House Prices Steady as she goes
An increase in activity in the buy-to-let sector and the range of competitive mortgage products available means we have seen a steady increase in property sales since October 2011
launching NewBuy mortgages and just how competitive their rates will be.
by
David Copland, chief executive, Pink
Mortgages are being placed much more evenly across lenders now than they were a year ago. This time last year Santander and Lloyds were dominating the market; now business seems to be spread across six or seven lenders with the building societies coming to the fore in the past few months.
Despite this, it is still difficult to place business and brokers sometimes need to submit a case three or four times before they get an acceptance for a decision in principle. It seems that lenders are pre-empting the affordability proposals in the Mortgage Market Review and are already tightening their criteria in line with what they feel might happen. On a positive note, we have seen a couple of lenders launch products to support the government’s NewBuy scheme although NatWest are not making their products available through intermediaries. It will be interesting to see how many more lenders take part by
• House prices rose £500 in February • Transactions rose by 13% • Rents dipped by 0.6% on a monthly basis, although rental inflation remained strong at 3.5%
• Total annual returns for landlords increased to 4.2% as house prices improved
• Tenant arrears dropped to 9.3% as falling inflation alleviated pressure on tenant finances
42 MORTGAGE INTRODUCER APRIL 2012
SURVEYOR VIEW According to the latest LSL Acadametrics report the average house price in England and Wales now stands at £219,844, an increase of 0.2% from January. Looking back over the past nine months, national average prices have fluctuated to such a small degree, +/- 1%, the market is really very stable. However, once you look deeper into the
figures you can see the national average tells only part of the story. On a regional basis the statistics continue to show significant differences. In Wales and Greater London, where demand continues to outstrip supply, prices are still rising and these are, in fact, the only two regions where house prices have risen in the past three months. It is fair to say that without Wales and
Greater London having a positive impact on the national figures, the story would undoubtedly be of prices continuing to fall. It will be interesting to see what impact the Budget announcements combined with the end of the first-time buyer stamp duty holiday and the launch of the NewBuy scheme have on the market over the next month or two.
ESTATE AGENT VIEW There was an influx of first-time buyers to the market as they took advantage of the stamp duty holiday before it was withdrawn on 24 March. This has had an obvious effect on the housing transaction figures for February. Current predictions are that around 52,000 properties will have been sold in the month which equates to a 13%
increase over January. This is more noteworthy when you consider that we would normally only expect to see a rise of 3% from January to February; however, it is most significant when you realise that, compared to the same month last year, there has actually been a 21% rise in property transactions. The increase in February is not necessarily attributable to the tax break for first-time buyers alone. An increase in activity in the buy-to-let sector and the range of competitive mortgage products available has meant we have seen a steady increase in property sales since October 2011. Although strengthening, the first-time buyer market remains key. We also need to see more done to help second-time buyers who still need high LTV loans, as around 61% of existing owners have been unable to sell their first home over the past 12 months.
LETTING AGENT VIEW Rents dipped in February as an increasing number of tenants considered buying a house to beat the end of the stamp duty holiday.
In February, the average rent in England
and Wales fell by 0.6% to £707 per month following a rise in January. Despite the monthly drop, rents continue to rise on an annual basis, increasing by 3.5%, or £24, in the past year.
As with house prices and transactions
there were notable differences across the regions. Rental arrears dropped for the first time in three months, as tenant finances improve and inflation eases, dropping from the 10.7% of rent late or unpaid in both January and December to 9.3%, in February.
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