Nationwide Back Funding for Lending as House Prices Fall

The Nationwide Building Society, who have been at odds with house price figures from other sources in the past have backed up the overall view that the market is in decline. The Society showed that property prices across the UK fell by 0.4% in September to an average figure of £163,964 and that the annual rate of decline now stands at 1.4%.

These statistics represent a small drop from that reported in August although the overall pattern will be causing concern in some quarters. However, the Nationwide are another organisation who are hopeful that the new Funding for Lending Scheme (FLS) will shortly start to show a positive impact on the housing market.

Robert Gardner, Chief Economist at Nationwide said that the market had “been impacted by a number of one-off factors this year, such as the ending of the stamp duty holiday that cannot be controlled by the usual process of seasonal adjustment”.

“For this reason the annual rate of house price change is a better guide to the state of the market at present. On that basis, the housing market remains fairly stable, with prices 1.4% lower than September 2011.”

Nationwide were one of the first mortgage lenders to sign up for the FLS and while they remain firmly behind the scheme, Mr Gardner warned that other factors were of equal importance if the property figures were to experience a sustained rise.

“Labour market developments will remain of paramount importance in deciding the trajectory of house prices. There are grounds for caution on this front, as the unusual combination of rising employment and declining economic activity that was evident in the first half of 2012 is unlikely to be sustained,” he added.

Once again, regional variations in the market vary wildly. At the top of the list, the average price of a property in London is now £301,168 while in Northern Ireland that average drops right down to £107,719.

“London continues to defy economic logic. To be just 2% below its peak in a paralysed economy is preposterous,” said Russell Quirk, of estate agents eMoov.co.uk.

Mr Quirk was also sceptical over the FLS, suggesting that it would not filter through to first time buyers and make a significant difference.

“I’m less confident than the Nationwide that the Funding for Lending scheme will have a major impact. Yes, it may make credit more available and cheaper, but will it get through to the people who need it?

“Cheap and available is idle chatter if it’s not getting through to higher loan-to-value borrowers,” Mr Quirk concluded.

Could Downsizing Push the Housing Market Forward?

A recent survey has revealed that downsizing has become the prime reason for moving house within the UK with one if five people moving to a smaller home sooner than they expected. The findings come from Lloyds TSB who claim that more and more homeowners are moving to cheaper houses, either for relocation purposes or simply to save money.

Within the survey, Lloyds TSB found that around one third of those taking part said that they were downsizing to save money on household expenses while 59 per cent stated that they were looking for dwellings that better suited their needs.

Traditionally, those property owners reaching retirement age have been the main demographic in any downsizing statistics but Steven Noakes of Lloyds TSB said that the findings were continuing to include people from all life stages.

“Downsizers are now playing a key role in the housing market and as the study shows we are starting to see homeowners on different stages of the property ladder considering it as a sensible option as more and more families are looking at ways to save money,” Mr Noakes said.

Many are still option to downsize in order to claim a cash windfall and this is another area where market factors have led to more homeowners selling up and moving to smaller properties. Those planning to trade down have seen the average amount of their cash windfall rise by forty per cent over the course of the last ten years. It’s claimed that trading from a detached home down to a small bungalow in 2012 will earn an average of £97,298 – an increase of £28,484 from 2002.

“While we have seen a significant rise in the potential cash windfall, downsizing can make a lot of sense for a wide range of people, it is important to consider carefully whether trading down is the best solution,” Added Steven Noakes.

“Whether you are looking to lower utility bills, pay for an offspring’s tuition fees, or free up extra cash for retirement we recommend you seek professional advice before taking action.”

For anyone thinking of downsizing, they are urged to weigh up all the advantages and disadvantages and there are more than just financial issues to consider. On the plus side there are factors such as less work and maintenance but some homeowners regret their decision purely because they miss the comfort factor that a larger property can bring.

For whatever reason, downsizing is on the up but will it make any significant boost to the property market over the next few months and years?

Are House Prices Finally Being Slashed?

