House Prices
Market flatlines
There are spots of hope in the housing market but overall house prices and transactions are flat
by
Mark Graves, sales director, Pink
Last year ended on a positive note with five consecutive months of increasing mortgage activity. However we can’t take anything for granted this year. The mortgage market will be tight and because lenders won’t need to entice people with exclusives, they’ll be looking for quality of business and will pick off the black and white cases. Lending could be lower than the
predicted £130bn mark and may well be closer to £100bn instead. What we read should not affect our individual performance however, nor should it unduly depress us. Statistics are here to provide information; our focus instead should be on gaining market share and moving our performance up another notch in 2012.
• Property prices rose 0.2% to £220,385 in December and 0.7% in the second half of 2011
• Transactions fell by 2.3% in 2011 - but the last five months all experienced higher activity than 2010.
• The size of mortgage advances increased by 3.5%
• London’s property values are 3.1% higher than last year
• Wales joins London as the only other region to show annual house price growth
• Rents fall for a second consecutive month to £711 per month
• Total annual returns for landlords increased to 3.7%
42 MORTGAGE INTRODUCER FEBRUARY 2012
The real winners in 2012 are those advisers who start treating customers as clients. As a rule of thumb I think of a client as someone who has more than one product from you in force at the same time and expects a review meeting with you at least once a year but preferably every six months.
SURVEYORS Average house prices in England and Wales at the end of last year rose by a marginal 0.2% month on month according to the LSL Acadametrics House Price Index, but mostly it was a static year, with the average house price ending the year at £220,385 compared to £221,591 in December 2010. This flew in the face of the doom and gloom merchants who, at the beginning of last year, were predicting house price falls of up to 10% across the year. The North suffered the most with house price falls rising to 6.6% over the last three months. Greater London, as has been reported on repeatedly, bucked all trends and showed an annual house price growth of 3.1%. However Wales also had an annual house price rise, if rather smaller at 0.7%. All other regions as a whole experienced falls, although in almost every region there were pockets with rises where even the type of property could have a bearing on whether the prices rose or fell.
ESTATE AGENCY Total property transactions for 2011 were 650,000, only marginally fewer than the 664,000 properties sold in 2010, although the last five months of 2011 exceeded all sales in the last five months of 2010.
The less rosy side is that 2011 had the second lowest number of housing sales
since the Land Registry began computerising its records back in 1995, the lowest was in 2009 when there were just 624,000 property sales. Undoubtedly lower numbers of first-time buyers have been a contributory factor to this although buy-to-let landlords will have filled some of the gap.
LETTING AGENCY Rents throughout 2011 rose inexorably. Only in the last two months of the year was there any dip according to the LSL buy-to-let index. Despite these two minor decreases, rents ended the year 4% up on the level they had started it, with the average rent now £711 per month. Rental levels are being pushed up by the ever increasing demand for rental property as people still struggle to get onto the housing ladder. Probably unsurprisingly the fastest rising rents on an annual basis were in London where rents rose by 5.6%. The next biggest increases were in the East and South East of England, with rents rising 5% in both regions. Landlords have also benefited by the stable house prices and the total annual return per property in December was 3.7%, compared to 2.7% in November. In cash terms this was an average of £6,107 – equivalent to £7,611 in rent with a capital loss of £1,504. If house prices hold their own again this year annual returns could rise by as much as 1% over the next 12 months.
The slight fly in the ointment is the level
of rent arrears. These rose at the end of the year and by the end of December 10.7% of all rent was either late or unpaid. In December, unpaid rent totalled £300m, a 12% increase from the £263m unpaid or late in November.
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