However the hike in transactions is


crucial, over the last twelve months transactions have been running at approximately just 61% of the long term average and June continues this way. The interesting picture this month is


The fall in prices


also hides myriad different scenarios around the country. In London and the South East, for example, prices have continued to rise. It is true that the majority of regions have seen an average house price drop, but within each region there are areas where house prices have still increased quite dramatically: Merthyr Tydfil in Wales for example has seen a rise in house prices of 7.4% over three months compared to the same three months last year. It’s a similar picture in Bath and North East Somerset, Pool and West Berkshire


by 0.8%, in June compared to May; the average house price in England and Wales at the end of June was £219,365. While the market remains weak, this


relatively large drop over a one month period may not be all it seems however, as it’s likely to have been affected by the rise in stamp duty earlier in the year on April 6th. This rise in stamp duty for properties over £1m caused a rush in the purchases of properties over this amount before the stamp duty rise came in, but has consequently caused a fall in the number of high value properties sold since then. This has resulted in a drop in the average house price as the higher prices have not been there to raise the average.


which have all seen rises ranging from 6.3% to 7%.


eState agency view Property transactions, or the number of houses being bought and sold, are the good news story of the month. Transactions picked up by a huge 20% in June - significantly more than would usually be expected at this time of year; normally we expect an increase of about 7% from May to June, so this month’s figures have exceeded this by 13%. These figures are taken from a low base in May but are also likely to be due to pent up demand from April which was significantly quieter than usual because of the increased number of holidays.


that in the places where house prices have fallen the most, the number of transactions has increased most significantly. This could indicate that house prices have reached their optimum level for this market in a number of regions. Transactions in Yorkshire and


Humberside, for example, rose by 14% in the three months March to May 2011 compared to the preceding three months; the north saw a 13% rise in transactions and the North West experienced 11%. At the opposite end of the scale,


London, where prices are still rising, experienced only a 2% rise in transactions over the same period and the South West just 3%


Letting agent view Rents continued to rise in June and have now exceeded an average of £700 per month - the average rent is now £28 per month higher than June 2010. This has had a positive effect on yields which have risen another 0.1% to provide an annual return of 5.2%. At the same time London rents exceeded £1000 per month for the first time, an annual increase of 6.9%. Also the amount of arrears from people


not paying their rent has dropped by 18%; as competition for rental properties has become fiercer, it is likely that people are prioritising their rental payments more than they did previously, but also that landlords, enticed by the higher rents available, are becoming less tolerant of tenants who do not pay their rent on time. As first-time buyers struggle to get


mortgages and are therefore forced to rent for longer, this inflationary pressure on rents can only continue. In fact it could well be fuelled by the rise in the number of buy-to-let mortgages, with many small investors and first-time buyers fighting to buy the same properties. n


mortgage introducer AUGUST 2011 49


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