House Prices


rising rents put tenants under pressure


Rents are still rocketing and the number of tenants failing to pay their rent is on the up


by


Mark Graves, sales director of Pink


We have seen a much higher number of mortgage transactions over August than we normally see, bucking the usual holiday trend and also bucking the trend for the year so far. This is partly inspired by the raft of attractive products out there as lenders compete to hit their targets and meet their gross lending figures. Gross lending figures are publicised


widely, however I do think we seem to have lost track of monitoring the net lending figure. How much new lending is actually being done? I appreciate that this was a depressing statistic in 2010, however I think we should take some comfort that net lending is positive this year and not negative, although I’m sure it will still be well below £10bn by year end. The concern still has to be that the


gross lending figures will only grow if the remortgage market returns which in itself is not going to stimulate first time buyer activity. However the net lending figure is a more accurate measure of house sale transactions, albeit that there is an impact on net lending from people paying off their loans.


I think it is positive that lenders like Aldermore are trying to stimulate the first-time buyer market - it is always easy to criticise regarding the higher interest


50 mortgage introducer OCTOBER 2011


rates being charged but it is a sign of the times and the risk involved. The acid test of the success of the product will be the feedback from estate agents regarding their first-time buyer house transactions. The worry is that with the increase in


remortgage activity stimulated by the low rates, that the funds lenders have available will be swallowed up by the remortgage market which will further hinder the recovery of first-time buyer market – or am I worrying unnecessarily?


Surveyor view


The average price of a home in England and Wales increased by just 0.3% during August to reach £219,078. This masked a range of price movements both up and down in individual regions and localities; the most dramatic being a 1.6% increase in London house prices after three months of falls.


In each of the other nine regions, prices showed small positive movements; after falls in many regions in previous months this provided a positive change of direc- tion.


House prices are still down compared to last year but they are now only £12,751 or 5.5%, below the house price peak re- corded in February 2008. Relatively static house prices are having some positive effects however. It appears that with low mortgage rates and stable house prices affordability is now at a 12 year high with typical mortgage payments for a new borrower just 28% of average disposable earnings, according to a Halifax survey,


• Prices rise in August, buoyed by a 1.6% rise in London


• Transactions are up 1.5% bucking the usual seasonal trend


• Rents rise by 1.2% in August - their fastest rate in a year


• Monthly rents hit new high of £713 per month following seven consecutive months of growth


• Tenants’ finances under greater strain by rising rents and holiday spending as arrears grow by 19.5%


down from a huge 48% in the third quarter of 2007.


Of the counties outside of London that have fared best in terms of house price rises, Wokingham has experienced house price rises of 6.5% over the last three months, while three counties in and around Wales, Merthyr Tydfil, Herfordshire and Monmouthshire have all seen rises of between 1.5% and 2.3% over three months.


eState agency view The number of houses bought and sold rose 1.5% in August which completely defies the classic summer slowdown as transactions usually fall about 1.5% between July and August. LSL estimates that housing transactions in England and Wales in August 2011 will total 64,500, significantly above the usual trend. People who already own property are driving these sales. Mortgage finance is very cheap at the moment – it’s just hard


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