Posts tagged ‘House Prices’
This Friday marks the end of the longest depression in British economic history, it has been revealed.
Official figures will confirm that the total amount produced by Britain – or Growth Domestic Product – exceeds the level last seen before the recession hit.
Government figures show GDP fell by 7.2 per cent between its height during the first three months of 2008 and its low in the second quarter of 2009.
Technically, a depression – defined as a long or deep recession – does not end until GDP exceeds this pre-recession peak.
Britain’s economic recovery has been slow. National output during the first quarter of this year was still 0.6 per cent below that peak, according to the Office for National Statistics.
But momentum has picked up significantly during the past year and Britain now has one of the fastest growing economies among wealthy countries in the world.
This confidence is already being felt in the property market. Latest research by Zoopla shows the average value of a home soared by £90 a day during the first half of this year, leaving the typical property costing £260,488.
But experts warn that while the economy is improving, there are other issues – such as the forthcoming General Election – that are influencing the performance of the house market.
Mark Harris, of mortgage brokers SPF Private Clients, said: “The official numbers are demonstrating what the housing market has known for some time – the worst is over for the economy. Confidence is returning, with many of the buyers who may have been worried about job security and delayed making a purchase, finally ready to take the plunge.
“However, while the recovery is welcome it is also tentative. There are signs that the housing market is now starting to cool a little with buyers better able to negotiate over prices than before. With the threat of an interest rate rise on the horizon and the uncertainty surrounding the General Election, along with the possibility of a mansion tax, there are plenty of hurdles for the housing market to overcome.”
The average cost of a home soared by £90 a day during the first half of 2014, research showed today.
House prices in Britain jumped by 6.5 per cent or £16,265 in the six months to the end of June, to leave the typical property costing £260,488, according to Zoopla.
Home values rose in all regions of Britain during the six months, with London leading the way with an increase of 8.2 per cent or £43,115.
The steep gain pushed the average house price in the capital up to £567,392.
But the East and South East were not far behind posting growth of 7.5 per cent or £19,440, and 7.4 per cent or £23,031 respectively.
The Zoopla research came as data showed the number of homes changing hands reached a six-and-a-half year high during June.
A total of 109,580 properties were sold for more than £40,000 during the month on a non-seasonally adjusted basis, according to HM Revenue & Customs.
The figure was the joint-highest number of homes to change hands since November 2007.
But on a seasonally adjusted basis, the property market showed some signs of moderating, with 102,680 residential properties sold during June, broadly unchanged from the previous two months.
The Zoopla data also provided further evidence that the housing market recovery is beginning to ripple out from London and the South East to other areas of the country.
Salford in Greater Manchester was the best performing town during the first half of 2014, with the average house price soaring by 12 per cent or £14,874 to stand at £138,619.
It was followed by Brough in Yorkshire, where prices jumped by 11.9 per cent or £25,184, to leave the average property costing £211,156.
Lawrence Hall, of Zoopla, said:“Homeowners up and down the country are starting to see the benefits of the recovery as home values make further headway in 2014.
“Property price growth has largely been a London and South East story until recently, so it is very encouraging to see the house price recovery broadening and the ripple effect starting to take hold further north.
“Over the past few years Salford especially has prospered from job creation in the area, which has helped boost the local property market.”
Overall, house prices rose by just over 6 per cent in the South West, North West and Yorkshire and the Humber during the first six months of the year, while they rose by more than 5 per cent in the East Midlands, North East and West Midlands.
Gains were lowest in Wales and Scotland at 3.5 per cent and 1.1 per cent respectively.
Recent strong house price growth has led to concerns that a bubble could be building up in the property market, particularly in London where values have soared by 20.1 per cent during the past year.
Booming property prices could trigger a fresh recession as households become increasingly indebted, the Governor of the Bank of England has warned.
Mark Carney said a property price bubble remained the biggest risk to the UK’s economy in the medium term.
Appearing before the Treasury Select Committee, he warned that as property prices rose, households could become overstretched financially as they struggled to buy a home.
He added that if households took on high levels of mortgage debt, they would have less money to spend on other things, hitting consumption and posing a danger to the economy.
He said: “What happens if households are borrowing at high multiples is they have to economise on everything else in order to pay their mortgages.
“And if enough people are highly indebted, that has a big macroeconomic impact. It can tilt the economy back into recession, and we start from a position of vulnerability.
“There is the possibility that currently responsible lending standards become irresponsible to reckless.”
Carney defended the Financial Policy Committee’s recent decision to limit the volume of mortgages lenders could advance to people borrowing more than 4.5 times their income to 15 per cent as an “insurance policy” against a rise in high loan-to-income mortgages.
But he added that it had stopped short from banning these loans, as they did have a role to play, particularly for first-time buyers whose incomes were likely to rise in the future.
Carney added that the Bank would continue to take steps to ensure mortgage lending did not become “reckless” if necessary.
His comments came hours after Government figures revealed that house prices rose at their fastest rate for four years during May at 10.5 per cent, with annual price growth reaching a record 20.1 per cent in London.
They also showed that the average cost of a property bought by a first-time buyer had crossed the £200,000 threshold.
The important Treasury Select Committee hearing came on the day of a major cabinet reshuffle, deflecting some media coverage over Carney’s warning.
There have been growing concerns that a bubble could be building up in the property market, particularly in the capital.
But recent data has suggested that the market may be beginning to slow naturally in London, as would-be buyers bulk at the current high prices being demanded by sellers, with prices falling in some boroughs.
