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| Interest
rates 2005 - Latest news and information |
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| When
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| Will
your current mortgage lead you into debt later in life? - It
might be worth noting the housing price statistics according
to the Royal Institute of Chartered Surveyors... |
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November 2005
House
Prices Appear to be Picking Up!
Nationwide's
latest property survey found prices rose by 1.3% in October, raising
the annual growth rate to 3.3% from September's figure of 1.8%.
The society said August's cut in UK interest rates appeared to have
been key in lifting activity in the market.
In
October the average cost of a home was £157,107, a rise of
just 0.2% from the flat 3 months to September.
Novemer 2005
Is
the Housing Market Recovering at Long Last?
Indications
are that since the Bank of England cut interest rates in August,
thereby ending a trend of rising borrowing costs that started in
2003, the housing market has started to pick up again.
Figures published by the Bank of England yesterday showed a marked
increase in mortgage approvals in September and that mortgage lending
growth has also improved.
Economists however, are not expecting house prices to inflate much
due to soaring petrol and utility bill costs dampening comsumer
confidence.
"Most affordability ratios are still stretched and will
only improve gradually over the coming months," said Howard
Archer, economist at Global Insight.
"Meanwhile, the large number of available properties means
that buyers have significant choice, which helps their bargaining
position."
Nationwide is also reticent to pick up on any forthcoming market
leap. Most economists think the market is at a turning point and
that although it is likely to pick up, there is no room for significant
growth.
October
2005
Where
are house prices heading in 2005?
Will
it be a hard or a soft landing? After five years of unstoppable
price rises, the housing market has been showing signs of jitters.
Booming double-digit price rises at the front end of 2004 eased
off towards the end of the year. Will the market bounce back this
year, or are house prices heading downhill?
Five predictions for 2005 are summarised here.
October 2005
House
market 'turning the corner'
Demand
is rising and there are fewer properties on the market. House prices
look set to rise for the first time in 18 months, according to a
poll of chartered surveyors.
Rising demand from buyers and hopes of more rate cuts roused the
market in September, said the Royal Institution of Chartered Surveyors
(RICS).
House prices are now expected to rise marginally by the end of the
year.
Earlier this month, mortgage lender Halifax said the cost of property
had risen 1.8% in the last three months, helped by August's rate
cut.
Additionally, the amount of new property coming onto the market
fell in September for the first time in a year and a half, RICS
said. The upturn in demand and improved outlook on interest rates
has led surveyors to predict house price rises for the first time
since early 2004.
August 2005
Prices
Remain low in London
A
recent survey shows that house prices in the capital fell by a further
0.1% in August.
With the rate of house price deflation in London remaining constant,
annual house price inflation now stands at -4.8%, reducing the average
cost of £13,200 from the price of a house in the capital over
the last twelve months!
The average property value in London is now £261,000, compared
to £274,200 in July 2004.
Out of the 33 London boroughs, only four experienced price rises,
20 remained static, and nine saw house prices come down.
August 2005
UK Property
Market Experts say They Do Not Think a Crash is Imminent
Extracts
from BBC Online
Sales are down 30% this year but prices haven't followed suit as
we all know. House price inflation has slowed to a crawl across
most parts of the UK but property market experts say that they do
not think a crash is around the corner.
The latest surveys from the Land Registry and Office of the Deputy
Prime Minister (ODPM) show annual house price inflation falling
from almost 20% a year ago to about 5%.
The last time house price growth was so weak in the UK was between
July and September 1996 when prices rose by 5.2% to an average of
£73,559, according to the Land Registry.
Recently, mortgage lenders Halifax and Nationwide said that house
price inflation was lagging behind the level of wage rises for the
first time since 2001.
More
>>>
30 July, 2005 - Extract from the BBC
Property
pensions
New
rules allowing the purchase of property through a pension will be
inappropriate for most people, the government has admitted.
In a statement to BBC Radio 4's Inside Money, Revenue and Customs
said this type of investment, which will be permitted from April
next year, would only be realistic for those with the largest pension
pots.
