UK Property Blog

Government Criticised Over Hips

2007-08-10T10:14:00.000+01:00

The National Audit Office have criticised the Government's handling of the Home Information Packs Scheme (Hips). A report has revealed that consultants who were hired to assist with the scheme had a financial interest in a recommended firm.

Home Information Packs were introduced in England and Wales on 1 August and are currently said to be costing between £400 and £700 each to produce.

The scheme is currently limited to those selling a property with a minimum of 4 bedrooms, though its expected that the scheme will be rolled out in full shortly.

Interest Rate Decision

2007-08-02T11:55:00.000+01:00

The Bank of England's Monetary Policy Committee have announced this lunchtime that UK interest rates will remain unchanged at 5.75%.

Watching a discussion on Bloomberg regarding the interest rate decision, it was interesting to see a representative of the Bank of Scotland suggesting that he thinks that there may be one more interest rate rise (to 6%) in the near future and that rates will then peak.

It's evident that the Bank of England are still concerned about inflationary pressure, particularly from rising oil and food prices. They've obviously taken the decision that another rate increase is not necessary right now though.

Contrasting news

2007-08-02T10:51:00.000+01:00

Do you sometimes wonder how reliable data on the UK housing market really is? This morning provides a good example. While we're waiting for the latest meeting of the Bank of England's MPC, I thought it might be an idea to look at what the newspapers are reporting.

I was hoping to get an idea of the likely decision from the MPC later. Unfortunately, it really seems like a muddle of news on house prices today.

Results from the Halifax today suggest that the housing market is still growing, albeit at a slower rate. They reckon that house prices rose by 0.7% in July. Some of us will recall that the Nationwide released their figures for July last week and suggested that house prices had risen by 0.1% in July. Who do we believe? Or are both simply unreliable?

The Halifax figures indicate that house prices have risen by more than 11% in the last year, with the average home now valued at £198,915.

Channel 4 News are reporting these figures under the headline of "housing market slowdown continues". They point out that both Nationwide and Hometrack suggest that prices rose by 0.1% last month.

This Is Money suggest that July saw a surprise £1,500 rise in house prices. A slightly more positive slant on the news.

So, what are we to make of it all? My analysis of the current situation is that UK house prices are still growing but at a very slow level. House price inflation has certainly slowed, undoubtedly as a result of the recent interest rate rises. Many people are wondering whether rates will continue to rise.

My best guess is that the Bank will take quite a conservative stance later today and decide to keep interest rates at the same level. The reason that I think they'll go down that route is because they won't want to push the housing market too far at this point, risking starting a crash.

It's also worth remembering that the small rise in national house prices last month will hide regional variations. Some parts of the country will have seen fairly substantial falls, while its likely that London, Northern Ireland and parts of South-East England will have seen prices rising considerably more quickly than the headline rates suggested by mortgage lenders.

Bank of England meet tomorrow

2007-08-01T17:28:00.000+01:00

The Bank of England is set to make a further decision on UK interest rates. News from tomorrow's meeting is eagerly anticipated by home-owners and others with an interest in the UK housing market.

Signals from the City suggest that the general feeling is that the Bank will leave interest rates unchanged, as they look for signs that past interest rate increases may already be having an impact.

We'll keep an eye out for what they decide and I'll bring you more analysis of the situation tomorrow.

Don't forget that the main Finance Facts website carries property news too.

Housing News Round-up

2007-08-01T17:15:00.000+01:00

I thought I'd take a look at what the newspapers and online media are saying about the housing market - here's a current cross-section of articles that should hopefully provide you all with some interesting reading material:

Standard Life are widely reported as suggesting that there may be a slowdown ahead for the commercial property market.

This Is London carry a report suggesting that UK property prices are currently over-valued by 20%.

The BBC carry similarly negative news with suggestions for house-builders Taylor Wimpey that the housing market is "subdued", although the builder does suggest that trading conditions remain stable.

