Exchange of Views on the Housing Market

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 24^th 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.

DIY Tasks to Tackle This Bank Holiday Weekend

The Bank Holiday weekend is almost upon us and a survey carried out by HSBC suggests that over 50% of us will be staying at home to carry out some of those DIY jobs that we’ve been putting off since the beginning of the year. A significant percentage of those people will be working around the house with a view to selling their property and there are many small and larger tasks that are known to help achieve a quicker sale.

If you believe the weather forecast, we are certainly in line for the type of weather that suits indoor DIY but what are the jobs that will carry most value when it comes to selling your home?

The 2012 HSBC Home Improvement Survey shows a list of jobs that property experts believe will add value to your house, while it also indicates how much importance individual homeowners place on those tasks.

As far as the experts are concerned, de-cluttering space is the most vital job by far with 93% claiming that this task made a bigger impact on potential buyers than anything else. In contrast however, only 71% of property owners felt that this was necessary.

This is just one area where experts and individuals disagree and it shows that there are many popular misconceptions over which jobs are vital to the vendor. It even seems in some cases that property owners are still falling into the clichéd traps of putting out fresh flowers and brewing fresh pots of coffee.

One of the key elements that HSBC stress is the importance of first impressions and there are many jobs that can be done right now that will have a tangible impact on any potential buyer.

“Many householders spend the Bank Holidays on DIY projects to help boost property value and saleability. However it is often the smaller jobs like painting the front door that can make all the difference when looking for a quick sale,” said Peter Dockar, head of mortgages at HSBC.

The front of the property is simply vital in regards to those crucial first impressions so aside from the front door itself, if you have an immediately visible garage door then this should be looked at. Door furniture is important too and if you have tired finger plates and letter boxes, they can be easily and cheaply renewed.

Fences and gates are other areas that experts believe will aid a successful property sale and above all, the HSBC survey highlights the disparity behind those expert views and the ones held by the homeowners themselves.

If you want to achieve a quick sale at a price to suit, the results of the survey should certainly be considered by any vendor.

Lenders Succumb to Mortage Rate Rise

Some of the UK’s biggest lenders have announced fixed rate mortgage rate rises this week as they finally succumb to the pressures that funding costs provide. At least ten lenders will have announced their increases by the time April comes to an end making it ever harder to obtain home loans for new purchasers.

The Bank of England has also announced that an average two year fixed interest mortgage backed by a 25% deposit has risen from 2.9% last September to 3.45% in March. However, that September 2011 figure marked an all-time recorded low after this type of funding peaked at 6.35% in 2008.

The Council of Mortgage Lenders (CML) indicate that this latest batch of rises backs up their claims that rates would have to increase because funding costs meant that the current low levels were unsupportable.

“Funding costs have been experiencing upward pressure for lenders, who have been operating at low margins,” said Sue Anderson of the CML.

“So at some point lenders will take the decision to raise rates for good balance sheet management,” she added.

The market seems to be experiencing a typical ‘reverse domino’ effect with lenders reacting to rises from their competitors and increasing their own rates accordingly.

“Lenders seem to have increased their rates in two stages this week, some at the beginning and the others catching up later in the week,” said Trinity Financials’ Aaron Strutt.

Among those increasing their rates this month are Abbey, Halifax, Santander, Lloyds TSB Britannia, HSBC, and Cheltenham & Gloucester.

“When you take into consideration that some lenders have raised their rates at least twice in the past month, they all add up,” Aaron Strutt added.

The figures also come at a time when certain organisations were pointing to a market dampening and the impact of greater restrictions on lending criteria. At the beginning of March, the Bank of England warned borrowers to expect more difficulty in obtaining finance and that seems to be the case.

The National Association of Estate Agents (NAEA) are also concerned at the moves which they believe will stunt a market which had showed signs of improvement during the stamp duty holiday.

“The recent move by some major lenders to severely limit the availability of interest-only mortgages is no doubt dampening the levels of supply in the market,” said Wendy Evans-Scott of the NAEA.

There have also been rises in the variable rate offered by some lenders and it is widely expected that more will follow the lead of their rivals in the weeks to come.

Interest in New Homes Soars

New homes have been firmly in the news of late with government schemes announced that attempt to encourage construction companies and local authorities to build the houses that will meet demand. Now, as we enter the second quarter of 2012, leading house builder Barratt Homes have announced that they have experienced their busiest start to a year for five years.