Throughout 2012, we’ve seen property prices fluctuate but the overall trend seems to be one of minor falls, depending on which set of figures you read. One point that many industry experts keep raising is the reluctance by sellers to bring down their asking prices but statistics released this week suggest that this situation may have changed.

Property website Zoopla has found that the number of houses that have sold for less than their original asking price is now at its highest level for nine months. However, the figures in financial terms may be very significant.

Of those properties sold, Zoopla reveal that 37% have had their asking price cut at least once while the average reduction is 7.6%, which in turn equates to an average drop of £19,000.

Traditionally, the summer is a quiet period for the market as a whole but those one-off events have also had an effect. It’s therefore thought that sellers have accepted the need to drop their prices in order to combat the further slowdown caused by the Olympics and the Queen’s Diamond Jubilee.

“Activity levels tend to fall over the summer months as holidays delay the buying process,” said Zoopla’s Nigel Lewis.

“With the recent bad weather and the extended jubilee bank holiday, the rise in proportion of price reductions is a signal that sellers have been doing everything they can to try and tempt those buyers still in the market.

“Once the distractions of summer holidays and the Olympics are gone buyers will once again be able to focus attention on their property search, and this should bolster confidence among sellers.”

Meanwhile, regional variations differ greatly but in regards to the overall market, it’s being claimed that the summer’s events are having little effect in some parts of the country. London based Estate Agent Marsh and Parsons claim that their own sales for the period of the Olympics – 27^th July to 12^th of August were up by 23 per cent compared to the same period in 2011.

“While many potential buyers were glued to their TVs and seats at venues rather than out viewing homes, London’s housing market didn’t grind to a halt by any means,” said Marsh and Parsons’ Peter Rollings.

“The traffic chaos and logistical problems feared in the run up to the Games thankfully failed to materialise, and a corps of committed buyers moving with urgency actually took advantage of quieter streets to secure homes.”

These figures are among the most interesting to have been released so far this year but were the boost in sales at this particular Estate Agents really down to quieter streets or are reduced asking prices about to have a marked effect on the property market as a whole?

Nationwide Reports Biggest Property Plunge in 3 Years

The start of any new month brings a fresh batch of property statistics and first out of the blocks are the Nationwide with claims of significant falls in house prices. In fact, the Society reports that property figures are falling at their fastest rate since 2009 and the trend looks set to continue for the remainder of 2012 at least.

Nationwide’s survey reveals that the average price of a home in Great Britain now stands at £164,389, a fall of over £1,000 from the June figure of £165,738. That represents a drop in percentage terms of 0.7% and this is the fourth month out of the last five that overall property prices have decreased.

It was also reported that mortgage approvals were at their lowest point since 2010 and Nationwide claim that the gloomy picture is firmly down to the current recession.

“The weaker price trend observed in recent quarters is unsurprising, given the disappointing performance of the wider economy,” said Robert Gardner, Nationwide’s Chief Economist.

“The UK recession intensified in the three months to July, with the economy contracting by 0.7% quarter on quarter.”

The Society also went on to point the finger at contributory factors such as the wet summer and the Queen’s Diamond Jubilee, but suggested that these were only minor issues and shouldn’t be blamed in isolation.

“This disappointing outturn can be only partly explained by unusually wet weather and the impact of an extra bank holiday during the quarter,” Mr Gardner added.

Elsewhere, property experts have met the news with resigned acceptance while it is forecast that property prices could ultimately end up falling by as much as 3%.

“The soft news on the housing market is coming pretty thick and fast at the moment,” said Howard Archer of IHS Global Insight.

“The Nationwide data reinforce our belief that house prices are headed lower over the rest of 2012 and very possibly beyond in the face of limited activity, low and fragile consumer confidence, muted earnings growth and relatively high unemployment.

“We expect house prices to end up losing at least 3% from current levels.”

Nationwide have also been in the news recently for releasing what some are heralding as the ‘cheapest ever mortgage deal’. After HSBC introduced a fixed rate product of 2.99% in July, Nationwide went on to trump this with a 2.95% deal.

