House price growth could be wiped out by year end
August 5, 2010
With the constant barrage of house price reports it’s hard to keep track of exactly what is happening throughout the UK, but if the latest one is anything to go by, prices now look set to fall.
New sellers have dropped asking prices in July for the first time this year, as properties continue to flood the market, which means the gains made in the first half of 2010 could be wiped out by the end of the year.
The average asking price of a home in England and Wales has risen by 7% since January, peaking at £237,767 in June, according to property website Rightmove.com.
Rightmove the property website reported that an average of 30,000 new homes are currently being put up for sale each week, 45% more than during July last year.
The average number of properties that estate agents have on their books has risen for the fifth month in a row, the highest level since August 2008. As a result, there are now five new properties on the market for every two potential buyers who have a mortgage approved.
While the flurry of activity makes for a potentially strong buyers market in the second half of 2010, it’s not complete doom for sellers when the research figures are put in context.
While average asking prices fell in some regions: by 2.3% in East Anglia and 2.1% in Greater London, asking prices have risen for July in other areas. The South West, Wales, West Midlands and East Midlands all saw a rise, with the South West leading the way with a rise of 2.8%.
So, while it’s not the news many homeowners may have been hoping for, it’s simply proof that there’s still a long way to go before any price rises can be considered a stable sign of recovery.
UK House prices fall!
July 30, 2010
UK house prices fell back in July, for the first time since February, as buyer demand remained weak.
According to Nationwide, the average value of a home declined by 0.5%, to £169,347, taking the annual rate of inflation down to 6.6%, compared with 8.7% in June.
The lender notes that the sizeable drop is due in part to the strength of house price gains in July of last year.
Demand from homebuyers remained subdued, attributes this to a combination of restrictive credit conditions and nervousness on the part of potential first-time buyers and home movers, who are uncertain about the future economic outlook.
At the same time, the imbalance between supply and demand has been easing since the abolition of Home Information Packs in May, putting further downward pressure on prices.
It will take several more months to establish whether house prices are now simply oscillating around a flat price trend or whether a period of downward trending prices may be in store!
Tougher rules to come on Mortgages
July 26, 2010
It’s just too easy to get a mortgage nowadays. All you need is a 10% or 15% deposit, and a brilliantly well-paying job, and you can borrow all you need – as long as you don’t need very much. For the average couple, unless you have £25,000 in the bank, you can say to buying your first home.
There were fewer than 50,000 mortgages approved in May. Everyone else was simply resigned to renting until they are old and grey. But the FSA disagrees, it wants to make it even harder to get a mortgage – putting even more hurdles in he way of hopeful buyers.
The proposal is to run affordability checks on every borrower, in an effort to ensure ‘responsible lending’.
All mortgages should be affordable, and it’s in everyone’s best interests to make sure that the buyer doesn’t suddenly find themselves running up arrears because they failed to budget carefully enough.
If you have an impaired credit history – and after a decade of irresponsible lending followed by a period of massive tightening, an increasing number of people do – then the affordability test will be even tougher, and require a buffer between your incomings and outgoings.
The second part of the proposals is to effectively outlaw self-certification mortgages and require proof of income from an independent source.
This is based on research that shows almost 50% of mortgages taken out in the last three years have been granted without proof of income.
If you have a normal job, the new rule shouldn’t make much difference to you. You just produce the pay slip as you always have. If, for any reason, your income is less reliable – if you are freelance or self-employed, or you work on commission, you’re in much more trouble. In effect you need to have this work for at last a couple of years before you can even think of getting a mortgage. Even then, it’s unlikely your first couple of years was massively profitable, so you can wave goodbye to a mortgage for the best part of half a decade.
If you work for yourself it’s amazing how poorly you are treated. They say freelance work is less reliable than a job, you can get fired at a moment’s notice, but even in a normal job you only get one months notice. And if you get your work from a handful of employers, there’s an argument you’re more secure, because they’d all have to dump you together for your income to be as risky as a full time employee.
Further house price falls predicted
July 13, 2010
More bad new for the housing market as Property professionals are predicting further house price falls following a surge in the number of homes being put up for sale, research indicates.
The Royal Institution of Chartered Surveyors (RICS) said that in June, 4% more of its members expected prices to fall during the coming months than those who thought they would rise.
The number of potential buyers registering with chartered surveyor estate agents fell for only the second time since the latter part of 2008, as consumers fretted about the state of the economy.
The easing in the mismatch between supply and demand, which was one of the key factors supporting the housing market recovery in 2009, has already led to a fall in the proportion of surveyors reporting price rises.
The group said surveyors were still reporting house price rises in most parts of the country, but the increase in the supply of homes for sale was pushing many of the regional balances towards negative territory, with the exception of London and Scotland.
More surveyors are already reporting price falls than those who are reporting rises in Wales, Yorkshire and Humberside, the West Midlands and Northern Ireland.
Many fail to get help for debt problems
July 12, 2010
According to a debt charity in the UK many people are struggling with unmanageable debts and are failing to get any help to aid them in managing their debt problems. In fact, it is estimated that around one million people may be struggling with debt that they do not seek advice about.
Officials are concerned that as a result of many of those in debt failing to get the advice that they need the level of personal insolvencies in the UK could increase sharply, as more and more people suddenly find themselves unable to keep on top of financial commitments..
The level of insolvencies in the UK is already very high, and officials from Credit Action believe that this could be just the tip of the iceberg. However, the charity also said that around half a million people with debt were seeking help to assist them with managing their finances, and this included seeking help from debt charities and organisations such as the Citizen’s Advice Bureau.
