House prices in the UK fell again in November for the 5th month in a row but dont worry, compare the figure 12% to 17% for the same time in 2007 and a huge 30% in 2008! The run up to Christmas is not a traditionally strong time for property sales with a down turn in viewings an sales and everyone going into hybernation for the 6 weeks of the festive season, the most important thing is how will the market fare in 2011?
The best bet from the most reliable predictions dont offer much in the way of hope, 2011 is going to be more of the same, a slow sluggish progression with prices stalling at current levels unless driven by a jump in mortgage level, the BOE are not winding everyone up for as raise in the mortgage rate so we can expect many sellers to stay where they are. The Chamber Of Commerce are predicting a general upturn for 2012 with growth of over 2% predicted.
Selected regions are bucking the trend but the picture for property, to find out what house prices are doing in your area use House Price Spy!
Average house prices fell by 0.8%, making the fifth consecutive monthly fall. Mortgage approvals also fell to their lowest levels since February to just over 47,000. This figure is half of the pre-2007 average of around 90,000 approvals.
The recovery of the finance sectory which was projected has stalled, growth is not as expected and to some extent this is the fault of the industry, the figures support the view that money is not being offered for mortgages despite the amount of total borrowing in the UK actually rising, the low mortgage rate has a disincentive effect which means that anyone who does not have one will not get as good a deal and few people that dont will now get one which was not meant to be the outcome of the changes which came in after 2007.
So not very good, during the short span of 2010 we have seen the bright hope that we would see a full recovery during this year gone to be replaced by EU countries falling like dominos, with millions of pounds of our money and panic in Brussels because they cannot agree their budget…
The last vestiges of any idea that the banking crisis was confined to the UK, US and anywhere those two have their money invested is well and truly over. Ireland, after a few days of bluster to the contrary have accepted a 90 billion Euro bailout weeks after Greece did the same thing, Portugal are the latest EU member country to be linked with a bailout.
It seems there are no immunity to the present crisis, it seems EU countries are suffering by being linked in with weak economies with are too dependent on stronger economies, stability is slowly returning to the UK with the US still in crisis, it seems our European partners are starting to suffer just as we are moving upwards.
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First time buyers have returned to the UK property market, with a large increase in proportion of first timers due to falling prices, and the preception that prices will fall further in the months to come. If public opinion is anything to go by we are sure to see another fall well into 2011, that will see the dreaded double dip.
Good news for first time buyers, bad for anyone planning to sell their property in the next year or so. The market had been getting a bit more stable, if not rising back to 2007 levels, with larger numbers of property on the market their was less scope for rapid fluctuations, but with prices dropping again this trend is not set to last. While the public think prices will fall, they do not obviously think this fall will last and are not throwing their cards in just yet and selling up.
As mentioned the previous government spent a vast amount of our cash on teasing First time buyers into the market which was mostly wasted since there was not the finance on the market to fund them, many of the options which first time buyers could have taken advantage of were removed leaving buyers with money but no mortgage, rather than mortgage and no money which the legislation was mean to protect.
Of course if the market falls enough, and the finance industry does not prevent it, first time buyers will be pushed up the property ladder by default. The only point of giving artificial assistance to first time buyers was to boost the overall numbers of buyers on the market to boost the market itself, could our money be better spent elsewhere?
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The media have been feasting on the projected cuts to be introduced in the next few years, you can hardly have turned on the TV without doom and gloom about what is going to happen to the country, but there is a much more serious influence for every household in the UK. Mortgage lending is down by 10%, and the finance industry has promised to make it much harder to get mortgages in the UK. The lessons of other countries (Germany to name one) and previous downturns have not been learnt it seems.
Rather than protecting the country from another 2007 style downturn by limiting the amount available for UK home owners, the lack of available finance is certain to see another drop in houses in the UK, rather than drawing in first time buyers and those priced out of the housing ladder the past shows that these are just the type of buyers who will be priced out of the market first, all the billions the previous government spent on first time buyers will be wasted and every home owner in the UK will see their investment suffer.
The market is set for a dip, the latest predictions are that there will be falls into 2011, if we artificially limit mortgage lending we will certainly cause a second panic.
The average property price in the UK fell for the third month in a row, with the number of properties entering the market (the word flooding has been used quite a bit) prices are being pushed downward as thousands of sellers test the market across the UK.
Buyers are reported to be described as ‘cautious’ viewing more properties than before and of course considering offering less than the list price.
One of the policy makers for the Bank of England, Andrew Sentance, stated that the BOE consider the current climate (Winter 2010) as being ‘volitile’ rather than a turndown in prices, and will not take pre-mature measures to stifle the slower than expected recovery by changing their low interest rate policy, the mortgage rate was held at 0.5% again last month.
In the news this week, 25% of buyers are late underbidding or ‘gazundering‘, buyers feeling justified in offering less now since prices have been falling in recent times. As mentioned the 21st century housing boom was partly based on the rental boom, many of whom are now selling up and these are the properties which are now flooding the market, apart from that many regular home owners are unable to wait until the next projected rise in prices in 2011. The average property price fell by around £6,000 in the UK last month and this trend is now expected to change before the end of 2010.
In the last couple of months mortgage lending has falled by over 10% and if FSA regulations come into force the number or mortgages numbers will decrease even further, sellers are adding all these conditions together and finding that the time is right to sell up if possible.
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UK property prices paused during September 2010, despite fears that government measures and the end of rental boom would impact on prices seem to be unfounded so far as averages over the whole UK hold in the last month. The only region of the UK which seems to be falling is Scotland where prices have tumbled by over 3.4% in the last 3 months.
The average 6.7% gains that the UK have seen during 2010, are not expected to increase but the increase in prices is slowing, the average house price in the UK is currently £167,423. The number or mortgages granted is falling 31,767 were granted last month which was down 10% on the previous month.
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