Property News

First-Time Buyers Down As House Prices Dip

31/08/2010

First-Time Buyers Down As House Prices Dip Share Share Comments (36)10:30am UK, Monday August 30, 2010

Huw Borland, Sky News Online

The number of people looking to buy their first home fell sharply during the past year - as house prices edged lower in August.

Sellers are also getting a lower proportion of their asking price, Hometrack says

Only 22% of potential buyers were looking to purchase their first home in July, down from 31% during the same month of 2009, according to property website Rightmove.co.uk.

The average cost of a home also dropped by 0.3% during August to £158,300, compared with a 0.1% decrease in July, property intelligence group Hometrack said.

Rightmove warned that the proportion of first-time buyers was half the level needed for a healthy housing market.

The group''''s director Miles Shipside said: "With the number of prospective buyers at the bottom of the chain being half of normal levels, the question sellers further up the chain will be asking is, ''''Who will be at the bottom of my chain?"''''

There is growing weakness on the demand side - a weakness which represents more than just a seasonal blip.

Richard Donnell, director of research at Hometrack The availability of mortgages continued to be people''''s main concern about buying a home.

Many first-time buyers quizzed in the survey (55%) said mortgage-related issues, like raising a deposit, were among their biggest worries.

But people were less concerned about house price falls, with 73% saying they thought prices would be around the same or higher in 12 months'''' time.

The price decline in August was driven by a drop in the number of people looking to move home, with demand for housing falling for the second month in a row by 2.2%, Hometrack said.

At the same time, the number of new properties on the market increased, with estate agents reporting a 2.4% jump in the number of homes they had on their books.

The change in conditions has seen the average time a property takes to sell increase to 8.9 weeks, the highest level for more than a year, Hometrack said.

Sellers are also getting a lower proportion of their asking price, dropping to 93.5% from 94% in July.

:: Rightmove questioned 22,010 people during July

EU legislation to make energy efficiency ratings compulsory for home sales

25/08/2010

As part of the government’s plan to reduce carbon emissions by 29% by 2020, as of 2012, it will be made compulsory for energy efficiency ratings to be made public for all UK home sales advertisements under EU legislation. Previously homeowners were required to provide an energy performance certificate (EPC) before the sale of the house, but this was not necessarily required to be produced before the sale of the house. Under this new legislation, the homeowners will be legally required to publish this information before the house sale is completed. The move will encourage homeowners to make their homes more energy efficient, not just to create more desirable homes to sell, but can also help reduce energy bills whilst creating a warmer environment to live in.

Higher Capital Gains Tax to affect landlords in UK

08/08/2010

A predicted shift in emphasis is due for private landlords from shorter-term capital gain to long-term investment income. While this will bring strength to the rental market it will also mean that landlords will have to reassess their long term views on income protection. It is also predicted that landlords will now begin to take a more protected approach with regards to their investments. The emphasis has now turned more towards rental income and the need to protect that income through insurance. Those looking to invest in property during the buy-to-let boom are rethinking their strategies if their intention was to capitalise on rising property prices Those investors looking to generate pensions from rental properties will be particularly at risk without insurance Due to the cuts in public spending continually raising the threat of redundancies, the risk of tenants defaulting on payments is likely to increase. The financial loss of defaulting payments could have the same impact as the dramatic fall in interest rates. The main difference is that landlords are able to protect themselves with insurance

Mortgage lending by UK banks continues to fall

30/07/2010

The housing market is expected to be sluggish in 2010 Mortgage lending by the major UK banks dipped in June compared with the previous month, figures show.

The number of mortgages approved for house purchases in the month fell to 34,813, the British Bankers'''' Association (BBA) said. However, net mortgage lending was still 4.1% higher than a year earlier.

Meanwhile, people continued to pay off more of their unsecured debts than they spent on credit cards, personal loans and overdrafts, the BBA said. Hips scrapped The drop in mortgage lending came despite some extra activity in the housing market brought by the abolition of Home Information Packs (Hips). HM Revenue and Customs reported earlier in the week that the number of sellers was rising. The sales figures were the highest this year and were up 15% on the same month last year. But a dip in future demand from buyers was in evidence in the BBA figures. The number of home loans approved for house purchases was down from 36,418 in May, the BBA said.

This was the lowest level since February and down from the average of the previous six months of 37,027. "The banks'''' mortgage lending position was little changed in June. The abolition of Hips and a reported increase in the number of house sellers is expected to encourage activity in the market, though this may be tempered by households'''' uncertainty over job prospects and the impacts of fiscal tightening," said BBA statistics director David Dooks.

Spending on credit cards has been relatively subdued Net mortgage lending - which strips out redemptions and repayments - fell from £2.5bn in May to £2.1bn in June. This was also down from the average of the previous six months of £2.5bn, although it was still higher than a year earlier.

No real house price recovery likely in the next 5 years

21/07/2010

• 70% chance that real cost of a property will be less in 2015 than in 2007 • Second half of 2010 likely to see falling house prices

PricewaterhouseCooper says there is a 70% chance that inflation-adjusted house prices will not rise above recession levels for five years. Photograph: Murdo Macleod

The inflation-adjusted level of house prices in Britain is likely to remain below its pre-recession levels for the next five years, one of the country''s leading consultancies said today.

A report from PricewaterhouseCoopers (PwC) showed there was a 70% chance that the real cost of a property in 2015 would be below that in 2007 and a 50% chance that it would take until 2020 for the market to rise above its previous peak.

The study coincided with the monthly health check of the property market from the Royal Institution of Chartered Surveyors (Rics) showing a slackening in activity. Reports from estate agents indicated only the second monthly drop in inquiries from new buyers since the autumn of 2008.

With the supply of homes boosted by the abolition of home information packs (Hips), the Rics said the second half of 2010 was likely to see falling house prices.

Cheaper borrowing costs and shortages of properties to buy led to a rapid recovery in prices last year, but the Rics said uncertainty over the outlook for the economy had made potential purchasers more wary. Agents reporting a fall in inquiries outstripped those reporting an increase by five percentage points last month, while the balance of Rics members recording an increase in homes for sale was at its highest for more than three years.

Today''s Rics report chimes with recent house price surveys fromthe Nationwide and the Halifax, which suggested that low levels of activity have brought a halt to rising prices.

Jeremy Leaf, Rics spokesman, said: "A shortage of stock has been one factor holding back transaction activity in the housing market but the abolition of Hips is helping to belatedly address this issue. This is likely to be reflected in higher sales numbers over the coming months. However, with supply of property now beginning to outstrip demand, there is a risk of some modest slippage in prices during the second half of the year."

PwC said possible trends in income growth, interest rates and housing supply meant homebuyers could not rely on the price of their homes rising in value over the next few years.

John Hawksworth, head of macroeconomics at PwC, said: "Although the average house price overvaluation of around 25% in mid-2007 is down to around 5%-10% despite the rally since March 2009, our analysis suggests that house prices remain vulnerable to setbacks. "The possibility of a renewed fall in house prices over the next few years, particularly in real terms, cannot be ruled out as mortgage interest rates start to rise again," Hawksworth added.

"While it can be argued in theory that house price changes have little effect on overall UK wealth," he said, "our econometric analysis suggests that an unanticipated future fall in house prices could have a significant impact in dampening the speed of the recovery in consumer spending in the medium term."

House prices: Surveyors expect property prices to fall

14/07/2010

Surveyors are expecting house prices to fall in the coming months owing to more home sales and economic uncertainty.

The rise in supply means more are expecting property values to fall than rise - a shift in sentiment from a similar poll a month ago.

The survey, from the Royal Institution of Chartered Surveyors (Rics), said that the number of inquiries from new buyers dipped in July.

This was only the second fall since the latter part of 2008.

Meanwhile, official government data for house prices show they rose by 0.7% in May, leaving the average 11% higher than a year ago at £209,505.

But the report, produced by the Department of Communities and Local Government (DCLG), points out that its figures are based on actual completion prices, rather than those produced by commercial organisations, which use asking prices, and reflect more recent trends.

Prices, according to the DCLG, are still 4.5% below the recent peak in its index, seen in January 2008.

A separate forecast by accountants PricewaterhouseCooopers has suggested that house prices might not reach the levels seen at the peak of the market for another decade.

House prices fall by 0.6%, say Halifax

01/07/2010

House prices fell by 0.6% in June following a similar decline in May, reveals the Halifax House Price Index - June 2010.

Prices in the second quarter of 2010 were 0.1% lower than in the first quarter of 2010. This continued the slowdown in the pace of house price growth since the beginning of the year and compared with a 0.6% rise in 2010 Quarter 1.

House prices in June were 6.3% higher on an annual basis as measured by the average for the latest three months against the same period a year earlier. This was below the 6.9% increase in May, which was the highest since October 2007 (8.9%).

Prices are 7.5% above their April 2009 trough despite the modest decline over the past few months. The average house price is now £166,203; 17% below its August 2007 peak.

The increase in the number of properties for sale is curbing the upward pressure on house prices. Estate agents have reported a sharp increase in instructions from new vendors following the recent abolition of HIPs, reinforcing the recent trend as more homeowners have been encouraged to sell following the improvement in house prices in 2009.