The government warning comes despite much hype in the media about
the many tax breaks which will enable people to buy residential
property more cheaply from April 2006.
more>>>
June 2005
News: Sharp fall in house prices
Extracts from The Times 8th June
2005
House prices have suffered their sharpest monthly fall since October,
taking the annual rate of inflation to the lowest in four years,
said the Halifax yesterday.
In figures confirming that the property market has remained flat
since the start of the year, the mortgage lender said that house
prices fell 0.6% in May after a drop of 0.1% in April.
The Halifax said that the decline in May took the annual rate of
inflation down to 5.7%, from 7.8 % the previous month, the lowest
since 2001.
But the Halifax noted that the trend has been much lower in recent
months than the annual figures suggested. Prices have fallen in
three out of the five months this year and have declined by 0.1%
over the whole period.
Simon Rubinsohn, of Gerrard, the stockbroker, said that the data
pointed to a flat market. The Halifax predicts that house prices
will decline by 2% over the year, as high employment, low interest
rates and rising earnings levels cushion the correction to overpriced
properties.
Fears that house prices might suffer a more abrupt drop have receded
as the Bank of England appears increasingly unlikely to raise interest
rates again in the coming months.
May 2005
What effect would rising interest rates have?
In theory, higher interest rates should lead to a slowdown in the
growth in borrowing and spending. But much depends on the mix of fixed
and floating-rate mortgages.
The latest figures suggest that some 36% of borrowers are now on fixed-rate
mortgages, and this figure is rising as customers take heed of warnings
of rising interest rates. This suggests that many borrowers could
take an interest-rate rise in their stride.
A recent survey by internet bank Egg showed that 93% of borrowers
felt 'comfortable' with their debt levels and only 7% thought they
might be over-stretching themselves.
Meanwhile, there is growing evidence that the consumer boom is winding
down. The Association for Payment Clearing Services reports that credit-card
holders are paying off their debts faster than they are borrowing.
Repayments in the year to the end of February grew 12.5% to £9.3bn,
while spending rose just 7.3% to £9.7bn.
May
2005
Might the market crash?
If the current house-price bubble bursts, it will create widespread
financial instability as borrowers default on their debts. Colleagues
on the Monetary Policy Committee are not convinced that there has
to be a crash. The Netherlands and Australia both saw house-price
rises slow, not fall, after a period of rapid growth.
There are also important differences between now and the early 1990s:
inflation is low and unemployment is falling. Even if capital gearing
rises to new levels, this need only be a problem if interest rates
or unemployment were suddenly to rise much higher than anyone currently
predicts.
May 2005
Reported asset value increase by UKs second largest property group
Excerpts from a
Reuters article by Ben Harding
The country's second-largest property group, British Land Co. Plc,
posted a forecast-beating 15 percent rise in the value of its assets
on Wednesday, and said it saw the value of London offices growing
strongly.
The UK's largest property investment company by assets and second
largest by market capitalisation said the value of its assets would
have grown even more had the government not removed stamp duty exemption
for disadvantaged areas.
"We think the portfolio is shaping up nicely to produce growth
in the future," said Chief Executive Stephen Hester, who took
charge of British Land (BLND.L: Quote, Profile, Research) in November.
"We believe it its probable there will be a significant upcycle
in City property values in the next five years," he said.
He added in a statement that the likely introduction of real estate
investment trusts (REITs) was likely to ensure that investor demand
for property continued to exceed supply.
April 2005
Rating
Revaluation
All non-domestic property in England and Wales has been subject to
a revaluation with effect from April 1, 2005.
Statistics from the Valuation Office Agency (VOA) have shown an overall
increase in rateable value in England of 18% compared to 16% under
the previous revaluation in 2000.
March 2005
House
price fall imminent
A
Fall in house prices is all but certain, according to a report published
by a national estate agent. The affordability of homes is at its
worst in 13 years and house prices are estimated to be overvalued
by 19%, the research by Cluttons and the Oxford Economic Forecasting
consultancy says.
