UK property market slows; Analysts say to bounce back again

UK house price growth has again slowed down, third month in a row. Last month, across the country, the prices grew by 8.5 percent, lower than that of October.

In October the house prices rose by 9 percent, if followed the data of Nationwide.

Even though November saw a small growth in house prices, but gradual slowdown is a matter of concern. It is also said the London’s housing market is coming down more significantly than the entire country.

According to chief economist at Nationwide, Robert Gardner, in recent months the housing market activity levels have been weak.

He added further that number of mortgages approved for house purchase dropped by around 20 percent in September that was below the level prevailed during the start of the year. Similarly the housing market rates too are far below the long-term averages.

There is no reason for the UK property market to slow down at this time as the economy is growing healthy and also around two million more people now have jobs after the coalition government coming to power. So, there may be something of disconnect between the two.

Meanwhile, analysts feel the slow down should not be of concern and they are quite positive that the UK property market will grow up smoothly soon.

It is expected the residential prices will be bouncing back again in near future. The main reasons for this are that employment in the country is up and affordability too.

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Property prices showing slow down

Latest data from the Land Registry shows that things are starting to slow down and even the powerhouse of property prices: London has shown prices are still growing – but at a slower pace.

Data shows the average house price in England and Wales is now £177,299 compared to the highest levels ever seen six years ago in November 2007 of £181,324. This is a rise year on year of 7.2%, but that’s a small fall in growth since last month. And not everyone is benefiting from rising prices as 863 were sadly repossessed and lost their homes in July 2014, although this is 33% lower than last year when 1,283 homes were repossessed. Twenty two percent of those repossessed were in the North West, with Yorkshire and Humber the next top spot for repossessions.

Some good news all-round though, although property prices will always go up and down, it’s the volume of sales which affects the economy as people spend a lot of money when moving and around £8,000 in the first two years they move in.  So, good news that actual transactions increased by 7% year on year with numbers heading back towards pre-credit crunch days, with nearly 80,000 properties changing hands.

But not every price bracket sold well in July 2014. We sold 30% less properties priced at under £150,000 and a staggering 37% less homes under £200,000. In fact, it seems only the rich and wealthy in England and Wales seem to be on the move lately. To see sales growth year on year, you need to spending more than £400,000 (up 6% year on year) while sales of properties of £500-£600k are up 20% and those worth one million or more selling 19% more than they did last year!

Regionally, while London still saw growth of 18.4% year on year, in contrast, Yorkshire and Humber saw hardly any growth year on year at all, just 1.4%, this including prices falling by 2.2% in the last month, reversing previous annual gains. Of the 10 regions covered by the report, seven showed monthly falls, although all saw a a rise year on year.

Areas with average property price under the 1% stamp duty include Wales, the North East, North West and Yorkshire and the Humber. Although the highest average is a staggering £460,000 in London, this is a bit of a nonsense figure as it’s an average of the likes of Kensington and Chelsea at over £1.3 million to Barking and Dagenham at £262,000. However one problem in London is the lack of new first time buyers coming through. This, I think is mainly a problem around stamp duty. Most First Time Buyers don’t pay any stamp duty outside of London, but when everyone of the 32 boroughs is seeing their average price go above the £250,000, 3% stamp duty mark, this is a huge tax to have to pay.

Someone buying a property at £249,000 would pay out 1% stamp duty at £2,490, plus other costs, the price of buying is around £5-6,000. Over £250,000 they would have to pay 3% stamp duty, so at £251,000 this would be £7,530 plus other expenditure of £2 to £3,000, so first time buyers would have to find twice the savings – very unfair on hard working Londoners!

For a full analysis of property prices and help buying, selling or investing in a home visit

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What’s the latest implications of property price changes for buyers, sellers and investors?

Kate Side on High ResHaving had a look at all the property price reports over the last few months across the UK, it is clear the property market is currently out of it’s six year long recession and prices are on the up. Many have reported this as ‘unsustainable’ and that homes are ‘unaffordable’ now. This is utter rubbish to be honest bar a few places in London. In reality, what the price indices show is:-

Nationwide who report on mortgaged properties are seeing a rise of 10.5% year on year, but this is only just above what prices were six years ago when the market dived. Nationwide suggest property prices are £190,000 on average.

The Land Registry which measure cash sales and is about six months out of date, suggest a lower average of £170,000 and prices up, but by 6%, so less for all properties than mortgaged ones.