Potential buyers are also reported to have become more cautious following warnings from the Bank of England that interest rates could start rising sooner than previously expected.
The Royal Institution of Chartered Surveyors also recently reported that more homes had begun to come on to the market, as sellers were keen to cash in on recent strong price gains.
At the same, the rate at which new buyers were registering with estate agents is falling, helping to ease the mismatch between supply and demand.
Data released by the Office for National Statistics yesterday also showed that house prices still remain below their pre-correction peak in all areas of the country apart from London, the South East and the East.
House prices rose at their fastest rate for four years during May pushed up by record growth in London, government figures showed today.
The average cost of a home in Britain rose by 10.5 per cent in the 12 months to the end of May, the fastest annual rate since May 2010, according to the Office for National Statistics.
London continued to lead the rest of the country, with house prices in the capital soaring by 20.1 per cent during the year, the highest jump ever recorded by the index.
But the ONS said property values increased strongly across most parts of the country, with the South East recording a gain of 9.6 per cent, while in the East prices rose by 8.6 per cent.
House prices rose by 0.8 per cent during May itself, to leave the typical home in Britain costing a record £262,000.
This figure was 7.3 per cent higher than the peak reached in January 2008 before the credit crisis triggered house price falls.
Property values rose in all regions of Britain during the 12 months to the end of May, apart from Northern Ireland, where they fell by 0.7 per cent.
Growth was most subdued in Scotland, with house prices edging ahead by just 3.6 per cent there during the year, followed by the North West and North East at 3.9 per cent and 4.8 per cent respectively.
But despite the strong growth in many regions, house prices have passed their pre-crisis peak in only London, the South East and the East.
In Northern Ireland, the average home still costs nearly 49 per cent less than the high reached in August 2007, while in Scotland prices are 4.3 per cent below their previous peak and in Wales they are 3.7 per cent lower.
London continues to have the highest average house prices at £492,000, more than three times above Northern Ireland, which at £134,000 has the UK’s lowest property prices.
First-time buyers continued to face higher house price inflation than those trading up the property ladder in May.
The typical person buying their first home paid £202,000 during the month, 11.3 per cent more than first-time buyers paid in May 2013.
Former owner-occupiers buying a new home paid an average of £301,000, 9.5 per cent more than a year earlier.
Strong house price growth, particularly in the capital, has sparked concerns that a bubble may be building up in the property market.
The Bank of England’s Financial Policy Committee recently introduced a cap on high loan-to-income mortgage lending in a bid to help cool the market.
But recent data, along with anecdotal evidence from estate agents, suggests that the market has already begun to cool naturally, while in some areas of the country, price growth remains subdued.
David Newnes, director of Reeds Rains and Your Move estate agents, owned by LSL Property Services, said:“The housing market recovery continues to seep across the country beyond the capital, but a balanced view has to be taken as some regions of the country have seen very little house price growth.
“Places like Lancashire and York are still experiencing annual growth below 1 per cent.”
He added: “There are also new signs that growth is beginning to slow as we move into summer.
“In London prices have begun to fall at the upper end of the market.
“In four of the top five most expensive London boroughs, average house prices have dipped below their respective peak levels.”
The average cost of a home in the UK now stands at £260,311, according to Zoopla.
The number of high value properties put up for sale soared during the second quarter as homeowners cashed in on booming prices, research showed.
There was a 30 per cent rise in homes valued at more than £500,000 that were put on the market during the three months to the end of June,compared with a year earlier.
The number of properties entering the market in the £250,000 to £500,000 price bracket also jumped by 16 per cent, according to information services group Experian.
The increase meant properties valued at more than £250,000 accounted for 41 per cent of all homes that were for sale during the second quarter, compared with 37 per cent in the same period of 2013.
The group added that the number of houses being marketed for at least £250,000 was at its highest level since it began collecting data in 2010.
Jonathan Westley, managing director of consumer information services at Experian UK & Ireland, said: “The growth in houses prices suggests that homeowners may have made reasonable capital gains on their existing properties, especially as they seek to move up the property ladder.
“Our latest index shows that higher-end properties now form a greater proportion of properties appearing for sale, implying it is now second or third-time buyers, who are more active in the housing market.
“But, 59 per cent of all properties across the UK were still valued at less than £250,000, so there are opportunities for those with smaller budgets.”
Overall, 9.6 per cent more homes were put up for sale during the three months to the end of June compared with the same period of 2013.
The North East saw the biggest rise in properties for sale, with numbers increasing by 25.6 per cent year-on-year.
The East was the only region that saw a decline in property listings, with 2.6 per cent fewer homes coming on to the market than a year earlier.
Unsurprisingly, London saw the biggest jump in homes being put up for sale with a price tag of more than £500,000, with the capital reporting a 50.7 per cent increase.
It was followed by the Outer Metropolitan and South West, with the West Midlands also posting a strong gain of 25.5 per cent.
Six areas of Britain saw a fall in the number of properties listed for £100,000 or less as recent strong house price growth pushed values higher.
The North East was one of the few regions that bucked this trend, with a 33.5 per cent jump in homes being listed for below £100,000.
But while the number of properties being put up for sale increased, there was a drop in new homes being advertised for rent, with these falling by 4.3 per cent compared with the second quarter of 2013.
The biggest fall was recorded in the Outer Metropolitan and South East at 10.5 per cent and 8.8 per cent respectively.
The North East and Wales were the only areas to record continued growth in the number of homes being made available to rent.