However, the qualify criteria for both products is very strict and as such, neither are likely to kick start the mortgage approval market on their own. In turn, property prices could be set to maintain their downward spiral for some time to come.

UK Rank Third in Europe for Costly Housing

A recent survey has shown that families in Great Britain spend, on average, 40% of their annual income on housing costs and this means that those outgoings are the third highest in the whole of Europe.

In fact, only Denmark and Greece spend more on those expenses which would typically include the cost of renting or paying a mortgage together with other living costs. The report, delivered by Shelter also suggests that as many as one in six of those households are becoming increasingly overwhelmed with their payments which subsequently lead to higher levels of rent or mortgage arrears.

As a result, it’s claimed that the families who are worst affected are having to cut down on other household essentials such as food, petrol and clothing.

“These figures are the evidence that the UK housing market is deeply dysfunctional,” said Campbell Robb, Shelter’s Chief Executive.

“With so many families spending huge amounts of their income on their rent or mortgage, people will be making daily trade-offs between food bills, filling the car tank with petrol, and paying their housing costs.”

The survey took in 29 countries from across the continent and it found that Cyprus headed the right end of the table with just 2.5% of its families faced with unaffordable housing costs. Meanwhile, our nearest neighbours France revealed that around 5% of its population were struggling with housing bills – a figure that is three times better than in the UK.

One of the main contributors to high housing costs is the price of fuel which continues to rise. The 2010-11 UK housing survey showed that each household pays an average of £1152 a year in energy bills and the figures look set to climb. However, the suggestion that those families struggling to pay rent and mortgages maybe going without heat is even more worrying.

Many cheap energy tariffs have also been scrapped in recent months leaving the cost of fuel to rise further and place an increasing strain on overburdened families.

“This is not set to get better any time soon,” Campbell Robb added. “While the situation is bleak at the moment, a succession of governments failing to provide much-needed affordable homes means that the future facing our children and our children’s children is only set to get worse.”

Overall, it’s a gloomy picture being painted by the survey but can the coalition government rise to Shelter’s challenge and provide the affordable housing that is being widely called for?

Affordable Homes Scheme Set to Fall Short

The Governments Affordable Homes campaign, launched in 2011, was designed to get Britain’s home builders moving to provide the supply to meet a considerable demand. However, reports released by the National Audit Office (NAO), suggest that the scheme may fall some 50% below its intended target.

The plan had looked to deliver 80,000 new properties by the end of 2015 but the NAO are not only suggesting that the numbers may be nearer 40,000, they also suggest that due to financial issues, providers may not be able to keep to their agreement and charge 80% of market rent.

The plans, announced in 2010, left little room for negotiation and manoeuvre at the time,

“There are key risks including the fact that more than half of the homes are planned for the final year, with no room for slippage,” said Amyas Morse, Comptroller and Auditor General.

“The final judgment on the success of the programme will depend on how well these risks can be managed between now and 2015.”

Under the programme, different organisations had set themselves up as housing providers and these included local housing associations, local authorities and private companies. The main problem, as identified by the NAO seems to lie with those providers struggling to raise adequate finance to fund the project.

“Some have had to offer additional collateral, generally in the form of assets rather than cash, to lenders because of using financial derivatives to reduce their interest rate risk,” the report claims.

“A survey by Baker Tilly in 2012 found that 63% of registered providers who responded are now considering alternative funding other than traditional banking sources, the most popular being corporate bonds.”

Margaret Hodge will chair the public accounts committee that will examine the report and she indicates that the government will not explain at this stage as to just how many tenants are likely to be affected.

“The department has scrapped the target rent guidelines for this programme, leaving vulnerable tenants increasingly dependent on housing benefits and increasing the welfare bill by £1.4bn,” she said.

“The department has refused to be transparent about just how many tenants will be affected and by how much.”

Margaret Hodge went on to suggest that the scheme would have to be more transparent if there was any hope of it being completed on time.

“My committee will want officials to regularly and transparently update their assessment of the costs and benefits of the programme so that we can hold them to account for the social and financial consequences of their decisions, particularly in light of changes to the welfare system,” she concluded.