Acadata, run by super Cambridge economists use Land Registry data, but measure it differently to give a more accurate picture of what’s happening to house prices suggests. Their data suggests average house prices are now £270,000, up as much as Nationwide by 10% versus 2013.

Does it actually matter to buyers, sellers and investors whether prices are rising or falling?
It only matters from a perspective of knowing what is happening in the market so you can be prepared to move as required and so you know if you are buying when prices are high, or at a low point.

For example, as a first time buyer, or a first time investor, it is very risky for you to buy when the market is falling. You will probably have a lower deposit, so if prices continue to fall you run the risk of negative equity. That can mean you can’t afford to move, get trapped if you have bought as a couple and then want to split up and sell or mean it takes years before your house value is worth more than the money you owe.

A rising market – ideally around 4-5% is a good time for you to buy, depending on whether the forecast is for this to continue over the next few years. This means you can buy a £150,000 home, which if it grows by 5% each year, 5 years later it will be worth £192,000.

If you bought with a 10% deposit, so put in £15,000, when you sell, you will now have £192,000 minus buying and selling costs (approx. £10,000) and the mortgage you owe (£135,000). This means you will now have £47,000 to put towards your next property.

Too many first time buyers I speak to seem to be trying to ‘save’ for their perfect home now, but that’s a very tough call and also means you lose out on one of the investment benefits of buying – you can “gear” the money you have now to buy a bigger asset and as long as you can afford the mortgage, prices go up, you can build up a great deposit for your next home.

From a property sellers perspective
If you are selling to trade down, a static or slightly rising market is best for you. What you want to do is to sell your £300,000 property so you have the benefit of lots of buyers to make offers, then buy the smaller property say for £150,000. If prices rise slightly, say by 5%, then you pay £150,000 x 5% = £7,500 more but you should gain £300,000 x 5% = £15,000 more for the property you are selling.

Interestingly, which most sellers don’t realise, a slow or falling market if you are trading up is ideal, as long as someone offers on your home. This way if prices fall, taking the example above, you might get £7,500 less for the property you sell, but the next one will hopefully sell at £15,000 less, so you may be more likely to get a bargain

What’s happening in regions and towns across England?
You would think with all the media hype, property prices are ‘spiralling’ out of control. What’s actually happening is we are seeing a ‘jump’ in demand which hasn’t been matched by an increase in supply and as people are desperate to move, they are offering, in some cases, silly amounts of money.

However, the supply and demand of properties is now starting to match. Pent up demand from the recession is trailing and this is softening property price growth.

To find out more about what’s happening in your region and town, visit

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Why property needs to be the Number one topic on the 2014-15 political agenda

Kate Side on High ResIn 2000, most properties – bar London – cost around £50,000. The average price today is over £160,000, according to the Land Registry. That’s a three-fold increase and although wages have risen, they certainly haven’t risen by this amount.

And that’s if you can afford to buy a property. Many can’t and for those who need support through social housing, in 1997 according to Shelter’s databank, there were a million households waiting for a home and rather than doing anything about it, councils and local MPs have allowed these numbers to increase by 70%.

The only market where people can live cost effectively is in the private rental market, now the second most popular way to live in England according to the latest English Housing Survey. Rents are pretty good value for money. Most people who rent properties with gross yields below 5.5% will be paying less in rent than they would in ‘dead money’ in interest to the mortgage lender – providing they bought with a 95% mortgage at a 5% interest rate. And although renters don’t benefit from price growth, they also don’t have to worry about maintenance and can up sticks and leave at very little cost, trading up and down as their life changes.

However, the big problem is, whichever property market you are in and want to move into, we have more people than homes. This means property prices and rents and the need for council housing is just going to go one way – and that’s up.

Few politicians or local authorities seem to be taking responsibility for how many homes are actually needed in their area. Instead, many are ‘turning’ on the providers they use such as landlords and agents, trying to ‘blame them’ for their own lack of action. Licencing landlords and banning letting agents from charging fees to tenants isn’t going to get rid of the number one problem we have: those ‘in charge’ are OK at planning what schools we need, how many police are required and medical care, but when it comes to making sure there are enough places for people to live, they have failed to get it right for over 30 years.

In my view, politicians and local authorities have run out of time and run out of people to ‘blame’ too. The idea of spending time hitting out at the private rental sector they are insisting placing socially vulnerable and low paid workers into – without protecting them through market regulation – is missing the main point.

