House Price Spy Blog

When you think of all the money you have spent during your lifetime it can be mindboggling! The amount of money it takes just to survive, but what are the top ten expenses that we need to stump up for?

Property - Mortgage or rent.

Kids - Food, repairs, education etc

Car - Purchase, running costs, petrol, repairs etc

Holidays - Flights, food/drinks etc

Insurance and pensions – Home, life etc

Electrics and electronics – Gadgets, kitchen appliances, domestic, av, IT etc

Clothing and footwear – Think for all the thousands you have spent on this during your lifetime!

Food and drink – The average person in the UK spends more on alcohol that they do on food! The average person in the UK spends more on junk food than any other place outside the US!

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The mortgages figures for April have been announced by the Council of Mortgage Lenders. The number of mortgages has risen to over 35,000 which is the highest since October 2008. This is a rise of around 16% in the Figures for March 2009.

I think we can agree that the rate with which the economy in general is contracting is decreasing…which means we are near the beginning of the end in terms of doom and gloom. All of the factors which affect us have to be balanced up rather than just the temporary value of our house, like employment levels, taxes, inflation, new businesses opening and a million other things.

The shortage in properties for sale means that prices rise, but when prices rise more people will enter the market meaning prices will then drop as there are more properties on the market and supply outstrips demand. Add in the fact that the summer is the season when most of us move home and you have to take the figures with a pinch of salt!

For the last few weeks I have been seeing a mixed bag of news, are we seeing the lowest ebb of the property slump or is there a further fall to come? Will the recession really hit in 2010? Without a Mystic Meg type crystal ball its all guess work at this stage (although the smart money is on a gradual easing of the situation during the next 12 months) but what can we take from the crisis? What lessons are there to be learned?

Buyer beware! This property can damage your health! Never, ever pay more than a property than its worth. Never buy in an area you are not sure of. Dont buy a property to rent you would not live in yourself. Dont make unusual alternations to properties. Dont borrow more than you can pay back if the worst should come to pass, dont borrow as much as you can get. Do play devils advocate but dont plan for disaster!

Dont borrow money from financial instiitutions and expect them to have a global or ‘bigger picture’! Plan for change by solid investments rather than short term money makers.

Dont get carried away with the current climate, dont overstretch your finances in the name of ‘who dares wins’ and expect to be bailed out! Dont withdraw your savings from a previously solid building society at the first sign of trouble! Dont buy newspapers that preach doom and gloom to sell copies!

OK, so the last few are subjective but you get the picture. We have overextended ourselves, believed everything we were told blindly and basically and let the media drag us into the fiasco. The fact that it does not now seem as dire as once thought just says to me that the media created it in the first place, like dominoes the finance industry then house prices, then jobs all fell!

The average property prices for last month (May 2009) have seen a rise of around 2.6% which is the largest for the best part of a year. However before we get the champage on ice this may refelct the fact that summer is the busy season for moving and there is usually a rise at this time of year due to the convenience of the weather etc.

Another story in the papers is that ex MP Hazel Blears sold two of her second homes and pocketed £13,000 in capital gains tax. Now that the whole thing has come out she has pledged to pay the money back, it also turns that Gordon Brown knew all about these deals. Blears claimed her second home (under expenses) as her first home when claiming tax and ‘flipped’ them to profit from the regulations.

God bless the web, it it was not for modern information technology we would never have know. While the whole furore is getting dull to most people the gravy train seems to be over….MPs actually get £100,000s as balloon payments when they resign so not quite over yet!

Many papers are reporting that the fall in the number of properties for sale of the last year (even if numbers are picking up now!) has led to an increase in Gazumping. The demand for suitable housing now outstrips demand and this dreaded word is back! Gazumping, or reneging on an oral agreement to sell when anther buyer comes in with a higher offer. Untill you have everything in writing from your lawyers nothing is settled! Anyone who has been in the position of being told that their new home is not theirs anymore will sympathise!

Everyone has been there, the pressure is off the biggest investment of your life is all settled and overall your happy with your dream home! Whether you actually got a bargain or not the emotional investment of buying a property means that having your offer accepted is like having a load removed from your shoulders. Having to start the process over again because someone went behind your back and offered a token amount of money more can be heartbreaking and costly. The only good points are that at that point your know what you want and are ‘in the zone’ in terms of watching the market and visiting properties. Still time is money and you could be better employed than hunting for a second time…

Gazumping has always been around (except in Scotland of course) now due to the fall in actual numbers of propeties for sale it is rearing its ugly head again. Is there anything the government can do? The answer to that is no, until papers are signed by both sides nothing is concrete. However the code of practice of estate agents and lawyers who facitiate (and profit from) this practice could be changed to respect good practice rather than profit first and foremost. You would get a bad name in business if you did things like this, why would it be acceptable in personal life. However you will never change some people.

While your home is the biggest investment you make and losing a big wack of cash on that can make all your other outgoings seem like a pittance, the economy is a larger picture that has many facets one affecting another so it pays to look at the bigger picture. The average sold property prices for May 2009 were up a few percent on the previous month but more importantly other indications are also good for an economic recovery during the next year or so.

Just in time for summer the Pound is well up against both the Dollar and the Euro, if you are planning to get away your cash should go further.

Mortgage lending for new properties is up for the 4th consecutive month.

Renting property average rents have started to rise after 9 consecutive months falling.

The asking price of propeties for sale is now rising, showing confidence is growing in the the market.

Overseas investers are seeing the UK as a good steady investment and record numbers are entering the UK market.

OK, so mortgages never went away but the crazy deals that almost brought the world to its knees are back on the market. Lloyds TSB have just released a 95% ‘loan to value’ mortgage, for first time buyers. The only proviso being that family members must find 20% of the value of the property which sits in a bank account, the people despositing the money would make regular 3.5% interest on it and this money held for as long as the mortgage runs.

High value mortgages (and irresponsible lending between banks) led us where we are now, do we really want to go back to this? Mortgage approvals are up in the last month or so and with interest rates still at their lowest for ages lenders are looking to raise their profits up after the losses that have been felt by everyone in the finance sector. This is where the government and IFA need to step in and legislate and regulate like they are meant to.

We were assured that the UK would never return to the problems of 2008, are we falling back into the bad practices that lost the UK billions? As we now know what one company does effects others and the public, the government will bail out companies who hold mortgages for the public so this effects us all. Private companies with boards, share holders and giant profits cant be let alone a free market if they expect to be bailed out with public money…

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The average asking price for UK non-commercial properties rose by around 2.4% (This figure rises to over 5% for regions like East Anglia) which represents the largest rise for more than a year. I stress this was asking price rather than sale price, but this surely shows that confidence is returning to the market during the peak selling/buying period of summer. Whether this is just the busy time of the year and not an upturn it still helps the industry and the finance industry.

There will be plenty of deals done during the next quarter, people are not accepting the recession bunker mentality-unless you or your partner lose your jobs then belt tightening will be all that is required. The number of mortgages approved rose to a 10 month high, so there are still sales being made.

The fact that prices are down means there are more overseas buyers and government schemes to put government workers into housing and the usual speculators. Low prices are just another challenge, unless you are selling up and NOT buying such as pensioners, in which case the rapid rise during the last 10 years will have been misleading. More importantly loss of jobs and the pensions crash has hit millions with a real re-think of their future needed.