Posts filed under ‘House Prices’
The rate at which people think house prices will rise has eased to a 13-month low as consumers brace themselves for higher borrowing costs, research showed today.
The Knight Frank Markit House Price Sentiment Index fell to 69.2 in September, its lowest level since August last year.
The figure was also well down on the peak of 75.1 reached in May, although at above 50 it indicates that people still expect house prices to rise, albeit at a slower rate.
The groups said the prospects of higher borrowing costs next year, tougher rhetoric from policymakers and stretched affordability in areas that have seen strong price gains were causing households to reign in their price growth expectations.
The index first started to ease in June, and the trend has continued during the summer.
Overall, only 46 per cent of people expected the price of their home to increase during the coming year, the first time the level has fallen below 50 per cent in 2014.
Grainne Gilmore, head of residential research at Knight Frank, said: “House prices are rising across the UK, but our index signals a continuing slow-down in the pace of growth.
“The strengthening economy, job creation and low base rate are helping underpin property values, but there are signs that households across the board are becoming more circumspect about the scale of price growth they expect.”
Households across the country thought the value of their property increased in September, but the rate of growth was the slowest recorded for eight months.
Just under 27 per cent of people thought the value of their home had increased during the month, while 5.5 per cent said it had fallen.
People in all regions of Great Britain thought house prices rose in September, with those in London reporting the strongest gains, followed by people in the South East and East.
Households in the South East were most optimistic that property values would continue to increase in the coming 12 months, with people in London and the West Midlands also upbeat.
The survey adds to growing evidence that the property market is beginning to slow down as buyers become more cautious in the face of recent house price gains and future hikes to the cost of borrowing.
At the same time, the number of homes being put up for sale has increased, easing the mismatch between supply and demand and reducing the upward pressure on prices.
The Council of Mortgage Lenders yesterday reported mortgage advances fell during August for the first time since February.
Mortgage lending fell during August in a further sign that the property market is beginning to slow down, figures showed today.
A total of £18.6bn was advanced during the month, down from £19.7bn in July, according to the Council of Mortgage Lenders.
It was the first monthly drop in mortgage lending since February, when the market was affected by lenders gearing up for the introduction of new regulations under the Mortgage Market Review.
But despite the dip, total advances were still the highest for August since 2008, and 13 per cent up on lending for the same month of 2013.
CML chief economist Bob Pannell said: “The narrative of recovering house purchase and buy-to-let activity continued through August.
“However, it is important to be aware that this picture is being flattered by strong seasonal factors through the summer period.
“A gentle slowing of lending activity may now be in prospect, as a result of the continuing impact of tighter lending rules and a softening of the London market.”
He added that on a seasonally adjusted basis, total lending during July was £17.1bn, little changed from May and June and broadly flat since the beginning of the year, and forward estimates suggest August’s figure will be similar on a seasonally adjusted basis.
The CML’s suggestion that mortgage lending may have reached a plateau is consistent with a report from the Bank of England yesterday, in which agents said housing market activity has stabilised at a lower level than was seen at the start of the year.
Recent data has pointed to a fall in demand from potential buyers as people have become put off by the high prices being demanded by sellers and the prospect of interest rate rises.
At the same time, there has been an increase in the number of homes being put up for sale, helping to ease the mismatch between supply and demand.
Meanwhile, Virgin Money has launched a new six year fixed rate mortgage, undercutting many five year fixed rate deals.
The loan, which is the only six year product available, charges interest of 2.99 per cent to people with a 30 per cent deposit who pay a £995 fee.
The only medium-term deal offering a better rate is a five year fixed rate loan from Yorkshire Building Society at 2.89 per cent, but it requires a 35 per cent deposit and comes with a £975 fee.
Virgin Money said it had launched the deal to give people a “prolonged period of certainty” for the cost of their monthly mortgage repayments.
It added that it expected the product to be very popular, so it was likely to be available for only a limited period.
A flurry of lenders have cut the cost of their five year fixed rate deals in recent weeks in response to falling swap rates, upon which the deals are based.
