December 2011
30th December, 2011
UK house prices edged up by 1% over the course of 2011: Nationwide
House prices declined by 0.2% in December,
but increased by 1% in 2011 as a whole, according to the December 2011 edition of the Nationwide House Price Index.
The price of a typical home is now £163,822, according to the report, with London seeing the strongest growth in 2011; but there was less regional variation in house prices compared with previous years.
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said: "The 1% rise in house prices recorded over the past twelve months could hardly be described as a strong performance, but against a backdrop of anaemic economic growth and a deteriorating labour market, UK house prices were surprisingly resilient in 2011.
"Resilience was less evident in other areas of housing market activity in 2011. For example, the number of mortgage approvals remained low, at just over half the longterm average.
"Although high rates of unemployment, falling real wages
and the uncertain economic outlook kept many potential
homebuyers on the sidelines, the supply side of the market
was similarly squeezed. Thanks to continued low interest
rates, the number of forced sales remained low. Together
with a dearth of building activity in recent years, this
prevented a glut of unsold homes from accumulating on the
market. This meant that although demand and supply were
both weak, they remained relatively well matched, providing
little impetus for prices to move strongly in either direction.
"2012 isnt shaping up to be much better than 2011, for the
UK economy or the housing market. There is no sign of an
end to the Eurozone crisis and, since the single currency
area is the UKs largest trade partner, this will continue to
weigh on our export performance at a time when the UK is
unusually reliant on international trade to drive its recovery.
"Deteriorating labour market conditions and elevated
inflation are already holding back household spending, while
austerity measures are restraining public expenditure.
Against this backdrop the UK economy is likely to expand by
less than 1% again in 2012 far below the 3% growth rates
that were the norm before the onset of the financial crisis.
"With the UK economy struggling to gain momentum,
labour market conditions are likely to remain challenging in
2012, deterring buyers from entering the housing market.
This may tip the demand/supply balance in favour of buyers.
However, there are few indications that a flood of properties
is about to hit the market, so tight supply conditions will
continue to provide some support for prices.
"The outlook is very uncertain, and will depend crucially on
how the wider UK economy performs. Nevertheless, as
things stand, the housing market in 2012 looks likely to be
characterised by low levels of activity once again, with prices
moving sideways or modestly lower over the course of the
year.
"There has been less variation than usual in house price
movements across the UK regions in recent quarters.
Annual price changes in 10 of the 13 regions were clustered
in a fairly narrow band between +2% and -2% in Q4. This
trend is also evident in the two measures of regional house
price variation shown below the range (the highest rate of
annual house price inflation recorded in a region during the
quarter, compared to the weakest rate) and the standard
deviation (which is a measure of how far price movements in
all the regions deviate from the average).
"However, two regions did stand out over the past 12
months. Northern Ireland was the main outlier, with house
prices falling by 8.7% in 2011 a marked contrast with the
picture of relative stability seen in the UK market as a whole.
Indeed, average house prices in Northern Ireland ended the
year at half the level prevailing at their all time highs in late
2007.
"At the other end of the spectrum, the London market
remained buoyant in 2011, with prices rising by 5.5% over
the course of the year. This is the second time in three years
that London has topped the regional house price
performance table. Prices in the capital are now just 1.6%
below their all time highs, while in the UK as a whole prices
are still 10% below their peak".
9th December, 2011
Renters on the rise haart forecasts steep rise in number of people renting over next twelve months
haart expects to see a dramatic rise in the number of people renting in the UK over the next twelve months.
One of the UK's largest independent lettings agents, haart is predicting a double digit increase in the number of people who will choose to become "professional tenants" and opt to rent rather than buy over the next few years.
The company says its forecast is borne out by the volume of applicants that it is seeing registering with its fifty-plus strong branch network, up over 10% in the last three months, and forecast to grow by a similar amount over the remainder of 2011 and well into 2012.
Andrew Benn, Managing Director of haart Residential Lettings explains: "We are seeing a real culture change in the UK towards letting with more people than ever before prepared to make a lifestyle choice and rent. And this isn't just restricted to people between the ages of 18-30. We're finding people well into their thirties and sometimes beyond opting to go down this route, particularly in London and the South East.
"This isn't to say that they don't want to buy their own home. It is more that with the continued economic uncertainty, they are delaying that decision, and the associated long-term financial commitment of a mortgage, until there is greater certainty in the country".
The trend towards renting has also increased pressure on the availability of property with some haart lettings branches seeing as many as ten potential applicants chasing every home. It is also reflected in the increase in enquiries from prospective landlords looking at buy to let as an investment opportunity, particularly with annual yields of between 5-10% per annum achievable in some parts of the country.
However, Andrew Benn doesn't foresee average residential rental prices climbing much higher, particularly given that in some areas, such as London, rents now account for 40% of people's annual income.
"We are likely to see a rise in prices in 2012 but nothing like the levels we've experienced in 2011. We are forecasting relatively modest increases, especially outside of London, as the market settles back down to something akin to normality after an unpredictable few months.
