Category Archives: Market Trends

ONS Produces First Rental Indices

The Office for National Statistics has produced its first private rental price indices.

However, unlike the house sales index, the ONS already produces each month, the rental version – despite its title – contains no actual prices. Instead, it contents itself with a series of percentages.

The ONS’s Index of Private Housing Rental Prices (IPHRP) is also described as “experimental” and a health warning recommends that caution be exercised when drawing conclusions from the data, as the index is likely to be developed further.

The first index, published yesterday, says that between May 2012 and May 2013, private rental prices in Great Britain rose by 1.3%. Private rents in Britain excluding London rose by 0.8% in the same period.

In the same period, private rental prices grew by 1.3% in England, 1.0% in Scotland and 1.5% in Wales.

Rents increased in eight of the nine English regions in the year. The largest private rental price increases were in London at 2.2% and the South-East at 1.2%. Rents decreased by 0.1% in the North-East.

Over the eight years between May 2005 and May 2013, says the index, private rental prices increased by 8.4% in England. During this period private rental prices increased the most in London (11.0%) and the East (8.3%), and the least in the North-East (5.2%) and the East Midlands (5.3%).

According to the Valuation Office Agency, reporting in March, national average rents are £724.

The data showed that rent inflation has not only undershot inflation over the past year, but also over the past eight years.

House Price Bubble Warning

One in five first time buyers (20%) say that Government schemes like Help to Buy will help them get onto the property ladder.

However, many first time buyers (23%) also say that the best thing Government could do to assist them is to stop taxing their deposit savings, the BSA’s quarterly Property Tracker report has revealed.

Results from the survey which questions 2000 consumers across the UK every three months indicates that recognition of the Government schemes is reasonably high but that not all those looking to buy a home thought that it was the most helpful approach.

There are clear indications however, that one important factor in the housing market – consumer confidence – is on the up. For the first time in the last three years, the majority of consumers in June 2013 expect house prices to rise in the next year.  Just 9% expect prices to fall over the next 12 months.  Historically, future prices expectations have been an indicator of consumer confidence, and in a market where most purchases are discretionary, is a guide to future activity.

Clearly, rising prices is a double-edged sword which challenges first time buyers. As in previous Property Tracker surveys, raising a deposit remains the single largest barrier to home ownership, 54% of those wishing to buy saying it is their main deterrent. Through schemes such as Help to Buy: mortgage guarantee, the Government aims to help potential homebuyers particularly those with smaller deposits. The scheme, which has yet to be defined, is scheduled for launch in January – but even before its launch there are already 60 mortgage products across the whole market – 40 from mutual lenders – available to those with a deposit of five per cent or less.

One serious risk factor of the Government’s strategy – already emphasised by the Governor of the Bank of England and the Office for Budget Responsibility – is the potential for the inadvertent creation of a future house price bubble.  For the Help to Buy: mortgage guarantee scheme in particular, it is critical that the Government designs and manages this scheme effectively, with a clear exit strategy right from the start if the clear market risk from state and ultimately tax-payer intervention is to be avoided.

Paul Broadhead, Head of Mortgage Policy at the BSA, said: “We are pleased that the Government shares our commitment to get the housing market moving, but it is vital that there is a clearly defined exit strategy right from the start for the Help to Buy: mortgage guarantee initiative.

“It cannot become a permanent feature of the market beyond the time when the country is in economic recovery mode. Care is needed to prevent the actions taken today inadvertently causing a distorted housing market in three years time – a market where state intervention has artificially hiked prices.There are encouraging noises from builders on sign-up for Help to Buy: equity loan. If this and other schemes do encourage builders to build – increasing supply and improving consumer confidence, it will be a success. If the Government were to add some form of savings tax moratorium that would assist consumers by shortening the time they need to raise a deposit.

“It is encouraging that one in five people with a smaller deposit say they can use Government schemes to their advantage. But January 2014 is still a way off and the fact is that, while the number of products may fluctuate, mortgages which demand a 5-10% deposit are already available to the 44% of prospective first time buyers who say they have a deposit of this size. For those keen to buy, now may well be the time to start.”


