House prices drop in what is being called...
Reason
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Editor
...a Double Dip.
Property prices across Britain have gone into reverse for the first time in seven months, according to website FindaProperty , which today warned of a "growing risk of a double-dip housing recession."
It said that prices fell 0.5% month-on-month, in the first evidence that a mini-boom that started in London during spring may now be over. Only last week the Royal Institution of Chartered Surveyors said that a shortage of properties, combined with cheap money, had sparked a surge in gazumping. In its most recent report, Halifax said that house prices rose by 1.2% in October, the fourth month in a row in which prices had increased.
But Michael O'Flynn, director of FindaProperty.com, said: "After seven months of sustained rises in house prices, we now see quite a sharp decline – with a thousand pounds slashed off the value of the average home. It is also likely that the market will soften as the traditional quieter year end approaches, so further falls over the next couple of months are not to be discounted."
The website, one of the UK's biggest property portals, said the average asking price sank to £218,654, from £219,658 last month. The biggest declines were among the most expensive properties, suggesting that the impact of the return of City bonuses may be petering out.
"More expensive properties for home movers, which had been performing more strongly than entry level properties over the past year, saw an above-average decline of almost £3,000 or 1% since last month," it said.
Prices for first-time buyer properties fell back by just £304, or 0.2% month-on-month. It added that first-time buyers face huge hurdles in stumping deposits for the typical purchase. Typical deposits have risen to £57,400 said FindaProperty, equivalent to 1.8 times gross annual household income.
In the past, first-time buyers could buy homes at three times their income, but today they have to find nearly two times their income just to put down a deposit.
Separate figures this morning from analysts Academetrics , indicate that prices rose for the sixth month in succession in October, climbing by 0.7% over the month. But the Academetrics index records past transactions that have gone on to the Land Registry rather than asking prices, and it too believes the recent rally will run out of steam and go into reverse in 2010.
"Continuing unemployment/underemployment, a still partly faltering economy and possible interest rate rises later in 2010, might well see prices stabilise or even fall during the coming year. This may further discourage some owners from putting their homes on the market, thus contributing to a continuing 'thin' market," said Dr Peter Williams , chairman of Acadametrics.
Other major property websites are understood to have seen asking prices drop in recent weeks. As the data emerges, it is likely to prompt calls for the chancellor, Alistair Darling, to extend the current stamp duty holiday when he delivers the pre-Budget report next month.
The current stamp duty regime entitles property transactions worth less than £175,000 to escape the tax until 31 December. In the new year, the threshold will return to £125,000.
Many leading forecasters are now expecting 2010 to be a tougher year for the property market than 2009. Earlier this month Savills , the upmarket estate agent, warned that prices will go through a double dip before rising again in 2011. It said that after rising by around 4% in 2009, prices will fall back again 6.6% in 2010.
Savills says price falls next year will be driven by the lack of mortgage products, erosion of pent-up demand constraints, gradually increasing supply and the overhang of unemployment. It forecasts a slow "extended W-shape recovery" starting in 2011.
In a written answer to a question from the Conservatives published yesterday, the Communities and Local Government department confirmed that the number of first-time buyers last year had fallen to an all-time low.
The figures show that in 1999 there were nearly 600,000 first time buyers. This fell to below 400,000 when prices peaked in 2007 and were down even further last year – to just 193,600.
"Whilst the cost of borrowing has fallen for many as a result of low base rates, many first-time buyers are still finding it extremely difficult to get a mortgage at present," said housing expert Henry Pryor . "We may be glad to see the back of 100% mortgages but the impact on the market has yet to be fully felt" he fears.
"Over 132,000 buyers have benefited so far from the stamp duty holiday. This will end in the New Year putting added pressure on first-time buyer finances in particular. This will leave the housing market without the crucial sector that traditionally underpins the whole market and with the buy-to-let market still out of favour, there are reasons for genuine concern as we head into an election year."
Tags: Property, Prices, UK, Reverse, Fall, November, 20...
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House prices drop in what is being called...
Reason
Posted by:
Editor
...a Double Dip.
Property prices across Britain have gone into reverse for the first time in seven months, according to website FindaProperty , which today warned of a "growing risk of a double-dip housing recession."
It said that prices fell 0.5% month-on-month, in the first evidence that a mini-boom that started in London during spring may now be over. Only last week the Royal Institution of Chartered Surveyors said that a shortage of properties, combined with cheap money, had sparked a surge in gazumping. In its most recent report, Halifax said that house prices rose by 1.2% in October, the fourth month in a row in which prices had increased.
But Michael O'Flynn, director of FindaProperty.com, said: "After seven months of sustained rises in house prices, we now see quite a sharp decline – with a thousand pounds slashed off the value of the average home. It is also likely that the market will soften as the traditional quieter year end approaches, so further falls over the next couple of months are not to be discounted."
The website, one of the UK's biggest property portals, said the average asking price sank to £218,654, from £219,658 last month. The biggest declines were among the most expensive properties, suggesting that the impact of the return of City bonuses may be petering out.