The ratio of house sales to the stock of unsold properties on surveyors'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' books fell for the fifth time in the past six months in May. (Source: RICS monthly survey, May 2010.) The easing in this ratio indicates a moderate loosening in market conditions, reducing the support for house prices.

Housing market activity has eased. Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase - a leading indicator of completed house sales - were largely unchanged between April and May, at a seasonally adjusted 49,800. Approvals in the three months to May, however, were 3% lower than in the preceding three months, indicating a modest softening in housing market activity.

In separate research, Halifax has found that the cost of owning and running a home in the UK has declined by 6% over the past two years. Between April 2008 and April 2010, the average annual cost associated with owning and running a home fell by £544 from £9,564 to £9,020. In real terms (i.e. after allowing for retail price inflation), the cost of housing has fallen by 9%. Housing costs in the UK are now equivalent to 27% of gross average full-time earnings, down from 30% in 2008.

The fall in the cost of housing since 2008 has been driven by a 19% (£881) decline in mortgage payments (interest and capital repayments). The average mortgage rate paid by existing borrowers fell by 2.13 percentage points between April 2008 and April 2010 from 5.80% to 3.67%.

Signs of reverse in Housing Market

01/07/2010

The UK housing market has stalled, according to one of the more interesting indicators – the number of new Sold and For Sale boards erected.

According to Agency Express, which covers the country, the number of For Sale boards converting to Sold fell by 5.3% compared with May, and were down 7% on last June.

The hardest hit regions were the West Midlands where there was a slump of 26.4% in the number of houses that were sold, followed by the South-West (down 11.4%), Wales (10.6%), North-East (8.8%) and London (7.7%).

Only two regions in the UK were able to report a rise in June Sold signs – the North-West where sales were up 10.5% and the East Midlands where sales rose 6.7%.

The cities with the most dramatic falls in house sales in June were Birmingham (down 34.7%), Nottingham (32%), Exeter (31.7%), Southampton (27.8%) and Glasgow (27.4%).

Only a few cities had an increase in monthly house sales with Leicester leading the way with a 44.0% rise followed by Manchester (up 37%) and Milton Keynes (30.1%).

Although the number of new Sold signs being erected tailed off, there was a 1.8% rise in new For Sale boards being erected.

Uncertainty Generated by Election

24/06/2010

Hometrack’s latest monthly national housing survey reports that the property market in May was even flatter market than that of the last three months.

Richard Donnell Director of Research at Hometrack (the property analytics business) said, “The May survey of 1,500 agents and surveyors across the country shows how uncertainty generated by the election had a clear impact on housing market activity with fewer buyers coming to the market, a marked slowdown in sales agreed and a drop off in the number of new homes for sale.”

After two very difficult years agents had been hoping for a Spring uplift, but it hasn’t yet happened – and that is very bad news for many agencies.

Hometrack’s report continues, “A continued trend over recent months has been the relatively low volumes of new demand coming to the market. In the last three months there has been just a 4.6 per cent increase in new buyer registrations - well down on the 21 per cent increase seen this time last year when we saw something of a mini recovery in the housing market”.

But despite weaker demand and rising supply house prices are still rising, almost certainly due to the continued scarcity of property for sale. The growth in sales agreed outstripped the number of homes coming to the market in the last three months, highlighting agents’ ability to quickly shift all new stock as it comes to the market. This combination of scarcity and continued growth in sales volumes is providing them with the confidence to mark prices ever higher.

Hometrack reports that while there has been much focus on the plight of first time buyers and access to mortgage finance, the reality is that today’s housing market is transacting on sales supported by buyers with either no mortgage or a relatively small mortgage.

“We estimate that together these two groups account for almost 75 per cent of all owner occupiers or 14 million households. Against a backdrop of continued low transaction volumes this group has the capacity to keep the housing market ticking over for the rest of the year. First time buyers and mortgage constrained households face continued problems accessing or climbing the property ladder”, says Richard Donnell.

“Headline price increases are being sustained by prices rising in less than a fifth of postcodes across the country - with most of these areas located in the ‘equity driven’ markets of southern England. Across the remaining 75 per cent of the market, activity levels remain low with prices neither rising nor falling as homeowners sit tight.

“Looking ahead we expect housing market activity to remain subdued over the summer and into the autumn as households shift their focus from the election to the forthcoming emergency Budget and the implications for take-home pay and the economy overall. While the contents of the Budget, together with recent turmoil in the equity markets, may have some short term impact on market sentiment, the recent balance between supply and demand is unlikely to change radically in the near term.

Low turnover looks set to remain the dominant feature of the market - a trend that will sustain the scarcity of housing for sale and continue to act as a support to prices, particularly in southern England”.

House prices "heading for double dip"

15/06/2010

Third consecutive monthly fall suggests evidence is growing of a "double dip" in the housing market, say analysts Acadametrics Average house prices fell for the third month in a row during May, according to the Acadametrics index, the only measure which uses actual prices for every property transacted in England and Wales rather than valuation estimates or asking prices. The scrapping of home information packs (Hips) and fears over a steep rise in capital gains tax (CGT) on second homes and buy-to-let properties propelled more homes on to the market, driving down prices for the third successive month.

The average price in May was £220,352, a fall of 0.2% on the month before. The figures suggest that the housing market may be experiencing a "double dip", with the post-credit crunch recovery – which saw prices start to rise again in 2009 – now over. Acadametrics reported declines in May across the country, ranging from a 2% fall in the east Midlands to a 0.1% fall in Greater London. The number of homes sold also fell in May, down by an estimated 18% from April levels which were themselves running at approximately 35% less than the number of properties sold in April 2007.

But the figure for the rate of annual increase in May was 9.7%, reflecting strong upward price movements a year ago. Dr Peter Williams, chairman of Acadametrics, said: "The housing market stalled in May, although it remains unclear as to whether this is the start of a sustained decline. The question now is will that decline continue through to the end of the year and beyond? "There is much to suggest that it will, although in reality there is a spectrum of views from analysts ranging from a price fall of 7% to a 3% rise over the next six months. Clearly, the emergency budget on 22 June will offer some clarity, not least on CGT but also on other tax rises and expenditure cuts." The fall in prices will be a major concern for buyers who bought towards the top of the market in 2007 and early 2008 and are now coming off fixed-rate deals. Many will be in negative equity and face problems remortgaging. "The problem for these owners will be that, if they need to renegotiate their mortgage at the end of its first term, their lender may be willing to offer only a lower loan-to-value loan," Williams said.

Net mortgage lending could be as little as £15bn-£20bn this year, Williams added, "well below anything that might be deemed a level of funding for a sustainable and healthy housing market." Transactions at 15-year low The number of transactions during May were the lowest in the 15 years the index has been tracking the market. Williams said the fall was all the more surprising given that May is usually a bumper month for property sales. "We are now left with the question as to whether we will see an above-average increase in sales volumes in June, as investors seek to sell before the presumed CGT rise," Williams said. "Sales by property investors typically make up less than 10% of the market, but if this increase should happen it would largely be in the "flats" market in urban conurbations, as the majority of buy-to-let properties comprise flats in city centres."

Lenders are now lobbying the government to extend emergency measures to support homeowners facing repossession. Adrian Coles, director general of the Building Societies Association said: "We are calling upon the government to maintain funding to help financially vulnerable homeowners at risk of losing their home. "We believe there is a real need to review the effectiveness of current schemes and commence a redevelopment of the public and private sector safety net, which should include revision of the current Support for mortgage interest programme. "We also believe that the structure of stamp duty land tax should be reformed, as the current system results in the bunching of transactions at prices just below the thresholds for different rates."

Housing market: a disastrous May

02/06/2010

Hometrack’s latest monthly national housing survey reports that the property market in May was even flatter market than that of the last three months.

Richard Donnell Director of Research at Hometrack (the property analytics business) said, “The May survey of 1,500 agents and surveyors across the country shows how uncertainty generated by the election had a clear impact on housing market activity with fewer buyers coming to the market, a marked slowdown in sales agreed and a drop off in the number of new homes for sale.”

After two very difficult years agents had been hoping for a Spring uplift, but it hasn’t yet happened – and that is very bad news for many agencies.

Hometrack’s report continues, “A continued trend over recent months has been the relatively low volumes of new demand coming to the market. In the last three months there has been just a 4.6 per cent increase in new buyer registrations - well down on the 21 per cent increase seen this time last year when we saw something of a mini recovery in the housing market”.

But despite weaker demand and rising supply house prices are still rising, almost certainly due to the continued scarcity of property for sale. The growth in sales agreed outstripped the number of homes coming to the market in the last three months, highlighting agents’ ability to quickly shift all new stock as it comes to the market. This combination of scarcity and continued growth in sales volumes is providing them with the confidence to mark prices ever higher.

Hometrack reports that while there has been much focus on the plight of first time buyers and access to mortgage finance, the reality is that today’s housing market is transacting on sales supported by buyers with either no mortgage or a relatively small mortgage.

“We estimate that together these two groups account for almost 75 per cent of all owner occupiers or 14 million households. Against a backdrop of continued low transaction volumes this group has the capacity to keep the housing market ticking over for the rest of the year. First time buyers and mortgage constrained households face continued problems accessing or climbing the property ladder”, says Richard Donnell.

