Property monitor
Monday, 12 May 2008 00:01
Property prices continue downward trend in April
The property bureau at inthenews.co.uk takes a look at the most recent house price indicators to let you know the current state of the British housing market.
The UK housing market continued its decline in April.
April saw further predictions of housing woe, with both Nationwide and Halifax saying house prices fell compared to a year ago – the first annual fall in over a decade.
Monetary policy committee (MPC) member David Blanchflower also warned house prices could fall by as much as a third in the next few years unless dramatic cuts in the interest rate are made. Unsurprisingly, Mr Blanchflower wanted to cut rates in April to 4.75 per cent, but was outvoted and the rate was only dropped slightly to five per cent.
In an effort to control the crisis, the chancellor met with Council of Mortgage Lenders (CML) representatives to discuss implementing some key strategies in order to help those most at risk of losing their homes in the financial squeeze.
As a result of the meeting, the government has announced plans to develop a new debt advice service with the National Housing Advice Service; train specialist staff at Citizen's Advice; and arrange free legal representation for those facing a court appearance.
Financial Times HPI
Average house prices in England and Wales fell by 0.2 per cent in April, according to the Financial Times (FT).
This is the second consecutive monthly fall, the first time this has occurred since April 1995.
"The FT index reports on final transaction prices, as distinct from the asking and mortgage offer prices reported in all but one of other series," said Dr Peter Williams, chairman of Acadametrics, which carried out the research for the FT.
"Regardless of stage in the transaction process, all five of the indices that have reported on April to date record negative prices. This suggests we will continue to see a downward trend in the short term at the very least."
Halifax HPI
April: House prices fall 1.3 per cent. Annual house prices fall 0.9 per cent.
Property prices in the UK fell by 1.3 per cent in April, according to the latest house price index from Halifax.
As a result of the fall the annual change in prices headed into the red, with average prices down 0.9 per cent year-on-year to April - the first annual fall for over twelve years.
Ahead of the news, Halifax had taken a decision to downgrade its forecast for 2008, and now expects "modest single-digit fall" over the course of the year.
"Price falls should be viewed in the context of the substantial price rises over recent years," said Halifax chief economist, Martin Ellis.
"UK prices nearly doubled 190 per cent over the ten years to August 2007. A growing economy, high employment levels, low interest rates and a shortage of new homes underpin housing valuations."
Nationwide HPI
April: Property prices slip by 1.1 per cent. Nationwide index reports fall for sixth consecutive month.
Nationwide building society said prices fell 1.1 per cent in April, the sixth consecutive monthly fall, and dragged annual growth into the red – with prices down one per cent since April 2007.
According to Nationwide, the average property in the UK now costs £178,555, down from £179,110 in March.
"April's fall in prices continues the trend of the last six months and reflects the weakening sentiment in the market brought about by poor affordability and tighter financial market conditions," explained Fionnuala Earley, Nationwide's chief economist.
Rightmove HPI
March: Asking prices fell 0.1 per cent. Rightmove says this represents a "sharp reversal" from last month.
Average asking prices for residential property in England and Wales fell by 0.1 per cent in March, according to property website Rightmove.
This represents a sharp reversal of the 0.8 per cent growth in asking prices recorded in February.
As a result of the fall, annual growth has slumped to 1.3 per cent, the lowest figure since July 2005, and down from the five per cent growth recorded in February this year.
The average asking price for a property in England and Wales is now £239,521 – just £134 lower than last month's figure of £239,655.
Bank of England lending figures
March: Number of mortgages approved falls to lowest level in 15 years.
Mortgage approvals for house purchases were limited to just 64,000 in March.
This was the lowest level since the Bank of England began keeping comparable records in 1993, and down from 72,000 in February and a 2007 peak of 115,000 seen in May last year.
"The news mortgage approvals dropped to a record low of 64,000 is hardly surprising given that lenders have been aggressively scaling back on the provision of finance to home buyers," commented Simon Rubinsohn, chief economist of the Royal Institution of Chartered Surveyors (Rics).
"Indeed, it is improbable the bottom of the cycle has yet been reached given the latest announcement that Nationwide is following the lead of other lenders in requiring new borrowers to now put down at least a ten per cent deposit to secure a mortgage."
Ministry of Justice repossessions data
The number of mortgage possession claims in Britain has soared, the government has revealed.
During the first quarter of 2008 some 38,688 claims were issued by UK lenders, the Ministry of Justice said.
In comparison some 35,662 mortgage possession claims were issued in the final quarter of 2007 – representing an increase of 8.5 per cent.
Land Registry
March: House prices in England and Wales fall 0.4 per cent.
Official house price data from the Land Registry has shown house prices in England and Wales fell by 0.4 per cent in March.
This monthly fall sees annual growth slip to 3.6 per cent, down from 5.3 per cent in February.
The Land Registry also finds sales volumes have continued to decline – a clear indication of a depressed market.
In the months October 2007 to January 2008, transaction volumes averaged 81,926 a month. This represents a 26 per cent decrease from the same period last year when sales volumes averaged 109,969 per month.
Rics housing market survey
In March, 78.5 per cent more chartered surveyors reported a fall than a rise in house prices, an increase from 65.7 per cent in February..
The Rics house price balance dropped for the eighth month in succession with 78.5 per cent more chartered surveyors reported a fall than a rise in house prices, an increase from 65.7 per cent in February.
This figure has exceeded the historical low of June 1990, when 64.5 per cent more chartered surveyors reported a fall in house prices and is now the lowest figure since the survey began in 1978.
In addition, demand continued to weaken as new buyer enquiries fell further, with 49 per cent more chartered surveyors reported a fall than a rise in new buyer enquiries, up from 39 per cent in January.