There are concerns that many people may also be turning to high interest borrowing such as high rate credit cards and doorstep loans in order to get them through financially, which in reality could leave them in an even worse situation. Further data from a study carried out indicated that 11% of adults spend more than they earn each month, which is likely to contribute to high debt levels.
Many people try to bury their heads in the sand & try to ignore their current financial situation, avoiding the issues & thinking their problems will go away. This is not the case, seriously think about solving your problems, it may be the case that you will have to move house or sell to release some cash or to get a cheaper one, renting may also be an option.
If this is you, please don’t just sit there, take action or seek advice as soon as possible.
High house prices affects first time buyers
July 2, 2010
Nearly three-quarters of potential first-time buyers have given up hope of ever owning their own home, due to the high prices, the deposits needed and the uncertainty that a dip may occur in the future.
Around 70% of people who do not own a property said they had abandoned plans to buy one in the UK because of high house prices.
A third of first-time buyers also said they were wary of getting on to the property ladder because of the volatility of the UK market.
But 24% of those questioned said they would consider buying a property abroad, with potential buyers expecting their money to go further overseas.
France was the most popular country for first-time buyers who were not relocating to consider buying a property in, followed by Spain, while Australia was the most popular country for people who planned to move abroad.
Double dip property crash
June 28, 2010
The property price crash that homeowners were fearing may well be around the corner, the experts are saying
With the axing of the unpopular Hips (Home information packs), has resulted in the market being flooded with properties, and marked a turning point.
Property website Rightmove says that the abolition of the packs has caused a 22% rise in the number of properties hitting the market, as a result it says the average price of a property has hardly risen.
Now I appreciate that’s no fall. It may be a one-off effect caused by the removal of the packs, and in many ways it could be considered a sustainable rise.
But that’s argument doesn’t wash. It comes on the back of a 0.7% rise the previous month, so it constitutes a slowdown. The thing about the property market is that it works on faith, and if buyers see a slowdown they are more likely to haggle harder and push for a discount just in case the market falls.
Many more properties currently on the open market, means prospective house buyers are more likely to haggle due to the choice, in which this may continue to push house prices down.
Things could get a whole lot worse too. Surely the only thing propping up the market for over a year has been the rock bottom interest rates, but this may be a signal that the Bank of England may have to raise rates in order to control inflation.
That could easily turn a slowdown and a small downturn into a crash. Given that this is going to coincide with massive pay freezes and redundancies in the public sector, we could easily see this turn into the kind of property crash people take decades to recover from.
Home repossessions
June 28, 2010
A total of 10,500 home owners had their property repossessed during the three months to the end of March, 11% fewer than during the previous quarter, according to the Financial Services Authority.
There was a drop in the number of people who fell behind with their mortgage payments during the period. Around 40,500 people got into arrears during the first quarter, 2% fewer than during the previous three months.
The fall contributed to a further improvement in the total number of people who were in mortgage arrears for the third consecutive quarter, with 362,000 behind on their home loan, the equivalent of 3.23% of all mortgage holders.
Repossession levels have remained lower than expected during the economic downturn due to a combination of low interest rates, Government support schemes and increased forbearance by lenders.
The CML had previously forecast that 53,000 people would lose their homes this year; however, it has indicated that this prediction now looks “pessimistic” and is likely to be lower.
The figures from the FSA also showed there had been a steep fall in mortgage advances in the first quarter as activity in the housing market stalled due to a combination of bad weather, the end of the stamp duty holiday and uncertainty caused by the general election. .
Despite signs that lenders were loosening their lending criteria and making more products available for people with small deposits, only 2% of new advances went to people borrowing more than 90% of their home’s value.
Why house prices don’t always rise!
June 18, 2010
There was a time not that long ago when it seemed you couldn’t lose by investing in the UK property market.
Things have now changed, when the recession left millions of people’s dreams of capital appreciation in tatters, with many more struggling with the horrors of negative equity.
But why do house prices rise and fall as they do?
* The property market, like all capitalist markets the world over, is driven first and foremost by demand and supply.
* If there are six similar properties for sale on the same street, it stands to reason that a buyer choosing between them will have more chance of getting a good deal than someone else buying in an area where there are six buyers to every seller.
* Just like stocks and shares, the value of a property is also driven by sentiment, or in other words what people think it is – or will be – worth.
* A major factor is the availability of cash, or in most cases mortgage finance, to fund purchases – and this is what suddenly dried up when the credit crunch hit in summer 2007.
Then came the crash, knocking thousands of pounds off the value of the average property and leaving many of those who had bought at the top of the market stuck with homes worth much less than they had paid.
The consequences of this on the mortgage market are still clear to see today, with the top mortgage deals still coming with deposit requirements of 35% or 40% – a lot different from the 125% mortgages being offered just a few years ago.
This continued reluctance to lend, along with the ensuing recession that forced some homeowners to put properties on the market at rock-bottom prices, has kept the market subdued ever since.
Past figures show that at one point a home somewhere in the UK was being repossessed every 10 minutes.
So the market was being flooded with cheap properties at a time when buyers were scarce, due to both a lack of confidence in the housing market and economy as a whole, and a general lack of cash or mortgage finance.
Little wonder then that Nationwide’s House Price index for May 2010 revealed that even after many months of modest gains, prices remained 10% below the level they reached at the peak of the market in 2007.
Cash house buyers!
June 16, 2010
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