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?

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.”

3% Property Price Fall Predicted For 2012

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.

First Positive Signs for 2012 Property

Now that the wave of predictions for the 2012 property market has died down, the first batch of actual figures are being released with some positive signs for the year ahead. Reports released this week indicate that the asking price for new properties released on to the market actually grew by 1.4%

Perhaps more significantly, there was an increase in potential buyer activity too with 27 per cent more internet searches performed than at the same time in 2011. While a figure of 1.4% in prices may not be enough to get too many experts excited, the 27% search increase is an impressive rise and may just lead to a more positive start to the year than many have predicted.

Property expert Selwyn Lim is certain that these figures are a positive indicator for the months ahead,

“Since the internet began, more people have been searching online and that trend is continuing,” Lim said. Nevertheless, I am sure some of it is a growth in people searching for property in general.”

Mr Lim did however warn that while these figures were welcome in a period where the forecast is generally a gloomy one, the market should guard against what he referred to as ‘excessive optimism’.

One of the problems with regards to moving the market forward is the continuing issues that new buyers have in obtaining a mortgage. The predictions that were produced at the end of 2011 hinted that this situation could be set to get worse as criteria tightens and the ever decreasing window for sub-prime lending continues to close.

Meanwhile, some property experts have been highlighting the value of hybrid mortgages this week while suggesting that they could increase in popularity during 2012. A hybrid mortgage starts its life as a tracker before ending as a fixed rate, thereby giving the borrower the ‘best of both worlds’ according to its supporters.

Catherine Hearnden, director at MyMortgageDirect said that a mortgage of this kind could be a perfect solution for any borrower who is undecided over which path to take.

“People are not keen on fixing now because rates are low and everyone has got it in their head that rates will increase. You have got the benefit now of a tracker, but you know that your rate will not increase between years three to five,” she said.

Hearnden also went on to say that many are unaware of the hybrid’s existence.

“It is quite a new thing, so I shouldn’t imagine that people do know they are out there. Certainly when we ever talk to anyone about them, it is not something that they were expecting,” she added.

A hybrid mortgage may not help those that are struggling to get funds in the first place but they could be a solution to help convert the increase in property searches into confirmed sales.

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Vendors with Great Expectations

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.

Property Predictions for 2012

Property predictions for 2012 are being highlighted profusely in this week’s media but the main question for existing and prospective property owners alike is, ‘what will happen to house prices next year?’

In the nation’s newspapers, the experts have been having their say and overall it’s a fairly mixed set of predictions. Jon Hall of the Saffron Building Society suggests a combination of outcomes, depending on the type of property involved.

“The lack of confidence in the economy means that house prices are unlikely to do anything spectacular. That said, we are seeing increased signs of activity at the top end of the market,” Hall said.

He went on to confirm the theory that a rise in demand for houses in need of repair is set to take hold.

“We’re also seeing people choosing to invest in refurbishing older properties to achieve greater returns on their capital,” he concluded.

On the whole, mortgage providers are suggesting that 2012 will mirror 2011 in many ways and if mortgages remain hard to secure, the market as a whole is unlikely to change.

I’d expect that next year would look broadly similar to this year,” said David Hollingworth of London and Country Mortgages.” Mortgage availability has played a key role in the reduced level of housing transactions and there is very little expectation that next year’s mortgage market will be any bigger and could even be a little down on this year.”

Elsewhere, there is a suggestion that the entire market is dependent on the Euro crisis and that nothing significant will happen until this is settled. This view is underlined by Ray Boulger of mortgage brokers John Charcol.

“If the euro collapses the consequences on our banking sector will be severe because of the global nature of banking and the huge write-offs, which will be necessary on loans made to Eurozone banks which will become insolvent,” Boulger said.

“The result of this will be that mortgage lenders will have no choice other than to reduce lending which will have a negative impact on the level of activity in the housing market and on property prices.”

While many are predicting no change, others have hinted at a significant drop and in conclusion, Howard Archer of IHS Global Insight added his views.

“I think house prices will fall by 5pc over the first half of the year and then flat line over the second half, “Archer claimed. “I believe there is a significant risk that house prices could fall more than this given the current weakness of the economy and worrying outlook.”

In twelve months’ time we will know if any of these predictions have come true but for now, the Eurozone crisis, availability of mortgages and many other factors look set to subdue next year’s housing market at the very least.

What Does 2012 Have in Store for Property?

As another tough year for the housing market draws to a close, many experts are taking time to predict trends for the coming twelve months. While some will paint a predictably gloomy picture, others have provided a more positive outlook for 2012.

The Telegraph have had their say this week and their predictions offer a mix of positivity with a hint of caution for the year ahead.

