Year ends with high price growth almost everywhere says Nationwide

House prices ended the year with strong growth of 0.8 per cent in the month of December according to the building society Nationwide.

This took the average value of property in the UK is now £196,999, up 4.5 per cent compared with a year ago. London remained the strongest performing region for the fifth year running, with average prices up 12 per cent in 12 months.

London’s average values are now 50 per cent above their pre-crisis peak in 2007 – a sharp contrast to, say, Northern Ireland which remains 44 per cent below its pre-crisis peak, despite rising by 6.5 per cent in the last three months of the year.

But the capital will not be such a success in 2016 because of widespread unaffordability across boroughs, says the building society.

UK-wide, prices are around 7.0 per cent higher than a year ago with Scotland the only part that saw a fall, with values down 1.9 per cent in the three months to the end of December compared with the same period a year ago.

“Further healthy gains in employment and rising wages are likely to bolster buyer sentiment, while borrowing costs are expected to rise only gradually. However, the main concern is that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability” according to Robert Gardner, Nationwide’s chief economist.

On Twitter, Howard Archer – chief UK and European economist at IHS Global Insight – says the Nationwide figures back up his firm’s forecast house price growth of 6.0 per cent in 2016.

Meanwhile Jeremy Leaf, former RICS chairman and north London estate agent, says: ‘Supply is simply not increasing fast enough to keep house prices in check and is making it harder for first-time buyers to get on the ladder. The situation is likely to get worse before it gets better in view of the build up to the increase in stamp duty in April, particularly as these [Nationwide] figures are a little historic.”

Source: Estate Agent Today


Price of flats rising faster than houses, says Halifax

halifax-logoOver the last decade the price of flats has risen much faster than the price of houses, according to research for the Halifax.

While flats have risen by 60% in value over that time period, the average house has only gone up by 34%, it said. Detached homes have seen the smallest price rise, at 21%.

At the same time the Halifax said the rise in UK house prices in the year to September slowed to 8.6%, from 9% previously. Between July and September, prices went up by 2% compared with the previous quarter.

On a monthly basis, the Halifax said prices in September dropped by 0.9% compared with August. As a result the value of the average house or flat in the UK has fallen to £202,859.


Last week, rival lender Nationwide said that house prices rose by just 3.8% in the year to September. It also said that the gap between prices in London and the rest of the UK had reached a record high.

The relative popularity of flats has fallen over the past decade, according to the Halifax research. In 2005, 20% of all property sales were flats. Ten years on, that figure has fallen to 17%. Price rises have therefore been driven by flats in the capital.

“The national increase in flat prices has been led by London where flats account for roughly one in two property sales; substantially higher than for the country as a whole,” said Martin Ellis, Halifax’s chief economist.

Source: BBC News

UK house prices up by 3.5%, while Stamp Duty falls

According to new data from the Nationwide house price index, UK house price growth has risen in July by 0.4%, boosting the annual pace of house price growth to 3.5%.

The New data also revealed that the average house price now stands at £195,621, up from £195,055 in June.

Robert Gardner, Nationwide’s Chief Economist, said: “After moderating over the past twelve months, there are tentative signs that annual house price growth may be stabilising close to the pace of earnings growth, which has historically been around 4%.

“This would bode well for a sustainable increase in housing market activity, though whether this will be maintained will depend on whether building activity can keep pace with increasing demand.

“The outlook on the demand side remains encouraging. Employment growth has remained relatively robust in recent quarters, and, after a prolonged period of subdued growth, wage growth is also edging up. With consumer confidence buoyant and mortgage rates still close to all-time lows, demand for housing is likely to firm up in the quarters ahead.

“It remains unclear whether activity on the supply side will catch up with demand. The number of new homes under construction has started to pick up, albeit from historically low levels, and further increases are required if a sustainable recovery in the housing market is to be maintained over the longer term.”

The index also shows that stamp duty changes have reduced “bunching” at key price points.

Robert Gardner continued: “The slab structure used to result in significant distortions with a clustering of transactions at the tax thresholds. Under that system, paying £1 more would result in significant additional stamp duty being due (for example, paying £1 over the £250,000 or the £500,000 threshold used to trigger an additional £5,000 of SDLT).

“Even though the change to SDLT only came into effect six months ago, the impact on the pattern of transactions is already evident, with much less bunching of transactions around the £125,000, £500,000 and in particular the £250,000 price points. Moreover, based on the first six months of transactions data from the Land Registry, nearly 235,000 purchasers in England and Wales have paid less tax under the new regime, with an average benefit of c£1,800.

“The benefits are greatest in the South of England where average house prices are higher. We estimate that around 85% of transactions in London, the South West and South East have benefited from the changes, compared with around 55% in the North, Yorkshire and Humberside, and the North West of England.

“However, we estimate that around 5,000 (2%) of purchasers paid more (two thirds of whom were in London), with an average of £28,000 more tax being paid compared with the old system.

“On balance (considering the net effect of those paying more and those paying less), we estimate that the changes have resulted in around £275m less tax being paid than would have been the case under the old stamp duty regime.”

