This morning’s headlines about the housing market certainly looked gloomy. Today’s Times leads with a ‘House market stalls as economy falters’ which made a good headline but reflected a fairly excitable and sensational view of the market.
Of course a headline that says ‘Glut of houses for sale coincides with possible economic downturn following yet-to-come government cost cutting’ isn’t likely to shift newspapers, but it’s more accurate.
So let’s separate the facts from the hyperbole. House prices are falling or at least stagnating in many parts of the UK but this is not because the economy is ‘sagging’ but instead, many of the writers have omitted to point out until their later paragraphs, because there has been a huge surge in property for sale.
On FindaProperty.com this supply into the market has risen by 31 per cent over the past 12 months and by nine per cent alone in June – so there is no argument that, after a period of price rises, many sellers have decided to put their homes on the market and see what happens.
The unfortunate and unintended outcome of this is to force prices down. The constant number of buyers house hunting at the moment means they have more properties to choose from and when that happens, their bargaining power increases and prices drop. But it doesn’t mean the economy – or the property market – is nose diving, as The Times, Daily Telegraph and Daily Mail have all suggested.
The greatest mistake many commentators make when examining house prices is that they are somehow like retail prices. They think that if prices drop it must be because demand is weakening and this means we’re all going to hell in a handcart. Instead, unlike the latest Jimmy Choos or iPhone, property is all about supply and price and not so much about demand.
The figures that sparked this morning’s frenzied reporting – almost every newspaper has led with the story – has been based on figures from the Royal Institution of Chartered Surveyors. It is a ‘new stock’ report that also takes ‘sentiment’ in as a factor, as Radio 4’s Today programme pointed out this morning, rather than being a whole-market appraisal. It’s a weighty piece of research (used by the Bank of England) but is only a part of the picture.
The other point is that although the property market may be wobbling this month, it is a very regional, not national, picture. The FindaProperty.com sales index clearly reflects what the Nationwide and RICS figures also show – that in London, the SW and the NW surveyors are feeling a bit downbeat about the market while in the NE, Yorkshire and Humber, Wales and the Midlands there’s a bit of a pall.
But most importantly (and missed out in all the newspaper reports) the same surveyors say things will look up over the next three months – which probably reveals the real story here: everyone is on holiday and buyers are thin on the ground at the moment, while properties for sale are rising.
After reading a recent story on the BBC News website which asked “Are beach huts the new penthouses?” we got a little curious and used our clever keyword search tool to find “beach hut” properties for sale on Zoopla.co.uk.
Beach huts regularly make the headlines due to their quirkiness but predominantly because of the prices they fetch seem to be on the rise. Typically prices range from £9,000 – £120,000. However an unusual case back in July 2006 saw a pre-war wooden beach chalet sell at auction for £216,000. It was one of a group of 14 that were built in 1934 and came with spectacular views over Chesil Beach at West Bexington, Dorset. One of the possible reasons it fetched such a premium, was the fact that in this beach hut overnight stays were permitted, which is unusual for a beach hut.
So, if you’re on the look out for a beach hut here are eight we found which range from £40,000 on Portland Bill to a £10,000 beach hut on the Isle of Wight.
Buckets and spades at the ready…
1. Portland Bill, Portland – offers over £40,000
2. Pier Avenue, Whitstable – £22,000
3. Tanketron Slopes, Whitstable – £21,000
4. Shoeburyness, Southend-On-Sea – £20,000
5. Marine Parade, Whitstable – £18,500
6. Puckpool, Ryde, Isle Of Wight – £15,000
7. Queens Gardens, Hove – £12,000
8. The Esplanage, East Cowes, Isle of Wight – £10,000
If you own a beach hut or have ever thought of owning one, let us know your thoughts in the comments box below, or come and say hello on twitter.
Almost one-third (32%) of property for sale in Britain today, has had their asking price reduced at least once since they were first listed on the market.
Our latest research reveals an average price drop of 6.1% for all homes that have been discounted and a total of £1.5 billion that has been slashed off the asking prices of properties that are currently listed for sale on Zoopla.co.uk (did you know we’re the only site to allow users to sort results by the properties that have been most reduced in price?).
At least one-third of properties for sale have been discounted from their original asking price in 36 of the main 50 cities/towns we studied – full list – as more and more sellers are cautiously reducing asking prices in a bid to attract buyers and lock in the house price gains of the past 16 months.
Barnsley tops the list of locations that have seen the most price reductions with 44% of all properties currently listed for sale having been discounted at some point. At the other end of the scale, only 24% of current sellers in Glasgow have knocked anything off their original listing price.
The highest average price reductions have been in Rotherham, Manchester and Barnsley, where average asking prices have been discounted by 7.1%. In Rotherham that represents a £9,442 drop in asking prices whilst average prices have been reduced by £11,376 in Manchester and £8,978 in Barnsley. By contrast, average price reductions in the south have been smaller, with average asking prices in Chelmsford and Brighton both having been reduced by 5.1%, or £18,814 and £19,928 respectively.
At the top end of the market, for properties with current asking prices of £1+ million, sellers are not feeling the pinch to quite the same degree with only 22% of properties having been reduced in price since first being put on the market. However, for those properties that have been reduced in this price bracket, the discount is much higher than the average at 9.6%.
Price reductions in 10 key British cities/towns
|Rank||Location||% of Listings with
Source: Zoopla.co.uk (as at August 1st 2010)
Full Top 50 list here
- Price reductions based on all properties listed for sale as at 1st August 2010
- Includes all price reductions since the property was first listed for sale on Zoopla.co.uk
- The Top 50 are taken from the key cities/towns across Britain based on the number of properties listed for sale
If the story of the credit crunch ever becomes a Disney cartoon then surely it should be a version of Snow White and the Seven Dwarfs. For Princess Mortgage, put to sleep two years ago after encountering a bad apple, continues to slumber today.
The question is, can a prince be found to break the spell and help more people get mortgages?
First of all, how deep is the sleep? The number of mortgages has shrunk by 90 per cent since 2008 and loan-to-value rates have dropped to 85% even for the most credit worthy. Also, the number of mortgages approved each month has plummeted from 98,000 in July 2008 to 42,000 last month.
There are some positives that have helped keep the property market afloat and most importantly, lending has remained cheap. The Bank of England base rate has been bumping along the bottom at half a percent since March last year and mortgage rates have followed. For example in April it was revealed that the average rate for a two-year fixed deal had fallen by 3.36% over the past 12 months, dropping the average monthly repayment by £316 to £853.
And there’s more. Recent research by a money comparison website reveals that both the number of 85% and 90% loan-to-value mortgages is beginning to increase as is the number of mortgage products available. For the first time for nearly 18 months there are more than 3,000 mortgage products, although this is still small beer compared to the 28,300 that used to be available.
But have matters improved enough? We decided to have a look at an online service from HSBC, which provides a mortgage finder service that claims to help you cut through the red tape and get to the nub of the question – ‘I am eligible for a loan’?
The answer is, in our case, just. We tried out the hardest scenario – a first time buyer looking to purchase a £250,000 home (bang on the upper 0% Stamp Duty threshold) with only a 10% deposit – or in other words seeking a 90% loan-to-value mortgage. HSBC has two to offer – a 5.49% two-year fixed deal at £1,380 a month or a 4.49% lifetime tracker at £1,249 a month.
But if you are moving home and have plenty of equity up your sleeve then the number of mortgages available rises dramatically. For example, if you are trading up to a £750,000 home but have £250,000 equity in your old one then HSBC has 26 mortgages to offer starting at 2.19% and rising to 3.94%.