The Telegraph look at house prices from a rather different angle, noting that the recent interest rate rises seem to have had little effect on the housing market.

Looking at news specific to one region, The News Shopper, which covers the London area, reports that house prices have risen by up to 30% in the last year alone in some areas of the capital.

A report from Reuters suggests that inflation is moderating and that consumers are generally upbeat. Interesting news with the Bank of England meeting tomorrow to take another decision on interest rates.

Nationwide: house prices stagnate

2007-07-26T14:13:00.000+01:00

Today saw the release of Nationwide's figures for July on UK house prices. According to the leading mortgage lender, house price growth appears to have come to a halt, with prices rising by just 0.1% in the month as a whole.

The results mean that the annual rate of growth dips to 9.9%.

In other news, the British Bankers' Association report that mortgage approvals have also fallen significantly - down by 11% on a year-on-year basis.

Bradford & Bingley, a lender who are heavily involved with the buy-to-let market, seem to give a differing opinion on the state of the market. They suggest that the buy-to-let market was very strong in the first six months of the year (January to June) and that they expect the second half of 2007 to see similarly strong sentiment among buy-to-let investors.

As ever, it seems that we get different signals depending upon who we listen to.

To see whether the reduced rate of house price growth is significant, it's interesting to compare how the market has performed in July during previous years. The table below gives the figures for monthly growth in July for the past 15 years:

1992: -0.4%
1993: -1.2%
1994: +0.9%
1995: +0.3%
1996: +0.3%
1997: +1.6%
1998: +1.3%
1999: +0.8%
2000: -0.2%
2001: +1.3%
2002: +2.2%
2003: +0.9%
2004: +1.9%
2005: +0.3%
2006: +1.1%
2007: +0.1%

Interesting times ahead it seems.

Northern Rock predict house price slowdown

2007-07-25T09:46:00.000+01:00

Northern Rock, the UK mortgage lender, have suggested that house price inflation will slow quite suddenly by the end of 2007.

Although house price inflation is currently running at about 10%, the lender suggests that this level is likely to fall quite dramatically - by the end of the year, it may be that house price inflation drops to nearer 4%.

This is an interesting statement, as we are already seeing that the headline rate of house price inflation (HPI) hides regional differences. For instance, both Northern Ireland and Greater London are performing at well above the headline rate of growth.

In order for the overall rate of HPI to fall to 4% by the end of December, it would surely involve some relatively large decreases in house prices in some areas (particularly when you take into account the current rate of inflation).

Rising interest rates are undoubtedly already hitting affordability in some areas and it will be interesting to see how the Bank of England react to news that house price growth is showing clear signs of slowing. Will they feel the need to keep increasing interest rates, or do these indicators suggest that interest rates are about to peak?

Panorama: Immigration Issues

2007-07-25T09:40:00.000+01:00

The Panorama programme shown on BBC1 earlier in the week mentioned some issues that could be relevant to the future of the housing market. The main focus of the half-hour show was on the fact that the UK government don't seem to be keeping count of how many immigrants (both legal and illegal) are arriving in the country.

Using the example of Slough in Berkshire, the programme makers noted that migrants arriving from Poland were living in unusual circumstances - with many adults being packed into relatively small houses, while others were living in converted sheds (sheds converted illegally by their landlords).

One figure that was thrown up was that there are thought to be some 500 more people arriving in the UK each day than there are leaving. That really caught my eye because of the potential impact on housing demand. If the figure is correct then it would mean that the net effect of migration alone on the UK population would be to increase it by more than 180,000 people on an annual basis.

Whilst many people who are new to the UK may not be able to afford to purchase a house, they are potential tenants for buy-to-let landlords. Will it be enough to keep levels of demand running high though?

Housing Market Still Going Strong?

