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3% Property Price Fall Predicted For 2012

by Alison Feemantle

As we’ve seen with previous months, conflicting sets of figures with regards to the property market are often released by various bodies but some of the more trusted statistics originate from the Land Registry.

Overall, the figures show that while there are big variations in property prices across the UK, the average price of a home in Great Britain is now around one per cent lower than a year ago at £160,417. In addition, the Land Registry confirm that their figures show a fall of 0.3% in prices from March to April and this tends to be consistent with those numbers released by other organisations.

Once again, there is widespread variation across the UK with prices in London climbing by 5.1% in April according to the survey; a rise that also means a 5.1% increase on the same period in 2011. Meanwhile, the biggest monthly fall of 2.7% was experienced in the West Midlands while Yorkshire and Humberside suffered the largest annual drop of 5.6% on statistics released a year ago.

“The divergence between house prices in London and those of the rest of the country has increased sharply this month,” the Land Registry announced.

“The average price of property in the capital is £360,721 in comparison with the average for England and Wales of £160,417.”

The prices across the UK are fluctuating so wildly that some industry experts are finding it hard to see a pattern emerging.

“Very low transaction levels are causing prices to shift unpredictably from month to month,” said Russell Quirk of emoov.co.uk.

“For prices in the capital to have shot up 5.1% during April, after a decline of 1.8% in March, drives home just how volatile and unpredictable the market is.

“Take prices in the North East. These shot up by 5.6% in March but fell 2.1% in April. Where’s the logic?”

Meanwhile, Howard Archer of IHS Global Insight believes that the figures released by the Land Registry are consistent with predictions that the market will start to settle into a steady fall over the next few months.

“We expect house prices to fall by around three per cent by the end of 2012,” he said.

Figures released by various bodies and organisations such as the Land Registry, Office of National Statistics, the Halifax and Nationwide can often give us a confusing set of figures. In addition, the property market picture was masked by the closing of the stamp duty holiday but maybe, as Howard Archer suggests, we are now set for a more stable period even if that reveals a steady drop in house prices for the remainder of 2012.

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Exchange of Views on the Housing Market

by Alison Feemantle

It’s that time of the month again where sets of figures and conflicting views are released in regards to the housing market and the Halifax have greeted their monthly statistics with the claim that prices are ‘fluctuating widely’. Meanwhile, the Royal Institution of Chartered Surveyors (Rics)state that the market is back in the ‘doldrums’ after a brief flurry of activity at the start of the year.

Halifax confirmed that average prices fell sharply in April as the stamp duty concession ended on the 24th of March. Overall, that drop equated to 2.4% in real terms with the average price of a house across the UK now being recorded at £159,833 – 0.5% less than for the same period last year.

However, the lender still claims that the underlying trend is one of upwards movement.

“Prices in the three months to April were 0.3% higher than in the previous quarter, marking the first rise in this measure for seven months,” said Martin Ellis, Chief Economist of the Halifax.

Howard Archer of IHS Global Insight suggested that the figures pointed to a rather more gloomy trend.

“Housing market activity is very low compared to long-term norms,” he said.

“And the economic fundamentals currently look worrying overall for the housing market with unemployment high and likely to rise further, earnings growth muted, and the outlook uncertain.”

Meanwhile, the Rics carried out its monthly survey of members and also found a sharp fall in sales, across the UK, except in London. The closure of the stamp duty holiday was always expected to have a damaging effect on the market and the institution claim that this is now being shown.

“With the recent surge in activity brought on by the stamp duty holiday coming to an end, it is unsurprising to see that prices across much of the country are continuing to fall,” said Peter Bolton King, the housing spokesman for Rics.

“Renewed concerns over the economy and talk of a double-dip recession dominating the headlines in recent weeks may well have served to undermine consumer confidence.”

Mr Bolton King went on to add that the lack of affordable mortgages was also having an effect on sales.

“What’s more, the continuing lack of affordable mortgage finance is still hindering many first-time buyers who cannot afford to get a foot on the property ladder,” he added.

For once, the Halifax and the Nationwide seem to agree that property prices are falling and only now are we beginning to see the effect of the end of the Stamp Duty holiday.

