Archive for August, 2011
Approvals starting to rise
Mortgage approvals to house buyers are starting to pick up. 49,239 mortgages were approved but not lent on to house buyers in the month of July. This is the third monthly increased and shown approvals to be up 3% from this time last year.
Mutual mortgage companies have approved an additional 16% worth of mortgages compared to last year. Completed sales this year have been stagnated so far, and HMRC confirmed that 79,000 homes were sold in July in the UK. Although that made the record for highest sales this year it is still lower than last year’s figures.
Under-supply of homes sees housing market go into ‘crisis’.
The Government are failing to see the under lying problem of shortage of homes on the housing market, The National Housing Federation have said that the shortage of homes has caused rents to rise and home ownership rates to decrease.
Although the housing market is going downhill due to the short fall of the properties available, the government are making more public land available for building. NHF have said that if the government invested in more affordable housing then they would see a faster economic recovery, it will also help the housing market dramatically.
First time buyers face dilemma
First time buyers are struggling with the mortgage market/housing market being so rigid at the moment. They are stuck in a dilemma as to whether to save for a mortgage deposit or go into a rental house knowing that the market for rental is increasing slightly.
First time buyer black spots are covering 11 regions of the UK which might wipe out first time buyers all together, but also causing the UK rental market to increase their monthly rents. In the normal market climax 40% of potential purchasers are first time buyers but as the market at a low currently the first time buyer’s percentage is 23% which is dropping further in many regions of the UK.
Lack of demand for borrowing
Households and companies are having a safety first approach to debt reflecting in the UK economy. There are outstanding debts on many clients’ overdrafts and personal loans of an outstanding amount £52bn; this is the lowest seen since 10 years ago.
However there has been a report that mortgage approvals have increased in July. Debt repayment by companies was outstripping new loans. People are using existing funds to cover payments instead of borrowing more.
Housing market continues to be challenging
Persimmon, house builders, have said that the housing market is looking to be stable but the economic situation at the moment makes it more challenging to keep it this way. During the first six months of 2011 the number of properties sold was down by 5% compared to 2010 leaving the figure at a low 4,439 properties. The average selling price fell by 4% leaving it tallied at £162,647.
Persimmon seen there pre-tax profits fall by a massive 41% compared to the previous figures from last year as they had a big one off boost by land being valued for a lot more than it was worth.
Finance fell in 40% of households
Between July and August almost 40% of households saw their finances drop. 1,500 adults shown that there finances worsened over the last two months. Some even reported a rise in debt and a decrease in savings and income.
Only 6% of all households reported an increase in their finance situations, according to the company Markit who use a Household Finance Index (HFI) which has fell for the last three months. Available cash to spend is falling month on month.
Savings have been hit the worst since the last major fall in 2009. House prices have risen in August but Buyers are still not looking to purchase at the prices that sellers are marketing at.
Rents demand stays high
Private rents throughout the UK have yet again risen seeing the average monthly rent at £705. Last month showed an increase of 0.6% which was the sixth additional month that the rental market had made a dramatic change.
Rents were rising £29 per month which compared to last year is so much higher; these were found out by the LSL property services.
Rents in London have seen a massive increase since this time last year, 7.1% higher taking their average rental income up to £1,009 per month.
Fixed Rate Mortgages slashed to record lows
Property valuers have said that it is only existing home owners that will benefit from the low rates whereas first time buyers are still going to struggle as they are facing a squeeze.
Coventry building society has slashed there fixed rate mortgages to less than 3.5% which is the first time that this has happened. Some of the other banks and building societies including in the slash of rates are; Nationwide, Northern Rock, Skipton and Barclays.
E.surv surveyors have said that even though rates have been cuts and there have been more than 90% of deals within the market place at the moment. Loan approvals for people on a low or medium income have fallen quite drastically.
Mortgage market subdues but stable at the moment
According to latest figures for CML the mortgage market is showing no signs of picking up. Lending for house buyers and remortgagers fell by 1% in July, compared to last year in July this is a fall of 6%.
CML have warned that the sales of houses might fall further in upcoming months but as the market stands at the moment its stable.
Bob Pannell, CML’s chief economist has commented, “Underlying house purchase activity may drift lower over the coming months. As a result, UK interest rates look like staying lower for longer.”
Rightmove suggest that house prices have been dropped for the second month
The reality gap in the market has held back sales, selling prices have remained flat. House prices have fell by 2.1% after a fall in July of 1.6%.
The average asking price is 14% higher than the average selling price; all figures are based on the government’s monthly house price surveys.
If any other data from other sources where used within these figures then the gap between the two would be even higher, Halifax have said there cost of the average home at £163,981 whereas Nationwide have their average home at £168,731 which shows that sellers and estate agents are making the house prices overpriced by 41%.