2007-07-20T12:04:00.000+01:00

It seems that news on the UK housing market has been swinging from one extreme to the other. Last week we saw plenty of news, following the latest rise in interest rates, suggesting that house price growth was slowing and that a crash might be on the horizon.

Some analysts have suggested that UK home-owners have got themselves into too high a level of debt and that we may struggle to meet mortgage repayments, given higher interest rates and greater expenses in other areas (for example, rising household bills and petrol prices).

One argument that had been put forward by those promoting the idea that the UK housing market would continue to perform strongly was that demand would continue to out-perform supply, pushing house prices still higher. Gordon Brown's announcement that he planned to build more houses suggested a growth in supply, though some suggested that it would not be enough.

So...what is being said by analysts this week? The news agenda has been dominated by HBOS (Halifax - Bank Of Scotland) announcing that they have adjusted their estimated for house price inflation. They are now suggesting that the average cost of a UK home will have risen by some 6% by the end of 2007. This would mean a rise of some £12,000 on a property valued at £200,000 in January.

Such a rate of increase is still slower than previous years but does hide regional differences. London house price growth is still predicted to remain strong (at around 12% for Greater London), while Northern Ireland continues to see the fastest rate of growth.

HBOS also see a further interest rate rise in the near future (taking the base rate to 6%), although they appear to be predicting that this will be the peak for UK interest rates. Maybe too optimistic a view?

New PM to target housing

2007-07-11T10:35:00.000+01:00

The new Prime Minister, Gordon Brown, is to make a speech in the House of Commons this afternoon where he will outline the key priorities for his Government.

It's thought that the PM will target at the UK housing market when it comes to new policy decisions. In comments made to the BBC, Mr Brown has already suggested that his housing plans will involve making property more affordable, with plans for more house building.

One idea that has been widely touted in the press is that the Government will look to mortgage lenders to offer longer fixed term mortgages. It's a policy that is already under fire, with some lenders suggesting that such mortgages are not wanted by borrowers.

There are also suggestions that the PM will reveal plans to build more houses on brown-field sites. It will be interesting to see the actual details for such plans, as a policy of building on brown-field locations wouldn't necessarily differ from the policies of Mr Blair. Many would-be first time buyers and others with an interest in the UK property market will be listening with interest.

Interest Rates: Paper Review

2007-07-06T10:15:00.000+01:00

The morning after the rates rise of the day before. Let's look at what the UK nationals have to say about interest rates and the housing market:

The Times leads with a story suggesting that the interest rate rise heralds that the cheap mortgage era ends, with many homeowners about to come off fixed rate mortgage deals over the next 18 months. They also offer advice on softening the blow.

The Telegraph suggest that Tony Blair's legacy is to have left a nation deep in debt, with millions paying a third more for their mortgages.

In The Guardian you can find analysis of the warning signs that are apparently flashing. It reports that two members of the MPC are concerned that interest rates are rising too aggressively.

Finally, the Independent concentrates on warnings from the Conservative Party that personal debt is spiralling, in the face of the interest rate rises.

UK Interest Rates Rise

2007-07-05T13:16:00.000+01:00

No great surprise today with the news that UK interest rates have risen by a quarter point to 5.75%.

The Monetary Policy Committee issued a warning about concerns over the continuing rate of inflation, which some analysts believe may indicate that there will be a further interest rate rise in the near future. Indeed, some had already speculated that this month's decision could have led to a larger increase.

Businesses have reacted by warning against further increasesm suggesting that the 5 rises in the past year are still filtering through and will lead to a decrease in the rate of inflation anyway.

Is the glass half empty?

2007-07-04T10:53:00.000+01:00

The way in which house price movements are being reported in the national newspapers provides an interesting study in market sentiment. For some, the housing market remains strong and property, as an investment, looks like a pretty good bet.

Others are rather more pessimistic and are looking for a slowdown at the very least. Some are even looking to a house price crash resembling that seen in the UK in the late 1980s.