The increase in activity began with a vastly increased number of searches on the company’s website back in January and this has subsequently been supported by a rise in visits to new sites and reservations on new properties.

As a result, Barratt claim that some sites are selling homes at twice the national average. The company’s figures have also been backed up by Right Move, who confirm a 27% rise in property searches since the start of the year.

Barratt believe that potential buyers are making their move as they become aware that home ownership is more cost effective than renting.

“We believe that one of the key factors is that savvy customers have worked out it’s now cheaper to buy than rent,” said Lisa Preston of Barratt West Midlands.

“We simply can’t believe how busy we are especially at a time when all you hear in the news is doom and gloom. It just feels like the people of Burton have decided to get on with their lives.”

Lisa Preston also added that she believes people are becoming aware that there may never be a more affordable time to buy their own property.

“In recent years many people have had to put their lives on hold but it seems that they are not prepared to wait any longer,” she added.

“Home buyers have also woken up to the fact that with interest rates low and house prices still some way below their peak, buying is more affordable now than many believe.”

Staying in the Midlands, home builder David Wilson have announced the development of six new sites across Leicestershire as they also start to meet an increase in demand.

“The Prime Minister has said again and again that one of the best ways to boost economic growth and get people working is through building more homes,” said Philip Lacey, David Wilson’s sales director for the area.

Mr Lacey also went on to confirm that over 1,500 jobs would be created for local people as a result.

“In addition to the local construction jobs created in building the new homes, the local people who move into the new housing will also spend their wages locally. This translates into a significant boost for local retailers at a time when concerns remain about the national financial picture. It’s exactly what this area needs,” he concluded.

In the midst of government announcements, the claims from these two home builders may just be tangible proof that the housing market, for new properties at least, may show a marked improvement in 2012.

Empty Homes Charity Helps to Ease the Housing Shortfall

As pressure to address the housing crisis in the UK grows stronger and stronger, new solutions are starting to emerge that could help to ease the strain.  According to UK charity Empty Homes, there are currently 1.7 million families on council housing waiting lists and that figure continues to grow.  The UK population is growing and yet house building rates have not been this low since the 1920s.

It Could Cost as Little as £10,000 to Renovate an Empty Property

New ideas come and go on how to ease this problem, but one idea that can’t be ignored is the idea of reusing the thousands of homes currently standing empty across the UK.  Empty Homes has spent a great deal of time collating local council statistics and estimate there are currently 720,000 empty properties in the UK.  Renovation of each property could cost as little as £10,000.  With new-build homes at an all-time low, this seems like the ideal solution to the shortfall in available housing.

Thousands of Properties Ready to Be Renovated

Often these properties are privately owned or properties that have fallen into disrepair.  Some have been inherited by owners who simply don’t have the resources to renovate the property.  Whatever the reason, it’s apparent that many of these homes could be made habitable for the thousands of families desperate for accommodation and that’s exactly what Empty Homes sets out to achieve.

Empty Homes was first established in 1992.  Over the years they have acted on behalf of those individuals and families desperate for somewhere to live by challenging Government policies and suggesting ways to take advantage of thousands of empty homes.  One of the largest problems faced by the owners of these empty properties is the lack of funds to renovate and repair them.  Empty Homes successfully campaigned for tax-breaks for these owners helping them to raise the funds to make them habitable once more.

Help Empty Homes to Rehome Thousands of UK Families

On a local level, Empty Homes is helping thousands of individuals to bring homes back into use. On a national level, every council in the UK now has a named officer whose responsibility it is to restore empty homes back into habitable condition.  These are just some of the initiatives that Empty Homes has addressed and they plan to continue working with home owners and local authorities to help ease the housing crisis and help the thousands of people desperate for a place to call home.

Empty Homes provides a wealth of free advice and assistance to those looking to renovate an empty property and to those looking to invest in empty property.  You can also report an empty property through their website so they can investigate further.

Estate Agents Can Survive the Downturn

The housing market is unsettled at best and among the victims of the current property climate are Estate Agents. In March, the Times newspaper revealed that 80 agents had closed their doors in February of this year due to low sales volumes and the increased costs of running their business in the first place.

That would tend to indicate a gloomy outlook for Estate Agents as a whole as we enter the second quarter of the year but  Richard Murray from Eurolink technology limited – a market leading consultant to agents in the UK believes that if businesses are pro-active, they can deal with the current situation and stave off the threat of closure.