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Typical Spring Bounce But Mortgage Approvals Down

by Alison Feemantle

A significant rise in the number of homes sold in the UK was recorded by HM Revenue and Customs (HMRC) in March and they claim that this is largely down to a seasonal ‘spring bounce’ that is evident in the housing market on an annual basis. HMRC also suggest that the Stamp Duty holiday has had an effect on property figures for the earlier part of the month.

HMRC recorded 74,000 sales during March as opposed to 63,000 for the previous month with Gross Mortgage Lending up by 30% over the same period according to the Council of Mortgage Lenders (CML).

This is the third year in a row that housing market activity has increased sharply from February to March but the figures are still some way short of those declared during the most recent housing boom. Sales activity for March 2012 stands at around 50% of the number of transactions recorded in March 2007.

In the meantime, the British Bankers Association (BBA) have produced a set of figures which at first glance seem slightly at odds with the claim that gross lending had risen sharply. The organisation indicated that mortgage approvals slumped alarmingly in March and they now stand at a ten month low.

Approvals had hit a two year high of 37,977 in January but after falling back to 32,840 in February they have dropped further to 31,888 in March. The BBA also point to the Stamp Duty Holiday as a reason for masking some of the figures but Howard Archer of IHS Global Insight fears that these figures indicate a worrisome trend that could lead to a depressed period for the UK housing market.

Moreover, Mr Archer is concerned that news confirming Britain’s return into recession will have severe implications for the property market as a whole.

“The housing market may well be hit by heightened consumer concern over the economic outlook following the news that the UK is officially back in recession with gross domestic product contracting 0.2pc quarter-on-quarter in the first quarter,” Mr Archer said.

“It is also possible that housing market activity and prices will be softer in the near term as a result of the stamp duty concession having brought forward a significant amount of fist-time buyer activity,” he added.

As we’ve seen in recent weeks, the recent Stamp Duty Holiday has been given credit for inflating many of the statistics within the property market within the first three months of this year. It had been widely expected that those statistics would be lower for the rest of 2012 but with consumer uncertainty over the recession, there are clear fears of an alarming slump.

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Modest Fall in March Property Prices

by Alison Feemantle

The Nationwide have claimed that house prices in March have fallen by just 1% from the figures declared in February and the drop is in keeping with predictions that suggest sideways or slight downwards movement for the remainder of 2012.

While a 1% fall may not seem particularly excessive, this is the first time for six months that figures have dropped on a year by year comparison and that may be seen as significant in some quarters. It also represents the largest fall recorded by the Nationwide for two years.

At present, the Society claims that the average price of a property in the UK is now £163,327 and that equates to a fall of 0.9% from March 2011.

Nationwide’s Chief Economist Robert Gardner went on to suggest that the outlook was likely to remain the same for the next year at least.

“In our view the challenging economic backdrop is likely to continue to act as a drag, with house prices moving sideways or modestly lower over the next twelve months,” Mr Gardner said.

The Stamp Duty holiday which drew to a close on the 24th of March 2012 is largely being blamed for the slowdown in March and with buyers now having to pay the 1% tax for properties priced between £125,000 and £250,000, this is expected to have a significant impact on figures due for release at the end of April.

However, Robert Gardner went on to suggest that if the Government’s NewBuy scheme were to have an effect and if there were any signs of improvement in the economy, this pattern could yet change.

“This dampening effect on housing market activity and prices may fade over the course of the summer, especially if the wider economic outlook begins to improve and other policy measures, such as the government’s NewBuy scheme, are successful in supporting buyer demand,” he added.

Nationwide conceded that it was somewhat difficult to read the market as it is impossible to tell how many property sales would have taken place if the Stamp Duty window had not been open at the start of the year. Therefore, a clearer picture can only occur over the course of the next few months.

In addition, we have seen Nationwide producing conflicting sets of figures to the Halifax in recent months and the latter’s statistics for March 2012 are still to come.

Overall therefore, it’s a mixed and sometimes confusing picture but with the Stamp Duty holiday finally at an end, figures should finally begin to settle down and give us a more accurate indication.

