House Prices Supply and demand
A static statistical picture hides regional variations in supply which are pushing up prices in some places
we do not know what will happen later in the year.
by
Jon Round, chief executive of First
Complete
Although last January we were struggling under several inches of snow which had a detrimental effect on the number of houses being bought and sold, that doesn’t take away from the fact that January this year has been ahead of most people’s forecasts.
However it does look as if things might be a little more challenging over the next few weeks or months, especially with the tightening of lender criteria over the last few weeks. This makes it hard to know what the consumer’s choice will be; with the considerable reduction in interest only options, will those consumers then adapt and choose other options, such as a repayment mortgage, or will they be driven out of the housing market because the interest-only option was all they could afford? We therefore need to make the most of the business that we can and are writing at the moment, but our spending patterns should be laced with caution as
• Transactions up 5.1% year on year • Fastest transaction rises in the north at 5.9%
• Property prices fell by 0.2% in January to 1.4% lower than a year ago
• National average house price now £218,992
• Rents rose by 0.1% - the first monthly increase in January on record
• Total annual returns for landlords ease, with average return of 2.6%
42 MORTGAGE INTRODUCER MARCH 2012 SURVEYOR VIEW
January is traditionally one of the quietest months of the year for residential property sales, so with lower transactions it is maybe unwise to place too much emphasis on this month’s average house price fall of -0.2%. Regionally, both Greater London and Wales experienced an increase in prices over the year, while six areas in England continue to show price falls. Of those regions where prices continued to fall, the rate of decline has slowed for all but two regions; these being the South East and the South West. On an annual basis, average property prices have fallen by -1.4% over the last year, this being the ninth month in which prices have fallen. The outlook for this year depends very much on what happens in Europe and the confidence that banks have in each other, but as far as prices as a whole are concerned, we expect a very similar picture to last year: mostly static with regional fluctuations.
ESTATE AGENT VIEW Transaction numbers increased significantly during the second half of 2011 compared with 2010 increasing by 5.1% in England and Wales for the last three months of the year alone. Significantly, both Greater London and Wales saw a below average increase in transactions over the three months, even though these regions are currently the only two in England and Wales that have increasing house prices over this period. Conversely the North and Yorkshire & Humberside, the two regions currently seeing the steepest decline in house prices, show an above average increase
in the number of properties being sold. The old adage about supply and demand has therefore again proved to be true, with the correlation between house prices and availability being made apparent.
In the past three months it is semi- detached houses that have been most in demand, followed closely by terraced properties. Flats and detached house have shown the smallest increases in sales volumes, although there is still significantly less demand for flats than there are for any of the other property types there has been a significant turnaround in the last three months, maybe triggered by buy-to-let investors purchasing flats to let.
LETTING AGENT VIEW Rents rose again in January, if only by a marginal 0.1%, however this is notable as it’s the first time since LSL started compiling its buy-to-let index that prices have risen in January. After the inexorable rise in rents at the beginning of last year, this is the first monthly rise in three months, resulting in an average rise of £30 a month over the course of the last year. Average yields for landlords remained steady at 5.3%, however with property prices weakening in January, total annual returns dipped to 2.6%, the same level as November 2011. Arrears remain high with 10.7% of all rent late or unpaid at the end of the month, above the average of 10.2% for the previous 12 months. If property prices maintain the same
trend as the last three months, an average investor in England and Wales could make a total annual return of 4.9% per property over the next 12 months – equivalent to £8,019 per property.
www.mortgageintroducer.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52