The average interest rate charged on a five year fixed rate deal has dropped to 4.11 per cent, down from 4.21 per cent in August, according to financial information group Moneyfacts.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “As we move into autumn, lenders have one eye on their year-end figures and are ramping up their lending volumes to meet them.
“Subsequently, there are some excellent fixed rates available over two and five years so borrowers who are concerned about rate rises should act now to obtain some security.”
There are nearly 10 buyers chasing every property for sale, despite a jump in the number of homes on the market, research showed today.
The number of properties listed with estate agents rose by more than 4 per cent in August, compared with the same month of 2013, as homeowners looked to cash in on recent house price gains.
At the same time, the number of potential buyers fell by 5.5 per cent, according to estate agents haart.
The group said the figures suggested the property market was rebalancing following a year of high demand and low supply.
But despite the fall in people looking to buy and the rise in homes for sale, the market remained highly competitive, with 9.5 potential buyers chasing every property.
The increase in supply helped to boost sales levels, with transactions rising by nearly 9 per cent year-on-year.
Paul Smith, chief executive of haart, said: “The property market is currently recalibrating as our data shows, with an easing of demand as new buyer registrations across the UK decrease 5.5 per cent annually, in contrast to the uplift in homeowners looking to sell.
“Despite this influx of stock the market remains competitive with an average 9.5 buyers registering interest in every new home that comes to market, which is the driver behind property price growth.”
He added: “This gradual return to normality should now dispel fears about property bubbles – which we have always dismissed as hype.”
The group said house prices had risen by 8.9 per cent in the year to the end of August, to stand at an average of £206,578.
But the typical price paid by a first time buyer actually dipped slightly during August, dropping to £153,967, 1 per cent lower than in July.
London continued to be the main driver of growth, with prices storming ahead by 23.6 per cent year-on-year in the capital to stand at £494,026.
Competition for property was most intense in London, with 15.7 potential buyers chasing every home on the market, despite a 27 per cent jump in supply.
Meanwhile, the Bank of England reported that housing market activity had stabilised at lower transaction levels, after dipping earlier in the year following the introduction of tougher lending criteria under the Mortgage Market Review.
In its Agents’ Summary of Business Conditions Report, it said the slowdown had been particularly marked in Central London, where the appreciation of sterling had deterred some foreign buyers.
It added that house price growth was also slowing, particularly in areas of the country that had seen significant gains, with estate agents saying this reflected a more balanced market, as supply increased.
The Bank’s Monetary Policy Committee also struck a more dovish tome in its September meeting, with members suggesting Britain’s recovery may slow in the fourth quarter, while risks from the problems in the Eurozone have increased.
Two members continued to vote for a rate hike, but they failed to persuade any other members of the committee that a rise in the official cost of borrowing was necessary.
Most economists expect the Bank Rate to be increased from its record low of 0.5 per cent during the first quarter of 2015.
House prices raced ahead by nearly 2 per cent in July as the property market showed little sign of slowing down, Government figures revealed today.
The average cost of a UK home jumped by 1.6 per cent during the month to stand at £272,000, according to the Office for National Statistics.
The rate at which prices are rising also accelerated to stand at 11.7 per cent for the 12 months to the end of July, up from an annual rate of 10.2 per cent in June.
London continued to be the driving force of the property market, with house prices in the capital increasing by 19.1 per cent during the year.
Growth was also strong in the South East and East, with these regions posting gains of 12.2 per cent and 10.6 per cent respectively.
But the London house price boom is continuing to spread to other regions of the UK, with the North East, North West, East Midlands, West Midlands, South West, Wales and Scotland all posting annual growth of more than 7 per cent.
The gains were enough to push property values in the East Midlands, West Midlands and South West up to record levels.
These regions now join London, the South East and the East in having average house prices that have passed the peak reached before the financial crisis struck.
In London, house prices are now nearly 40 per cent higher than they were before the property market correction, while across the UK as a whole, prices are 11.4 per cent higher.