Property Prices Back Down With a Bump

As the first week of July comes to an end, the usual sets of conflicting property price figures for the previous month are coming in. Among the falls currently being reported, the Nationwide claim that figures across the UK fell by 0.6% in June and this continues the sharpest decline for three years.

Among the likely causes as far as Nationwide are concerned are the end of the Stamp Duty holiday and the weakness of the economy as a whole. It says that there is little indication of an upturn in economic fortunes in the near future and as such, the housing market faces an extended period of uncertainty.

“Economic conditions are expected to remain challenging over the next twelve months,” said Robert Gardner, Nationwide’s Chief Economist.

“However, policymakers’ efforts to bolster the supply of credit to the economy and to help lower the cost should provide support to demand.”

The figures confirm that the average price of a property in the UK now stands at £165,738. The society also state that the quarterly price figures fell by 0.9% in June compared to the findings from March of this year.

We were promised a challenging summer with Jubilee celebrations followed by the Olympics and some property experts are claiming that the effects are already being realised.

“The Olympics and traditional summer lull mean the next few months look set to be even more challenging,” said Mark Harris of SPF Private Clients.

“It is still too early to see what effect the emergency funding from the Bank of England will have, and whether it will mean cheaper mortgages for those with small deposits, as well as those with sizeable down payments.”

Meanwhile, figures from the Land Registry have been produced this week and while they are a month behind those of the Nationwide, it claims a 0.5% rise in UK house prices between April and May 2012.

Figures such as these always seem to vary, depending on their source, although those from the land Registry are generally viewed as being the most comprehensive. It is, however widely accepted that an uncertain few months lies ahead.

“What is consistent across the country is that the volume of transactions is well below what we were seeing at the height of the market,” said independent house buying agent Gabby Adler.

“Many vendors are waiting to see what happens with the economy, while many would-be buyers believe they will not be able to get mortgage finance so there is no point in trying.”

How to Add Real Value to Your Home

In recent weeks we’ve looked at many easy and inexpensive ways in which you can encourage buyers for your home and increase its value. Tidying your garden, painting your front door and de-cluttering are all good ideas but what about those major jobs such as extensions, loft conversions and conservatories? A recent survey by estate agents Savills told us exactly what to do if you want to make a major difference to the market value of your home. Here are the top five findings.

1. Loft extension

The key to most of these methods is in creating extra space. A loft which is otherwise left empty or used for storage can be perfect for an extra bedroom or a home office.

It is claimed that converting your loft space can add between 10% and 20% to the value of your home depending on the total size of your property and on the area. In London, for example, where extra space is highly desirable you could expect to receive the full 20% increase on a future sale price.

1. Side Return

The first question to ask here might be ‘what is a side return’? In Victorian times, this was the area outside the home that led from the door at the side of a house and out into the back garden.

Some viewed it as wasted space and had the kitchen extended to make a larger kitchen area or even to add a dining room if feasible. Many older properties in the UK still have a side return and by converting it, Savills estimate that you can add around 10 to 20% to your property in financial terms.

1. A new kitchen

In the case of a new kitchen, you aren’t actually adding any square footage to your home but you are making better use of the space inside. A transformed kitchen can be stunning and comes in at third place in the list.

However, while it may add 5 – 7% to your property value, it is claimed that the initial cost of your new kitchen is rarely, if ever, claimed back on a future sale.

1. A new bathroom

A bathroom is arguably the one place in the house that will be redecorated in accordance with the new owner’s tastes. It is also widely claimed that the thought of upgrading such a room is likely to deter prospective buyers.

Restyling your bathroom can therefore encourage a sale and it’s also claimed that it can add up to 5% to the final figure.

1. An en suite bathroom

This represents the ultimate in luxury and convenience and more and more buyers are adding an en suite bathroom to their list of requirements.

If you have enough space in your main bedroom then you could consider adding the extra room for your own use and when the time comes to sell, you may find that you’ve boosted your property value by up to 4%.

