House Price Spy Blog

There are a few bits of news for today,

Only a third of mortgage lenders have passed on the recent rate cuts that were intended to benefit borrowers hit by the Credit Crunch. Whether these lenders are passing the money they have saved onto savers was not indicated. There are even calls for a further cut to a historic 0.5%, although personally I think this would be crazy. With savers already losing out and lenders not passing on cuts what would be the point, this also raises the point that at some point the rate will have to rise leaving some people high and dry. Since its not worthwhile to save the money saved because you dont get a decent rate does this not lead to people spending money rather than putting in away when times are tight? Savings are £2.2 billion down on the January figure.

Approved mortgages are rising to over 23,000 (up over 1,000) while total lending has fallen. As expected the market has picked up slightly but is still not comparable to 2007 figures.

The amount of money spent by UK households fell by 0.7% during Winter 2008 to the lowest levels since 1991 even though utility prices are higher than any time since the early 1970s.

So no surprises on any of these stories, we are saving less (because of the low rates), we are spending less on our outgoings and lenders are suiting themselves. While its not a great time to be in the estate agency business sales interest is picking up and people get used to the recession rather seeing the end of it, if you can get approaching market value for your property there are bargains out there-but you still should buy in reliable areas. Dont buy anywhere you would not have bought before…

A good feature of the money pumped into the finance sector is that Northern Rock has pledged to offer an extra £14 billion for mortgages for responsible borrowers such as first time buyers and re-mortgages. The institution is ahead of schedule in paying back the billions it borrowed from the public coffers with an extra £16 billion payed back over what was expected. This will be good for the national debt and good for the industry in terms of a health and brave attitude to lending, after many people were expecting the mortgage sector to die off

Over a year ago I blogged about the outcry about new housing being built and with the building industry facing another slump less properties are being built than ever, a new group called the 2020 group are saying that an extra £6.3 billion needs to be spent to cope with the shortfall, although pumping billions of public money into something that will surely lower property prices could be counter productive. Subsidising private building companies to build cheap housing that will mean our own properties are worth less…this will not be popular.

Gordon Brown has been in the news in the last few days saying that he wants to ban the ’100% mortgage’, but of course the horse has bolted on that one! He should have thought about that ages ago before we reached this point. With President Obama now inaugurated we can see what he intends to do about record numbers of home repossessions since the UK usually follows in line. UK repossessions rose by 50% to 40,000 during 2008.

There are still people buying property, still mortgages to be had and great interest in the property market!

Another week another set of predictions, another set of figures…

Following on from what I was saying on Monday about the demand for housing rising in the next year, figures for property viewings have risen 50% on figures for the same time last year according to Hamptons International. Many of these are first time buyers attracted by the crazy low mortgage rates and the deals available on property plus the new legislation on Stamp Duty, most of the rest will be people with extra cash they are not trusting to savings accounts, ISA’s or pensions.

Another new feature is the increase in the number of overseas buyers who are taking advantage of the low pound and low property prices.

If you saw the Channel 4 news last night you will have seen the most dire prediction yet about the recession/credit crunch ie that we could be in for a decade of recession rather than just a couple of years. I dont see that happening, however by the Autumn we will know the worst, the smart money will be on some sort of recovery by 2011 or late 2010, this is based a rise in prices rather than a return to the inflated property prices of 2007. The media seem to try to be outdoing each other for doom and gloom, rather than playing a positive part.

Its a buyers market with keener pricing taking us back to 2006 prices (and beyond), that means there are bargains to be had everywhere on desirable propeties that may have been previously out of range or just getting a bargain.

There are always people who play the ‘boom and bust’ just right, buying low and selling high and now is the time for players to snap up bargains which will grow in value in the years to come. The business elite is full of people who did their homework and bought at the right time….

You may not be an Alan Sugar or Peter Jones but you can use your knowledge of your local property market to your advantage in the year to come to move UP the property ladder. House Price Spy lets you do (most) of your homework without spending much time or any cash, using your ground level experience and predictive powers to your best advantage.

There are still people selling properties across the countries and with many external concerns (job loss, retirements, bereavement etc) to take into account it may be time to snap up a bargain. In addition, with less people buying to let the demand for rented accomodation in reliable areas is still strong so this could be an option for people with enough of a deposit available.

There are bargains to be had, and (despite what you may have heard) finance to be had. As always it pays to do your homework more carefully than ever, seeing which areas are reliable and which cannot be considered for one reason or the other. Prices are set to drop during 2009 but many people are seeing a rise after that so dont delay too long!

Below are the price trends for the UK by country from House Price Spy data, the price trends have been changing in late 2008. Scotland has finally seen a downturn, whereas England has actually see a rise in December.

To see the price trend for England for late 2008

To see the price trend for Scotland for late 2008

To see the price trend for Wales for late 2008

Scotland seemed to be the only country to keep their gains, while not growing as much as before while England had seen the largest previous rises and was most susceptible to a contraction in prices. From the figures the number of sales is still falling, this number will have to rise before prices start to recover. The Council of Mortgage Lenders has released its fuigures for the last year only 500K mortgages were approved, while 2007 saw 1 million approvals.

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The Bank Of England has announced that the mortgage rate has just been reduced by 0.5% to 1%. The major lenders have pledged to pass this saving on as much as possible.

This is the lowest it has ever been, giving every mortgage holder a real boost in the cold weather. Can this level be sustainable? Only time will tell.

This does not give lender much profit to play with, maybe the BOE thought that lenders were putting their shareholders first previously and want to give some cash to the general populace. As mentioned, hopefully this money will not be found at savers expense or at the expense of new mortgage borrowers.

The Nationwide and Halifax building societies are both stating that the average prices of property in the UK has fallen from around £200,000 to around £159,000 or about 20%.

The CEBR (or Centre for Economics and Business Research) is predicting that we will lose the same again before the downturn is over. They also predict that prices will bottom out during 1009 and start to rise in the 12 months after that. Prices will return to previous levels in around 2013.

This is quite a pessimistic view, many insiders are stating that we might see significant improvement during early 2010. It’s fair to say that for the price increases we say in the early/part of this decade we could have to wait much longer than that-but to be fair we all realise that was artificial and could not be sustained. For the economy to get back on its feet and jobs to start to appear again it will take much longer.

I think we all agree that while property prices are an important indicator of what is happening, jobs and the general economy are our bread and butter. However people who are retiring this year will be worried, Gordon Brown encouraged us to take out personal pensions just a year ago and now these people dont have the working time to replace this cash. Retire at 65? More people will have to work longer to pay for this mess..apart from young people who cant open businesses due to the lack of loans being granted.