House Prices
north South divide still stark
Stagnant housing transactions are weighing more heavily on prices in the north
by Phil
Whitehouse, head of TMA
According to the Council of Mortgage Lenders, mortgage lending increased 9.8% in the year to October and has risen for the last three consecutive months for the first time since the summer of 2007, which has contributed to the 4.5% rise in transactions seen last month. The mortgage market at the moment hinges on confidence and the perceived stability of the economy. The Government’s first-time buyer indemnity guarantee scheme will not solve the problem but if young people and house builders start to feel incentivised to build and buy it will help to build confidence. In fact in many quarters, confidence appears to be shifting to property away from other forms of investment which is helping to fuel a quiet boom in buy-to-let lending and helping to hold up house prices. The remortgage market, while not experiencing dizzy heights, is still bubbling along. Typically there will be an increase in remortgages in the first couple of months of the year as some people look to refinance their Christmas borrowings. In addition, in the first few months of 2012 a batch of fixed rates come to an end which should present mortgage advisers with an opportunity. Eurozone issues will not affect people’s appetite for buying or selling their houses but what it will do is potentially affect banks’ willingness to lend to one another;
42 mortgage introducer JANUARY 2012
without the restoration of some stability in the Eurozone we will potentially see reduced funding for next year. However a number of smaller building societies are looking to come back into the market; many businesses are going back to their roots, and as a result some societies are trying to find ways to get back into the market maybe through small tranches of money or through controlled distribution.
Altogether last year saw a fairly positive conclusion, with a number of new initiatives from lenders and some higher loan to value products coming onto the market, as a result lending has increased and the number of house sales has risen.
Surveyor view Average UK house prices started last year at £221,591, and finished November 2011 just 0.7% lower at £220,043. There have been some slight fluctuations through the year but really nothing to write home about.
Since March 2010, there have, in fact, been only two months in which house prices have changed by 1% or more. However, these months (April and May 2011) reflected the change to stamp duty levels which took place at the end of March rather than fundamental movements in the housing markets. Looking across 2011 house prices are likely to have fallen by less than -1.0%, rather than LSL Acadametrics’ earlier predictions of -2.5% and others who predicted far larger drops at the beginning of the year. This shows that the housing market in 2011 has performed better than expected helped by low interest rates,
• House prices static at £220,043 • Transactions rise by 4.5% in November and 10% when comparing the quarter to end of October with the one before
• Mortgage lending increased 9.8% over the year
• Demand remains highest for detached properties
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