Property monitor
Property prices continue downward trend in May
Tuesday, 10, Jun 2008 03:59
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 declined faster in May.
Nationwide and Halifax both said house prices continued in their run of negative results during the month.
Despite the housing market decline, young buyers are still being priced out of a place on the ladder, studies have shown. Rural areas are particularly vulnerable, with some communities in Wales facing a 'lost generation' unless affordable housing can be provided, according to a report.
Meanwhile, homeowners are unlikely to receive relief from the Bank of England from high mortgage repayments anytime soon.
The Bank of England monetary policy committee held the interest base rate at five per cent again as inflation rose over the month - but Bradford & Bingley announced it would raise its rates anyway.
And this month housing minister Caroline Flint accidentally revealed the government's concerns about property, with values thought to fall between five and ten per cent this year "at best".
Hometrack HPI
House prices fell for the eighth successive month in England and Wales during May, Hometrack has said.
Research from the organisation finds average prices were down 0.5 per cent during the month, following a 0.6 per cent fall in April.
Average prices fell in 53 per cent of all postcodes, with the sharpest falls located in East Anglia and the East Midlands. Just 92 per cent of properties sold now reach their asking price, down from 93.5 per cent in March.
"It is too early to say whether the level of monthly falls will now start to moderate as this will require an improvement in demand and sales agreed which are both linked to overall buyer confidence," comments Richard Donnell, Hometrack's director of research.
"The current trends in the survey indicate that pricing looks set to remain under downward pressure over the coming months."
Halifax HPI
May: House prices fall 2.4 per cent. Annual house prices fall 3.8 per cent.
New research from the Halifax finds average house prices in the UK slipped 2.4 per cent during May.
This follows drops of 1.3 per cent in April and 2.5 per cent in March - which was the largest drop recorded since 1992.
As a result of the sustained monthly falls, annual house price inflation remained in the red, with year-on-year declines now totalling 3.8 per cent.
"The decline in prices is caused by the difficulties created for potential house purchasers by the rapid rise in house prices in the last few years, a squeeze on spending power and the reduction in credit availability," said Martin Ellis, Halifax chief economist.
Nationwide HPI
May: Property prices slip by 4.4 per cent. Nationwide index reports fall for seventh consecutive month.
Nationwide building society said prices fell 4.4 per cent in May, the seventh consecutive monthly fall, representing their biggest drop in 17 years.
According to Nationwide, the average property in the UK now costs £173,583, down from the £178,555 recorded in April.
"Problems in credit markets have clearly been the trigger for changing fortunes in the housing market and while it is never wise to place too much weight on one data point, the apparent speed of the adjustment may lead the monetary policy committee to look more closely at the balance of risks to inflation in the medium term," commented Fionnuala Earley, Nationwide's chief economist.
Rightmove HPI
May: Asking prices fell 0.1 per cent. Rightmove says this represents a "sharp reversal" from last month.
Asking prices for houses in England and Wales were up 1.2 per cent in May, Rightmove has claimed. The group found the annual increase in asking prices has recovered to 2.2 per cent.
This is up from 1.3 per cent in April.
However, this does not mark the return a positive market, according to RightMove.
Instead, the organisation argues 'discretionary spring sellers' of larger properties in the south of England have pushed up average national prices.
"New sellers can see the storm clouds overhead but seem to believe it's only raining on other people. The reality is it started raining last September, and has reached storm force in the last month," explained Miles Shipside, commercial director of RightMove.
Bank of England lending figures
April: Number of mortgages approved falls to record low.
Mortgage approvals for house purchases slumped to a record low in April, the Bank of England has said.
In total there were 58,000 mortgages approved for house purchase - a key signal the property market is slowing - worth £8.3 billion.
This compares with 73,000 mortgage approvals in January and 115,000 in May 2007.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics), said: "The latest weak data on mortgage approvals highlight the continuing problems facing borrowers trying to secure finance to purchase property.
"Lenders are continuing to tighten up on the conditions accompanying new loans making it hard for first-time buyers to take advantage of the modest fall in house prices seen over the part few months."
Rics housing market survey
In April, 95.1 percent more Chartered Surveyors reported a fall than a rise in house prices, an increase from 79.4 per cent in March..
The regional picture is even more depressed with surveyors in East Anglia, the north and north west unanimous that house prices are falling, Rics said.
Demand continued to weaken as new buyers' enquiries fell further and 68 percent more chartered surveyors reported a fall than a rise in new buyer enquiries, up from 51 percent in January.
Rics spokesperson Ian Perry said: "Although most surveyors are now seeing price declines, the extent of the fall, is at this stage, quite modest.
"The real issue is the collapse in the number of housing transactions. This has very real implications, not just for the property industry but also the high street and the wider economy."