Property prices in England and Wales dipped by 0.3% between March and April to stand at £160,417 – 1% lower than last year, according to the Land Registry.
However, the price dip would have been steeper had it not been for an annual rise in London house prices of 5.1%. In Hammersmith and Fulham, between March and April, house prices bounced by 3%, and in Kensington and Chelsea they shot up 3.6%.
The average price of a property in the capital is now £360,721. By contrast, house prices fell in most regions, with a monthly fall of 2.7% in the West Midlands and 2.4% in Yorkshire & the Humber.
The Land Registry also reported a rise in property transactions, although its data is very historic. The latest statistics show an average of 52,350 sales per month between November and February, up from 47,624 for the same period the year before.
Meanwhile, property website Primelocation reported that top-priced property is more expensive than ever: the average ‘prime property’ asking price in the UK is now £478,797, while in London it is £1,307,801. The site defines ‘prime’ as being in the top 25% of UK property by value.
Analysts were not impressed by the Land Registry statistics, blaming a lack of mortgages.
Richard Sexton, director of e.surv chartered surveyors, said: “The housing market is being propped up like a Friday night drunk by landlords and wealthier buyers.
“House prices are tied to events across the Channel, and the market is feeling the full force of the political chaos that is paralysing the eurozone. The crisis is stemming the flow of mortgages, which is stifling first-time buyer activity and dragging down prices. Fear in the investor markets over the future of the euro has pushed banks’ funding costs up by 40% since February.
“The major banks have responded by bumping up mortgage rates, and reducing lending to first-time buyers to protect their balance sheets.
“A recovery in mortgage lending looks a long way off. Banks will continue to rein in the amount they lend to low income buyers over the next few months, and will be forced to raise rates further if the crisis worsens.
“They are terrified by the prospect of a messy Greek exit from the euro and Germany’s brinksmanship tactics in dealing with the debt crisis. Until the turmoil in Europe quietens down, mortgage lending will be subdued and prices will remain suppressed.
“The key that will unlock the door to consistent house price growth is more mortgages to borrowers with small deposits. But that won’t happen while the euro zone is in such a sorry state.”
Meanwhile, there are indications that a slowdown has extended into this month. Agency Express, the boards supplier to estate agents, said that the number of For Sale signs converting to Sold this month slipped 7.2% compared with April.
New For Sale listings also fell, by 5.5% on April.
Comments
@ Phil S
@Chris
"....Inflation reduces the value of money so 24-years on £27,500 is a car loan amount, not a property mortgage amount."
"Only if incomes increase at the same rate as inflation and at the moment that's not happening!"
Sorry Phil, wages have nothing to do with it. I accept that inflation can only go so far. If the price of bread increases to a point where people can't afford bread anymore, the bread maker either lowers the price or stops making it, but currently bread continues to rise and it doesn't matter if wages are rising or not. This means that inflation is still happening and the latest figures are that inflation is running at 3% per year.
This means that 100 loaves of bread at £1 each loaf will cost you £103 next year for the same number of loaves. The money in your pocket is worth less as £100 is no longer enough.
It must therefore also be true that the £100k debt on my house has also reduced by the same 3%. Okay the banks are charging interest on that debt which is greater than the 3% inflation rate, so they are still doing okay, but the interest is not being added to the debt (It is not compounded) and eventually a £100k debt with 4% interest charges will feel like my parents £27,500 debt with 4% interest charges in real terms.
If inflation is happening, it applies to all money in circulation, not just money in your pocket or money in your savings account, all of it. Debts as well.
@Chris
"....Inflation reduces the value of money so 24-years on £27,500 is a car loan amount, not a property mortgage amount."
Only if incomes increase at the same rate as inflation and at the moment that's not happening!
@Rant
" I'm not sure how you think today's inflation is eating away at your outstanding mortgage debt? "
My parents have an endowment policy linked to an interest only mortgage that will mature next year. When they took out the mortgage 24-years ago, they thought £29,000 was a lot for a house and £27,500 was a huge mortgage to repay! Inflation reduces the value of money so 24-years on £27,500 is a car loan amount, not a property mortgage amount.
So to sum up, I do know what I am talking about. Inflation reduces the value of money, whether this is your savings in your bank account or my outstanding debt balance on each of my mortgages. :-)
As it goes, I tended to raise rents on the BTL properties each year a little after checking what the going rates are first and ensuring my rates are slightly lower than the going rate for that type of property.