Price
falls of up to 4% are 85% likely by the end of this year, their
research claims. The report adds that there is only a 5% chance
of a 17% slump in prices in the next 3 years.
Central
London still has the healthiest residential sales market, with houses
overvalued by only 8%, according to the report. Last year the report
predicted that house price inflation would drop by 10% by the end
of the year. Prices rose by 15% overall last year.
March
2005
House price rises are "still slowing"
Times Online
Britain's
biggest mortgage lender has reported a fall in house prices last
month, contradicting rival surveys and casting doubt on hopes that
the property downturn has ended. >>>
March 2005
Housing market slowest in EU
Times Online
Housing markets across Europe surged last year with the only exception
being Britain, according to the RICS Foundation’s European Housing
Review.
House prices stagnated and mortgage demand fell significantly in Britain
in the latter part of 2004 after a series of interest rate rises.
In other European countries, however, property values, house sales,
mortgages and building all showed signs of strong growth.
France, Spain and Ireland maintained double-digit price rises, and
in Germany’s long-term stagnant market, demand for residential
mortgages grew. Belgium, Italy, and Portugal also saw price rises
between 5 and 8 per cent.
Foreign investors were cautioned to be prudent in new EU countries
in Central and Eastern Europe because of more precarious housing markets.
Predictions for Europe’s housing markets in 2005 were far from
bullish: the report said that the sluggish economic activity meant
that a housing market slowdown was more likely.
Low interest rates would continue to stimulate house price rises in
the first half of 2005, the report said. However Michael Ball, author
of the report, added: “Changes may occur towards the end of
the year as pressures for increases in eurozone interest rates grow.”
A report by the Association of Investment Trust Companies, out today,
agrees that confidence in the British market is fading. Private investors
are also now tipping the stock market to outperform the housing market
this year. This coincides with figures from Primelocation, the property
website, showing London and country house prices stagnating.
February 2005
House
prices still slipping according to Government figures
The Office of the Deputy Prime Minister says values fell 0.7% in December,
the latest available data, with an average UK home costing £178,906
– down from £180,126 in November. Average UK property
prices rose 10.7% in 2004 although London 's annual increase was only
3%.
The highest rises regionally were in north east England (up 20.5%
in 2004), Yorkshire and Humberside (18.8%) and north west England
(17.8%). Increases in the West and East Midlands and the south west
were also above average.
Other data from the ODPM suggest that detached houses fell in price
in December by 1.3% on average, terraced houses fell by 0.6% and flats
by 0.8%. Meanwhile the average price paid by first time buyers across
the UK in December was £145,408.
All ODPM figures are based on a sample of 25% of completed property
transactions. Because of the time it takes to compile the figures,
they do not reflect sales since the New Year. Some other indices,
based only on mortgage offers, suggest price falls have moderated
over the past six weeks.
February
2005
Campaign launched to regulate property prices
House prices should be regulated to allow more people to buy their
own property, a new pressure group claims.The House Price Control
campaign has been set up by Bob Goodall , who started the Save
Our Building Societies group in the 1990s.
He wants campaigners to lobby MPs and other organisations to highlight
issues such as availability and affordability. The launch came
after the Halifax bank revealed that average house prices were
too expensive for people on average incomes to buy in 90% of locations
throughout the UK .
Goodall says high house prices represent an ‘illusion' of
wealth resulting in higher peripheral costs such as insurance.
"A person only realises the wealth if they sell their home
then the 'wealth' is gone when they buy another one, unless they
move away [to a cheaper area]" he says.
Goodall wants MPs and property organisations to consider how to
control house price inflation, using government regulation if
necessary. "Regulation is a free tool for the government
that costs nothing financially," he said.
Limited supply of land and rising demand through a booming population
means that prices will continue to soar, he says. "With one
hand people work to raise their standard of living but lose with
the other as the cost of finding a home increases.”
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