Are House Prices Still Falling

UK Housing Market Still In Decline

The UK housing market and house prices suffered further decline with 1.3% fall in September, according to the Halifax.

Halifax said the decline meant the annual fall was now around  12.5%, with the average cost of residential property the UK now at £172,108.

Halifax, together with Nationwide claims that the rate of decline was starting to bottom out when looking at quarterly comparison figures.

But continued to say that the state of the property market would remain “challenging” as mortgage availability was still far from the heights of a few years ago.

The yearly rate is calculated using a comparison of the past quarter in comparison with the same three months back in 2007, aiming to cut out any short-term volatility.

When comparing prices in just September with the same month the previous year, the drop in prices reaches 13.3%, the biggest recorded by the Halifax.

House prices have fallen every month since the beginning of 2007.

The average price of a UK home is close to that seen in January 2006.

“The ongoing pressures on householders’ income, combined with the reduction in the availability of mortgage finance mean that market conditions will remain challenging,” said Martin Ellis, chief economist at the Halifax.

But he welcomed the move by the Bank of England’s Monetary Policy Committee to cut interest rates by half a percentage point to 4.5% on Wednesday.

“Lower interest rates will help mortgage borrowers faced with increasing pressures on their finances and provide a valuable support to the housing market,” Mr Ellis said.

Could House Prices Stabalise Soon

Property Prices declined by 5.2% in the third quarter of this year, close to the 5.1% fall of the previous three months. This was evidence that the pace of decline was stabilising, Mr Ellis said.

But with food and fuel prices having risen over the last year, and wages failing to keep up with the increase, households had less discretionary income.

“The resulting pinch on incomes, combined with the high level of average house prices ratio to earnings, has made it hard for potential house buyers to gain a foothold on the first rung of the property ladder.” he continued.

Other analysts were in agreement that the rate of decline could stabilise soon and start to bottom out.

The anual falls in house prices should hit a maximum of 15% next month and fall no further, according to Ray Boulger, of mortgage brokers John Charcol.

Prices were increasing up until October 2007, before the effect of the credit crunch hit. As a result the year-on-year comparisons have been striking in recent months, he said. He said the Halifax figures were “not surprising”.

But Howard Archer, chief UK and European economist at Global Insight, said he expected house prices to decline still further.

“Faster rising unemployment, heightened concerns over the economic outlook and widespread expectations that house prices will continue to fall markedly seem set to depress housing market activity and prices for some considerable time to come,” he said.

Despite hopes that Wednesday’s rate cut will spur lending and boost the housing market, banks have been slow to pass on previous rate cuts to new and existing borrowers, as they continue to scale back lending.

The latest Bank of England figures show the average mortgage rate paid by new borrowers rose from 5.88% in August 2007 to 6.1% in August 2008 despite a three-quarters of a percentage drop in the Bank rate over the same period.

The average mortgage rate for those with existing mortgages has dropped from 5.91% in August 2007 to 5.83% to August 2008, although it has fluctuated during the year.

These cuts made by the Bank of England’s Monetary Policy Committee have benefited existing borrowers, mainly those on tracker mortgages and tracker rates.

Earlier this month, the Royal Institution of Chartered Surveyors reported that completed property sales in August were 47% lower than in the same month a year ago.

Source bbc.co.uk

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Is The Property Market Going To Crash

Property Market - Is It Going To Crash

According to the media the UK property market is free fall - not a day passes without a mention of the current property crisis in the UK. But is the property market in as bad condition as we are lead to believe?

If you are worried about the situation and have been convinced the UK housing market is going to crash like the USA and Spain you are worrying unnecessarily -  There may be some similarities between us, but our (the UK) prices will drop less significantly than those of the USA and Spain.

The reason for this confidence is simple economics and the fact that the demand for housing far exceeds the supply.

This year alone (2008) the UK government has predicted we will only build 100,000 new homes - a quarter of the required amount- before 2009. So until the UK can match this demand, the market is safe.

Why The UK Property Market Will Not Crash

1.    One of the reasons why Spain is struggling is that they are still building more than they require. The number or available properties far exceeds the population. We have got the opposite problem in the UK.

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In 2005, 193,000 new houses were built. This may sound impressive but to make a real impact on the growth of housing prices and reduce their costs, 245,000 new homes need to be built. And we are far from reaching that goal.