For me, the political party which should win in 2015 is the one that proves to voters they will create cost effective housing for those that need council homes, need affordable or private housing to rent or buy. To do this, they need to identify land which can be made available to build on and make sure they find a better way to ‘agree’ with the local community what is built and where – rather than ‘dumping’ planning permission on them which they typically find out about via the local newspaper.

Property policies which deliver cost effective housing moving forward is essential over the next 12 months. Anyone who thinks they can’t afford to buy or rent or find a council home should take their time to bombard local MPs wanting to get elected next year with requests for a decent roof over their head.

For more information on property prices, rents and how to research what’s happening in your local market, visit

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We will often hear the phrase ‘my home is my castle’ in the UK and indeed the current willingness of buyers to offer over the asking price  on property suggests we are willing to pay increasing amounts to put a roof over our heads.

If there is one thing I have learned about property though, it’s to be very cautious about ‘overpaying’. This is easier said than done when property prices are rising and there is typically such a shortage of properties to choose from.

So how do you actually work out how much a property is really worth and then how much you are willing to pay for it?

Most people these days go on-line to start hunting for property and so spend their time looking at the marketing price of a property. This isn’t though the best place to start. We actually have access to much better information which is far more useful to us called ‘sold property price data’.

Sold property price data can be found on sites which advertise properties and the great thing about them is they tell you exactly what price has been paid for similar properties on similar roads, so before you even start your hunt for a property, no matter what it is advertised at, you can find out what the true value might actually be.

Here’s an example of how sold property price data can help you. Take a property that’s advertised for say £500,000, and you think that’s a bit too expensive, when you look at sold property price data, a similar property might have only sold for £425,000 – so a lot less and it may be affordable. So the job is then to visit the property and road to check out why there might be a difference in value or if the property has been overpriced. Another good way to test the theory of a property being overpriced is if it then sits on the market for some months. Many buyers will ignore it as a result, thinking that there is something wrong with it, but if you visit, like it, keep an eye on it, you never know you may be able to secure it at a price you can afford.

For more information on property prices, rents and how to research what’s happening in your local market, visit

Of course, this method isn’t perfect, but it is one way to help you feel a bit more in control of what is actually going on, rather than being at the mercy of agents or sellers telling you what they want for a property.

What’s the main drawback of this method? The main flaw to be aware of is if prices are rising quite fast and if in some areas, properties are going for more than they are even marketed for, as it takes several months for the sold property prices to appear on-line. So in London for example, property prices may have increased by 10% since the last ‘sold property price data’ appears. However, you can find this out from chatting to local agents and finding out what people are offering versus asking prices. You can also check on latest property price reports, such as the mortgage ones (Nationwide and Halifax) what they say property prices have gone up in your region, or county if quarterly data has just been published.

So, if you are thinking of buying a property, or indeed selling your own, start with sold property prices on the same road, or nearby, work out why some properties sell for more than others and then talk to local agents to find out what’s been happening over the last few months.

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OECD: British Housing Market Could “Overheat”

07A report from Paris-based think tank, the Organisation for Economic Co-operation and Development, warns that the government and Bank of England might need to take steps to reduce he scale of mortgage lending to prevent a real estate bubble from hurting long-term UK economic growth.

According to the think tank, a failure to stop increasing house prices could result in prices “spiralling out of control” and affecting the economy. The organisation notes that government schemes such as the Help to Buy scheme are fuelling a real estate bubble that will eventually cause the market to overheat.

Other issues include the low deposits many borrowers are required to put down for mortgages. The organisation recommends introducing new regulations requiring a larger deposit as a percentage of total home loans in order to reduce the demand for housing in the UK.

The latest OECD report forecasts annual growth of 3.2 per cent for Britain during the rest of 2014 – a significant increase from its 2.4 per cent growth estimate from November of last year. The figure puts the UK’s economic growth ahead of the USA, France, and Germany, which is expected to grow by 1.8 per cent in 2014.

The organisation also upgraded Britain’s 2015 economic growth prospects to 2.7 per cent, noting that “accommodative monetary policy” has supported the British economic recovery, along with strong employment growth. The latest economic outlook report also indicated a pick-up in investment throughout the UK.

At the same time, the report warns that there could be long-term side effects from the rapid increase in housing prices fuelled by programmes such as Help to Buy. If the government doesn’t take steps to reduce demand for housing, the OECD thinks that a dangerous housing price bubble could grow alongside the UK economy.