The thing to remember is that there are loads of people out there looking for somewhere to rent and rents have risen a lot while house prices have fallen. There is a shortage of housing in this area, so not a problem asking for inflation level increases. If the tenants feel that the rent increases are too high to manage, they will leave and there are another ten-tenants standing behind them willing to move in. In April, my BTL was the only 2-bed property available in the area and every tenant we took round the property wanted it. Some were actually begging to have the house, pleading with us on bended knee. There are 8000 families on the council house waiting list!!!
As it goes, I am in a fortunate position of having a good income and over the last few years have decided to chip away at my BTL mortgages instead of saving the money in the bank. Interest rates in the bank are about 3% and my BTL mortgage rates hover around 5%, so it makes sense to pay off the mortgtages instead of waiting for the tenants to do it for me. Ovbiously I will use the money from rents to speed up the amount I pay off, so the process is increasing rapidly each year.
I don't think you have grasped how the student debt works. It is lnked to salary, so if my daughter lands herself a good job with good pay, the amount she pays back is higher than it would be if her job paid less well.
Lloyds were doing 5% deposit mortgages again last week as were a few Building Societies, so she would only need to save around £5000 to buy a 2-bed house in this area. (£100k for a nice 2-bed semi) Not hard if she is earning above the £23,000 average salary for this area, which I would hope is achievable with a degree on her CV, 3-years from now. Otherwise she'll have to work for her dad for a bit.
"Peterborough’s resident’s average income is lower than the national average but with house prices also being relatively low, disposable income in the city is
average to high." That's a good thing right? What you have been asking for in fact, lowish house prices, strong disposable income. Perhaps living here isn't so bad after all.
Source: http://www.opportunitypeterborough.co.uk/wp-content/uploads/downloads/2011/12/Economic-Intelligence-Website-November-2011.pdf
Just as long as you're alright then Jack, I mean Chris...
I see you're still struggling to get to grips with how inflation works. I'm not sure how you think today's inflation is eating away at your outstanding mortgage debt? If your tenants were getting pay rises, then yes, you could extract more rent from them. Do you think your tenants are getting many pay rises at the moment?
Good to see you acknowledging that much of the strength of your current financial position stems from having been born at the right time. Yes, a much larger part of a generation is priced out of buying a house than when you first got on the property ladder (you're not going to try arguing again I hope that getting on the property ladder today is as easy as it was in the mid '90s). Keeping property at today's prices also means that the next generation will be priced out too, especially those with oodles of uni debt. Your daughter is staring this scenario in the face I believe?
Noticed in the last Land Reg by the way that prices in Peterborough eked out their first month-on-month rise for a while... ; )
I own a 1-bed freehold property which is only worth £80,000. It is currently rented out to a proffesional man who pays me £435 per month or £5220 per year. This equates to 6.53% of interest minus any repairs and servicing costs, which can also be offset against the income, as can any interest on the loan.
I am aware that most banks in the UK pay less than 3% in interest, so 6.53% is more than double.
Also, if I spend any interest from savings I am devaluing my savings because inflation is at 3% and any interest I receive is only just maintaining the value of my savings, whereas any income/ profit from property rents can be spent and the value of the property remains linked to the housing market, not inflation. Even if property prices fall and inflation is eating away at everything, it is also eating away at the value of the outstanding debt/ mortgage and the value of the property only really matters when you sell it many years later.
In otherwords, people with BTL properties can happily live off the rental income as long as the mortgage is serviced and the property condition is maintained, but savers do not have this luxury. They like people investing in gold must leave their money tied up and not touch it.
The smart people with money are still buying property and renting them out.
Before the 1980's, most people rented their homes and like the housing bubble that burst, correcting house prices, a correction is taking shape whereby many families will go back to becoming life long tenants again. Nothing wrong with this.
The Greeks were allowed to borrow almost unlimited amounts of money when they joined the Euro and now their bubble has burst and they need to leave fairy land and return to reality. In this country many people borrowed more than they should have and for many of them, fairy land must end also and they need to return to renting again. Life is full of corrections.
Rant seems to think that a lost generation has been deprived of buying a home, but perhaps like the generation before them, they should have not been allowed to buy in the first place! Also, using the term "Generation" is propaganda. I am sure many people in that generation have been successful enough to buy a home, just not as many as the generation before them. Oh well, life's like that sometimes. The party is over and anyone lucky enough to have been in it then good for them. Many that went are sorry they went and some like me are pleased I got the chance.
Rant is cheezed off and bitter because he wasn't born when the party was in full swing, but if he had been, he might have been one of those that lost out afterwards anyway and should perhaps count his blessings.