“Headline price increases are being sustained by prices rising in less than a fifth of postcodes across the country - with most of these areas located in the ‘equity driven’ markets of southern England. Across the remaining 75 per cent of the market, activity levels remain low with prices neither rising nor falling as homeowners sit tight.

“Looking ahead we expect housing market activity to remain subdued over the summer and into the autumn as households shift their focus from the election to the forthcoming emergency Budget and the implications for take-home pay and the economy overall. While the contents of the Budget, together with recent turmoil in the equity markets, may have some short term impact on market sentiment, the recent balance between supply and demand is unlikely to change radically in the near term.

Low turnover looks set to remain the dominant feature of the market - a trend that will sustain the scarcity of housing for sale and continue to act as a support to prices, particularly in southern England”.

More house price falls next year

06/11/2009

We’re not out of the woods yet; house prices in Britain will fall by 6.6 per cent next year, according to estate agency Savills’ most recent forecast. While prices across the mainstream market have risen by 3.7 per cent this year, Savills research team believes this is a “temporary phenomenon” and the market will soften next year as the economy remains weak.

“The economy has probably bottomed out as far as gloom is concerned,” says Yolande Barnes of Savills research. “But we’re still looking at low levels of economic growth, so next year is still going to feel like a recession.”

But it won’t be long before house prices are back in positive territory, if Savills has got it right. The research team expects prices to rise by 2.7 per cent in 2011 before increasing by 27 per cent between 2012 and 2015.

Today’s forecast paints a very different picture from 12 months ago, when Savills was busy predicting 11 per cent falls in 2009. “It’s come as a surprise. No one appreciated that the market would grow as much as it did,” says Lucian Cook of Savills research. “We thought prices would fall 25 per cent from the peak but actually they’ve fallen 20 per cent.”

So why exactly have prices risen this year? Unemployment levels are increasing and the economy is still in recession. Savills puts it down to the short term mechanics of supply and demand: “The lack of credit constrained the market so transactions remained at a historic low,” says Barnes. “Meanwhile in 2009 there have been just above two applicants per property, which was enough to drive the market.”

Cash purchasers - “the bank of mum and dad” - were the predominant players across all parts of the market. “We didn’t anticipate the level of cash buyers,” says Cook. “We expected them to appear later on in the recovery.”

But Savills’ researchers are under no illusions that these cash buyers have saved the property market; already the balance of homes on the market to the number buyers has tipped. “True recovery will be credit dependent,” says Barnes. “And the credit crunch could stretch on for another five years.”

If this seems vague, it is because forecasting the property market is extremely difficult on a short term basis, she says. “The housing market doesn’t always follow economic levels,” says Lucian Cook . “Other outcomes could be a stepped recovery, with no further price falls, or a ''''''''''''''''capital W’ recovery where a price bubble in 2010 is followed by steeper falls in 2011.”

One thing they are certain about is that a raft of City bonus money will make its way into the property market next year. Bonuses this year are forecast by CEBR to be £6bn - a rise from last year’s £4bn payout. “We predict that maybe a third of the bonus payout, in gross terms [£1.2bn in net, post-tax terms] will find its way into the property market,” says Lucian Cook. “This will happen in prime central London between March and August next year, but it won’t cause a rush. There may be modest falls in prime central London next year; at best bonus money will just support existing prices.”

House asking prices fall by £5,000

17/08/2009

Asking prices fell by £5,000 during the past month as the housing market experienced its traditional summer lull, figures showed.

Asking prices remain 3.1 per cent lower than they were a year ago, unchanged from the previous month.

The price of homes on the market in England and Wales averaged £222,762 during the four weeks to August 8, just over 2.2per cent less than in the previous month, according to property website Rightmove.

The group said the dip in asking prices was in line with a similar fall seen in August 2008, although it was still the biggest drop recorded so far this year, with price rises seen in five of the previous seven months.

It added that the market was continuing to be held back by a lack of mortgage finance.

Asking prices remain 3.1 per cent lower than they were a year ago, unchanged from the previous month.

Miles Shipside, commercial director of Rightmove, said: "After several months of activity and prices revving upwards from last winter''s low point, both will start to hit the limiter without more mortgage finance.

"In spite of pent up demand, the market and pricing is boxed in by restrictive lending criteria put in place to ration mortgages, given the lack of funds available to lenders."

Rightmove said buyers were continuing to return to the market, with the group recording its busiest ever month for traffic, despite the fact that there is usually a fall in househunting activity during the summer, as potential buyers go on holiday.

Buyers are also feeling increasingly confident that the market has stabilised, with three-quarters of people saying they do not expect their to be further price falls during the coming 12 months.

But there continues to be a shortage of properties for sale, with 82,700 homes put on the market during the month, 23 per cent fewer than in August last year when there was already a supply shortage.

It is also around half the level of new properties that were put up for sale in August 2006 and 2007.

East Anglia saw the biggest monthly dip in asking prices with these dropping by 8.3 per cent, although the group cautioned that the figure was likely to have been exaggerated by summer selling patterns.

The West Midlands and Greater London both recorded drops of 3.8 per cent during the month.

Economy ''dampening house prices''

28/07/2009

The sluggish UK economy is likely to mean that house prices will not see any "meaningful" recovery for some time, two separate surveys suggest.

There will be no "sustained" upturn until mortgages become more available, the Royal Institution of Chartered Surveyors (RICS) says.

Meanwhile, PricewaterhouseCoopers has warned further price falls are likely in 2009 and 2010.

The government''s own house price survey reported property values fell in May.

''More falls''

Surveyors did suggest that there was some optimism among surveyors that prices would go up in the short term.

Latest house price surveys suggest some stabilisation in the market, with the Nationwide suggesting that UK house prices have risen in three of the past four months, leaving them nearly 6% higher than they were in February.

But PwC''s economic outlook said that with mortgage levels subdued and UK unemployment looking likely to continue rising for some time, "average UK house prices are likely to fall further between 2009 and 2010".

"Despite some recent reports of rises, we are not out of the woods yet and buyers should take a long-term rather than a short-term view," it said.

And it warned that by 2020, even if there had been five years of strong growth, house prices could be lower, in real terms, than 2008 levels.

''Uncertain conditions''

The RICS monthly survey for June suggested that there was some short-term optimism - with more surveyors expecting property prices to rise than fall for the first time since May 2007.

Some 6% more chartered surveyors expected price increases than price falls - compared with 11% more expecting falls during May''s survey.

Low housing availability and increasing interest from would-be buyers had driven this optimism, it said.

However, it added that although there were signs of improvement, it was "unlikely that there will be a sustained upturn while mortgage lenders remain risk adverse".

"A lack of stock on the market is providing a platform for modest price increases," said RICS spokesman Jeremy Leaf.

"While supply remains tight, the market may continue to show tentative signs of firming, but instructions are starting to increase in some regions and this could dampen any meaningful recovery as long as economic conditions remain quite so uncertain."

The reports came as the Communities and Local Government (CLG) Select Committee said that a government scheme to kick-start the UK mortgage market was not working.

The £50bn asset-backed guarantee scheme (ABS) was "doomed to fail", MPs said.

Prices dip

The monthly survey by the Department of Communities and Local Government (DCLG) showed that property values were continuing to fall, but at a slower rate than previously.

Average prices in the UK in May were 12.5% lower than in the same month a year earlier, with the average home costing £188,991.

Between April and May, prices dropped by 0.1%, primarily as a result of falling values for detached and semi-detached houses. This was partly offset by an increase in the average price of bungalows, terraced houses and flats.

In the last year, prices have fallen the most in Northern Ireland (23.2%), with smaller falls seen in England (12.8%), Wales (8.8%) and Scotland (6.9%), the survey found.

In the English regions, average prices were highest in London at £287,142 and lowest in the North East at £129,052.

The average price paid by first-time buyers for a home in the UK was £137,013 in May, with the typical price paid by former owner-occupiers at £220.998.

House prices ''fell 0.5% in June''

07/07/2009

House prices fell back in June, according to the latest property survey from the Halifax.

It says property prices dropped by 0.5% last month, partly reversing a large 2.6% rise in May.

Despite June''s decrease in house prices, the annual rate of decline eased from 16.3% to 15% last month.

The Halifax said there was evidence the property market was stabilising after the sharp slump in sales and prices seen since the middle of 2007.

The average UK property now costs £157,715, according to the Halifax.

The lender''s chief economist, Martin Ellis, said prices had fallen by only 1.9% in the past three months - the lowest quarterly rate of decline since early last year.

"These figures provide evidence that the underlying pace of house price decline is easing," Mr Ellis said.

The Halifax, whose figures are based on a sample of its own lending, said prices had risen only once in the past four months, and were still 2% lower than they were in February.

"The [Halifax] provides a timely reminder that despite the better news flow emerging from the housing market it is far from clear that prices have bottomed," said Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors.

"The combination of further job losses and a continuing lack of mortgage finance remain major headwinds for the market," he added.