"But it is clear that the days of seeing renting as a short-term fix is over. Today renting is viewed very much as a lifestyle choice with many people making a conscious decision to rent for the medium to long-term, and in some instances for life, as we see on the continent".
6th December, 2011
Halifax says house prices fell by 0.9% in November - but with a modest pick up in housing activity
The latest issue of the Halifax's House Price Index - published today - reports an annual change of -1.0% in house prices, which were down 0.9% in November (compared with October) and down 0.6% annually on a quarter-on-quarter basis.
The figures contrast with recently-issued data from Nationwide, which for instance highlighted a 1.6% annual increase.
Key facts
•
House prices in the three months to November were 0.6% lower than in the preceding three months. This measure of the underlying trend was negative for the second successive month following three consecutive increases.
•
On a monthly basis, house prices fell by 0.9% in November. This continued the very mixed picture shown by the more volatile monthly figures. There has been an even split of monthly price rises and falls this year with five of each and one month of no change.
•
The average UK house price in November was marginally lower than at the end of last year. The average price in November was 0.7% lower than in December 2010 on a seasonally adjusted basis, at £161,731.
•
Annually, prices in November were 1.0% lower as measured by the average for the three months to November against the same period a year earlier. This continues the improvement experienced since May when prices were 4.2% lower and is the smallest annual fall since November 2010 (-0.7%).
•
Signs of a modest pick-up in housing activity. The industry-wide number of mortgages approved to finance house purchase - a leading indicator of completed house sales increased by 3% in October and was 13% higher than in October 2010. The seasonally adjusted total of 52,700 in October was both the highest this year and the highest since December 2009 (source: Bank of England).
Commenting, Martin Ellis, housing economist, said:
"House prices in the three months to November were 0.6% lower than in the previous three months. Prices fell by 0.9% between October and November. This followed October's 1.2% gain, therefore, continuing the very mixed monthly pattern seen this year.
"Overall, house prices have remained remarkably stable in 2011 despite the difficult and deteriorating economic climate and the substantial pressure on households' finances.
seen this year.
"The UK average price now is only marginally lower than at the end of 2010. In addition, activity has recently shown a few signs of strengthening a little. We expect the market to remain broadly unchanged in terms of both prices and sales over the coming few months as demand and supply conditions alter little."
4th December, 2011
UK house prices continue to creep up in November, according to Nationwide
UK house prices increased by 0.4% in
November, with the price of a typical home 1.6% higher than a year ago, according to the latest issue of the Nationwide House Price Index.
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:
"UK house prices increased by 0.4% in November, taking
the annual rate of growth to 1.6%, up from 0.8% the
previous month. The price of a typical home is now
£165,798.
"House prices have remained surprisingly resilient in recent
months, despite the deterioration in the economic outlook.
But, with the UK economic recovery expected to remain
sluggish well into 2012, house price growth is likely to
remain soft, with prices moving sideways or drifting
modestly lower over the next twelve months".
"Demand conditions remain extremely subdued in the UK
housing market, with the number of housing transactions
and mortgage approvals still well below their pre-crisis levels
and their long-term averages.
"Moreover, many of the factors that underpin the demand
for homes have deteriorated further in recent months. For
example, the UK economy lost almost 200,000 jobs in the
three months to September similar to the pace of job
losses seen during the depths of the 2008 recession.
"At the
same time, wage growth slowed to 1.7% - less than half the
pace of inflation over the same period. Similarly, consumer confidence, which also influences the
willingness to make a major purchase, remains extremely
depressed. Nationwide's index of consumer confidence fell
to a new all time low in October (see chart below).
"Given the challenging economic backdrop, much of the
current resilience in house prices reflects the lack of supply
on the market at present. Indeed, the pace of building in
recent years has fallen well below the pace of household
formation especially in England.
"In the ten years to 2008, household formation in England
averaged around 170,000 per year, while new dwellings
construction were close to 145,000 per annum - a deficit of
a quarter of a million units over that ten year period. Ultra
low interest rates have also played an important role in
supporting the market since 2008, by helping to limit the
number of forced sales and preventing a build-up of unsold
homes on the market.
"The recently announced Mortgage Indemnity Scheme,
which aims to boost first time buyer demand for new build
properties by reducing the deposit requirement, offers the
potential to boost housing demand from current subdued
levels, especially if implemented against the backdrop of an
improving economic environment.
"However, it is important that policy efforts are effective in
boosting housing supply especially given current
population trends. For example, government projections
point to an average annual increase in household formation
in England rising to around 240,000 a year over the 2013 to
2023 period.
"Current rates of building activity are below what would be
necessary to meet housing demand, if these population
projections prove accurate. For example, in the four quarters
to Q2 2011, 107,530 new dwellings were completed in
England, less than half the volume required under this
scenario.
"Similarly, even returning to the rates of building seen in the
ten years before the financial crisis, around 150,000 units a
year, would still be below the required rate of construction.
However, it is reassuring that steps are being taken to try to
address this issue".
* Seasonally adjusted figure (Note that monthly % changes are
revised when seasonal adjustment factors are re-estimated)
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