Posts tagged ‘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.
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.”
Hardworking families in London are being provided with ‘tens of thousands’ of new homes, the Government’s housing minster has exclusively told Zoopla.
Brandon Lewis, who was appointed to the Government post earlier this year, insisted affordable homes are being provided for those wanting to live and work in the capital.
His comments come in the same week that the Government’s flagship Help to Buy scheme was deemed ‘a flop’ by the opposition – particularly for those hoping to buy in London.
Housing Minister Brandon Lewis said: “Everyone has the right to live in a safe and affordable home. This Government has worked tirelessly to make that possible and fix the broken housing market we inherited from the last Government.
“Our current affordable homes programmes is on track to deliver 170,000 new homes by 2015, to be followed by a further 165,000 by 2018, which will be the fastest rate of affordable house building for 20 years.
He claimed the Government’s Help to Buy scheme, which helps those with a small deposit to buy a home, was a key element in helping people onto the property ladder.
“Our Help to Buy scheme has enabled over 40,000 aspiring households to buy their first home with a fraction of the deposit they would normally require, and our action to cut the deficit has kept interest rates low and mortgages more affordable,” he said.
“And in London Help to Buy equity loans have allowed over 1,400 people to get a foot on the housing ladder. We have also increased discounts for council tenants looking to exercise their Right to Buy and have introduced new housing zones to boost house building and create tens of thousands of new homes for hardworking families across the capital.
However, he admitted that more need to be done to improve the property market. As well as struggling to save for a deposit, many home buyers are unable to keep up with the sharp rise in house prices, particularly in London.
The typical value of a home in Britain has increased almost £18,000 in the past year to £275,721, while in London they have risen by more than £60,000, according to Zoopla.
Lewis said: “The sector is clearly moving in the right direction, but there is still more to do, and improving the housing market will continue to be a vital part of our long-term economic plan,” he said.
A baby born today faces the prospect of paying £3.4m for their first property, new research has suggested.
The alarming statistic comes on the back of recent double digit house price rises that have forced first time buyers to turn to the Bank of Mum and Dad to help with a deposit.
The calculation is based on the average house rising in value by 8.6 per cent during the past 60 years.
If this pattern continues, a typical house worth just over £200,000 today is expected to reach £3,391,474 in the year 2048, the year when a child born today reaches a typical first time buyer age of 35.
The research by online estate agents eMoov also suggested that even a child who is 10 years old today faces paying more than £1.6m for a property, requiring a deposit of more than £320,000.
And if you have a child who is currently 4 years old, they will most likely need £2.4m.
By 2032, the average deposit of 20 per cent will be the equivalent of the price of the average price of a property today.
Russell Quirk, eMoov’s chief executive, said: “Our research shows the staggering truth about the rise of property prices within Britain in recent times. Property prices are always on the move, but viewed over decades our research shows an annual rise of 8.6 per cent since 1954.
“If the trend continues then the bank of Mum and Dad will become even more important for the next generation of home owners”
Mortgage experts agree that parents will play a more pivotal role in helping their children onto the property ladder.
Mark Harris, of mortgage brokers SPF Private Clients, said: “Already the Bank of Mum and Dad has become essential in helping first-time buyers onto the housing ladder and this research suggests that their role will become even more crucial.
“With wages failing to keep pace with property prices, home ownership is only going to become more unaffordable unless Mum and Dad come to the rescue with a hefty deposit.”
Mortgage lending jumped to a six-year high in July as the market remained resilient in the face of regulatory change, figures showed today.
A total of £19.1bn was advanced during the month, 7 per cent more than in June and the highest figure since August 2008, according to the Council of Mortgage Lenders.
The group said mortgage activity appeared to have remained robust, despite the tough new affordability criteria introduced under the Mortgage Market Review earlier this year.
But it cautioned that the eventual impact of the regulatory change remained uncertain.
July was the third consecutive month during which lending levels have increased, following a slight dip in March ahead of the introduction of the MMR.
Caroline Offord, CML market and data analyst, said: “Property transactions in the first half of the year showed a 25 per cent increase compared to the same period a year ago, but we expect that intensifying affordability pressures could start to dampen this upwards trend.”
The figures came as minutes from the Bank of England’s Monetary Policy Committee suggested a hike in interest rates could be closer than previously expected.
The minutes showed that two members of the committee vote to raise the Bank Rate from its current record low of 0.5 per cent to 0.75 per cent in August.
It was the first time that the MPC has been split on what the official cost of borrowing should be since July 2011.
External MPC members Martin Weale and Ian McCafferty argued that although wage growth remained weak, it was a lagging indicator of the amount of slack there was in the economy, and rates should begin rising before that slack had been used up.
News of the vote prompted speculation that interest rates could start rising before the end of the year.
But Samuel Tombs, senior UK economist at Capital Economics, pointed out that data released since the MPC’s meeting showing a fall in inflation to 1.6 per cent in July and slower growth in employment, eased the pressure on the Committee to raise rates quickly.
He said: “We still expect the first hike to come in February 2015.
“But, even if the Committee decides to get on the front foot and raise interest rates before the end of the year, low inflation should ensure that the pace at which they rise is extremely gradual by historical standards.”
A 0.25 per cent increase in interest rates would add just over £20 a month to repayments on a £150,000 variable rate mortgage, which moves up and down in line with changes to the Bank Rate.
Meanwhile, the Bank of England’s Agent’s Summary of Business Conditions, also released today, built on previous indications that the housing market is beginning to slow down.
The report said housing transactions had eased in recent months due to a shortage of homes on the market and the introduction of the MMR, which had lengthened the mortgage application process.
It added that there were also signs of an easing in house price inflation, concentrated in the South, with some prices lower than they had been a year earlier, while there were also fewer cases of sealed bids and offers being made over the asking price.
But recent survey data has pointed to a slowdown in growth as more homes have been put on the market and buyers have started to bulk at high asking prices.
Nationwide Building Society said property values inched ahead by just 0.1 per cent in July, while surveyors questioned by the Royal Institution of Chartered Surveyors predicted prices in London, which has been the driving force of the market recovery, would rise by just 1.9 per cent during the coming 12 months.