More house price falls ''likely''

05/06/2009

UK house prices are continuing to fall sharply, according to the latest survey from the Halifax.

The lender, now part of the Lloyds Banking Group, says prices fell by another 1.7% in April, pushing the annual decline from 17.5% to 17.7%.

It means that the average UK property is now worth £154,716, £33,264 less than a year ago.

The Halifax warned that house prices would probably continue falling in the coming months.

''More falls''

"Rising unemployment, low consumer confidence and the reduced availability of credit are all expected to exert downward pressure on the housing market over the next few months," said Martin Ellis, the Halifax''s chief economist.

"As a result, further house price declines are likely," he said.

However, the Halifax said there were tentative signs that the slump in sales was now stabilising.

The number of new mortgages approved, but not yet lent, have risen in the past couple of months, while estate agents have been reporting a revival of interest from potential buyers.

"Vendors, in recent months, have become considerably more realistic about what they can achieve for their properties in the current climate, which is no bad thing," said David Smith, of Carter Jonas estate agents.

"It''s realism like this that will bring the genuine recovery in the property market forward rather than put it off."

Regional difference

The Halifax''s figures come shortly after the Nationwide reported that UK house prices fell by 0.4% in April.

Unlike the Halifax, the Nationwide said that the pace of decline in house prices slowed, but the typical home still cost 15% less than a year ago.

Recent figures from the Bank of England showed that the number of mortgage approvals made in March rose by 4% from the previous month, signalling the potential for more activity in the housing market in the coming weeks. However, approvals remain at a very low level compared with a year ago.

The Halifax data uses a measure to calculate the annual house price change which compares the past three months with the same quarter a year earlier, a method which it says irons out any short-term price fluctuations.

When comparing Halifax''s average price in April to the value in the same month a year ago - as with other surveys - the figure is the same - a drop of 17.7%.

Prices in the three months to April compared with the previous quarter dropped by 3.3%.

The data showed that the cost to homeowners of making their mortgage repayments had fallen sharply alongside the Bank rate.

A borrower with an average outstanding mortgage of £107,000 has seen their monthly repayments fall by £111 since October 2008. Falling costs for individual borrowers are obviously dependent on the type of mortgage they have.

Although the Halifax data does not offer a regional breakdown in prices, the group said that areas outside the south-east of England had benefitted more from Chancellor Alistair Darling''s decision to extend the stamp duty holiday for properties under £175,000 until the end of the year.

Some 18% of total sales were below £175,000 in London in September 2008 to January 2009, compared with 79% in the North of England.

UK house prices ''down in April''

30/04/2009

House prices in the UK fell by 0.4% in April reversing some of the rise seen in March, according to the Nationwide.

The building society''s figures show that the pace of decline in house prices slowed, but the typical home still cost 15% less than a year ago.

The price of the average property in the UK was £151,861 in April.

The group welcomed some of the moves made by Chancellor Alistair Darling in the Budget but warned this would not bring a swift turnaround in the market.

Figures showed that prices fell 3.1% in the quarter to the end of April, compared with the previous quarter.

This was less of a decline than than the 4.1% fall, using the same measure, seen a month ago.

The Nationwide surprised many homeowners last month when it announced that prices rose by 0.9% in March compared with February.

But it warned at the time against reading too much into the change, saying that it was not a sign that the market had turned.

In a speech a week ago, Matthew Wyles, chairman of the Council of Mortgage Lenders (CML), said that the mortgage market remained "highly dysfunctional" and that 2009 would be a tough year.

Now, Nationwide''s chief economist Fionnuala Earley said that the housing market was "in the doldrums", partly because of limited lending from banks.

The state of the economy, and the threat of unemployment, meant demand for home loans would continue to fall, she added.

The Nationwide offered some support to Mr Darling for his Budget measures to get lending moving again.

UK annual house prices graph

The extension of the stamp duty holiday - from September to the end of the year for properties of less than £175,000 - was also welcomed.

Falling prices meant that the average home was now priced below the threshold in every area of the UK except London and greater London. For first-time buyers only the capital has property prices typically above the threshold.

Although this, as well as falling prices and low interest rates, was providing more of an incentive for first-time buyers, Ms Earley said that buyers were remaining cautious as they expected prices to keep dropping.

Some surveys have suggested a shift in the housing market of late, most notably HM Revenue and Customs figures, which showed the number of homes sold in the UK jumped by 40% in March from the previous month.

Some commentators have been relatively upbeat about data, but Ms Earley said it was too soon to talk about a revival.

"While affordability is indeed more favourable and there does seem to be some cautious optimism from some quarters, it is still far too soon to say that this is the start of a solid revival in the market," she said.

David Smith, senior partner at Dreweatt Neate estate agents, said: "A sideways-moving market like this, with the odd blip up or down, is how things look set to continue given the highly uncertain economic climate.

"Consumer confidence is weaker than it has been for many years and the property market will not recover until it returns."

Negative equity stops home moves

17/04/2009

Falling house prices mean that two million households have either negative equity, or too little equity to finance a house move, lenders have said.

Negative equity is the situation where someone''s house has become worth less than their mortgage.

Research by the Council of Mortgage Lenders (CML) said the problem would restrict the number of home sales.

But it said two thirds of the 900,000 homes in negative equity had only a modest shortfall of less than 10%.

That equated to an average of about £6,000 for first-time buyers in that situation, and £8,000 for the other home owners.

"Although negative equity has resurfaced as house prices have fallen, one big difference from the early 1990s downturn is that it is less concentrated among young, first-time buyers, and more evenly spread across wider age groups and those at different points on the housing ladder," said Bob Pannell, head of research at the CML.

"Negative equity will contribute to subdued property turnover, but otherwise should have few adverse effects for the majority of households affected," he added.

Small deposits

With lenders still restricting their lending because of a shortage of mortgage funds, few are currently prepared to accept a deposit of only 10% from anyone buying a house.

Recent figures from the financial information service Moneyfacts showed that there were currently only 106 mortgage deals requiring a deposit of 10% or less, while more than two thirds of the 1,485 deals available asked customers to put up a deposit of at least 25%.

The impact is that even people who still have some limited equity in their homes, but less than 10%, are unlikely to be able to move.

The CML estimated that there are about 600,000 mortgage holders who have less than 5% equity in their homes, plus another 500,000 whose equity would amount to a deposit of more than 5% but still less than 10%.

Thus about two million homeowners in total could not raise a 10% deposit for a new mortgage simply by selling their current homes.

1990s comparison

The CML carried out its research by looking at data supplied by its members.

With house prices dropping by about 18% since the middle of 2007, the fall in prices has already outstripped the national price drop experienced during the early 1990s house price crash.

But the 900,000 estimated to be in negative equity now are fewer in number than the 1.5 million estimated to have been in this position more than a decade and a half ago.

Of the households currently in negative equity, about 270,000 have a shortfall of between 10% and 20%, and about 30,000 have a shortfall of 20% or more.

In those most extreme cases their negative equity amounts to an average £28,000 for first-time buyers and £37,000 for other home owners.

Despite this, the CML argues that it is myth that there is a strong link between negative equity and mortgage repayment problems.

"Payment problems are typically associated with unexpected spending commitments, reduced income and changes in household circumstances," the CML said.

"Negative equity, on the other hand, only surfaces as a problem if households need to move, or are also experiencing repayment difficulties," it added.

Mortgage lending at 34-year low

03/03/2009

The number of mortgages lent to house buyers fell last year to its lowest level since 1974, the Council of Mortgage Lenders (CML) has said. There were just 516,000 mortgages granted to house buyers, down 49% from the level seen in 2007. The squeeze on mortgage funds has seen widespread rationing by lenders, which meant that first-time buyers had to put down an average deposit of 22%. The CML believes that lending is likely to fall even further this year. "The shortage of mortgage funding and reduction in the number of active lenders has reshaped the mortgage landscape in the space of a year," said Michael Coogan, the CML''s director general. "This low level of transactions is insufficient for the functioning of an efficient market," he added. The slump in lending and sales has been directly responsible for the sudden collapse of house prices seen since the credit crunch started in the summer of 2007. Last year the number of loans to first-time buyers fell by 46% to just 194,200, which was the lowest figure since the CML''s records started in 1974. And mortgages granted to people moving house dropped by more than half to 322,200. The government has launched a number of initiatives to stimulate bank lending, which it is widely hoped will feed through into greater lending to home buyers. But the CML expects that in 2009 new lending will fall to a level where it will be outstripped by people repaying their mortgages. "Measures are now in place to seek to restore the flow of funding to the mortgage market, but this will take time to feed through," said Mr Coogan. "Further action may still be necessary to increase transactions, stabilise prices and restore confidence," he added. Despite the Bank of England cutting the Bank Rate in recent months to just 1%, the dramatically lower cost of repaying a mortgage has not led to a revival in buying and selling houses. Lenders have increased the level of deposits they demand from borrowers, choking off the supply of potential buyers. About two-thirds of all new mortgage deals currently require at least a 25% down payment from the borrower. And the average 22% deposit currently being put down by first-time buyers is the highest since the CML''s records started back in 1974. Until the end of 2007 a 10% deposit was the norm. Andrew Montlake, at mortgage brokers Cobalt Capital, said business was now dire. "The CML data crystallises what we already knew, namely that from a mortgage perspective, 2008 was a massacre - the entire market is barely recognisable from what it was two years ago." Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA), said there was now a lot of pent up demand. "NAEA figures show that there is a huge demand for property from first-time buyers, who are increasingly visiting estate agents, registering their interest and searching for property," he said. "These figures demonstrate that they are being frustrated at the final hurdle because lenders are not making mortgages available."