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Bank of England: Housing Price ‘Correction’ Possible

03The Bank of England has warned that their could be a ‘correction’ to housing prices that would seriously affect the property market. Deputy governor Sir Jon Cunliffe, in recent comments, warned that it would be “dangerous to ignore the momentum that has built up in the housing market”.

Sir Jon noted that their could be a “sharp correction” to housing prices, resulting in a massive increase in negative equity and a large amount of debt for homebuyers that purchased property at the peak of the boom. Despite the warning, Sir Jon notes that housing prices are likely to continue to rise in the short term.

His warning that a correction may be imminent comes alongside reports that a flat in Hyde Park has been sold for more than £140 million. The Hyde Park penthouse covers more than 16,000 square feet on two floors, offering panoramic views of Hyde Park and Knightsbridge and has been purchased by a Russian or Ukrainian investor.

According to the Nationwide Building Society, housing prices have grown by more than 10.9 per cent over the past year. The rate of pricing growth is the highest on record in the past seven years. Economists believe that programmes like Help to Buy, a government scheme to assist first-time buyers, are fuelling the price growth.

Sir Jon believes that the Financial Policy Committee may need to take action within the next few months in order to avoid a large-scale housing market crash. He notes that momentum is continuing to build and that failing to control house prices in the short term could result in a serious property market downturn in the future.

A variety of regulations aimed at controlling housing prices have been introduced in recent months, including the Mortgage Market Review. Banks may need to introduce new borrowing ratios to prevent borrowers from taking out large home loans with no significant deposit in order to increase capital as security against loan defaults.

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London Flats Available on 0.8% Credit Card Deposit

February-04Interested in buying a home for as little as £2,00? New London apartments are being marketed to potential buyers using a new credit card payment scheme in which customers can make a £2,000 initial payment using their credit card.

The innovative financing deal has attracted a huge amount of feedback from credit experts and consumers alike. But not all of the feedback has been positive – many believe that the tiny deposit and credit card-style interest spell a return to the days of easy credit and unsustainable borrowing.

The apartments are being developed by Galliard. The property company notes that homebuyers won’t be able to secure the apartments with just a £2,000 deposit – in the 20 days following their initial deposit, they will also need to secure £25,000 – a ten percent deposit on the apartment’s value.

Galliard sales director David Galman said that the controversial financing scheme will “enable ordinary Londoners to get on the housing ladder.” Credit charities are less enthusiastic about the scheme, with many claiming that the small deposit is a deceptive marketing tactic designed to trap consumers in high-interest loans.

A Money Advice Trust spokesman claims that the many buyers would be “seduced by the small deposit” and trapped in a long-term mortgage. He continued to state that lenders should be “extremely careful” with their affordability assessments in situations where mortgages are available with “little or no deposit”.

The cost of London housing has continually increased over the last two years. Ernst & Young recently reported that, if current trends continue, the average house price in London would reach £600,000 by 2018. Prices have risen as credit becomes more available to homebuyers that were previously “locked out” of the market.

Unless this rise in credit availability is accompanied by an increased in supply, the market could become unsustainably overpriced.

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Home Asking Prices Up 6.3% in Past 12 Months

january-19Homeowners have benefited from a massive rise in asking prices over the past 12 months. New research from property website Rightmove shows that home prices have grown by 6.3 per cent in England and Wales during the past 12 months – an incredible growth rate not seen since late 2007.

Thanks to the rising tide of housing prices, the average UK home is now valued at £243,861. In over 43 different regions, average home prices have surged to over £1 million.

The recent Rightmove survey shoes that London’s property market saw the highest rate of growth during 2013. Home prices in the capital grew 7 per cent year-on-year, making it one of Europe’s most expensive property markets. The average London home is now worth a staggering £514,704.

Other regions have benefited from the surge in home prices. Home prices in Wales grew 6.2 per cent in the last 12 months to £163,181, while prices in Yorkshire and the Humber rose 6.8 per cent during the last year. Only the North was affected by a declining property market, with prices falling by 0.1 per cent to £136,786.

According to estate agents Savills, there are now 43 ‘property zones’ in the UK with average prices in excess of £1 million. Knightsbridge and Belgravia is the country’s most expensive property market, with the average home selling for £4.4 million – an increase of 342 per cent in the past decade.

Property market analysts note that while homeowners have benefited from the rise in prices, many first-time buyers are finding it difficult to purchase property in the capital. The Help to Buy scheme, launched by the government to increase access to property for first-time buyers, has fuelled a shortage of properties that’s pushed asking prices up across the country.

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