Tag Archives: crisis
UK house prices increase almost five time more in areas with low unemployment
Houses prices in the UK have increased by an average of almost £90,000 in the past decade in areas with lowest unemployment rate, the latest research data shows. This is almost five times more than in those area with high unemployment and the 10 areas with largest drop in unemployment saw house prices increase by 76%, according to the research report from Lloyds Bank. It means that the gap in house prices between areas with the highest and lowest levels of unemployment has widened significantly over the past 10 years. Average house prices in the 20 local authorities with the lowest rate of unemployment have risen by £89,446 since 2006, nearly five times the rise for those with highest unemployment, which increased by just £18,657 over the same period. The average house price for those high unemployment areas is £139,520 which is £102,655 or 42% below the national average price of £242,175. By contrast, areas with the lowest unemployment rates have an average price of £352,224 to £110,049, some 45% higher than the national average. ‘Employment boosts consumer confidence, helps put more cash into customers’ pockets and makes it easier to secure a mortgage, all of which drives increased housing activity,’ said Lloyds Bank mortgage products director Andrew Mason. ‘Unfortunately, in areas where more people find themselves out of work, house prices can stall as people are financially less able to progress up the property ladder, reducing demand. There are, however, other factors which affect house prices such as lower mortgage rates, improved affordability and low housing supply which will have contributed to rising prices in the past decade,’ he added. The 10 areas which have seen the largest falls in unemployment since 2006 recorded an average price increase of £200,155 or 76% to £464,373. Nine of these local authorities are in London, with Haringey, Hackney, Southwark and Waltham Forest seeing average home values almost doubling in the past decade. Over the same period these 10 areas recorded an average decline in unemployment claimants of 2.4% from 4.7% to 2.3%, four times the national decline of 0.6% from 2.5% to 1.9%.This is in marked contrast to the 10 areas with the poorest unemployment performance where unemployment claimants increased by an average of 0.5% since 2006, with average house prices growing by only £24,587 or 18%. Seven of these 10 areas are in the North West. In the UK as a whole over the past 10 years, average house prices grew by 34% or £61,575, whilst the average unemployment rate was 3%. Excluding London, the average price growth for Great Britain fell to £47,920 or 29%. The Lloyds Bank report also reveals that: The 10 areas with the lowest unemployment rates show an average house price rise of £107,000 or 36% since 2006. The four areas with the lowest average unemployment rate of 1% over the decade, Hart, West Oxfordshire, Mole Valley and North Dorset, recorded house price gains of between 33% and 44%… Continue reading
British people dream of a four bedroom home by the sea equipped with high tech
A four bedroom home near a beach or a city centre is the most sought after dream homes in the UK, according to new research. Some 45% dream of a home built to their own specifications designed by an architect or themselves but only 38% think they'll only get to live in their dream house if they win the lottery and 26% don't think they'll ever achieve it. Most people would want an array of high technology and glamourous features that costs £3 million, the research from home buyers estate agency Tepilo found. It also found that 48% would want en-suites in every bedroom and the same number a television or cinema room, while 47% want a huge kitchen with its own kitchen island and the same number a huge garden. Other top desires were walk-in wardrobes and dressing rooms, an indoor swimming pool, a conservatory or orangery, open fires and wood burning stoves, a double front door and his and hers bathrooms. Some 38% want high technology security features, and a further 35% say they'd want their dream home to contain a series of mods cons such as remote controlled heating, lighting and sound systems. Other things near the top of the list are a balcony, a relaxation room, a library, a gym, a separate granny flat or guest lodge, a wine cellar, an aquarium, a bowling alley and a bar. On a beach is the most popular location with 16% wanting a view of the sea but another 16% want to be in a city centre, 11% in the countryside, 10% in the suburbs and 9% in a village. Some 29% want four bedrooms, 27% want three bedrooms and 21% would want a house with five bedrooms. Only 11% would want six or more bedrooms. Meanwhile 14% want a cottage, 12% a huge mansion, 13% a detached bungalow, and 13% a modern home. Amazing views from the garden are important for 52%, 40% want a built in barbeque, 38% a large veranda, 34% a big garage, 30% a water feature, 30% a sweeping driveway, 30% separate out buildings and 20% a children’s play area. ‘What's also interesting is the amount of money Brits would spend on their dream home, despite money being no object. Up to £3 million seems a pretty low price to pay for the ultimate pad, but it demonstrates that we're a price orientated nation that expects value for money when it comes to property,’ said Sarah Beeny, owner of Tepilo. Continue reading
Mortgage lenders concerned about impact of banking reforms on UK housing market
First time buyers and housing associations in the UK could bear the brunt of banking reforms which affect credit risk, it is claimed. Proposals from the Basel Committee on Banking Supervision to revise its standardised approach for credit risk could adversely affect parts of the UK housing market, according to the Intermediary Mortgage Lenders Association (IMLA). The Basel framework ensures that banks, building societies and other deposit taking institutions have sufficient capital for the underlying risks they bear. While supporting this objective, the IMLA has raised significant concerns over some proposed revisions in the latest Basel consultation, which it argues are not justified by differences in risk and could limit access to mortgage finance in key areas of the UK housing market. In particular, one of the most serious impacts could be on lending to UK housing associations. By preventing lenders from taking into account borrowers’ financial strength, the Basel proposals could see loans to many housing associations redefined and subject to much higher capital requirements, despite the exemplary payment track record and their government regulated status. The same proposals mean the regulatory cost of buy to let lending could far outweigh the risks involved, as they do not accommodate the fact that many buy to let borrowers are substantially more financially secure than the average owner occupier. IMLA also strongly disagrees with proposals which could distort mortgage pricing and push up the cost of higher loan to value (LTV) mortgages, which are relied on by many first time buyers to become home owners. Doing so could incentivise them to seek out unsecured ‘top up’ loans to fund their house purchases with a lower LTV mortgage, which would be potentially harmful to their finances. The IMLA’s consultation response highlights how aspects of the Basel proposals could create a ‘bizarre’ situation where unsecured lending can be given a lower risk weighting than secured lending to the same borrower. It could also penalise lenders that have adopted conservative lending standards and create an artificial incentive to lenders to remortgage or ‘churn’ customers, creating outcomes that would not be deemed good for either the customer or the lender. ‘It is vital to have the right checks and balances in place so lenders can provide mortgage finance where there is a legitimate need while maintaining a stable UK housing market,’ said Peter Williams, IMLA executive director. ‘The Basel consultation sets out with the important aim of ensuring capital requirements are appropriate to the underlying risk, but we are concerned that the current proposals will not meet this goal,’ he explained. ‘Government and industry need to work together to bring greater balance to the UK housing market. This includes ironing out the technical details of the Basel proposals to defend consumer interests across all housing tenures,’ he added. Continue reading