House prices ''fall another 1.8%''

03/03/2009

House prices fell by 1.8% in February as confidence in the UK property market failed to pick up, according to the Nationwide building society. The lender said that the average UK property had fallen in value by 17.6% over the past 12 months, to £147,746. Although cuts in interest rates have made mortgage repayments cheaper for some, this has yet to be seen in increased sales, it said. But it added that "curiosity" in the market was growing. Nationwide''''s chief economist Fionnuala Earley said that falling prices and interest rates meant sales could pick up quickly once confidence returned. But she said that this might not be for some time yet. "Further cuts in [interest] rates will be welcome in the housing market, but the economic conditions that require them will mean that there is unlikely to be a swift turnaround in the housing market in 2009," she said. Market experts are expecting prices to keep falling this year, probably until the economy stops shrinking, with continued restrictions on credit reducing the number of people taking out mortgages.

Repossessions To Reach 75,000

04/12/2008

The number of homes being repossessed will rise sharply to 75,000 next year, the Council of Mortgage Lenders (CML) has estimated. That would be almost as many as during the peak of the last recession in 1991. The CML believes that repossessions, already rising steadily, will hit 45,000 this year. The lenders organisation has told ministers that on current trends the figure will continue rising unless action is taken to stop repossessions. "The CML told me that it hasn''t yet finalised its forecast for repossessions in 2009, saying it was waiting to see whether ministers would take action to reduce the surge in the number of houses where families are evicted and their properties are sold," said the BBC''s business editor Robert Peston. Rock pledge Earlier, the nationalised Northern Rock bank, as well as Bradford & Bingley, said they were adopting a policy of waiting six months before repossessing any of their mortgage borrowers who fell into arrears. The banks are copying the recent example of RBS NatWest, now under majority state control. Northern Rock said it normally took 15 months to repossess a home anyway. But the bank has been accused of being aggressive and recently admitted that it would account for 10% of all repossessions this year. "We continue to work with customers facing repayment difficulties to try and agree an acceptable debt management solution and avoid repossession," said Gary Hoffman, the Rock''s chief executive. "In the vast majority of cases, where repossession regrettably does take place, we have been working with the customer for well over six months. "We will now formalise our policy and agree not to repossess a property for a period of at least six months from the point of arrears," he explained. Recession The state controlled bank said repossession was always a last resort, and that at the moment only 1% of its cases involved people who were less than six months behind with their mortgage payments. But the problem is growing throughout the banking industry as the economy heads towards recession and more people are made unemployed. The number of repossessions jumped by 12% in the third quarter of the year, according to figures from the Council of Mortgage lenders (CML), with 11,300 homes taken back in that period.

House Prices Still Falling Fast

04/12/2008

House prices fell another 2.6% in November, the Halifax says. According to its latest survey, that increased the annual rate of house price falls to 14.9%, as against the 13.7% rate in the 12 months to October. The Halifax said the average property in the UK was now valued at £163,605, a level last seen in July 2005. Last week, the Nationwide building society said the pace of house price decline had eased off, with prices down 13.9% in the year to November. But the Halifax figures suggest that house price falls are accelerating. "The combination of high house prices in relation to earnings, constraints on householders'' incomes and spending power, and the decline in the availability of mortgage finance since the summer of 2007 has curbed housing demand," said the Halifax''s chief economist, Martin Ellis. The mortgage lender calculates the annual rate of decline by comparing the average house price over the past three months with the average for the same three-month period the year before. A straightforward monthly year-on-year comparison suggests that prices may have fallen even faster, by 16.1%, although the lender argues that this approach can be distorted by short-term price fluctuations. Stabilising? The Halifax''s survey suggests that the average house price has now dropped by £31,485 in the past 12 months. Mr Ellis said there were indications that sales, if not prices, had bottomed out. "The number of mortgages approved to finance house purchase was broadly unchanged for the fourth successive month in October at a seasonally adjusted 32,000," he said. "The recent flattening off in approvals suggests that housing market activity may be stabilising." However, there are widespread fears that the current rationing of mortgages will become even worse in the coming year, unless the government''s efforts to overcome the crisis in the banking industry and to revive mortgage lending come to fruition. The Council of Mortgage Lenders (CML), among others, has warned that new lending may be negative in 2009, for the first time on record. That means that there could be so little new lending by banks and building societies that it would be outstripped by borrowers paying off their mortgages. That in turn would means sales falling even further, putting further downward pressure on prices. More price falls The Halifax will be publishing its formal house price prediction for 2009 later this month. "We have said we were comfortable with the consensus that prices would fall by about 20% over the course of 2008 and 2009," said Mr Ellis. "But we do need to look at that again," he added. Other commentators have already suggested that prices will continue to fall fast, with some suggesting they could drop by another 15-20%.

Stamp duty axed below £175,000

02/09/2008

Homebuyers will not have to pay stamp duty on properties costing £175,000 or less for the next 12 months. The current £125,000 threshold will be raised from Wednesday in a move aimed at kick-starting the housing market. Someone buying a home for £175,000 will save £1,750 under the scheme, which is likely to cost the Treasury £600m. The government estimates half of all property transactions will now be exempt from stamp duty - up from one third when the threshold was £125,000. Prime Minister Gordon Brown said the package of measures - including help for first-time buyers and families facing repossession - showed the government was taking action to help people through difficult times. "Home owners need to know that we will do everything we can to keep the housing market moving," he told BBC News. But the Conservatives - who say they would scrap stamp duty for first-time buyers on properties worth £250,000 or less - said the measures were a short-term survival plan to keep Mr Brown in a job. Darling ''optimistic'' The government has not said how it will pay for the £600m estimated cost of the stamp duty move. Chancellor Alistair Darling said he would reveal more details in his Autumn Pre-Budget Report. He said the government was also considering ways of increasing the availability of mortgage finance. But - in an echo of his weekend interview with The Guardian in which he said the economic downturn could be worse than previously thought - he said other factors would be crucial to the housing market''s recovery. "We face a unique set of circumstances that we have not seen in generations, where you have a credit crunch and where you have high oil and food prices. "But I remain optimistic, as I have said on many occasions before, that we can get through it. "We will get through it and today''s measures, helping the housing market, are one example of how the government can help people." Other housing moves announced by the government include: "Free" five year loans of up to 30% of a property''s value for first time buyers of new homes in England Extension of powers for councils and housing associations to be able to pay off debt for homeowners who can no longer afford mortgage payments and then charge rent. Shortening from 39 weeks to 13 weeks the period before Income Support for Mortgage Interest is paid Bringing forward spending from future years to encourage more social housing to be built The funding for these measures has been previously allocated and brought forward, the Treasury said. House prices are reportedly falling at their fastest rate since the early 1990s, while rising fuel costs and the global credit crunch are denting economic confidence. Under the new loans system, called HomeBuy Direct, households in England earning less than £60,000 will be offered loans free of charge for five years on new properties, co-funded by the state and developers. Once the five-year "free" period is up, homebuyers will be asked to pay a fee, the Department for Communities and Local Government said - although no more detail of this was provided. In a statement, the DCLG said: "Not only will this [HomeBuy Direct] help first-time buyers... it will help the housebuilding industry weather difficult conditions." ''More homes sooner'' The prime minister has faced a difficult few months, with Labour losing two parliamentary seats in by-elections, the London mayoralty and many councillors in May''s local elections. On Monday, he said the UK faced "unique circumstances", including oil prices trebling and the global credit crunch. But Mr Brown said the government was "resilient in... dealing with these problems". He earlier denied a rift with Chancellor Alistair Darling, who had said the country was facing its worst economic crisis in 60 years. For the Conservatives, shadow chancellor George Osborne said: "We will look at the details of these measures and we will support those that will work. "But let''s be clear, they are not going to help the vast majority of families facing a rising cost of living and falling house prices. "Nor do they amount to the first instalment of the economic recovery plan we were promised. "I suspect that what we will see in the coming weeks is a desperate and short-term survival plan for the prime minister rather that the long-term economic plan the country needs." Liberal Democrat leader Nick Clegg said: "This looks like a hotchpotch of measures thrown together to save Gordon Brown''s political skin. "The social housing stock could be increased far more easily by allowing local authorities to buy up unsold properties and use them for new social housing. "Yet again the government is desperately scrabbling around for a way to fix problems of its own making."

