News Review: House Prices
November Transactions 5% more than a year ago by
David Copland, LSL Director of Mortgage Services
For almost all advisers the year ended on a high: there was not the usual November dip in sales numbers, and de- mand has remained high not only for mortgages but also for protection too. Not only has demand
stayed high but the rates have been there to support it, signs that some of the money from the Funding for Lending Scheme is filtering through to residential mortgages and buy-to-let. What we now need is more
of that lending to be at higher loan to values with more in- novative schemes to help first -time buyers. Tis is especial- ly crucial with no new mea- sures being introduced by the Chancellor in the Budget. Te biggest sticking point
is the amount of deposit re- quired and the tightness of criteria, but a boost in first -time buyer numbers would have a very positive effect on the whole housing market. It has been a good year
for landlords with rents and yields escalating, so despite the slight dip in rents at the end of the year, buy-to-let looks to be a growth area next year, and many advisers have already seen increased inter- est
from both existing and
potential landlords. Many brokers have report-
ed being busy right up until Christmas so there is a lot of optimism for a good start to next year. Lending figures for the year
over all have been good with Te Council of Mortgage Lenders’ predictions for gross lending finishing the year at £144billion rather than the predicted £133billion. And with a forecast for 2013 now £156billion, there is an appe- tite for lenders to lend more. It is inevitable that the low
LTV market will soon be- come saturated, however, so it will be interesting to see if lenders start to move up the risk curve later in the year. As the market remains un-
predictable, a positive start to the year should enable advis- ers to get in a more secure po- sition to weather whatever the second half of the year might bring.
Surveyor’s view Tis year, house prices have risen in eight months, dropped in two and were static once in the 11 months up to December 2012. Te LSL Acadametrics England & Wales house price index reports a small increase of 0.2%, or £465 last month tak- ing the annual average in- crease slightly above £7000. Te bulk of activity was in the first half of 2012 when the index went up by 3.2% cumu- latively, whilst the latter half showed minimal movements resulting in a cumulative 0.0% flat market. Te average house price
in England and Wales now stands at £226,918 and the overall picture for 2012 was one of growth. In fact house prices remained stable for more months than in any year since 2007 - an encouraging statistic for the health of the housing market. Especially as this growth followed eight
20 MORTGAGE INTRODUCER JANUARY 2013
months of price falls in 2011. Of course, the national av-
erage price hid regional fluc- tuations which varied greatly from +8.4% in Greater Lon- don to -2.9% in Wales. When broken down further the vari- ations are even more telling. For instance the annual in- crease in Bath and North East Somerset was +12.2%, whilst Blaenau Gwent recorded an annual fall of -7.3%. Greater London has reached another peak with the City of West- minster borough showing an increase of 29.4% last year.
Estate agent’s view In an average year there are 2.5% less sales in November than October. Last month then we were expecting the number of transactions to be markedly lower than in Octo- ber, which was a particularly buoyant month following a very quiet September. How- ever, the LSL Acadametrics house price index shows there were in fact slightly more transactions in November, 5% up on the same month in 2011. Until distribution figures are finalised there is a certain amount of specula- tion as to the reason for this unexpected activity.
It could
be that that the Funding for Lending Scheme, which is providing more liquidity and giving lenders the ability to offer more enticing rates, is starting to have an effect on the market. Another possible reason is that the rise in de- mand for private rented ac- commodation is encouraging landlords to increase their property portfolios. Or it could be something as simple as more Fridays; November having five working Fridays
to get completions through. Despite increased activity
in the last two months, and an overall increase of 3% in the first 10 months of 2012, the number of properties sold in England and Wales from August to October 2012 was down 4% on the same period in 2011, highlight- ing the inactivity in August and September caused by the Olympics.
Landlord’s view Tere was good news for ten- ants last month as property rental prices fell for the first time since March 2012. Te latest buy-to-let index
from LSL Property Services reported the average rent in England and Wales at £741, a fall of 0.4%, taking it back to the same level as in Septem- ber. Although this fall in rent is a welcome relief it is half the average fall expected in No- vember, leaving the current average 3.4% above the rate in the same month in 2011. Rents dropped in six re-
gions with the most notice- able fall of 1.9% seen in the South East. Wales, Yorkshire and Humberside all saw in- creases along with London where the rise was minimal at 0.2%. Across England and Wales
the amount of outstanding rent was £241m, its lowest level since June 2010, £24m down on the amount out- standing in October. If trends stay the same as
the last quarter, investors in England and Wales could expect a total annual return of 2.7% per property over the next year. Average yields were 5.4%, compared to 5.3% a year ago.
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