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Does House Price Index Data Provide A Clearer Picture Than The Newspaper Headlines Suggest?

Does House Price Index Data Provide A Clearer Picture Than The Newspaper Headlines Suggest?

Does House Price Index Data Provide A Clearer Picture Than The Newspaper Headlines Suggest?

There can be a great deal of contradiction with the rising number of published House Price Indices, (HPI), that attempt to show the general public what is happening in the UK residential property sales market.

Many Spotlight subscribers are already aware that some of the published House Price Index data provided by mortgage lenders only relate to residential property sales, whilst others relate only to property asking prices.

However, property purchasers are often told to use the official published Land Registry data as a true guide to property prices rather than rely on any house price index data, but Land Registry data is a few months out of date because the Land Registry only record actual completed residential property sales.

Consumers need to know if all the HPI data is anywhere near accurate before they decide to part with cash to purchase a property, and with some degree of disparity between different indices the information provided can be confusing.

However, one thing is becoming very clear – UK property price growth is slowing!

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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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Banks To Be Stress Tested On 35% Drop In House Prices

Banks To Be Stress Tested On 35% Drop In House Prices

Banks Stress Tested On 35% Drop In House Prices
And 5% Rise In Interest Rates

UK and Continental banks are to be stress tested using a worst case scenario in an effort to assess if they could cope with a house price slump of 35% or a sudden spike in interest rates to more than 5%, the exercise will be monitored by the Bank of England.

Sky News broke the story on Monday ahead of an official announcement on Tuesday by the Prudential Regulation Authority (PRA), after learning that banks would be subjected to an armageddon style scenario to see if they have sufficient capital to withstand another economic slump.

A series of commercial real estate losses is expected to be applied to the banks’ balance sheets as part of the tests, but it’s not certain whether or not the interest rate hike will be quantified as part of the tests, but the 35% slump in property prices could reveal if banks and building societies would need to raise billions of pounds of fresh capital to survive, unless they can demonstrate their ability to withstand such a huge slump.

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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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New Data Shows Residential Property Prices Are Still Climbing

New Data Shows Residential Property Prices Are Still Climbing

New Data Shows Residential Property Prices
Are Still Climbing

UK property prices are continuing to increase across all UK regions, according to the latest data published by the mortgage lender, Halifax.

The latest data gathered in a survey by the Halifax for February 2014, shows that residential property prices increased by 2.4% during the month, making average property prices 7.9% higher than they were in February 2013.

The growth in UK residential property prices over the last 12 months is the fastest annual pace of increase since October 2007 and means an average residential property in the UK now costs around £179,872 (GBP).

Residential house prices are increasing because of improving economic conditions in the UK and increased demand from frustrated buyers, encouraged by the Government’s Help-To-Buy scheme offering first-time and next-step buyers cheaper mortgages.

A recent poll of 27 economists and analysts by news agency, Reuters suggested that residential property prices could increase by another 7% this year, led by activity in the London property market.

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UK PRS Landlords Expect Tenant Demand To Increase

UK PRS Landlords Expect Tenant Demand To Increase

42% Of UK PRS Landlords Plan 2014 Rent Increases

According to the latest survey by specialist house share website, Spareroom.co.uk, 42% of UK private rented sector landlords expect to increase rental prices over the next 12 months and of those some 26% are planning to increase rents by more than 3%, which is significantly higher than inflation.

In their latest Rental Index, Spareroom revealed the average cost of a double bedroom in a shared house increased by 4.5% in the final quarter of 2013, reaching a new average of £507 (GBP) per calendar month.

Room rents in London also saw a rise in prices, with an increase of 2% over the same time frame, meaning the average cost of a double room in a shared house in the nation’s capital is now at an average cost of £676 (GBP) per calendar month.

Whilst some landlords plan to increase rental prices, 58% of Spareroom’s Rental Index respondents stated that they will not be raising rents and 5% of UK PRS landlords claimed that they intend to reduce rents during 2014. 

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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.

Manchester Leads UK Property Boom

Manchester Leads UK Property Boom

Manchester Leads UK Property Boom

Increasing property prices are not just a phenomenon belonging to London and the South-East of England, as new data from Nationwide shows that all UK regions are now enjoying increasing property prices as the property boom continues to gather pace.

Every region across the UK saw property prices increase year-on-year, ranging from a 14.9% annual increase in London to a 1.9% uplift in the North.

Nationwide reported that property values increased by an average of 8.4% across the whole of the UK in 2013, as the market revival became increasingly broad-based, but Manchester emerged as the property boom city, with property prices up by 21% over the last year, to reach an average value of £209,627 (GBP).

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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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Buy-To-Let Mortgage Lending Increases By 31%

Buy-To-Let Mortgage Lending Increases By 31%

UK Buy-To-Let Mortgage Lending Hits £5 Billion (GBP)

The resurgence of property investment in the UK means that landlords are extending their rental property portfolios and cashing in on the strong demand for rental property from “generation rent”.

The buy-to-let boom has seen mortgage lending reach another milestone as latest figures released by the Council of Mortgage Lenders (CML) show that mortgage borrowing has hit a five-year high, and the Bank of England’s (BoE) historically low interest rates are predicted to fuel even more growth in the sector.

Buy-to-let mortgage lending has continued to excel expectations as the latest CML data shows £5.1 Billion (GBP) was advanced to landlords in the second quarter of 2013, that’s 21% up on the first quarter of the year and up 31% on 2012 figures.

The new governor of the Bank of England, Mark Carney, has indicated that interest rates are expected to remain low until at least 2016, encouraging further growth in the UK private rental sector (PRS).

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