Mortgage approvals hit fresh low

01/09/2008

Redemptions from customers who were paying off their loans outstripped new lending by £79m. That was only the second time this has happened in recent years. But bank lending to all mortgage borrowers, whether moving house or not, shrank by £12.1bn in July - far and away the biggest monthly contraction on record. "Yet another low for mortgage activity offers little hope that house price declines will find a floor any time soon," said Oliver Gilmartin of the Royal Institution of Chartered Surveyors (Rics). "With the barrier of mortgage finance fortified by the day, pent-up demand will only exacerbate the boom-bust cycle once a return to normal market conditions resumes," he warned. The collapse in business by specialist lenders other than banks and building societies, such as those specialising in sub-prime mortgages, is also illustrated by the Bank of England''s figures. In July 2007 these lenders gave out 32,000 mortgages for house purchase; in July 2008 they lent just 2,000. Higher savings New lending to house buyers is currently dominated by just a few big High Street banks. In July the banks approved 24,000 loans for house purchase, compared to just 7,000 by building societies. But the building societies have found that their inflow of cash from savers continues to be very buoyant, as attractive interest rates have been drawing in much higher savings. Building societies saw the money saved with them rise by £1.435 billion in July, compared to £723 million in July last year. Overall the situation in the housing market was now "very disturbing" according to Howard Archer of Global Insight. "The very weak Bank of England mortgage data show that housing market activity continues to be throttled by stretched affordability and ongoing very tight lending conditions, and point to further marked falls in house prices over the coming months," he said. "Global Insight forecasts house prices to fall by 15% in 2008 and 12% in 2009," he added.

House prices ''fall 10.5% in year''

28/08/2008

UK house prices have seen an annual double-digit fall for the first time since 1990, according to the latest survey from the Nationwide. Prices were 10.5% lower in August than they were a year ago. Prices fell by 1.9% compared with July. The average home now costs £164,654, which is more than £19,000 cheaper than the average price one year ago. Gloomy forecasts from house builders mean the market is likely to remain subdued, Nationwide says. The Nationwide survey found that house prices have fallen for 10 months in a row and are at their lowest level since early 2006. Fixed-rate favour Data from estate agents suggested "there may be some glimmers of interest returning to the market" as some buyers were taking the opportunity to secure large discounts, said Nationwide''s chief economist Fionnuala Earley. But she said that an increased supply of properties on agents'' books would continue to act as a dampener to house price growth in the short term. House builders were pointing to a loss of consumer confidence for the continued slowdown, the report said. And Ms Earley added that the lack of availability of mortgages was still pushing down house purchase activity. "There is clearly less mortgage borrowing taking place in the current market, but those borrowers choosing a new loan are tending to opt for fixed rate loans, even though they have been more expensive than trackers," Ms Earley said. First-time buyers Earlier this month, figures from the Council of Mortgage Lenders (CML) suggested that the slump in mortgage lending continued in July. Total lending stood at £24.8bn, up by 5% from June, but still 27% lower than a year ago. First-time buyers, who would normally benefit from falling prices, have struggled to obtain cheap mortgage deals without a large deposit. However, the cost of fixed-rate mortgages has been falling in recent weeks with a series of lenders cutting their interest rates.

Bank Mortgage Lending Falls 20%

24/06/2008

Mortgage lending for house purchase by the UK''s main banks has fallen to its lowest level on record. The British Bankers Association (BBA) said that in May, the number of new mortgage approvals to home buyers fell to just 28,000. That was a 20% fall in just one month and 56% down from May last year. The BBA said the number of new approvals was the lowest since its records started in 1997 and warned that the market would stay subdued. "Measures of mortgage activity were lower in May as a result of tighter lending criteria and economic pressures on households," said David Dooks of the BBA. "Only remortgaging business is holding up, where people need or want to take advantage of deals with other lenders," he added. BBA members account for about two-thirds of total UK mortgage lending. Contraction The UK property market is going through a rapid and unprecedented slump in activity and sales. The supply of mortgage funds, much of which comes from lenders in the international financial markets, has largely been turned off because of the continuing credit crunch which started nearly a year ago. Many participants in the property market, such as house builders, individual mortgage lenders, estate agents and surveyors, have been telling the same story, with widespread predictions that sales will fall by between 35% and 45% in the course of 2008. The knock-on effect has been that house prices have been falling for the past few months, with many experts now expecting a fall of more than 10% by the end of the year. Mortgage approvals are widely seen as a good indicator of sales in the next few months. The figures from the BBA suggest the most dramatic contraction in lending so far. However, its data does not include building societies. Figures from all lenders will be published by the Bank of England on 30 June. ''Deep correction'' Howard Archer, chief UK and European economist at Global Insight, said: "More housing market data, more very worrying news that heighten concern that we are in for an extended, deep correction in the housing market. "The BBA data graphically highlight that housing market activity is currently being throttled by stretched affordability and tight lending conditions. "Very low housing market activity seems certain to feed through to further depress already markedly weakening house prices."

Figures Show Plunge In Home Sales

23/06/2008

The number of UK property sales has fallen by 32% this year, according to HM Revenue and Customs (HMRC). There were 504,000 sales in the first five months of 2008 that were worth more than the new stamp duty notification limit of £40,000. That compares with 743,000 such sales in the same period last year. Meanwhile some big lenders have again put up the cost of their mortgages for new borrowers, with the Halifax and Lloyds TSB raising interest rates. House and flat sales have fallen sharply this year, mainly due to the shortage of mortgage funds available to borrowers in the wake of the credit crunch, and the increased cost of borrowing the money that is available. The HMRC''s figures show that in May alone sales were down by 37% on last year at just 98,000. Higher rates The cost of borrowing a home loan continues to rise day by day. The Halifax said it was putting up the interest rate on half of its fixed-rate deals by as much as 0.5%, and five of its tracker-rate loans have had their interest rates raised by another 0.3%. "Wholesale money is very expensive," said a bank spokeswoman. "Unfortunately, these increased costs have to be passed on to new customers by banks and building societies," she added. Lloyds TSB, which sells mortgages through its Cheltenham & Gloucester subsidiary, has also made its fixed-rate deals more expensive, putting them up by 0.3%. Someone taking out a 90% mortgage for two years with the Halifax will now be charged interest at 7.29%. The effect of all this has been a glut of homes for sale on estate agents'' books, according to the property website Rightmove. It says that sellers now outweigh buyers by a ratio of 15 to 1. "It''s a sign that properties are taking longer to sell so there are more on the market," said Miles Shipside of Rightmove. "There are approximately half the mortgages available there were a year ago, so there''s only about half the transactions," he added.

Housing gloom 'worst in 30 years'

29/04/2008

"Confidence in the UK housing market fell in March to its lowest point in 30 years, according to a closely watched survey of property surveyors. The Royal Institution of Chartered Surveyors' (Rics) said that 78.5% more surveyors reported a fall than a rise in house prices in March. This was the gloomiest reading since Rics began the survey in 1978. The government's own house price figures confirmed a fall in prices in February by 1.6%. The results come after leading mortgage lenders have offered similarly downbeat views on property prices. Rics said the next six months would be crucial for homeowners and would-be buyers in the UK. Historical low The Rics house price balance dropped for the eighth consecutive month. It exceeded the previously lowest reading in June 1990. Jeremy Leaf, Rics spokesman, said the gloom was the result of the credit crunch and its effect in stopping mortgage providers lending to each other. Sentiment is at a very low ebb and will continue to remain depressed while the economy suffers from this unique liquidity blight," he said. But he added that a significant crash in prices remained unlikely and buyers with access to large deposits had the chance to get their hands on property they could not previously aspire to. Following the trend The survey follows March reports from the UK's two biggest mortgage lenders which reported month-on-month falls in house prices and predictions of a fall throughout 2008. Last week, the Halifax reported a 2.5% fall in prices in March, the biggest monthly decline since September 1992 and the slowest annual growth for 12 years. Prime Minister Gordon Brown and Chancellor Alistair Darling are meeting banks and mortgage lenders to discuss liquidity - widely regarded as the key factor affecting mortgage availability. The problems in the financial markets has meant lenders are keen only to attract low-risk customers who can offer a significant deposit. Some 49% more surveyors reported a fall than a rise in new buyer enquiries, against 39% in January. "Many would-be buyers are either struggling to raise the necessary finance to precipitate a move or are exercising caution in the light of current economic uncertainty," Rics said. Falls in price The falls in prices are particularly marked for flats and maisonettes and in certain parts of the country. The sharpest falls were in the East Midlands and East Anglia, while slower falls were recorded in north-west England, Wales and London. Scotland continued to buck the trend, with house prices reported to be rising slightly. The stock of unsold property on surveyors' books declined by 1.3% compared with February, but up 50% over the year. Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA) warned against doom-mongering, saying the housing market was still underpinned by strong economic factors. "The market is battling with the credit crunch, which has undoubtedly had an effect on confidence," he said. "However, the key factors that underpin the housing market still exist - low unemployment, historically low interest rates and a pent-up demand for houses. "We can see from the figures that it is not all doom and gloom out there and we need to tread very, very carefully before making long-term judgements on the market at this current, unsettled, time." Government figures Meanwhile, the government's own house price survey, also published on Tuesday, confirmed a fall in house prices in February, down 1.6% on the previous month. The Department for Communities and Local Government (DCLG) survey runs a month behind other house price indexes as it is based on sale completions, rather than mortgage approvals. It put the average house price in the UK in February at £217,737. In the three months to the end of February, property prices fell by 0.5%, against a fall of 0.2% in the previous quarter. Annual house price inflation in the UK was down from 8% in January to 6.7% in February, with the slowdown particularly marked in London (down from 13.8% to 9.5%). Again, Scotland showed the highest year-on-year rise in prices, at 9.7%.

