House Price Spy Blog

It seems like every day the papers, TV and web has doom and gloom about the property market and the UK economy and this week is no different: the average price of a home is down by 2% in June 2008 alone

The UK Government has a new scheme to lure more people into stepping on the property ladder called the MyChoiceHomeBuy Scheme. The first area to test this scheme is Lincoln, it means a property buyer can get an equity loan of between 15% and 50% which can be paid back monthly or all in one go if they choose to sell up. This will be available through selected agents in England intially. This scheme also means you can get £1,500 towards your moving costs and it also means you get 100% mortgages through selected lenders such as the Halifax.

The MyChoiceHomeBuy Scheme will be open to first time buyers AND other buyers, there are 1,000 properties up for grabs in the UK however priority will be given to keyworkers and members of the armed forces.

This will obviously have a knock on effect on the building trade, but how much impact will 1,000 home make when over 100,000 are required to reverse the trend of first time buyers being priced out of buying property?

If these schemes will be a success or just be a drop in the ocean will remain to be seen, some properties in the Uk have fallen by £20,000 already so will this mean that first time buyers can afford them? Probably not. First time buyers are not keen to be tied down to a long term mortgage, as they are ususally young and will have to move for work etc so they will still lose out.

With UK propety prices falling between 2.5% and 3.3% during the last year (and 1% during June 2008) the trend for ’sell to rent’ properties looks to be on the increase.

‘Sell to rent’ involves selling your property, rent another property while prices fall, and finally buy another property while prices are at their lowest ebb. Abbey say that 827,000 borrowers planed this route in the near future.

The only problem with this scheme is that with mortgage lenders not giving the number of mortgages out the number of suitable rented properties will be down, therefore the prices for rented accomodation will rise meaning you pay more for the same rented property. And of course at the end of the day you are still paying someone else mortgage!

Another problem with sell to buy is how long will this period last? and When can I buy again without losing out? Property experts consider 3-4 years to be the expected duration however I believe this is too much.

There is no magic way out of the present downturn, apart from staying put. While you should never pay more for a property than its market value, a house is an investment in the future rather than money in the bank. So selling, expecting further falls, is a short term measure!

Scotland, which had previously resisted the UK downturn, is set for its first average fall in property prices announced by lenders Nationwide and Halifax from their mortgages figures.

For an example, there are 50% more properties for sale in Edinburgh which has driven prices down by 10%. Many properties are now fixed price, while ‘offers over’ properties are only fetching 10% over asking price. This is of course after the boom in Edinburgh property prices after the completition of the Scottish Parliamant in 2000, causing prices in many areas to double or treble.

House prices in Scotland had previously risen while south of the border prices stagnated and dropped month on month by a few percentage points.

The Single Home Reports Scheme which was introduced only north of the border, has seen the expenses of sellers rise and made more sellers think twice about moving.

Location and age of property should be taken into account more than ever when considering buying property, houses in ever popular areas is still a great investment while you may need to re-consider holiday homes, new build flats with inflated price tags etc

The recent slump in house prices has caused a reduction in new home being built to a record low of 110,000 across the country planned for 2008. In the medium term this will cause more demand on existing housing leading to a bounce back in property prices.

Buyers with a imperative to move, first time buyers plus property professionals will all raise the demand for housing in the UK in the year to come.

With supply not meeeting demand it is only a matter of time untill prices start growing strongly again in the UK.

The average property price in the UK is £210,00 down just £1,740 on the previous month. Spain, the fourth largest economy in the EU, has an even greater problem the prospective construction of holiday homes has led supply to exceed demand and the property market fell by 7.1% during last month alone! Spanish inerest rates have risen by 11.1% in the last year.

One point that I think needs to be made regarding the current financial situation, is that Chancellor Alistair Darling based his budget 2008 figures on certain revenue from Stamp Duty which will now be down by 15% at least. This means he will have to fund this shortfall from somewhere else. The Northern Rock debacle has caused a chain of events which has resulted in the taxpayer bailing out a major lender and now will have to find billions of pounds from somewhere else to compensate for the lack of consumer confidence in the property market.

The total loss to the UK public will be of the order of £5BN!!!!