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Nationwide and Halifax Still At Odds Over House Prices

by Alison Feemantle

The Halifax has released its latest set of property figures and has reported a fall in house prices of 0.5% in February. This has offset a seasonal rise of 0.6% from the previous month but it is still at odds with the Nationwide who have declared an overall increase of 0.6% for the first two months of 2012.

The Halifax’s three month index, which is viewed more favourably by economists as it tends to iron out any seasonal spikes, reports a 1.1% drop in prices in the last three months while the annual index points to a 1.9% fall.

The report concludes by stating that the average property price in the UK currently stands at £160,118 and it suggests that the market is facing ‘significant uncertainties’ for the rest of 2012.

Martin Ellis, Housing Economist at the Halifax claimed that a relatively small number of transactions were currently leading to a situation which was roughly similar to the same period last year.

“Overall, prices nationally are at broadly the same level as last spring,” he said.

“This stability in prices is explained by the fact that market conditions have changed very little over this period with demand supported by low interest rates and supply remaining tight.”

However, Mr Ellis went on to refer to the uncertainty that clouds the market and like many other property experts, he suggested that the true picture would not be made clear until the Eurozone crisis was addressed.

“Significant uncertainties, however, persist and the prospects for house prices during 2012 will, to a large extent, depend on events in the Eurozone and the potential knock-on effects on the UK,” he concluded.

To the general public, any uncertainty probably isn’t helped by contradictory claims from the Nationwide who suggest that property prices have increased. Both organisations use their own mortgage data to compile their statistics but the anomaly tends to arise from the fact that the Halifax figures are compared to those from a year ago while Nationwide use a month by month and quarter by quarter comparison.

Howard Archer from HIS Global Insight summed up the overall picture as one of uncertainty and one that is further clouded by the impending closure of the Stamp Duty Holiday.

“With housing market activity recently trending up moderately and the economy showing signs of improvement, some of the downside risks to house prices are currently abating. We still expect house prices to drift downwards over the coming months, although we have recently trimmed our forecast overall fall in 2012 to 3% from 5%,” he said.

Overall it’s another confusing outlook and one that is unlikely to become any clearer until the second half of 2012.

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Europe in midst of property market agony claim RICS

by Alison Feemantle

Since the start of 2012, various organisations and property experts have been analysing fresh statistics in the hope of finding positive signs for the housing market. In the UK, the stamp duty window which is due to close in March was expected to yield a ‘spring spike’ in sales and elsewhere, some claims had pointed towards chances of a slight recovery.

However, figures released this week by the Royal Institution of Chartered Surveyors paint what is arguably the gloomiest picture yet for 2012 and they claim that Europe as a whole is in the grip of property market ‘agony’ which shows no sign of abating.

In countries such as Austria, France, Switzerland and Norway, there was actually a rise in prices of 5% or higher but this was comfortably countered in countries such as Ireland and Spain, which suffered property price falls of 17% and 10% respectively in 2011.

The Rics European Housing Review went on to suggest that the future for property prices remained bleak unless the Eurozone Crisis were to be resolved. It also claimed that building booms prior to the crash were also contributing to the decline.

“Not only did Ireland, Spain and Cyprus all have substantial price booms prior to their crashes, but they also had huge building booms as well,” the report stated.

“Each one in consequence is still suffering from severe new supply overhangs.”

Across Europe, Ireland’s fall of 17% was the biggest recorded but the Rics went on the claim that the UK property market was currently one of the worst. While Great Britain posted a slim 1.5% fall on the Halifax institute, the report’s author Michael Ball claimed that high inflation meant that the drop in real terms equated to 5.7%. Furthermore, since 2007, that real term fall has resulted in property prices slumping by almost a third.

“Most probably, the housing market will continue to be broadly flat in nominal terms for some time yet and inflation will gradually erode house prices and indebtedness,” Mr Ball said.

“A sustained upward change will only happen when the economy as a whole shows more signs of growth. In the meantime, the housing market remains a drag on the economy as a whole.”

Overall, the report rather puts into perspective some of the suggestions of a possible recovery this year. If the Rics projections are true then the property agony that they refer to could continue for a long time yet.