House Auctions at 3 Year Low

19/03/2008

The number of properties sold at auction hit a three-year low amid a credit squeeze, the Royal Institution of Chartered Surveyors (Rics) says. In the final three months of 2007, some 57% of properties were sold after being put up for auction, compared with 69% in the same period of 2006, Rics said. Total sales were also down, although it remained a popular way to sell homes, according to Rics. House price rises have stalled in subsequent months, other surveys show. The Rics figures show 4,539 properties were sold in the final quarter of 2007 at auction, a fall of 9% compared with the same period the previous year and also down 9% on the previous three months. That left 3,310 properties unsold, a 50% rise more than in there months running from October to the end of December in 2006. Tough year The slowdown was particularly marked in London and the North East, the survey said. "Fears over further house price falls have taken some stimulus out of achieved sales at the auction house as specialist lending has all but evaporated," said Rics economist Oliver Gilmartin. "While lots offered at auction have stabilised, we expect a tougher year for many at the margins in 2008 as mortgage providers become more selective." He added that the mid-tier of the market would be affected, as well as people with poor credit histories feeling the pinch. But Rics said that going to auction was still a popular method of sale, with 15% more residential properties being offered for auction in 2007 than the previous year.

Surveyor Gloom Close To A Record

11/03/2008

The number of UK surveyors reporting house price falls in February was close to the historic level of June 1990. Cautious homeowners have caused housing stockpiles to rise to levels not seen for a decade, the Royal Institution of Chartered Surveyors (Rics) said. Some 64.1% more surveyors reported a fall than a rise in house prices in February - up from 54.7% in January. But the survey said Scotland was bucking the trend, with 25% more reporting price rises - up 18%. Highs and lows The survey showed the UK trend had continued for the seventh consecutive month and was close to the June 1990 low, when 64.5% more surveyors reported house price falls than increases. But the picture in Scotland mirrored economic data coming out of the country, showing a rise in the balance of surveyors reporting price rises from 7% to 25%. Across England and Wales, enquiries from would-be new buyers are still dropping fast and fell for the 15th month in a row, suggesting a continued slowdown in the market is likely in the coming months. "Many would-be-buyers are either struggling to raise the necessary finance to precipitate a move or are exercising caution in light of current economic uncertainty," said Rics. Common theme House price surveys have all suggested a slowing market, but differ in their interpretation of the pace of decline. According to a monthly survey from the Halifax, prices across the UK fell by 0.3% in February, taking the annual rate of inflation down from 4.5% to 4.2%. But it did not report such a speedy decline as its rival, the Nationwide, which registered its fourth monthly price fall in a row and said prices in the three months to February had been 1% lower than in the previous three. Rics said that would-be buyers were struggling to raise the necessary finance or sitting tight during the current economic uncertainty. Some 37% more surveyors said new buyers' enquiries were down than those reporting increases. Effect on stock Employment levels remain strong in the UK, which means homeowners are under little pressure to sell. Yet a lack of demand meant the stock of unsold property on surveyors' books was up 8.5% in February, the fifth monthly rise in excess of 8%. "Confidence in the market is clearly having an effect on prices," said Rics spokesman Ian Perry. "While there is very little new supply coming onto the market, it is unlikely that there will be significant price drops in the short term but the build up of unsold stocks will encourage buyers to negotiate lower asking prices."

Surveyors' gloom at house prices

14/02/2008

The number of UK surveyors reporting house price falls grew for the sixth consecutive month in January. The Royal Institution of Chartered Surveyors (Rics) says such a trend has not been seen since the housing recession of the early 1990s. Some 54.7% more surveyors reported a fall than a rise in house prices in January - up from 49.1% in December. The picture mirrors other surveys in recent weeks which suggested that the property market is stalling. The Rics survey said that the only part of the UK where prices continued to rise was Scotland. 'Lack of demand' Surveyors say the credit crunch is continuing to have an effect on the housing market. "A lack of demand and confidence in the housing market is clearly behind the recent price slowdown," said Rics spokesman Jeremy Leaf. "Tightening mortgage lending criteria is a block to many who are keen to take the housing market plunge. "Agents are finding it difficult to market properties to an audience which has decided to watch the current economic theatre from the wings." The Bank of England cut interest rates at its December meeting from 5.75% to 5.5%, and then again by a further 0.25% last week. "If mortgage lenders filter the recent interest rate cuts into the market, demand should begin to increase," said Mr Leaf. He added that strong employment conditions were shielding the housing market from significant price falls. Housing stock The stock of unsold property on surveyors' books increased by more than 10% in January and by in excess of 40% since September, the Rics figures showed. The average level of unsold property per surveyor was 85 - the highest figure since February 1999. January figures from the Halifax bank and the Nationwide Building Society signalled falls in annual house price inflation. The Halifax, the UK's biggest mortgage lender, said annual house price inflation was 4.5% in January, down from the previous month's figure of 5.2%. Nationwide said the annual rate of price growth dropped to 4.2% in January, which was the lowest rate since December 2005.

House repossessions at eight-year high.

09/02/2008

House repossessions are at an eight-year high, having risen over 20 per cent in 2007, figures have shown. A total of 27,100 homes were taken back by lenders after their owners failed to keep up with mortgage repayments. The figure is the equivalent of 0.23 per cent of all mortgages, the Council of Mortgage Lenders said. But, the CML said the figure is 10 per cent lower than previously estimated and well down on the high of 75,540 repossessions reached during the 1991 housing crash. Overall, fewer than one in 400 mortgages led to a home being repossessed during the year, less than half the level seen during the first half of the 1990s. At the same time, the predicted increase in repossessions during the course of 2007 failed to materialise, with just 13,500 homes taken over by lenders during the final six months of the year, compared with 13,600 during the first half. The CML said that although repossessions had risen from their recent low of fewer than 10,000 a year in 2003 and 2004, they continued to represent a tiny fraction of all home loans. The number of mortgages that were in arrears of more than three months rose by nearly 9 per cent during the year to 129,800, the equivalent of just over 1 per cent of loans. But less than 0.5 per cent of mortgages were in arrears of more than six months - around a seventh of the level seen during the early 1990s. The CML said it is difficult to forecast what the likely level of arrears and repossessions would be in 2008. Michael Coogan, director general of the CML, said: "Lenders take their responsibilities to borrowers facing repayment difficulties very seriously, and many go to exceptional lengths to provide debt counselling, reschedule payments, extend loan terms, or in some circumstances even allow payment breaks. "Despite this, the number of repossessions is likely to be higher in 2008 as a result of wider issues in the economy and the mortgage funding markets."

Home Repossessions rise to 27,000

08/02/2008

The number of people whose homes were repossessed last year has risen by 21%. The Council of Mortgage Lenders said 27,100 homes, the highest figure since 1999, were taken over by lenders after people fell behind with repayments. The figure for the UK is more than the 22,400 in 2006, but not as extreme as the CML had forecast. It is still a sharp rise on the 8,500 of 2003. And the CML warned that the number of repossessions was likely to rise again in 2008 as the credit crunch tightened. Meanwhile, the numbers of mortgages behind on payments rose by 8.6% compared to 2006, the organisation, which represents mortgage lenders, said. 'Wider issues' Added cost pressures on homeowners are expected this year, owing to higher energy and food bills, while more than a million people are coming off fixed-rate mortgages. Michael Coogan, CML director general, said: "The number of repossessions is likely to be higher in 2008 as a result of wider issues in the economy and the mortgage funding markets." He said that "no one is necessarily to blame for this" but called for "a fair and reasonable balance of responsibility". Mr Coogan said consumers, their advisers and lenders, and the system of state support, all had a role to play to ensure "repossessions are minimised". Tighter credit market The rise in repossessions was likely to be down primarily to the credit crunch, with lenders taking fewer risks with borrowers who were already over-extended. Charities have previously warned about some homeowners using credit cards to pay their mortgages, but with credit increasingly difficult to come by, many have been struggling to meet repayments. Most mortgage possession claims do not end with the owner losing their home, because the lender often comes to an arrangement with the borrower to pay off the arrears. But Sue Edwards, head of consumer policy at Citizens Advice, said: "Our evidence shows that lenders are not always doing everything they can to help borrowers in trouble, all too often piling on extra charges and being too quick to take court action rather than being prepared to negotiate affordable repayment arrangements. "We want to see all lenders being reasonable when dealing with customers who do get into trouble, and taking court action for possession only as a last resort." And Shadow Housing Minister Grant Shapps said: "These figures sadly make a mockery of Labour's hollow claims to have helped more people onto the property ladder." Interest rates Despite the latest rise in repossessions, figures are still much lower than the numbers in the early 1990s. when they reached 75,500 repossessions a year. The CML figures have been released the day after many of the largest - but not all - mortgage lenders announced they would pass on the 0.25% cut in interest rates in full to customers. These lenders said the cut on the standard variable rate would come in early March. Simon Rubinsohn, chief economist of the Royal Institution of Chartered Surveyors, predicted further interest rates in the coming months, offering more relief to homeowners. Godfrey Blight, chairman of the Intermediary Mortgages Lenders Association, said arrears and repossessions would rise in 2008, but not "catastrophically so". Political row The figures have prompted political debate. Liberal Democrat leader Nick Clegg said: "We must take steps to ensure that repossession is only ever a last resort - by making financial advice compulsory at the point repossession claims are issued." For the Conservatives, shadow housing minister Grant Shapps said: "These figures sadly make a mockery of Labour's hollow claims to have helped more people on to the property ladder. "The Government needs to urgently address the issue of affordable housing." A Treasury spokesman said: "The Government's Housing Finance Review, to be published in the Budget, will explore options to increase the uptake of affordable long-term fixed-rate mortgages." On Monday, the Insolvency Service said the number of people declared insolvent in 2007 was 106,645, just slightly below the record high in 2006, while bankruptcies were up 2.4%. Experts said it would be increasingly difficult for people to borrow their way out of trouble. Those who fear getting into trouble with mortgage repayments have been urged to speak to their lender.