North – South Divide Is Alive And Well

House prices rebounded last month – but behind the headline figure is a story of completely different markets.

In London, said the Land Registry, house prices went up 6.2% in the last year. In the North-East, house prices fell by almost the same amount, 5.7%, over the same period.

Overall, the average price in England and Wales last month was £161,458 – up 0.4% since March, and up 0.7% since April last year.

In London, average house prices are well over double the national average, standing at £375,795. In the North-East, the average house price is £95,546.

London’s monthly rise of 1.4% between March and April was also much higher than elsewhere, and contrasted with the monthly fall in the North-East of 1.6%. But even in London itself there were big differences, with five boroughs showing double-digit increases in house prices over the last year and two with gains of under 2%.

House prices rose over the month in five regions, and in five regions they fell.

House sales went down, the Land Registry also said, although its latest figures only go to February. Between November and February, there were an average of 51,386 sales per month, compared with 53,151 for the same period 12 months earlier.

In February itself there were just 43,573 transactions, 3% down on February 2012.

The Land Registry also now reports on repossession figures, which it says averaged 1,400 per month between November and February, down from the 1,695 per month from the same period a year earlier.

Nationwide’s latest – and more up to date – house price survey, reporting for May, said house prices in the UK edged up 0.4% compared with April, to stand at £167,912.

Nationwide said that there were signs of real momentum in the market, with the number of property transactions in the first four months of this year running at around 5% above the monthly average of 2012.

In London, estate agents insisted there is no house price bubble in the market.

He said: “A steady growth of 6.2% does not constitute a bubble and the figures show the London property market continuing its orderly rise. Demand for prime London properties remains consistently high, bolstered by both overseas and domestic buyers striving in competition for the best properties.”

* Meanwhile, the Land Registry has announced that it is to make public, as from next month, data on house prices which currently goes only to paying customers. This ‘price paid data’ – as distinct from the House Price Index which is calculated on the basis of prices of houses sold more than once since 1995  – shows the records of the actual price paid for every home sold between January 1, 2009, and January 31, 2012.

By November, the data will go back earlier to 1995.

New Build Prices Outperform Rest Of Housing Market

The average house price of new build property in the UK has increased by 12% over the last five years with the average price now at £233,822, new research shows.

It means that new builds are worth 9% more than the average house, according to the analysis from the Halifax.

Nationally, there has been an increase of 40% from £166,473 over the past 10 years, while regionally, the biggest rise in the past 10 has been in Greater London where the average price for a new home has risen by 57% to £415,540.

The research shows that the north-south divide is as prevalent in the price of the new homes market as it is in the overall market. Over the past five years, more than half of UK regions saw the average price of new homes fall, with the north experiencing the greatest fall of 10% to an average of £157,190.

The research also shows the most popular types of new property sold. In 2012 some 37% of sales were flats, followed by terraced houses at 24% and detached properties 23%.

Yorkshire and the Humber had the greatest proportion of terraced properties sold at 30%, with Greater London seeing the highest proportion of sales of new build flats in 2012 at 88%.

‘In a relatively flat housing market, the new homes market has changed enormously over the past five years. We have seen a lot of positive sentiment towards the new homes market, with various schemes launched to get the house building industry moving and changes in policies and deposit requirements allowing shared equity buyers to participate more fully in the new build market,’ said Craig McKinlay, new mortgages director for Halifax.

‘We are continuing to increase the number of builders we are working with and it is a testament to our commitment to put the purchase of a new build home back within the grasp of both first time buyers and home movers,’ he added.

Halifax said that it is a leading affordable housing lender and one of the biggest supporters of the New Buy Scheme. One year on since the launch of a range of mortgages to support the New Buy Scheme, Halifax has signed up its 64th house builder partner representing 90 individual builder brands.

To date, Halifax has helped approximately 1,900 buyers’ purchase through NewBuy, representing one in three of all applications and completions on the scheme.

Since the launch of the NewBuy scheme in March 2012, in addition to nationwide builders, Halifax has partnered with smaller local and regional builders through a multi user cell network. This ensures that lower volume builders can also participate in the scheme.