"Phil S Pay attention, thats 4.8% pa pre tax, so again where can you get that??
Mate good advice when you have made your self look a pratt, firstly stop digging the hole!"
Well the last comment said it was 40% so we are getting closer!
I said APPROX £2k in interest. If he has £75k in savings in a fixed rate 4.25% ISA (e.g Halifax), that works out at £1330. The other £25k in a fixed rate savings account (3.2% net) adds £330, giving a total of £1660.
He may well have £150k. If so, the extra £50k in the fixed rate savings account would add a further £660, giving a total of £2320. Like I said, APPROX £2k interest.
(I have assumed that if you invested TESSA money in a TOISA and invested the full amount in a cash ISA since 1999 you would have approx £75k in a cash ISA by 2012).
It's not rocket science or maths, just simple arithmetic!
Chuck that should be a capital I not i.
Phil S Pay attention, thats 4.8% pa pre tax, so again where can you get that??
Mate good advice when you have made your self look a pratt, firstly stop digging the hole!
Dave, coud you please provide a credible source which shows that houses in Japan are cheaper now than they were in 1991.
"Its a well known fact" or "I did a thesis on it" do not count as answers.
I am not trying to catch you out, just interested to read more about it.
"Great where can you get a savings rate of 40% on 5k?? Please do tell!"
Pay more attention, it's not interest on £5k.
Ader said "I'm a ftb with enough cash to buy outright", so he probably has in excess of £100k deposited. This would yield approx £2k in interest over 5 months in the right account.
Looks like a copy and paste job from Grauniad Money 5th March?
Just remember Rant it was Gordon Brown and his attempts to smooth out the boom and bust of the housing market that has created all the woes that you are constantly whinging on about.
Too funny for words!
"1) What will happen to society when large numbers of people lose their homes in a crash?"
This point of view is popping on EAToday more and more. 'House prices can't be allowed to crash because the consequences of that for society and the economy would be too severe.'
Let's just recap the costs involved to society and the economy of today's house prices as they currently are (and the efforts to keep them at that level):
* Vast sums of money borrowed on behalf of the taxpayer at interest from countries like China and funnelled through the SMI scheme to keep 300,000 families in property they can no longer afford.
* High fuel and food prices thanks to the money printing necessary (aka 'quantitative easing') to prevent the banks from having to repo those behind with mortgage payments.
* High fuel and food prices thanks to the devaluation of sterling that 300-year low interest rates has created.
* Loss of income to prudent savers through those same low interest rates, money which could be spent in the economy.
* Combined with the above, a significant reduction in the return of pension schemes, thanks to a third of a trillion quid of funny money QE suppressing bond yields.
* A generation that is priced out of buying a house, shattering their life plans, dreams and ambitions.
* A generation that in many cases is spending half of their income paying off someone else's mortgage (see new stories on the LAToday site). With no capital to show for years or even a decade plus of their labour, the future prospects for swathes of this country's young people is looking increasingly bleak.
* Stress put on marriages and relationships as two people have to go out to work to service jumbo-sized mortgages. This can be extended to tension between older parents and their adult children who cannot afford to move out of the home they were raised in.
* The loss of business to the UK economy as international firms look to invest in countries where they don't have to pay their staff so much just for them to put a roof over their heads.
No doubt there are plenty more items that could be added to the list. This leads to the question - at what point does the damage of maintaining today's house prices surpass the damage of letting them to correct to historically more affordable levels? I would say that level has been passed quite a while ago, especially given the recovery to the UK economy that could be underway had the housing bubble been lanced earlier, rather than allowed to fester indefinitely.
an international sign of distress
Dave wrote:
'all the evidence is there that something spectacular is going to happen in terms of houseprices and the housing market
anyone with a mortgaged btl portfolio is gonna be taken to the cleaners
its going to be messy and nasty
banks may force portfolios in negative equity into bankruptcy and then take the family house'
Is it 2002 again? Because those very sentiments have been repeated on the house price crash site 1,084,625 times (I do not exaggerate) in the last 10 years.
So - when is a boom not a boom?
Answer - when house prices have been roughly static for 10 years (true in most of the South and West of the country (where about 60% of people live))
When is a crash not a crash?
When it hasn't happened and when there hasn't been a boom (see above)
In areas of the country where house prices went up by a factor of 5 or more, they have already corrected a fair amount.