The house price boom of recent years...

12/10/2007

The house price boom of recent years has brought "misery" to thousands of people and represents a "failure" of policy, a leading economist has argued. Roger Bootle, managing director of Capital Economics, told a property conference that the lack of new housing being built was the critical problem. Ministers had failed to secure more land for housing development, he said. But a leading civil servant said the government was "taking action" to provide more land for building. 'Gimmicks' Annual house price inflation in England and Wales has slowed in recent months, the Land Registry confirmed earlier this month, following a series of interest rate rises in 2007. But house prices in London are still rising 15% year on year. Mr Bootle said the "extraordinary" rate of house price growth seen in recent years had had damaging effects for the economy and household finances. "Most people see the UK housing market as a story of great success," he told an industry event in Wales. "I don't. On the contrary, I see it as one of the UK's most unbridled failures." The root of the problem was the lack of land being made available for new building, he said. "I wish the government would forget all the gimmicks - affordable housing, key workers and the like," he added. "The central issue is quite clear - it is getting to grips with the availability of land for building and ensuring that the rate of building moves up quite sharply after that." Policy priority Prime Minister Gordon Brown has made closing the affordability gap for many aspiring homebuyers a key policy priority. He has increased the target for new housebuilding to three million homes by 2020. Responding to Mr Bootle's comments, a senior official from the Department of Communities and Local Government (DCLG), acknowledged housebuilding had to keep pace with the rising number of households being created. "We will, and are, taking action to deliver more land through the planning system and recognise just how important that is," said Richard McCarthy, the DCLG's director general of programmes, policy and innovation.

The UK housing market is continuing to slow down under the effect of higher interest rates...

12/09/2007

The UK housing market is continuing to slow down under the effect of higher interest rates, the Royal Institution of Chartered Surveyors says. Its latest survey reveals that in August slightly more surveyors saw prices fall locally than saw them rise. Rics says this was the first time this had happened since October 2005. This contradicts the evidence of all other house price surveys, but Rics said enquiries from new buyers had also fallen for the ninth month in a row. "Affordability is at its most stretched in over a decade and many will worry that rising mortgage repayments will prove a step too far," said Ian Perry of Rics. "The market will soften further, going into the autumn, reducing some impetus from those that have been chasing a rapidly-moving target," he added. Divergence Surveys from organisations such as the big mortgage lenders, the Department of Communities and Local Government, and the English and Welsh Land Registry, have all reported house prices continuing to go up at a brisk rate. The persistence of double-digit house price inflation this year, despite the five increases in interest rates imposed by the Bank of England since the summer of 2006, has surprised most market observers. For instance, earlier this week, the DCLG reported that average house prices in July were rising faster than before at 12.4% a year - the fastest rate since March 2005. Two of the UK's largest mortgage lenders the Halifax and Nationwide both reported a small rise in house prices in August. One explanation for what is going on is that there is a divergence between London and the South East - where prices have been stoked up by huge City bonuses and a shortage of new houses - and the rest of the country, where prices are rising more slowly. That is why the Rics survey may be a good indicator of an impending downturn. Survey methods The Rics survey does not measure actual house prices. It simply asks a sample of its members around the country if prices locally are higher or lower than in the previous month. The balance between the two is what gets reported. Thus surveyors in some parts of the country are detecting a slowdown, even if average prices across the UK have yet to fall. The methodology may seem crude and subjective. However, Rics has traditionally had its finger on the pulse of the market when it has changed direction - as during the property slump of the early 1990s, when many other commentators refused to acknowledge that prices were falling. Rics also says that the market was affected in August by the advent of compulsory Home Information Packs for the sale of houses with four bedrooms or more. It says 51% fewer of these were sold during August than in the same month a year ago.

The buy-to-let property market is still booming

07/09/2007

The buy-to-let property market is still booming, despite higher interest rates, according to the Royal Institution of Chartered Surveyors (RICS). Demand for rented property is rising as high property prices are forcing potential home buyers to remain in rented accommodation, the group said. The result is that rents are rising at their fastest rate on record. Meanwhile, buy-to-let mortgages have surged over the past three years as investors make the most of rent rises. "Current economic uncertainty has created an ideal platform for buy-to-let investors to cash in on rising rental levels," said RICS spokesperson Jeremy Leaf. "Many would-be buyers have decided to wait and see how the interest rate cycle will affect the market," he added. Rising rents In the past three years the number of buy-to-let mortgages in existence has nearly doubled to 939,000 - and they now comprise nearly 10% of all outstanding mortgages. Experts have blamed rising house prices and rising rents on the continuing shortfall in new homes being built and the rapid increase in the UK's population - largely due to immigration. The Association of Rental Letting Agents (ARLA) reported that rents have now risen to an all-time high as demand outstrips supply in all parts of the market. The average weekly rent for a flat in prime central London is now £525 a week, with £215 a week being charged in the South East and £150 in the rest of the UK. The growing influence of buy-to-let investors, with more financial muscle than the typical first-time buyer, helps explain why house prices in the UK are still rising briskly, despite the Bank of England having imposed five rises in interest rates since the summer of 2006. On Monday, the Department for Communities and Local Government said UK house prices were still accelerating, rising 12.4% in the year to July - driven largely by increases in London and the South East.

First-time buyers are suffering an increasing squeeze on their incomes as they get on the property...

02/02/2007

First-time buyers are suffering an increasing squeeze on their incomes as they get on the property ladder, says the Council of Mortgage Lenders (CML). Its latest figures show that average first-timers are now borrowing 3.39 times their incomes, a new record. They are also using up 19.7% of their incomes to repay just the interest on their loans, the biggest proportion since 1991. Overall, the CML says the property market is starting to slow down. "Both market conditions and sentiment are coming off the boil and affordability is ever more stretched, but consumers should not expect any immediate easing in the financial pressures they face," said the CML's director general, Michael Coogan. As evidence, the CML pointed to the fact that in July, all loans for house purchase, or by people remortgaging, fell back from their level in June. Although these figures are erratic from month to month, in both cases they were lower than in July last year. "The long-anticipated slowdown in the housing and mortgage markets may now be beginning to materialise," said Mr Coogan. Squeeze The number of new loans to first-time buyers - and their total value - dropped in July too, as rising interest rates and ever-increasing house prices took their toll. At 32,400, these were down on both June this year and July last year. And with annual house price inflation still in double digits, the average first-time mortgage has now reached £119,000. The number of people taking out mortgages to move house also dropped back, with these borrowers facing a financial squeeze too. They are now, on average, using up 16.9% of their incomes to meet their interest payments while borrowing on average £137,350. That interest repayment burden is the highest experienced by this category of borrower since 1992. At the same time, fixed-rate loans are at a new peak of popularity, with 79% of all new mortgages being lent at fixed rates, as borrowers have sought to protect themselves against any further increases in interest rates.

Property prices are falling for the first time in two years

08/01/2007

Property prices are falling for the first time in two years due to a drop in demand, a leading housing market survey revealed today. The latest Royal Institution of Chartered Surveyors study, released today, said that inquiries from potential buyers suffered their biggest fall for three years in August and prospects looked dim for the market picking up in the near future. The influential report, based on a poll of estate agents and surveyors, showed property values falling in the Midlands, the North West, East Anglia, Wales, and Yorkshire and Humberside. London and the South East, the South West and Scotland are still seeing an increase but on average prices are down. It said that 1.8% more chartered surveyors reported a fall than a rise in house prices in August, down from 10.8% more reporting a rise in July. New instructions to sell property fell for the third month in succession and Rics said the stock of unsold property on surveyor's books declined with levels down 10% on year-ago levels. The number of four bedroom houses on the market has declined by 51% compared to a year ago, potentially pushed down by the August home information packs deadline for four-bedroom, or larger, homes and the high cost of moving, especially at the top of the market. Rics said that weakening demand, driven by rising interest rates, had severely dented surveyor confidence in the outlook for house prices. Ian Perry, Rics spokesman, said: 'Potential house buyers have become far more cautious as they wait and see what affect interest rate rises will have on household finances.