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