2.    In 2000-2006, the uk population increased by approximately 1.7 million this resulted in the need for 800,000 new residential houses. Although 1.1 million were built in this period, these extra 300,000 new houses were insufficient. They could not account for the growth rate of the churn or 2nd home ownership.

3.   When UK inhabitants are looking to move home they do not compare their salary to the price of the house. The big mistake they usually make is to actually compare their income to their annual mortgage payments.

Although, it could be argued that mortgage payments - as a share of a household income - has increased from 15% (2001) to 19.6% in 2005, these figures are still well below the 34% recorded in the last property crisis in 1989.

4.    It is natural to see fluctuations and property activity in certain areas of the country as the economy grows, but some areas struggle to match these demands. Through a combination of a lack of housing and transport, certain locations have become property hot spots to accommodate this need, but cannot expand fast enough.

Stratford in London springs to mind. Read about Property Investment In Stratford

Is Property A Safe Investment

Throughout the last two decades the UK has survived two property crashes and bounced back stronger than before. Experts predict that by 2010 the housing market will be buoyant once again.

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5 Reasons Why Houses Prices Are Falling

Why Are House Prices Falling

The housing market in the UK is in freefall currently, in stark contrast to the buoyant property market scene of just a few years ago. But why are house prices falling and are you concerned about the negative equity that your home presents you with.

Throughout the nineties and midway through the 21st century the UK property market enjoyed its biggest ever boom. Our homes it would seem were our biggest asset. This though was a false sense of economy as most would never realise the equity in our homes as to move would negate the profit gained.

1. House Prices Are Unaffordable To First Time Buyers - First time buyers are finding it increasingly difficult to get onto the first step of the property ladder as the average house price to earning ratio are now poles apart.
2. Mortgage Lenders Are Not Approving Finance - The phrase Credit Crunch applies to the mortgage industry more than any other. Applications for mortgages are fewer and more mortgage applications are being rejected.
3. Interest Rates Increasing - Interest rates are increasing with velocity, the average monthy mortgage repayment has risen by 30%. This effects first buyers and low wage earners who are now in danger of repossession.
4. Unstable Economy - Any rumour of an unstable economy and one of first industries to be hit is residential property market.
5. What Goes Up Must Come Down - the last decade of phenomenal growth had to slowdown sometime, an initial slowdown is viewed as a negative - the knock on effect is panic, reduction in consumer spend and eventually a credit crunch situtaion.

Is Now A Good Time To Invest In Property

If you intend to move house or buy a property for the first time for the sole purpose to live in it may be wise decision to not do anything yet. House prices will probably continue to fall for the forseeable future - then recovery is expected.

For the property investor now is the perfect time to invest in property both residential and commercial. The Buy To Let market will increase dramatically as tenants will outnumber available property.

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Property Investment

Property - A Safe Bet?

Investing in property even in times of economic downturn is and always will be a wise investment of your time and money.

However the wisest investment of all, is the ability to invest just your time. My Property Investment can teach you how to profit from the property market without using any of your own money. All that’s required is your time.

The property market enjoys peaks and troughs just like any other investment opportunity - the wise investor can benefit from a negative property market possibly more so than a buoyant one.

If the idea of profiting from the housing or property market appeals, whatever the market conditions, then read on »

When Will House Prices Rise Again

When Will Property Prices Start To Rise Again

As UK homeowners watch in anguish as the equity in their properties starts to fall almost monthly there is at least some better news hopefully just around the corner.

Some property experts say the housing market has reduced in activity by as much as 50% over the last 12 months. Worse still the insider experts predict further falls and more negative equity.

It is not all doom and gloom as simple economics points to a recovery but for a few years yet. Whilst the property market is being strangled new house building projects are being postponed by house builders. This will aid the property market in the coming years.

Soon, demand will outstrip supply and this will force house prices up again. The property market has and always will be prone to peaks and troughs. At the time of writing we are most definately in a trough - whther the hosuing market has reached its lowest point time will tell.

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One fact is certain the smart property investor is relishing this particular trough as very soon the savvy investor will be making a purchase or two to benefit from an under valued property that is sure to rise in the coming years.

The worst areas effected by the fall in property prices is London and the South East - this is traditionally the area where house prices are highest and potential profit is greatest. Predictions indicate that house prices will match 2007 in London and the South East by 2012 and a decade on a further 80% increase is expected.

Where any kind of investment is to be made the highs and lows have to be experienced - the smart property investors are about to get on again … are you going to join them.