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Property Optimism Falls To Lowest Level For 18 Months

Property Optimism Falls To Lowest Level For 18 Months

Property Optimism Falls To Lowest Level For 18 Months

UK property price optimism among private rental sector landlords and residential property owners has dropped to the lowest recorded level for 18 months after buy to let mortgage lending in January was reported to be decidedly sluggish.

Traditionally, the UK property market generally experiences a slow start that incrementally builds to a summer buying frenzy before reaching another plateau and then a further period of increase followed by a gradual easing at the end of the year.

The latest Halifax House Price Index (HPI) found that UK property prices increased by just 2% in January 2015, reaching a new UK average property price of £193,130 (GBP).

Combined with figures released by the Department of Communities and Local Government, showing a slowdown in the number of new homes being built, and it is clear why landlord and residential property owners optimism has fallen.

60% of landlords and property owners, surveyed for the lender’s latest housing market confidence tracker report, expected the average property price to be significantly higher in 12 month’s time.

This means that house price optimism has fallen by 10 points from 62 to +52, the lowest level of consumer confidence since June 2013, when 52% of private rental sector landlords and residential property owners expected a large rise in property prices.

So what’s different?

  • In June 2013 UK inflation was at 2.9% compared to the current 0.3%
  • Employment was just over 30 Million compared to today’s figure of 30.9 Million
  • Mortgage lending levels were at £15 Billion (GBP) compared to the current £17 Billion (GBP).

Despite the fact that the UK’s Gross Domestic Product (GDP) for 2014 increased by 2.6% and all members of the Bank of England’s (BoE) Monetary Policy Committee (MPC) voted to hold interest rates at 0.5%, the dip in confidence levels over UK property prices reflects public concern over the UK economy in general.

Craig McKinlay, mortgages director at the Halifax said that “More than half of consumers still believe UK property prices will be higher than they are now in a year’s time; however optimism has continued to weaken. Despite this we’re now seeing a return to the seasonal trend for house price activity”.

But he pointed out that of more concern are the figures from the Department of Communities and Local Government showing a slowdown in the number of new homes being built. ‘It’s widely acknowledged that the UK needs an increase in the amount of new housing being built,’ said McKinlay.

‘The Lloyds Banking Group Commission on Housing targeted 2 to 2.5 million new homes built by 2025 new homes to be built before 2025. If we are to address demand the increase in new homes coming onto the market needs to be sustainable,’ he explained.

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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Land Registry Data Show Property Values Not Rising As Fast As PredictedLand Registry Data Show Property Values
Not Rising As Fast As Predicted

Data from the Land Registry’s House Price Index (HPI) in March 2014, shows that overall annual UK property values have increased by just 5.6%, taking the average UK property value to £169,124 (GBP).

The monthly change from February to March 2014 actually shows a property value decrease of 0.4%, however London saw property values increase by 12.4%, while the Eastern and North East regions experienced their greatest monthly rise, with property values rising by 1.1%.

Wales was the only UK region to experience an annual price drop of 1.6% and was also the only region that showed the most significant monthly price fall with values down 4.2%.

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2014 UK Property Prices To Increase Further

2014 UK Property Prices To Increase Further

UK Property Prices Continue To Increase

There could be more good news for UK property investors over the coming months as projections for the rest of 2014 indicate that property prices are set to rise even more, providing the potential of greater Return On Investments (ROI).

Since the UK housing market crash in 2008, UK property prices slumped and were depressed for some time afterwards due to uncertainty in the economy, however, the end of 2013 saw the UK property market spring back to life.

According to data from the Halifax House Price Index (HPI), there were over 1 Million residential property transactions in 2013 for the first time since 2007, and residential property sales increased for the ninth month in a row in December 2013,  30% higher than in 2012.

The data from Halifax is great news for property owners and shows that the UK property market is well and truly back on its feet.  So, if you’re a property investor who is planning on investing in property in 2014, you can expect to see property prices continuing to rise.

2014 started with residential property prices on the increase and more people buying and selling. The introduction of the 2nd phase of the Government’s Help-To-Buy scheme in October 2013 allowed property purchasers to get 95% Loan-To-Value (LTV) mortgages, heralding the return of the first-time buyer to the UK property market. 

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Governor of the Bank of England thinks Northern Ireland's House Prices Are Not Keeping Pace With Rest Of UK

Governor of the Bank of England thinks Northern Ireland’s House Prices Are Not Keeping Pace With Rest Of UK

Northern Ireland House Prices Not Keeping Pace With Rest Of UK

Mr Carney told the Andrew Marr programme that “if you look at the UK as a whole, everywhere bar Northern Ireland – we are now seeing house prices begin to recover”

On Sunday 16th February, the Governor of the Bank of England, Mark Carney said in a BBC interview with Andrew Marr said that Northern Ireland is the only part of the UK where house prices are not recovering, stating: “If you look at the UK as a whole, everywhere bar Northern Ireland – we are now seeing house prices begin to recover, so it is a more generalised phenomenon”.

However, Mr Carney’s comments provoked a backlash from Northern Ireland’s finance minister Simon Hamilton who reckons that Mr Carney’s remarks were at odds with analysis carried out by Stormont’s Department of Finance and Personnel (DFP).

Mr Hamilton posted on his Twitter account, “Doesn’t tally with DFP analysis. Never thought I’d have to correct a governor of BoE!”