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Halifax Declares Rise in January House Prices

by Alison Feemantle

Earlier this month, the Nationwide revealed figures that claimed a small drop in house prices for January 2012 in comparison with the previous month. Overall, the society suggested that average prices had fallen by 0.9% over the period but those findings are at odds with the latest set of figures produced by the Halifax.

From December 2011 to January 2012 the Halifax suggest that the average cost of a home in Great Britain actually rose by 0.6% to £160,907. The reasons behind these findings lay with low interest rates although they still represent a fall of 1.6% compared with the same period in 2011.

These statistics will be a positive sign for economists who had predicted a gloomy opening to the year. Martin Ellis of the Halifax welcomed the findings while warning that any future figures would be subject to the economy’s ability to withstand all the various problems that it currently faces.

“Low rates have contributed to mortgage payments falling to their lowest level as a proportion of disposable earnings for a new borrower for 14 years. A recent improvement in employment trends may also have supported demand,” Mr Ellis said.

“Prospects for house prices over the coming months will, to a large extent, depend on events in the eurozone and the repercussions of developments there for the UK economy. If the UK can avoid a prolonged recession, we expect broad stability in house prices in 2012,” he added.

Welcome though the figures may be, they still contradict not only the Nationwide’s findings, but additional statistics released by the LSL/Acadametrics house price index which suggest a fall of 0.2% from December 2011 to January 2012 with an annual rate of decline of 1.4%.

LSL Property services who supplied the figures also suggested that the fall was sharper than expected.

“Prices edged down in January, dropping further than the normal seasonal slowdown we expect to see in the first month of the year,” said David Brown, Commercial Director at LSL.

“This means prices are now falling at 1.4% on an annual basis – the fastest rate of decline since September 2011. This has been driven by growing concerns among property buyers about the state of the global economy – especially the extent to which the eurozone crisis will slow the market.”

Confusing though these figures may be, the Halifax are sticking by an overall prediction that will see prices drop considerably for the whole of 2012. This forecast was backed up by Howard Archer, Chief Economist at IHS Global Insight.

“We are sticking to our view that house prices are likely to fall by around 5pc in 2012,” he said. The latest Halifax data, along our belief that the economy will likely just avoid recession, suggests that house prices are unlikely to fall sharply,” Mr Archer concluded.

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January Reveals Slight Fall in Property Prices

by Alison Feemantle

After the predictions for 2012’s property market begin to disappear, they are replaced by tangible figures and the Nationwide have indicated a minor drop in housing prices for January, in comparison with the previous month.

The figures reveal that the value of an average home in the UK was £162,228 for January and this represented a fall of just 0.2%. The Nationwide also claim that the rate of property price growth also slowed to 0.6% as opposed to 1% in December 2011.

Nationwide are the first organisation to declare figures of this kind and they are in keeping with the forecasts of many property experts. The organisation themselves had predicted a small decrease or a sideways movement and they appear to have been vindicated by the announcement.

“Given the challenging conditions prevailing in late 2011, with the UK economy contracting in the final three months of the year, it is not surprising that house price growth softened at the start of 2012,” said Robert Gardner, Chief Economist at the Nationwide.

Mr Gardner went on to predict a similar scenario for the first six months of 2012 at least,

“The economy is not expected to gather much momentum until the second half of 2012 at the earliest, which suggests that labour market conditions and buyer sentiment may be slow to improve,” he added.

The Nationwide also pointed to two elements that stand to have a major influence on the figures released for February and beyond. Mr Gardner claimed that the flow of properties emerging on the UK housing market had slowed almost to a standstill and that has helped to keep prices fairly stable.

The other factor surrounds the commonly cited subject of the availability of mortgages and in this regard, a further set of statistics claims that more help to first time buyers with low deposits is becoming available.

The financial information website Moneyfacts shows an increase in products designed for those with a deposit of around 10%. The statistics released at the start of this month show that there are 49 mortgage products for those looking to fund 95% of a purchase compared with just 24 at this stage last year.

In addition, borrowers requiring a 90% mortgage can now find  343 relevant products which represents a significant increase from 280 at the beginning of January 2012.