Source: Property Reporter

UK house prices rise 0.5% in January

The price of a typical home rose by 0.5% in January, but was unchanged compared with January 2012, according to the latest data from Nationwide.

The typical UK home is now worth £162,245.

Robert Gardner, Nationwide’s Chief Economist, said: “UK house prices increased by 0.5% in January, though prices were unchanged compared with January 2012.

“While activity in the housing market remains muted by historic standards, there have been tentative signs of a pick-up in activity in recent months.

“The Funding for Lending Scheme has achieved some success in bringing down mortgage rates, with some signs of a pick-up in lending activity.

“Hopefully, the momentum will continue to build in the months ahead, though much will depend on whether the wider economic environment improves. Progress is likely to be relatively slow on that front if recent trends are any guide, with the UK economy shrinking for the fourth time in five quarters in Q4 2012.”

Richard Gordon of UKPI commented on the figures: “2013 has certainly got off to a positive start. There is generally more optimism around and activity levels are higher.

“Whether this will be sustained through out the year will remain to be seen and will largely depend on wider economic factors. But it is clear the demand is there and now it seems for many is the willingness and ability to commit to a purchase.”

Source: Nationwide

UK property price growth in 2012 hit three-year high

Despite a slowdown in the UK housing market in the final quarter of 2012, residential property prices still ended the year up 3.4%.

This was due to strong growth in the opening six months of the year, according to Assetz House Price Watch, an analysis of house price data from ONS, LSL Acadametrics, Halifax, Nationwide and Rightmove, which claims to give a comprehensive overview of the UK property market.

The data, which Assetz claim offers a more accurate picture of house price trends, shows that the average price of a home is now £202,824, an increase of £6,634 since December 2011.

The annualised average rate of growth for December was -8.6% while the three, six and 12 month annualised rates of growth are -1.4%, -3.4% and 3.4% respectively.

Stuart Law, chief executive of Assetz, said: “In spite of some downbeat forecasts, 2012 saw the strongest calendar price growth for three years, comfortably achieving our predicted 3%. Following a healthy first six months, there was an inevitable price correction in the second half.

“The UK housing market in 2012 was buoyed by an influx of buy-to-let investors from home and abroad which has increased competition for the best properties in areas where there is strong employment prospects, transport connections and amenities. For this reason, the market remains two tiered with London and the commuter heartlands of the South East and regional cities such as Manchester, Leeds and Liverpool seeing stronger prices rises than elsewhere in the UK.”

With the base rate set to enter a fifth year at its historic low of 0.5%, Mr Law believes that more people will divert capital from low interest savings accounts to high yield property investments. This coupled with the greater availability of mortgage finance as part of the Funding for Lending Scheme (FLS) will support growth.

He added: “We are confident of price growth of as much as 5% this year which would leave prices just shy of the 2007 peak in nominal terms and their highest since February 2008. The property market is well advanced on its slow road to recovery.”


UK house prices increase 88 fold during Queen’s reign

The average UK house price has increased from £1,891 to £166,022 during the Queen’s reign, that’s almost an 88 fold increase over the 60 year period, according to the Nationwide House Price Index.

The Nationwide House Price Index also shares an anniversary with the Queen as it marks its 60th year, being first produced in 1952 and has therefore run for the Queen’s entire reign.

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said: “The Nationwide House Price Index has reached an important milestone; it was first produced in 1952, and has therefore run for the Queen’s entire reign.

“According to our data the average UK house price has increased from £1,891 to £166,022 during the Queen’s reign, that’s almost an 88 fold increase over the 60 year period, while the cost of goods and services have recorded a more modest 25 fold increase.


“Dramatic increases might be expected over such a long timeframe, but over the last eighteen months, house prices have been fairly stable, despite the challenging economic backdrop.

“May’s data provides some comfort that this pattern is being maintained. Prices were up by a modest 0.3% over the month, and were just 0.7% lower than May last year, even though the UK economy dipped back into recession in Q1, and showed few signs of a significant pickup in economic activity at the start of Q2.

“Demand for homes remains subdued on the back of weak labour market conditions, but the lack of homes coming  onto the market is providing support for prices. This is in part a reflection of the low rate of building in recent years  which has  failed to keep pace with household formation.”

The constrained supply of homes is apparent in a number of metrics. House prices remain high relative to incomes, at more than five times average earnings, well above the long run average of four times earnings.

Affordability appears less stretched when comparing the cost of a mortgage to incomes. Repayments on a typical mortgage are equal to around 31% of take home pay, the lowest level for a decade, but this is because interest rates are near three hundred year lows.

Upward pressure on rents also suggests that demand for housing is outstripping the available supply. Rental growth tends to track pay growth fairly closely over time. However, rental growth is now outpacing wage growth by a significant margin.

NewBuy Guarantee scheme launched by UK Government

Details of two ambitious schemes that are aimed at unlocking the aspirations of a new generation of home buyers, and get Britain building thousands of new homes, were unveiled today by Prime Minister David Cameron and Housing Minister Grant Shapps.