Rental properties are constantly in the news and while demand is high, it’s suggested that Landlords will be charging higher monthly rental charges in order to cash in on the current state of the market.

That would seem a logical conclusion but it is at odds with a recent suggestion that rental prices are experiencing a slight fall. A survey by LSL Property Services claims that prices fell by 0.4% in November – the first drop for ten months.

“Following their relentless march upward throughout the year, rent rises have taken a pause for breath,” said LSL director David Newnes.

Elsewhere, there are predictions of a rise in innovative schemes such as the Taylor Wimpey Family and Friends advantage where friends and relatives of the property buyer put money into the overall purchase and earn interest on that figure.

With new buyers turning to parents and anyone with sufficient collateral to help them fund a deposit, a rise in similar schemes could be evident in 2012. In addition, the growth of shared equity and shared ownership schemes is also expected to rise over the course of the next twelve months.

Those that are able to secure a mortgage could well be in a stronger position than ever before when it comes to buying new homes. With demand showing a slight increase, tempered by a strict mortgage market, it’s felt that those buyers who can secure a home loan will be holding out for greater discounts as well as bonuses such as an increase in fixtures and fittings.

Other predictions include more aggressive marketing from estate agents as they battle to take their share of the current situation. A single advertisement in the shop window will no longer be enough as vendors demand that their agent works harder for their commission.

Overall, the survey isn’t making any bold predictions in what promises to be another tough year. Small changes are promised here that could benefit the housing market slightly, while avoiding any drastic improvement or the alarming slump that some are predicting.

Housing market “lacking direction” according to the Halifax

Mortgage lender Halifax have reported that the property market continues to lack any direction following a second successive month of lower prices today.

Last month’s decline of 0.5% followed a fall of 1.1% in August, although Halifax said average prices in the quarter to September were still 0.1% higher than the previous three months – the first such rise since early 2010.

Halifax housing economist Martin Ellis said September’s drop continued the mixed monthly picture so far this year with four rises, four falls and one month of no change in prices.

He added: “This mixed pattern is consistent with a market where prices are lacking genuine direction.”

The average UK house price in September was 1% lower than in December 2010 on a seasonally adjusted basis, at £161,132.

Mr Ellis said the financial uncertainty was likely to be constraining demand but added that low interest rates and a rise in employment over the last year have been supporting the market.

“We expect little change over the remainder of this year,” he added.

Typical mortgage payments for a new borrower have fallen from a peak of 48% of average disposable earnings in mid 2007 to 26% in the most recent quarter. This is well below the average of 37% over the past 25 years and the lowest since 1997, the lender added.

This week, price comparison website Money Supermarket said the average fixed two-year mortgage deal of 3.82% was the lowest since it began compiling records in 2007, down from 4.01% in August.

The latest drive downwards saw Leeds Building Society launch its lowest ever two-year fixed-rate mortgage with a rate of 1.99%.

2011 property market…early signs?

Frankly there wasn’t much appetite or excitement for predicting what might happen in 2011. It’s a mug’s game at the best of times and most of us in the business have been so worn down by the last few months of 2010 that anything would be better. So are the first signs good?

Well it depends again on who you are and what constitutes good. If you’re an estate agent the chances are it’s not looking overly good right now. More of the same grind with no sellers and a frustrated bunch of buyers who have good mortgage offers but nothing to buy.

If you’re a property owner in London chances are you’d be feeling happy with that as the lack of supply is creating the same effect as a strong demand, ie it’s keeping house prices up. Indeed for really good quality property this year is looking very good for values.

But is that what the market needs or wants? For all the people jumping up and down delighted at any woes affecting estate agents it’s worth reiterating that estate agents are the bellwethers of the wider economy. If agents are going bust (and they have been, with 40% of individual agents out of work since 2008), and companies likely to this year, then it means the entire industry that depends on property: building, decorating, soft furnishings, surveying, solicitors, movers etc etc are all in trouble. If people aren’t spending on property the chances are they aren’t spending elsewhere. That’s a universal truth whether you like it or not.

So there’s nothing much more to say as it’s early, and things may yet get busier, but if they were going to get busier I’d be seeing more sellers looking to get their properties valued now with a view to taking on the Spring market. I cannot grasp why sellers aren’t going for it with historical low rates for buyers likely to have bottomed out and price gains from the unexpected bounce last year still crystallised, and perhaps looking as if they may slip later this year. Perhaps we’re back in that dreadful spiral that potential sellers can’t find anything and so aren’t bothering to go to the market.

As usual when these situations arise it’s difficult to see who’ll blink first, and with buyers very reluctant to pay the asking prices some desperate agents are putting on property, I think it’ll be sellers who’ll blink and go to the market, the only question is can the cleverer ones avoid a possible lemming like rush later in the year.