Property price gains were more subdued in North Ireland and Yorkshire and the Humber, with prices in these regions rising by only 4.5 per cent and 5 per cent respectively during the past year.
The ONS data is slightly at odds with other housing market surveys that had indicated the property market was starting to slow down as buyers balked at high asking prices and more homes came on to the market.
Halifax reported that house prices edged ahead by just 0.1 per cent in August, although this followed a strong gain in July.
Jonathan Harris, of mortgage brokers Anderson Harris, said: “ONS house prices tend to be more historic than the other indices, revealing that there was no cooling in the housing market in July with house prices continuing to increase strongly.
“However, since then the temperature has definitely dropped as growing uncertainty – both with regard to the political climate and interest rates – takes the wind out of prospective buyers’ sails.”
Homebuyers wanting to live close to a popular station can expect to pay an extra £42,000, research claims.
Adding £42,000 to their budget means buyers can afford to include properties that are just 500 metres from a London station in their search, compared to an otherwise identical property 1,500 metres away.
The findings by Nationwide Building Society were based on a typical London home.
It also suggested the premium on a typical property in Manchester that is 500 metres from a station is £12,000, while in Glasgow it is £9,400.
Robert Gardner, Nationwide’s chief economist, said: “London homebuyers’ willingness to pay a greater premium for being close to a station compared with those in Greater Manchester and Glasgow probably reflects the greater reliance on public transport in the capital, with residents less likely to drive.”
The research found London has the densest network of stations and services, with 94 per cent of properties within 1.5 kilometres of a station, compared with 72 per cent in greater Glasgow and 69 per cent in greater Manchester.
Homebuyers can find properties that are within commutable distance of their work with the help of Zoopla’s travel time search tool.
You can discover which locations are within your preferred commute time from work. For example, if you work near Waterloo Station, you can search for properties for sale or to rent that are within a certain travel time from there.
The research comes as the building society also unveiled an increase in house price growth in August, with property prices rising by 0.8 per cent.
The annual rate of house price inflation also increased during the month, rising to 11 per cent, up from 10.6 per cent in the 12 months to the end of July.
The latest monthly gain, which followed a change of just 0.2 per cent in July, left the typical home costing £189,306.
The acceleration in price growth is at odds with recent reports that the property market was beginning to slow down as more homes were put up for sale and buyers stayed away from the market.
Gardner said: “The outlook for the housing market remains highly uncertain.
“The number of mortgage approvals fell by almost 20 per cent between January and May, suggesting that activity was cooling.
“However, there was a modest rebound in June and it is unclear how much of the slowdown was due to the introduction of the Mortgage Market Review rather than an underlying loss of momentum.”
He said surveyors had reported that inquiries from new buyers had moderated in recent months.
But he added that the brightening economic outlook was likely to provide ongoing support for housing demand, while supply remained constrained, despite more homes being put up for sale.
Meanwhile, the first increase to the Bank Rate is not expected until early 2015, despite the fact that two members of the Bank of England’s Monetary Policy Committee voted for a hike at the most recent meeting.
The Nationwide figures come just days after the National Association of Estate Agents reported a steep drop in the number of people submitting above asking price offers in a bid to secure a home.
The group said only 4 per cent of homes sold for more than the asking price in July, down from 19 per cent in May, while 66 per cent of sales were agreed for offers below the asking price last month.
It added that the number of homes being put up for sale had increased during July at its fastest rate for nearly three years.
Gardner said house price inflation was continuing to outpace earnings growth by a significant margin, with average wage increases running at less than 1 per cent in recent months.
But despite this situation, he said affordability at a national level did not appear stretched by historic standards, partly due to low mortgage rates, which have left the cost of servicing a home loan close to the long-run average of around 30 per cent of take home pay.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “August proved to be a decent month for the housing market, even though it is traditionally a quiet time of year when not much gets done.
“Prices continued to edge up slightly, while we had one of our best months for new business – emphasising the continued strength of the London property market in particular.
“While borrowers may be worried about an interest rate rise, there are plenty of excellent rates still available which will continue to support activity in the market to an extent.”