House Prices


Autumn boost


Advisers are reporting full diaries and a boost in activity by


David Copland, LSL Director of Mortgage Services


It is a relatively positive picture at the moment; remortgaging appears to be making a comeback with Funding for Lending making attractive rates available and increases in SVR by some lenders driving borrowers to look at their rates and take advice. Altogether it looks like we have a buoyant quarter to come, so expect to see the result in all this activity feed into CML figures in November and December. However, on a cautionary note, the market won’t come back properly until the powers that be stop cautioning lenders about being innovative and some of the restrictions regarding capital adequacy rules are eased - the current demands on lenders are stifling their appetite to lend. What we really need as an industry is for lenders to increase their risk appetite especially taking on more risk in higher loan to values.


SURVEYOR’S VIEW Stable is the word when it comes to house prices over summer. The national average house price has remained


„ Transactions in August climb by 2.5% to highest level in 2012


„ House prices increase by 2.6% annually


„ Regional markets continue to diverge as North/South divide grows


„ Average house price £226,243 „ Strong month for landlords as record rents rise while arrears fall


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between £226,000 and £226,250 over the past four months, with August prices just £6 different from May. Last month there was a rise of £153 or 0.1% in the average price for properties sold in England and Wales compared with July, 2.6% higher than the same month a year ago.


Although the national average has


remained stable, individual areas have seen much larger swings, for instance Yorkshire & Humberside witnessed a 1.0% decline in August. With the regions fluctuating up and down it is the continual and marked rises in central London keeping the national average at its current level. London recorded an increase of an


incredible 10.5% in the past three months, with all nine of the other regions in England and Wales falling below the 3.3% average rate. This figure is buoyed by increases in the five highest priced boroughs where price inflation is now in excess of 13%, with Kensington and Chelsea rising by a remarkable 31%.


ESTATE AGENT’S VIEW When we look at statistics we generally look at averages but this year can in no way be described as average. So when we look at the average number of housing transactions over this summer of sport and celebration, we have to take into account the extraordinary circumstances that have affected the housing market.


On average we would expect to see transactions at their highest in July tailing off in August and September. This year, following the dip in July business, August has proven to be a much healthier month with 62,500 transactions taking place, the highest amount in 2012.


Housing transaction numbers are taken from the date of completion,


which is typically around one month after an offer has been made. This means that August figures reflect buyer activity in July, with July business revealing activity in June. When you consider this it becomes apparent that the subdued transaction figures in July can be explained, in part at least, by the particularly inclement weather, extra bank holidays and the Jubilee celebrations in June. It will be fascinating to see what the numbers in September will say about activity in Olympic August.


LANDLORD’S VIEW Landlords in England and Wales continued to see rents rise last month, as demand on the already stretched rental market increased with new job starters and graduates entering the rental sector, adding to the raft of frustrated buyers in rented accommodation. This is the fifth consecutive month rents have risen and in August landlords were doubly rewarded with a fall in arrears, for the first time in three months. The rise in rental prices in August surpassed the previous July high increasing 1.2%, making the average rent £734 per month - a climb of 2.9% compared to August 2011. Across ten regions in England and Wales rents increased in all but two, with record highs being recorded in London, the South East, the East of England, the North West and Yorkshire & the Humber. On an annual basis rents fell in two regions, decreasing by 1.9% in the South West, and by 1.8% in Wales. If rental property prices maintain the same trend as the last three months, an average investor in England and Wales could expect to make a total annual return of 9.2% per property over the next 12 months.


MORTGAGE INTRODUCER OCTOBER 2012 41


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