Much of these figures have been met with a firm degree of expectation but perhaps the most important development is the increase of those low deposit mortgage products. Their potential effect on the property market will be monitored with great interest in the coming months.

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Vendors with Great Expectations

by Alison Feemantle

Figures released by the Royal Institution of Chartered Surveyors indicate that there has been a further rise in the number of new properties released onto the market. December statistics show that new instructions rose for the third consecutive month but RICS claim that the housing market will remain stagnant, largely due to the unrealistic expectations of vendors.

Overall, the figures are impressive and in London, the number of new properties coming on to the market has reached its highest level since 2005. The number of buyer inquiries has also increased but surveyors are resigned to another quiet year and have put the blame firmly on those ‘unrealistic prices’.

“The increasing number of prospective sellers who placed their homes on the market in December is a positive development, as a lack of stock has been a big issue in some parts of the country,” said Ian Perry, spokesman for RICS.

“But with sales expectations remaining flat, it is important that vendors are realistic in their pricing if they wish the sale to go through in good time.”

Those comments echo earlier reports that suggest some vendors have been cutting their prices significantly in the hope of driving through a sale. Back in November 2011, Property website Zoopla claimed that certain sellers were dropping their asking price to the extent where the market was seeing its biggest reductions in two years.

“With the current economic uncertainty and difficulty buyers face in finding funding, it is no wonder that sellers are having to reduce prices in order to encourage sales,” Zoopla’s Nicholas Leeming said at the time.

While it may be bad news for the market as a whole, anyone in a strong financial position who is currently looking to buy could be set for a bargain if they are prepared to wait for the price drops.

Those buyers are in the minority however as reports continue to suggest that obtaining a home loan will be an even harder task in 2012. As a result, Ian Perry is not predicting any positive changes to the housing market as a whole.

“Looking ahead, along with surveyors’ flat predictions for transaction levels, price expectations remain low,” he added.

The property news is mixed here once again although it is encouraging that there so many more new instructions on the market. However, as RICS suggest, the reductions as reported by Zoopla last year remain isolated and until that position changes, the market will continue to stagnate.

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Nationwide Predicts Stagnation for 2012

by Alison Feemantle

House price figures for 2011 are currently being announced throughout the media and the Nationwide Building Society is one of the first to comment on the statistics and to offer their predictions for 2012. Over the course of the last twelve months, the average house price rose by 1% but a fall of 0.2% from November to December leaves Nationwide predicting a subdued market this year.

Regionally, there were some significant differences with prices in London rising sharply while in Northern Ireland there was a contrasting slump. Nationwide’s chief economist Robert Gardner claimed that the figures pointed to a resilient market in the face of such economic uncertainty.

“The 1% rise in house prices recorded over the past 12 months could hardly be described as a strong performance, but against a backdrop of anaemic economic growth and a deteriorating labour market, UK house prices were surprisingly resilient in 2011,” Gardner said.

That has led the society to predict a similar scenario for 2012 as experts point to a stifling of economic growth as the Eurozone crisis continues to dominate the headlines. Against this backdrop, Nationwide feel that the market can do nothing but stagnate.

The society’s figures for 2011 also serve to highlight just how extreme some of the regional variations have been over the last twelve months. In Northern Ireland, that drop in prices equated to 8.7% while in London, the average price rose by 5.5%.

Earlier this week, the Daily Telegraph hinted at a rise in ‘forced sales’ over the next twelve months but Gardner went on to suggest that this type of property purchase had little or no effect on the market last year.

“Thanks to continued low interest rates, the number of forced sales remained low,” Gardner added. “Together with a dearth in building activity in recent years, this prevented a glut of unsold homes from accumulating on the market. This meant that although demand and supply were both weak, they remained relatively well-matched.”

This is the time of year when market predictions will dominate the property news but as far as Nationwide as concerned, they can see little change ahead for 2012 with sideways figures or a slight drop being the most likely outcome,

“The housing market in 2012 looks likely to be characterised by low levels of activity once again, with prices moving sideways or modestly lower over the course of the year,” Robert Gardner concluded.

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