• The average house price in January rose by 0.6% on an annual basis and fell 0.1% on December
• Just 40,600 house buying transactions took place in January - 60% of the long term average
• Rents fell 0.3% to £682 per month compared to December as increasing investment pushed up supply
• Despite the slight decrease in rents the average is still 4% higher than a year ago
• The average rental yield fell slightly to 4.9% in January as rents declined at a faster pace than rental property values
temporarily affected and there is a knock- on effect for other areas of the property market.
A mismatch in supply and demand
with more properties than tenants gives the latter the upper hand in price negotiations. A landlord with a competitive mortgage interest rate will take the lower rent to fi ll the property and rental yields will decline. That’s exactly what we’ve seen. In
January rents fell by 0.3% on December to £682 per month and the average yield fell slightly to 4.9%. Rent declined at a faster pace than rental property values. The question is, are the statistics
a refl ection of the market or are the fi gures dictating the short term market? Because the overall picture is fl at and there’s not a lot of change it can be diffi cult to see the pattern.
THINK LOCAL It is more important to look at local trends and local markets as each area of the country has its own peaks and troughs which can give a more realistic picture of what is happening. This year I expect the local variations to
become more important than the national fi gures. Greater London is now showing annual price increases of more than 5% in the Acadametrics index. Not only are prices are not going down but in some roads they are going up with some huge deals to foreign
nationals.That skews the national index completely away from what’s happening in Manchester and the rest of the country, which is seeing house price falls of up to 1.9%.
OUTLOOK It is encouraging to see lenders
responding to the market by becoming more fl exible and relaxing their criteria a little. Even though we know that money is likely to come in small tranches it is positive to see lenders like Woolwich launching innovative products and NatWest offering a 90% loan to value mortgage which bucks the trend. Although we know the criteria will be tight it may well encourage other lenders to innovate and we may see activity improve as a result. I believe lenders will continue to support advisers throughout 2011 albeit at a lending level similar to last year. With the likes of Precise Mortgage and Aldermore getting more of a foothold in the market and sweeping up behind the main lenders it can only be good for borrowers across the country.
Average UK January rent MORTGAGE INTRODUCER MARCH 2011 47
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