In my commuter part of the South East, house prices are between 2 and 3 times what they were in 1997 - but they have been at those levels for 10 years or so.
Ah, so i spelt "realise" with a "z". Thank you for your observation on spelling.
Chuck your spell check Chuck this is England not the USA, best when trying to be clever!!
"because after five months of renting, you've also lost 5k. "
Obviously this poster is a planted troll by a HPC'er. Nobody (especially on this site) should be ignorant enough not to realize that in buying a house, via a mortgage, they are "renting" capital from the bank at an agreed interest rate. Hence, in buying, they “lose” 5k every 6months on the rent of capital (or what is also known as interest).
Great where can you get a savings rate of 40% on 5k?? Please do tell!
"because after five months of renting, you've also lost 5k."
But gained perhaps £2k in savings interest.
Had it then!! Rent, you waste money, rent out you lose money, tents then? But they lose value and the tent maker make the profit, lost what to do! As sensible as the thread on here!
because after five months of renting, you've also lost 5k.
I'm a ftb with enough cash to buy outright.
But... the house I rent costs me £1k a month to rent (actually less thanks to some interest earned on my cash but still).
And according to the Land Reg it fell in value by £5k last month.
Why on earth would I buy anytime soon?
I'm a ftb with enough cash to buy outright.
But... the house I rent costs me £1k a month to rent (actually less thanks to some interest earned on my cash but still).
And according to the Land Reg it fell in value by £5k last month.
Why on earth would I buy anytime soon?
in japan the kids left and the population fell to the level in 1950 adding to their woes
after a crash and people lose their homes,opportunity passes to the next generation of growth makers
the species known as youth
We're heading back to a rentier society, where only 32% (the long run average) own land/property.
I'd be interested to know what the figures are if London house prices are stripped out.
I'm getting tired of the closed minded rantings from both sides: the maniacal HPCs and the maniacal property lovers...
Both are guilty of closed minded comments and statements without thought.
Both parties need to open their eyes and THINK. Either way, whether prices crash or rise ad-infinitum there are (possibly dire) consequences to both these outcomes.
1) What will happen to society when large numbers of people lose their homes in a crash?
2) The discontented youth don’t have to vote to make changes, they can vote with their feet (or their fists?). Do you think they will stick around in a country to pay for the pensions and geriatric care of those with housing “wealth”?
Regarding wage inflation surely it only has to be relative to house prices, not foreign salaries?
Seems reasonable that wages could inflate in pounds whilst house prices stagnate and at the same time wages fall relative to developing world salaries as the pounds devalues relative to their currencies.
A Right Charlie, Ponzi was your post with just a hit of jealously and frustration that thats just not happening mate? Unlucky . And your name used didnt scam property. Are you idiot Dave?
“The key that will unlock the door to consistent house price growth is more mortgages to borrowers with small deposits. But that won’t happen while the euro zone is in such a sorry state.”
The problem is, that is not even possible is it, if you stand back and think about that statement for more than one second.
Is 'house price growth' the aim anyway. Surely for people it is lots of choice for good quality and low priced housing. And for agents, they want to see some transactions taking place.
Like all pyramid schemes, the UK property market needs new suckers to come in at the bottom, borrowing excessively to give early entrants their rightful profits!
Unfortunately there aren't many suckers left, and the few there are can't get mortgages. The solution? Early entrants use their profits to leverage themselves and rejoin the scheme at the bottom, calling themselves 'investors' - and making the classic mistake of believing the propaganda that wasn't meant for them!
The early entrants to the great pyramid scheme have now become the suckers, and will lose everything when it collapses. Good.
Same drivel.
The Governement's solution to the current financial problem is pushing more money into the ecomomy i.e. quantitative easing, and to keep taxes high.
Their borrowing is higher than that of the last Labour Govt failures and we need growth, but there is only a Plan "A".
The main spondulicks coming into the country are from foreign investors buying up all the city hotspots.
But then again you all knew this so we're just wasting our time trying to influence a Government with its hands clapsed firmly over its ears.
great point...
anyone considered that with the worlds population exploding and becoming global that wages may actually fall over the next 20 years?
AC - seems like you're describing a 1970's type scenario of rapid wage inflation coming to the rescue. The world has changed though - there are literally hundreds of millions of Indians and Chinese who will do the jobs of UK workers for lower salaries. I cannot see any upward pressure on wages in this country for the foreseeable future.
Another view......