Property Asking Prices On the Rise

A survey from property website Rightmove has shown that asking prices for homes across the UK rose for the third month in a row as buyers sought to choose from a fairly restricted availability. Additionally, Rightmove claim that the average asking price for UK homes has risen by 2.4% in the past twelve months and currently stands at £246,235.

It’s questionable however as to what this statistic really means because, according to the Land Registry, the housing market at the moment is static at best. In simple terms, vendors can ask what they want for their homes but the market dictates that there is no guarantee they will achieve the figure they really desire.

Additionally, with a set of new builds about to enter the market, a dip is now predicted as supply starts the catch up with demand.

But the overall message for vendors is to not get excited about the new figures and to not become complacent about realising a fair asking price that suits both parties. Property experts advise that cutting prices and promoting any unique features in your home will both be vital factors for anyone looking to sell in today’s climate.

“While the national average price of property coming to market has set new records in each of the last three months, sellers should not break out the bunting in celebration until they have done their homework,” said Miles Shipside of Rightmove.

“It remains a very local market ruled by property style and location. Cutting your asking price to be cheaper than your competition and promoting your selling points better will be the key to avoid being an also-ran in the race to sell.”

In addition, Rightmove claim that there is a confused, two tier market at present: On the one hand there are sellers who price at a realistic figure while others have so little equity in their home that the numbers are increased in a desperate hope to sell.

“‘Agents report a two-tier market where those who can afford to price realistically are selling, while those who are equity-poor are struggling to sell as they often have to price up to make any prospect of a move viable,” Mr Shipside added.

Any summer of optimism is also expected to tail off as the London Olympics approach. Major events such as these have traditionally led to a slower market which causes sales to stagnate at best and it is felt that further estimates in 2012 will reflect this.

Surrey Tops the Tables in the Property Price League

In recent weeks we’ve seen just how regional variations differ in property statistics and how significant the respective rises and falls can be in some cases. As an example, London has generally stood out as a region where house prices are increasingly steadily whereas areas such as the West Midlands and Northern Ireland are experiencing some alarming drops in sales figures.

A recent survey by primelocation.com has shown the property divide even more clearly with a survey that indicates just how much the south of the UK dominates housing wealth. Overall, homes in the UK are worth a total of £5.6 trillion pounds and heading the county tables is Surrey, which accounts for around 5% of that combined figure.

Total property values within the county amount to £287.6 billion pounds which equates to £255,125 per head of the population. Below Surrey in second place comes Dorset but the top ten UK counties show just how the much the south prevails throughout the country.

The top of the table reads as follows:

1. Surrey (£255,125 per head; £287.6 billion total)

2. Dorset (£207,220; £83.8 billion total)

3. Buckinghamshire (198,490; £98.8 billion total)

4. East Sussex (£196,300; £101.2 billion total)

5. Essex (£178,705; £252.4 billion total)

6. Hertfordshire (£175,492; £194.3 billion total)

7. Devon (£161,817; £121.3 billion total)

8. Hampshire (£159,171; £206.4 billion total)

9. Kent (£157,288; £224.5 billion total)

10. Warwickshire (£145,431; £77.9 billion total)

The survey went on to indicate just how the country is divided on a regional basis and once again, the final table shows a clear pattern when it comes to overall regional property wealth.

1. South East (£1.6 trillion total property values)

2. London (£1.0 trillion)

3. South West (£488.3 billion)

4. East (£482.5 billion)

5. West Midlands (£367 billion)

6. East Midlands (£336.1 billion)

7. Scotland (£322.1 billion)

8. Yorkshire & Humberside (£300 billion)

9. North West (£253.9 billion)

10. Wales (£223.3 billion)

11. North East (£162.9 billion)

Of course, that table only gives you the overall total and it may be fair to assume that the North East for example, is less densely populated with housing that London. However, those figures are a good indication of an overall picture.

”Property wealth per head is driven by one key factor – demand,” said primleocation.com’s Nigel Lewis.

”Homes in and around the capital will always be sought-after because of the increased population density in the South and its better employment opportunities.”