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Property Repossessions Fall As Prices Increase

Property Repossessions Fall As Prices Increase

Property Repossessions Make Great Investments

Latest figures from the Land Registry show that property repossessions have dropped in every region of the UK with falls in the past year ranging from 10 – 39% whilst property prices have continued to climb.

The December 2013 data from Land Registry’s House Price Index (HPI) shows an annual property price increase of 4.4% which takes the typical average property value in the UK to £167,353.

The monthly change from November to December 2013 showed a property price increase of 1.1%.

But behind the good news there is a large North-South divide in property repossession volumes, with the number of property repossessions far greater in Northern England than the number of repossessions in the South, even after the recent falls.

Property repossessions are a fantastic opportunity for would be property investors as the mortgage lender in possession of the property are only seeking reimbursement for their initial mortgage outlay, presenting below market value (BMV) opportunities for investors.

Repossession volumes decreased by 31% to just 1,129 in October 2013 compared to 1,636 property repossessions in October 2012.

The UK regions with the greatest fall in the number of repossession property sales were the East Midlands and the South West.

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Published UK Property Data For 2014 Suggests A Record Start To The Year

Published UK Property Data For 2014 Suggests A Record Start To The Year

Published UK Property Data For 2014 Suggests
A Record Start To The Year 

Confirmation that the UK’s residential property market has returned to health is the first data from Rightmove covering 2014 which suggests that the year ahead looks good for property!

The Rightmove House Price Index (HPI) of 2014 shows that property asking prices increased by 1% in January.

Property prices are traditionally subdued in the first month of the year, prices increased just 0.2% in January 2013 and have usually fallen by an average of 0.2% in the month of January over the last decade.

The number of properties coming to market and activity is also up as both estate agents and property vendors look to cash in on the increased confidence in the UK property market.

Year on year property asking prices are up 6.3%, the highest annual rate of increase since November 2007, before the onset of the UK’s credit crunch. 

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House Prices Officially Rising Across The UK

House Prices Officially Rising Across The UK

UK House Prices Rising Faster Than Inflation

The Office for National Statistics (ONS) has recorded year-on-year house price increases across the UK with property values increasing by:

  • 5.6% in England
  • 5.4% in Wales
  • 2.5% in Scotland
  • 3.3% in Northern Ireland

The increase in house prices and activity in the UK property market has been credited to an increase in first-time buyers (FTB) purchasing residential property using the Government’s Help-To-Buy scheme.

The ONS have revealed that annual house price growth outpaced the cost of living in November 2013, even after removing property market activity in London and the South East of England from the calculations, property prices were up by an average of 3.1%, compared with a 2.1% rate of inflation.

Property price increases in the UK are generally driven by market activity and price increases in London and its surrounding areas, although other regions have started to show accelerating property price increases.

Property prices in London were up by 11.6% in November 2013, compared with a year earlier, and property prices have also increased strongly across the whole of the UK according to official figures

Regional Property Price Increases

  • London: up 11.6%
  • South East: up 4.5%
  • West Midlands: up 4.4%
  • North East: up 4.2%
  • East: up 4.1%
  • Yorkshire and the Humber: up 3.2%
  • South West: up 3.1%
  • East Midlands: up 2%
  • North West: up 0.6%                           Source: ONS annual change, Nov 2013

UK regions are becoming far more buoyant and less reliant on activity in the London property market and the majority of buyers are having to look further afield than central locations to find affordable properties, creating a halo effect on property prices.

The annual increase in UK property prices in November follows on from the 5.5% rise observed in October 2013 and although the annual comparison did not show any acceleration, property prices were higher than the previous month increasing by 0.5% in November compared with October, with an average residential property valued at £248,000 (GBP).

The ONS house price index is based on mortgage completions, and is considered to be more comprehensive than House Price Indices (HPI) produced by mortgage lenders such as the Halifax and Nationwide whose figures are based on their own mortgage data.

Autumn Surge In UK Property Prices Predicted

Autumn Surge In UK Property Prices Predicted

Various residential property indices published by banks and mortgage lenders have shown that UK house prices have been increasing for some months, however the latest survey from Rightmove shows that property asking prices have actually declined over the summer although it is predicting an autumn surge in uk property prices.

The Rightmove report says that there was a summer  slowdown in residential property prices as discretionary sellers were distracted by the heat-wave and have been waiting to market their properties.

Those property vendors who were unwilling to wait had priced properties more aggressively and asked an average of £3,704 (GBP) equivalent to 1.5% less for their property in August compared with the previous month’s asking prices.

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UK Property Prices Continue To Rise

UK Property Prices Continue To Rise

UK Property Prices Increased By 0.6% In August 2013

The latest House Price Index (HPI) published by UK building society and leading mortgage lender, Nationwide, reveals that UK property prices are continuing to increase at a steady and sustainable pace.

Data from the Nationwide HPI show that UK property prices are now 3.5% higher than they were in 2012 and 0.6% higher than they were in July 2013, making a typical residential property now worth around £170,514 (GBP).

The data also reveals that the annual rate of residential property price growth has slowed, down to 3.5% from the 3.9% observed last month, but economists had allowed for a drop in growth because of only having a low base for comparative purposes.

The quarterly measure of UK property prices has increased by 1.4%, showing that residential property prices are rising at their strongest pace for the last three years, which could promote fears of another property bubble.

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