Current home owners will NOT sell, unless they really HAVE to - they will stick. It will mean a stagnant market. There will obviously be some price "falls" (by downsizers with a lot of equity or those who cannot afford their mortgage - but an awful lot can afford it - even if SVR goes to 6/7/8/9% or more). It is their home for goodness sake - not estate agents fodder!
In those now immortal words
Keep Calm
&
Carry On
Nothing is going to happen, by design.
First Post "dave" at the bottom might I suggest you pop another a pill and chill out?
The "plan" is to keep house prices static for 10 years.
With inflation running as high as it is this DELIVERS a real world reduction in VALUES of about 55%.
This is the figure you keep banging on about.
In the interim there are other pressures on salaries and the like which means that non of us will notice for the moment.
But the effect is real and we are already 4 1/2 years down the road.
This is a sensible way of dealing with the situation as far as any government can and for the moment, the UK is definitely a safe haven and LOADS of euro money is heading in our direction. Which is good for us and bad for them.
Seems like it will all be ok in the end.
Oh, BTW, I'm an estate agent and a BTL investor who has almost no borrowing so whilst I can see the real world value of my portfolio decrease (which is somewhat upsetting) I am in no way troubled by the situation.
The only thing that worries me is the "Olympic Effect" because most of my portfolio is in East London.
But all that will happen is that the shine will come off, rather than massive drops in value.
(I hope!)
that was 95-100% mortgages
reply to dorset ranger
you assume quite alot
I doubt interest rates will stay at 0.5% for 5 years and mortgage rates are likely to rise anyway
as for capital appreciation,well thats unlikely over the next 20 years...japan is 40% less than 1991 after it did much the same as us
as prices fall,more people will sell or be forced to sell..if prices fall to ftb levels banks will offer 5% or 100% mortgages,people will buy rather than rent as most people hate rented.
http://www.youtube.com/watch?v=Z0YTY5TWtmU
rental property will find getting tenants harder so rents will fall creating a downward spiral on prices
by all historical measures houseprices are 30-50% overpriced so I cannot see how you think its never been a better time to buy...I can only liken it to dotcom boom or US housing boom where people thought the good times would never end and anyone who suggested they would was ridiculed
1. Bank of England base to 0% is on the cards and if this doesn't work what then?
2. Reducing stamp duty on all properties under £250,000
3. Releasing more land for development especially for properties to £250,000
4. Reducing VAT
5. Sensible Self Cert mortgages say to 50% LTV for next time buyers
Re B2L investors *DAVE*
Can you square off your comments in the context of a burgeoning rental sector particularily 1 or 2 bed properties (i.e. would be first time buyers) interest rates at their all time low and the mentioned forecast in the finance community that BBR will remain as low as 0.5% for the next 5yrs, perhaps. There simply hasn't been a better time to become a landlord. The usual rules apply at being a profficient landlord. One of the best fixed B2L is 75% LTV on 5yrs at 5.49%. If someone has £125,000 to spend then even better if you're not using all of your personal tax allowance and better still joint owner/tax allowance. Where else can you get 7% ROI with a capital appreciation vehicle when taken over 15 - 20 yrs. Acquiring a property has never been better couple with the fact the rental market shows no signs of abating I can't figure out where you're coming from. I'd be interested to hear your thoughts.
asking a surveyor about house prices is like asking a hospital porter about the operation you are about to have.
"The latest statistics show an average of 52,350 sales per month between November and February, up from 47,624 for the same period the year before." An AVERAGE figure for a period of lodging registration applications that reflects the second peak of the 2011 market. Sounds like encouraging news to me.
But then, when the article contains no other information or statistics as to the number of transactions since the period to which the Land Registry stats apply, you go on to write "Meanwhile, there are indications that a slowdown has extended into this month". What slowdown? Your article is mostly about average house prices. You never mentioned a slowdown before. Is it since February? Or is it just April? And if the board counts for May show a lower figure than comparable statistics for April, how does that drop compare to the April/May drop in 2011? Is it not just the usual start of the slowdown into summer after the spring peak?
If you are going to try to analyse statistics, get a statistical analyst on your payroll please
all the evidence is there that something spectacular is going to happen in terms of houseprices and the housing market
anyone with a mortgaged btl portfolio is gonna be taken to the cleaners
its going to be messy and nasty
banks may force portfolios in negative equity into bankruptcy and then take the family house
all the evidence is there that something spectacular is going to happen in terms of houseprices and the housing market
anyone with a mortgaged btl portfolio is gonna be taken to the cleaners
its going to be messy and nasty
banks may force portfolios in negative equity into bankruptcy and then take the family house