“The screws are tightening and estate agents who can’t run a tight ship are sadly diminishing,” Richard Murray warned.

“We are often called in to estate agencies to find solutions to cutting costs and increasing productivity and we find that simple changes can make a huge difference.“

As they continue to provide assistance to help agents thrive in the current market, Eurolink have issued a list of top ten tips for an efficient and cost effective property business.

1. Automation: Streamline your processes, in particular, the repetitive manual ones which take up valuable time that is better spent on negotiating and closing deals.

2. Setup a solid IT infrastructure: Ensure your systems are functional, reliable and easy to navigate and that staff are well trained in using them.

3. Maintain a dependable IT support network: Use a reputable IT support provider to ensure consistently quick access to data and to prevent being caught out when systems go down.

4. Keep staff knowledge up to date: Provide regular training sessions and news updates for staff, advising them of new legislation changes, local events and your key point of difference from local competitors, and how these might affect business practice and your varied client base.

5. Customer Relationship Management: Ensure that your software application can deliver all of the relevant contact information for every individual client you deal with. Understanding who the person is and what they mean to your business will ensure that all potential opportunities can be explored.

6. Integration: Utilise one software system for both estate and lettings work. This allows for the cross sharing of customer data, reduced data storage and is cost effective (you only pay for one license, one technical support team etc.)

7. Familiarity: Implement a software system that is familiar to your staff, as a complicated and unfamiliar interface will make adoption difficult. A product like the Veco-onesystem™ which appears similar to Microsoft Outlook allows for easy navigation and will mean staff take less time to embrace the latest and most innovative technology.

8. Organisation of data: A complete software solution allows your business to free itself from the restraints of filing cabinets and storage units and is also environmentally friendly.

9. Streamline customer communications: Link your network phone system to your software solution to enhance customer communications by delivering a fast and knowledgeable service.

10. Security: Store data in a secure software storage facility. Information can still be easily accessed by authorised staff, and access can be monitored.

By following these tips, Eurolink are confident that any agency can thrive through the harshest of market conditions.

“Your offering needs to provide more for less – that is, less cost to you, the business and less cost to the customer,” Richard Murray added.

“Innovative technology can improve business decision-making and, ultimately, customer service, which is one of the benefits of IT advances of the last few decades.”

Modest Fall in March Property Prices

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 24^th 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.

House Market Showing Bouyancy

While the underlying trend for the housing market is one of uncertainty, the Council of Mortgage Lenders (CML) have suggested this week that there are some positive signs as property experts search for the merest hint of a potential recovery.

The claims come as the CML confirm that gross mortgage lending for February stood at £10.7bn and while this was virtually unchanged from the previous month’s figures, it still represented an increase of some 14% from this time last year.

This was the seventh time in a row that month on month lending had increased compared to 2011 and CML’s chief economist Bob Pannell was positive about the findings.

“Property sales remain fundamentally weak, but have shown strong year-on-year increases since the closing months of 2011,” said Mr Pannell.

“Allowing for the seasonal factors that depress activity over the winter months, the underlying picture for house purchase activity continues to show some buoyancy.”

Economists have been quick to point out that the February figures are still some way below those of last summer but this is a view that underestimates the power of the weather as a factor in buying activity. Seasonal increases have been shown year after year as buyers begin to stir as soon as summer starts to roll in.

A further reason for the fact that lending is increasing in 2012 seems to be the Stamp Duty holiday which is getting the credit for much of the figures currently released in the property market. At present, the charge of 1% is waived for property purchases up to £250,000 but that window is due to close in the next few days.

“We expect the number of first-time buyers to drop back after March as would-be buyers adopt a wait and see attitude,” said Mark Harris, of mortgage broker SPF Private Clients.

Mr Harris went on to suggest that despite the CML’s claims of ‘buoyancy’, the overall picture was essentially one of a depressed market that was firmly anchored in a period of uncertainty.

“Weak consumer confidence and a shortage of homes coming to market are set to continue, although we do not expect interest rates to rise for three to five years, which will support the market to an extent. Mortgage rates, however, will continue to rise on the back of higher funding costs,” he added.

Looking at the two sets of quotes it almost seems if the CML are desperately willing them to spark a feeling of positivity with economists. However, Mark Harris’ view is a commonly held one and a further gloomy outlook could be triggered by the imminent closing of the Stamp Duty Holiday.

Nationwide and Halifax Still At Odds Over House Prices

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.

Europe in midst of property market agony claim RICS

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.