The Telegraph pick up on recently released figures from the Halifax to note that property prices in Northern Ireland have risen by an astonishing 50% in the past 12 months. Indeed, the last quarter of 2007 saw a rise of almost 9% in the value of an average property in Northern Ireland.

The chief executive of the Halifax is reported as suggesting that UK house prices will continue to remain strong, partly due to a lack of supply of housing stock.

The Times, however, take a different approach. They report on information produced by Nationwide and comments from the Chief Executive of Nationwide, Graham Beale. Mr Beale predicts that there will be a downturn in the UK housing market, with prices set to grow by between 5% and 8% in 2007 as a whole.

This lower than might be expected growth is predicted as it is felt that there will be a slowdown in the second half of the year, brought about by increased borrowing costs as a result of recent interest rate rises.

Interest Rate Rises Taking Their Toll?

2007-07-03T10:30:00.000+01:00

Much of the debate in the media right now seems to be surrounding whether or not the recent interest rate rises are likely to lead to a significant cooling off in the housing market. If house prices are to fall (or if they are to rise at a slower rate, at least) then it's likely to occur in conjunction with a slowdown in consumer spending.

The news from Reuters that many people are skipping bill payments may be an indication that some of us are finding ourselves in a slightly tighter financial position than we might like.

It seems that more of us are not paying our Council Tax bills on time (as well as other utility bills), with the suggestion being that late bill payments are down to many of us finding it that little bit harder to keep up with mortgage repayments. Scare-mongering or an important indicator? We'll have to wait and see.

Mortgage Approvals Rise

2007-06-29T11:31:00.000+01:00

The Bank of England today released its figure for mortgage lending in the month of May. To the surprise of many analysts (and possibly to members of the Bank itself), the figures showed an increase in the number of mortgage approvals when compared to the month of April.

The figures for May show loan approvals standing at some 114,000, up from 109,000.

The total amount of mortgage lending did see a dip, however, to £8.701 billion (a decrease from £8.763 billion in April).

It seems that, in general terms, the performance of the UK housing market remains strong. Interest rate rises don't appear to have had a major impact in terms of stopping people taking out new mortgages, or reducing house prices.

Nationwide figures for June

2007-06-28T11:34:00.000+01:00

The Nationwide has annouced its figures for the housing market, telling us all how the market performed in June 2007. Quite how it produces these figures, considering we are not at the end of the month yet, is a mystery to me. Anyone have the answer?

Anyway, putting the logistics to one side for a moment, let's look at what they are saying. I've got my hands on the Press Release, so let's take a look at some of the key points.

They reckon that "house price growth bounced back" in June, with the monthly rate of increase showing at 1.1%. This compares to a rate of increase in May of 0.5%. Prices are now increasing more than twice as fast as last year - with the rise in value of the average UK property being equivalent to around £50 per day.

The annual rate of increase now stands at 11.1% and they put the price of an average home at £184,070. They do, however, predict a slowing in the market during the second half of the year. Their prediction is that house prices will rise between 5% and 8% in 2007 as a whole.

The Nationwide also comment on the likelihood of interest rates rapidly reaching 6% and, while welcoming Gordon Brown's commitment to housing, they suggest that any new measures will need to be thought through carefully.

House Price Growth to Slow?

2007-06-27T07:54:00.000+01:00

Housebuilder George Wimpey plc is predicting a slowing of the UK property market, largely due to recent increases in interest rates.

In separate news, the deputy governor of the Bank of England, Sir John Gieve, has suggested that interest rates will need to rise again in July in order to cool the housing market (Daily Mail, 26 June 2007).

He pointed out that: "House price inflation in London has outstripped the rest of the UK with prices in the smartest areas of Kensington and Chelsea climbing by 40 per cent since the start of 2005".