Mr Shapps declared the NewBuy Guarantee open for business – a scheme that will enable an estimated 100,000 prospective and existing homeowners to buy their dream home with much smaller deposits than currently required.

At the same time, the Minister announced details of the reinvigorated Right to Buy, which will give up to two million social tenants the opportunity to buy their council home with a discount of up to £75,000 and, for the first time, ensure that additional properties sold are replaced with new affordable homes for rent.

The NewBuy scheme means that from today, three leading high street lenders and seven of the country’s biggest house builders will begin to offer mortgages on newly-built properties to people with just a five per cent deposit; a financial product not available anywhere else in the market. Other leading names are expected to follow.

Today’s deals will mean that instead of a typical buyer requiring a £40,000 deposit for a £200,000 property, they will now only need £10,000. The government and housebuilders will help provide security for the loan, so if the house is then sold for less than the outstanding mortgage total the lender will be able to recover its loss.

The scheme, which has attracted strong support from many of the country’s biggest house-builders and mortgage lenders, will offer help for up to 100,000 buyers who would otherwise be frozen out of the market.

The deals will include:

  • Barclays – who will offer 95 per cent Loan-to-Value mortgages on properties built by Barratt, Bellway, Bovis, Persimmon, Redrow and Taylor Wimpey at just 4.99 per cent fixed rate for two years and 5.89 per cent fixed rate for four years.
  • Nationwide – who will offer 95 per cent Loan-to-Value mortgages on properties built by Barratt, Bovis, Bellway, Persimmon, Redrow and Taylor Wimpey at just 5.69 per cent fixed rate for three years and 5.99 fixed rate for five years.
  • NatWest – who will offer 95 per cent Loan-to-Value mortgages on properties built by Barratt, Bellway, Bovis, Linden Homes, Persimmon, Redrow and Taylor Wimpey at just 4.29 per cent fixed rate for two years and 4.99 per cent fixed rate for five years.

However, the scheme is not without its critics. Some feel that the scheme is just following the same principles of creating high levels of property based debt that caused the financial crisis in the first place. Others believe it is wrong for the Government and therefore the taxpayer to underwrite mortgages.

Richard Gordon of UKPI said: “The NewBuy scheme could boost home ownership and help kick-start the building industry which would of course be good for Britain’s economy.

“However, I am concerned that it could keep prices of new homes artificially high and drive people back into high levels of borrowing. Banks have been criticised for offering 90% or 95% loans during the boom years and now the UK government is encouraging exactly the same thing again.

“Having said that, mortgages for new homes account for only around 10% of the overall market so the impact on the wider housing market is likely to be fairly limited.”

UK house prices rose by 0.6% in January

UK house prices increased by 0.6% in January, according to the latest survey from the Halifax.

The change means that the average cost of a house was £160,907 last month, the bank said. House prices are 1.8% lower than a year ago, according to the Halifax’s measure.

The bank said prospects for the housing market over the coming months depended on whether the debt crisis in the eurozone would affect the UK economy.

“If the UK can avoid a prolonged recession, we expect broad stability in house prices in 2012,” said Martin Ellis, Halifax’s housing economist.

The Halifax, now part of Lloyds Banking Group, said that the price of the average home in the UK was very similar to the average value in the middle of 2011, mainly due to the low level of interest rates, the lender said.

House prices in the three months to January fell by 0.9% when compared with the previous three months, the Halifax said. This three-month on three-month comparison is often thought to be a better measure of underlying conditions in the market.

Last week, the latest survey from the Nationwide building society valued the average home at £162,228. It said that prices fell by 0.2% in January compared with December.

The Nationwide said the annual rise in house prices in January was 0.6%, notably different to the 1.8% fall recorded by the Halifax.

However, the year-on-year comparison is calculated slightly differently by the two lenders. The Halifax compares the previous three months with the same three months a year earlier to give a smoother comparison, rather than a direct comparison of the equivalent months.

Nationwide announces 90% LTV fixed-rate mortgage

Mortgage lending conditions continue to improve with more lenders announcing increased LTV products.

Nationwide announced today that it is launching a new, competitive 2 year fixed rate at 90% LTV for first time buyers, home movers and existing customers moving home. The Society is offering a rate of 5.29% with a £900 product fee or 5.69% with no product fee.

The Society will also make a number of other pricing changes on selected fixed and tracker mortgage rates with effect from Thursday 12 January 2012.

Martyn Dyson, head of mortgages at Nationwide, said: “We are continuing our support for the housing market by extending our range of 90% LTV mortgages to now include 2 year fixed rate products. It means we offer a comprehensive fixed rate range at 90% LTV including two, three and five year fixed rate deals, offering some of the best low deposit deals currently available.

Leeds Building Society has also announced it is raising its buy-to-let LTV cap to 80%.

The mutual’s 2-year fixed rate is now available at 80% LTV with a rate of 5.69%, a £199 booking fee and an £800 completion fee.

The announcement follows the launch of the society’s 95% LTV direct-only range of 5-year residential deals last December, and Aldermore’s maximum LTV increase for buy-to-let mortgages from 75% to 80% earlier this week.