Property monitor
Friday, 07 Sep 2007 08:59
What is the current state of the British housing market
InTheNews.co.uk takes a look at the most recent property price indicators to let you know the current state of the British housing market.
The British housing market is entering a new period of uncertainty as question-marks emerge about the extent of the current slowdown.
The dramatic increases in property prices seen throughout 2006 have well and truly come to an end this summer, but the grind to a halt has not been complete and there are real differences among experts about what the market is going to do next.
Many on the ground predict negative growth in the next 12 months, with the five interest rate rises in the 12 months to July this year enough to drag down purchasing power among the country's buyers.
Others like the mortgage lenders are more upbeat, while some prefer a middle course of a return to stable normality as the likely outcome of the market's course in 2007.
The latter appears to be the most likely turn of events, but as usual there remains a dark cloud looming over the market to keep homeowners awake at nights.
This time it is not the dreaded home information packs which are causing commentators to get the jitters. Instead the dreaded volatility of the global markets, caused by the US sub-prime mortgage market credit crunch, is a potentially serious worry for the UK economy.
At present the situation is nowhere near bad enough to begin to have an effect, but some are warning that a deterioration could have a negative impact on the lives of both buyers and sellers.
Halifax HPI
August: House prices rise 0.4 per cent. Three-monthly increase falls from 4.5 per cent in March to less than 0.5 per cent in August.
Martin Ellis, Halifax chief economist, said: "While the market remains robust, this provides further evidence that house price inflation has slowed since the beginning of the year.
"The downward trend in house price growth is expected to continue over the remainder of 2007 as the five interest rate rises since last summer have an increasing impact on household spending and housing demand."
Nationwide HPI
August: Property growth improves to 0.6 per cent. Annual change continues single-digit fall to 9.6 per cent.
Nationwide's chief economist, Fionnuala Earley, explained: "The expected slowing results from three main factors, each of which have been around for some time. First, weaker affordability, as house prices continue to grow more quickly than earnings; second the effect of higher interest rates and inflation on consumers’ pockets; and third lower house price expectations."
Rightmove HPI
August: Asking price increase rate doubles to 0.6 per cent. London asking prices slip for first time since August 2006.
Miles Shipside, commercial director at Rightmove, commented: "This much slower rate is consistent with prices and the market starting to adjust to the increased costs of home ownership. It finally paves the way for a return to a sustainable market without the need for further interest rate rises, though many buyers will still face affordability problems."
Hometrack HPI
August: House prices unchanged. Lowest monthly rate of growth for 20 months.
"Buyer confidence has been weakening on the back of increased affordability pressures over recent months but the turmoil in the global equity markets has added a new external dimension," Hometrack said.
"If this continues it is likely to further undermine market sentiment which will drive weaker levels of demand into the autumn and further undermine the rate of house price growth."
Land Registry
July: House prices in England and Wales up 0.1 per cent over month. Average house on the UK market currently priced at £181,460; annual increase of 8.8 per cent.
"The growth rate divergence between London and the rest of the country persists," the Land Registry pointed out.
Royal Institute of Chartered Surveyors (Rics) housing market survey
July: 12.6 per cent more chartered surveyors reported rise rather than fall. Up from 10.6 per cent in June, but surveyor confidence in sales turns negative for first time since March 2003.
"The combination of softening demand and supply is causing market conditions to weaken further. Buyer activity has pulled back a little over fears that we may have seen the top of the market," Jeremy Leaf, Rics spokesperson, said.
"With interest rates perched at 5.75 per cent and a jump to six per cent a strong possibility, aspiring first-time-buyers are continuing to rent until the market trend becomes clearer."
British Bankers' Association (BBA) mortgage lending
July: Gross mortgage lending up 12 per cent to £21.3 billion on July 2006. Boosted by higher levels of re-mortgaging activity.
"Lower approvals volumes simply reflected the seasonal pattern, so we expect the stable trend in the banks' lending to continue over the next couple of months," BBA director of statistics David Dooks said.
Council of Mortgage Lenders (CML) mortgage lending
July: Gross mortgage hits £34.4 billion. One per cent month-on-month fall, but record figure for July.
"As we move into the autumn the cumulative effects of… [the recent interest] rate rises will become more pronounced, and we expect this to feed through to lower levels of mortgage lending as the year progresses," the CML said.