Change of Prime Minister

2007-06-26T18:19:00.001+01:00

Tomorrow will see Gordon Brown take over as the UK Prime Minister. For the last 10 years the economy has been dominated by Mr Brown in his position as Chancellor of the Exchequer - now that he's moving into 10 Downing Street, many analysts will be interested to see how the economic outlook will change.

Over the next few weeks we are likely to see if there is likely to be any early impact for the housing market.

In one other piece of news, it seems that many more of us have started to take out so-called offset mortgages. For those of you that are unfamiliar with these types of mortgage, they allow you to "off-set" your mortgage with money that is kept in your bank accounts.

So, for example, if you have a £200,000 mortgage but had £20,000 in a savings account then you would only pay interest on £180,000.

According to figures from the Council of Mortgage Lenders, 170,000 offset mortgages were taken out last year (a rise of 49% when compared to the previous year). These mortgages are now worth some £30 billion in total.

King issues borrowing warning

2007-06-22T11:16:00.000+01:00

The last 24 hours have produced a number of articles in the printed press about the UK housing market.

Many focus on the minutes of the last meeting of the Bank of England's Monetary Policy Committee (earlier in June). The meeting led to a decision to leave UK interest rates unchanged at 5.5%, though the minutes reveal that 4 of the 9 members of the committee were in favour in a further rise in interest rates. These included Mervyn King, the Governor of the Bank of England.

This news has increased speculation that July may bring a rise in interest rates, possibly taking them up to 5.75%.

Related news items consider what effect interest rate rises are having on the UK property market. Mr King gave a speech where he suggested that borrowers and lenders need to be careful to ensure that they don't over-stretch.

In his article in The Times ("Housing market studies differ on impact of rates"), Gabriel Rozenberg considers recent data on the UK housing market that has been released by the Royal Institution of Chartered Surveyors (RICS), the Halifax and by the Department for Communities and Local Government. The three separate sets of data appear to point in different directions when it comes to deciding whether the recent interest rate rises have led to the hoped for cooling down of the housing market.

Elsewhere, Bradford & Bingley have reported that they see the buy-to-let sector continuing to perform well during the remainder of 2007. This suggestion does not appear to be universally supported, judging from the media reaction.

Buy-to-Let Landlords

2007-06-21T14:55:00.000+01:00

There is something of a debate at the moment about "buy-to-let" landlords and their effect on the UK property market.

The advent of property as a pure investment (rather than simply as a place to live) is undoubtedly having some sort of effect on the property market and on the economy as a whole. With buy-to-let (BTL) landlords happily snapping up properties around the country, they have helped to drive the rising house prices of the last decade.

Would-be first time buyers complain that BTL'ers are helping to keep them out of the market. This argument is argued particularly strongly on the house price crash website's bulletin boards.

Ruth Sunderland asks Who can blame the buy to let landlords? in her recent piece in The Guardian, taking a somewhat different approach to the issue.

One thing that will be interesting will be if there is a house price crash (or correction), as there seem to be even more individuals exposed to shifts in the UK property market now than was the case in the 1980s.

Land Registry Data

2007-06-19T11:37:00.000+01:00

For my first "proper" post I'd like to take a look at the subject of house price statistics. There are a number of organisations that provide figures on UK house prices, including the likes of Halifax, Nationwide and various estate agents.

Most such organisations have a vested interested in ensuring that we all see UK house prices on an upward curve. For a more objective view of the state of the market, my preferred information source is the data provided by the Land Registry. Their information is based on actual selling prices, which I think gives a better guide.

Welcome!

2007-06-19T11:16:00.000+01:00

Well, this is my first post on my self-titled UK property blog!

Welcome to the blog and thanks for taking the time to find your way here.

I'm intending to use this space to discuss all aspects of the UK property market, from the latest house price data, to thoughts on estate agents and other property professionals. It will hopefully be a source of advice and information for home-owners, tenants, landlords and other interested parties.

It's my intention to update the blog regularly with plenty of UK property news - I look forward to hearing your comments.

Phil