"More expensive properties for home movers, which had been performing more strongly than entry level properties over the past year, saw an above-average decline of almost £3,000 or 1% since last month," it said.
Prices for first-time buyer properties fell back by just £304, or 0.2% month-on-month. It added that first-time buyers face huge hurdles in stumping deposits for the typical purchase. Typical deposits have risen to £57,400 said FindaProperty, equivalent to 1.8 times gross annual household income.
In the past, first-time buyers could buy homes at three times their income, but today they have to find nearly two times their income just to put down a deposit.
Separate figures this morning from analysts Academetrics , indicate that prices rose for the sixth month in succession in October, climbing by 0.7% over the month. But the Academetrics index records past transactions that have gone on to the Land Registry rather than asking prices, and it too believes the recent rally will run out of steam and go into reverse in 2010.
"Continuing unemployment/underemployment, a still partly faltering economy and possible interest rate rises later in 2010, might well see prices stabilise or even fall during the coming year. This may further discourage some owners from putting their homes on the market, thus contributing to a continuing 'thin' market," said Dr Peter Williams , chairman of Acadametrics.
Other major property websites are understood to have seen asking prices drop in recent weeks. As the data emerges, it is likely to prompt calls for the chancellor, Alistair Darling, to extend the current stamp duty holiday when he delivers the pre-Budget report next month.
The current stamp duty regime entitles property transactions worth less than £175,000 to escape the tax until 31 December. In the new year, the threshold will return to £125,000.
Many leading forecasters are now expecting 2010 to be a tougher year for the property market than 2009. Earlier this month Savills , the upmarket estate agent, warned that prices will go through a double dip before rising again in 2011. It said that after rising by around 4% in 2009, prices will fall back again 6.6% in 2010.
Savills says price falls next year will be driven by the lack of mortgage products, erosion of pent-up demand constraints, gradually increasing supply and the overhang of unemployment. It forecasts a slow "extended W-shape recovery" starting in 2011.
In a written answer to a question from the Conservatives published yesterday, the Communities and Local Government department confirmed that the number of first-time buyers last year had fallen to an all-time low.
The figures show that in 1999 there were nearly 600,000 first time buyers. This fell to below 400,000 when prices peaked in 2007 and were down even further last year – to just 193,600.
"Whilst the cost of borrowing has fallen for many as a result of low base rates, many first-time buyers are still finding it extremely difficult to get a mortgage at present," said housing expert Henry Pryor . "We may be glad to see the back of 100% mortgages but the impact on the market has yet to be fully felt" he fears.
"Over 132,000 buyers have benefited so far from the stamp duty holiday. This will end in the New Year putting added pressure on first-time buyer finances in particular. This will leave the housing market without the crucial sector that traditionally underpins the whole market and with the buy-to-let market still out of favour, there are reasons for genuine concern as we head into an election year."
Tags: Property, Prices, UK, Reverse, Fall, November, 20...
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Housing Crash 'Past Its Worst'
Reason
Posted by:
Editor
.jpg) Bank of England's property expert David Miles says housing crash is now past its worst
The worst of the housing market crash is now over, David Miles, the Bank of England's new resident expert on the mortgage and property market, claimed yesterday.
David Miles says neither the housing market nor the UK economy could expect more than “anaemic” growth in the coming years.
Professor Miles, who wrote a Treasury report on mortgages five years ago, said that both the housing market and the broader economy had now endured the worst of the slump, and could recover soon.
His comments come amid growing signs that although the economy remains weak, the signs of recovery are now becoming increasingly convincing. According to Nationwide, house prices rose in June for the third time in four months.
Professor Miles, who was testifying at the Treasury Select Committee, said: “Expectations are crucial in the housing market and they look a bit better now than a few months ago. My hunch is that we have seen most of the overall aggregate house price falls.”
However, he warned that neither the housing market nor the UK economy could expect more than “anaemic” growth in the coming years due to the severity of the financial crisis that preceded.
“It may be the case that we get what looks like a very sharp rebound over the next few quarters: one might interpret that as a V-shape but that doesn't really tell you an awful lot about what the likely path of GDP growth will be,” he said. “The prospect of a rapid return to growth doesn't seem a highly probable outcome. But there are reasons for thinking the period of the most rapid declines in output are behind us.”
The comments coincided with a speech by fellow MPC member Tim Besley, who said it was still too early to tell whether the Bank's decisions to slash interest rates to just above zero and pump £125bn into the economy through quantitative easing were working.
Prof Besley, who is standing down from the MPC in the autumn, said that the MPC “will need at some point to tighten policy through… raising nominal interest rates and ‘quantitative tightening,' to make clear that upside risks to inflation can be headed off and to maintain a credible policy reaction function.”
But he added that it remains “difficult” to assess the success or otherwise of the operation.
Tags: Housing, Prices, Rise, Stronger
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