Tag Archives: crisis
Latest UK house price index shows a slowing of growth in the market
UK house prices in the three months to May were 2% higher than in the preceding three months but they fell 0.1% month on month, according to the latest index figures. The annual growth compared to May last year is 8.6%, taking the average price of a home to £196,067, the monthly index report from lender The Halifax shows. And an analysis of the data shows that the quarterly measure of the underlying rate of house price growth has eased for the second consecutive month, falling to its lowest since January. On top of this annual house price growth only increased marginally from the 8.5% recorded in April and continues to be in the narrow range of 8% to 9% where it has been throughout 2015 so far. ‘Housing supply remains extremely tight with the stock of properties available for sale currently at its lowest level for many years,’ said Martin Ellis, Halifax housing economist. ‘At the same time, ongoing economic recovery, increasing employment, real earnings growth and very low mortgage rates are all supporting housing demand. This combination has kept annual house price inflation well above earnings growth although activity levels are subdued,’ he pointed out. ‘The imbalance between supply and demand is likely to continue to push up house prices over the coming months. Looking further ahead, the increasing level of house prices in relation to earnings is expected to dampen house price growth,’ he added. The report also points out that figures from HMRC show that home sales fell by 3.4% between March and April to 97,020. Nonetheless, sales in the three months from February to April were marginally higher, up 1.3%, than in the preceding three months. Mortgage approvals continue to pick-up. The volume of mortgage approvals for house purchases, a leading indicator of completed house sales, increased by 9.9% in April. Whilst approvals in the three months to April were 6.6% higher than in the preceding three months, they were 4.3% lower than in the same three months a year ago, according to the latest available Bank of England, seasonally adjusted figures. And supply remains tight. The stock of homes available for sale fell further in April and is currently at its lowest level for many years. New instructions declined in April for the eighth month in the last nine, contributing to the very low levels of supply, data from the Royal Institution of Chartered Surveyors shows. But there has been an increase in those thinking it is a good time to buy. The latest Halifax Housing Market Confidence Tracker shows that the net proportion of consumers who believe the next 12 months will be a good time to buy increased from +21 in March to +26 in April. In contrast, the net proportion that thinks that the next year will be a good time to sell fell from +33 to +30. The headline House Price Outlook balance, i.e. the difference between the proportion of people across Britain that… Continue reading
An interest rate rise could cripple almost seven million borrowers in the UK
Almost seven million how owners could struggle to cover their mortgage repayments if interest rates rise just 1%, according to new research. Interest rates have been at a historical low of 0.5% but some economists have predicted that they will begin to climb from Spring 2016. They are unlikely to rise steeply, however, a rise of 1% would see borrowers with standard variable rate mortgages pay an additional £55 a month for every £100,000 owed and once rates begin to rise, some 63% of borrowers say they would have to cut back on all non-essential spending, such as weekends away or even meals out, to cover the additional cost. The research, carried out on behalf of mortgage and loans provider Ocean Finance, also shows that while many borrowers are able to reduce spending to cover the increased mortgage cost, a further 13% are concerned they would quickly get into financial difficulty trying to make ends meet. Almost a quarter of borrowers have already switched to fixed rate mortgages and a further 16% plan to take fixed rate mortgages to protect themselves against a rate increase. However, the firm says it is worryingly that more than a third of home owners are not taking any steps to shield themselves from an interest rate rise. The pressure to meet increased mortgage payments would force about 10% of home owners to consider selling their home to avoid the higher cost of their mortgage, the research also suggests. ‘It’s inevitable that interest rates will rise at some point, whether that happens in Spring next year or later in the year. Whilst the rate rise is likely to be gradual and it may take a while to get to a 1% increase, every rate hike will have an impact on hard working families who are already struggling to make ends meet,’ said Gareth Shilton, Ocean’s spokesperson. ‘Many people will feel like mortgage prisoners because their circumstances have changed since they took out their loan and they’ll understandably be concerned about what a potential interest rate rise means for them,’ he pointed out. ‘It’s important to understand that in most cases there are options, so it’s important that anyone who is concerned about a rate increase should seek advice on the best deal available to them,’ he added. Continue reading
Prime London rental values up but price growth remains muted
Rental values in prime central London continued to climb in May, and annual growth of 4.2% was the highest figure since December 2011, the latest published data shows. It compares to a decline of 1.4% in May 2014 and the positive upwards momentum over the last year has been driven by the recovering UK economy and the transfer of demand from the sales market ahead of last month’s general election, according to the report from Knight Frank. A mood of hesitation around the election, combined with the two bank holidays, meant activity in May was slower compared to last year in what was a stop start market, the report says. Indeed, the number of new prospective tenants was down 12% in May compared to the same month in 2014, while the number of viewings declined 18%. In spite of the recent dip, new prospective tenants and viewings in the 12 months to May 2015 are up by 12% and 7%, respectively, and activity is expected to increase over the summer as part of a seasonal trend among students, families and corporate tenants. Demand has remained strong in markets including Marylebone and Hyde Park, particularly in lower price brackets, suggesting companies and private renters are still cost conscious despite the improving economy. Prime gross rental yields edged upwards to 2.96% in May, their highest level since August 2013, widening the spread between the risk free rate on a 10 year government bond. Meanwhile, in the prime central London sales market annual growth is lower than at any time since the last general election in 2010. Although prices grew 0.3% in May, an annual increase of 2.3% is the lowest since November 2009. ‘This relatively low level of growth underlines the gap between the expected impact of the result and the reality of a property market still digesting a series of tax changes,’ said Tom Bill, head of London residential research at Knight Frank. Continue reading
