House Price Spy Blog

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.

Remember when every mortgage advert mentioned Mortgage Repayment Holidays? While you wont get them as add-ons to your new mortgage many people are checking the small print on their loan and taking the option to have a year or even a few months out of payments at crucial times.

Mortgage lenders probably wish they had not offered these and in the current climate we have to take any opportunities we get!

Apart from Mortgage Repayment Holidays we also recommend shopping around for your mortgage and getting advice from a finance professional to give you the best advice. While it may cost you a bit it could save you thousands over the term of your mortgage.

Many people are taking longer mortgages on a fixed rate, but remember that the current problems will not last for ever and then you might regret signing up for 10 years!

So check the small your small print on your mortgage whether you could be take the pressure off with Mortgage Repayment Holidays!

The Scottish Executive are handing all first time buyers a helping hand up onto the property ladder by lending between 40% and 20% of the property value through a registered Social Landlord.

This will give much needed assistance to first time buyers who are short of a deposit or struggling to get a larger enough mortgage or are on low wages. The equity will be shared by the buyer and the Housing Association.

Whether owners will want to have part ownership of a property will remain to be seen…

The popularity of this scheme North of the border will determine whether it is expanded to the rest of the UK.

Find out more about the Scottish Supply Shared Equity Agreement Scheme

How many repossessions are the credit crunch going to cause? Of course we dont really believe all the hype the media has been trying to propagate, but with a drop in house prices comes negative equity which is where repossession comes in. While the recent developments in finance, and mortgages in particular, have tried to deal with overpriced and overvalued property paid for by over mortgaging property there are still plenty of people who face having their homes repossessed.

It goes without saying you should think twice about overmortgaging your property, not taking out remortgages without good reason, paying more than a property is worth and over stretching your finances in other areas. If you do get into trouble then the first stop should be to rationalise your finances and obviously get in touch with your lender stating what your position is. Even after repossession proceedings start you can claim the property back during negotiations between lenders and borrowers. While lenders can make money back from repossession these are bad for business so they try to keep these to a minimum. The recent developments in the US finance industry have been as a result of stricter regulation of borrowing and have led to the end of 100% mortgages and many special deals that were offered.

Buy to let borrowers can even be hit with top up payments to keep their borrowing at a certain percentage of the total value and this is pricing many out of that market

The Halifax has revealed that the UK property market has suffered the Biggest price drop since 1992. The average price drop will be around 5%, The average house price in the UK is £191,000 rising from around £60,000 in 1992.

While house prices are down unemployment is down to a record level and property prices are driven by the labour market so these figures are seen as being an leveling out of inflated property prices.

First time buyers will need a downpayment of at least £10,000 to get onto the property ladder these days with the demise of 100% mortgages and many of the special deals the lender used to entice borrowers into taking the plunge.

Government legislation comes into force today which could see many ‘buy to rent‘ landlords selling up and place their propeties on the market, the rate of Capital Gains Tax has been cut from 40% to 18% (over value of £9,600) in the recent budget. This could lead to even more properties on sale, lowering prices still further. Good for buyers, bad for sellers.

With contraints being put on credit given out by lenders, many are feeling they want to get out and this change in Capital Gains Tax is the perfect reason. On a national scale house prices dropped by 2.5% during March.

Bradford & Bingley and HBOS have announced that they require ‘buy to let’ borrowers to top up their deposit if their mortgage rises above 85% of the value of the property and many small scale lanlords are bailing out.