This drop in prices will last for around 4 years and take up to 20% in total off the average property price. Gordon Brown has a lot of thinking to do if he wants to win the next election, Tony Blair won voters confidence in the economy anf brown will be judged on ho he deals with a mess he helped create!!!

As with all property slumps there will be some areas worse hit than others, inflated prices in the capital seeing modest flats changing hands for millions, will hit London property prices hardest. The HBOS predicted that prices in London will fall by a massive 9%, the lender is planning a rights issue in the months to come, hoping to raise £4 billion to counteract falling sales of mortgage plans.

London was of course hardest hit in the 1980s when inflated prices caused negative equity for many.

The Council Of Mortgage Lenders last year predicted a 1% increase in average property prices and are now predicting a 7% drop in prices. Conservative estimates predict a 5-10% drop with the higest estimates reaching 20% for extreme cases!

Some thing to think on is that although property prices are on average 4% down on 2007 they are in fact 5% up on 2006 which, I think puts things in perspective! Prices are not rising as high as they were but have reached a ceiling where steady rises will apply.

The average property price is a huge 39% higher than in 2003, which tells its own tale!!! You could also consider the fact that if you buck the trend and move homne you will be losing a one end (selling) and gaining at another end (buying cheaper) so overall wont lose out too much…

The SBE (Society of Business Economists) has predicted that UK property prices will fall by up to 10% during 2008 and reach rock bottom in 2009 losing up to 20% of their value. They did however predict that prices would then get back to peak values seen in 2007 and start rising from that point onwards. However this may take up to 4 years….

UK estate agents saw an all time low of sales during May 2008.

With no end in sight to the Credit Crunch there will be no quick ‘ Bounce Back’ effect and people appear to be waiting out the situation rather than bucking the trend.

The Bank Of England has lowered and retained the mortgage rate in recent months at 5%, while this has not been passed onto the borrower by all lenders. This does not seem to have a very beneficient effect on the Uk housing market

This may be the time to either reduce the price of your home or indeed to wait out the next period and see what happens in the UK property market.

As the ‘credit crunch’ media hype goes into overdrive the papers were reporting that almost 2 million people in the UK were stuggling to pay their mortgages. In the early 90’s a record breaking number (hundred of thousands!) of home owners lost their homes due to the devaluation of the pound and rising unemployment.

With few people taking the option of mortgage insurance or employment insurance there are more people than ever at risk of losing their home…

This is not taking into account the fact that there are more people in the UK than ever with the population rising by almost 10 million in the last 10 years and the fact that mortgage lenders untill recently were handing outcrazy mortgages to anyone who applied.

I’m probably not alone in thinking that the media played a part in the so called ‘credit crunch’ hyping the thing untill it turned into what they wanted. If the news has negative news about house prices every night people are less likely to move home meaning sales will be down. It’s probably not what Gordon Brown needed but he is a victim of the reletaive success of the last 10 years inflating property values beytond sustainable levels.

Have you ever wondered where the the noisiest and quietest areas in the UK are? The Department For Environment Food and Rural Affairs have a new site where you can see what an area is like before you buy there. We have the Freedom Of Information Act to thank for letting us into these secrets that are gathered by government departments and retained on records.

Enter the type of noise you want to know about ie train, airplane, car etc and you can search regions in England getting results with usefull info on noise polution and known noise problems.

See for your self what they are saying about areas near you! Get the info!!!

See the BBC report on Noise Mapping in the UK

With the next Bank Of England interest rate announcement early next week the pressure will be rising for drop in rates to stave off a potential recession in the UK. During the last 5 years house prices have risen by over 50% which is almost 7x average salery! Mortgage approvals have dropped to their lowest ever level and recent drops in the lending rate have not been passed onto clients leaving the market fragile.

The constant media attention and Northern Rock have taken their toll on consumer confidence and left it low, The Bank of England have now compounded matters by saying that prices may fall by up to 30% and stay at those levels.

Now is not the time to buy property in anything less than a surefire area, buy to let is out the door and property abroad forget about it! or so they would have you think…if you have enough credit or equity it may be a great time to move in the months to come and get a bargain! Forget the Credit Crunch!!

Get details on the next mortgage rate change direct from the Bank of England.