GB Investments

House prices continue to fall for the fourth month in succession, according to a new survey.

The Royal Institution of Chartered Surveyors (RICS) reported that house price growth remained negative, but supply still remained tight.

Of the Chartered Surveyors questioned, 40.6% more reported a fall rather than a rise in house prices, down from 23.4% in October.

The figures are the most negative since May 2005 when 49% more Chartered Surveyors reported a fall than a rise.

Housing supply has started to loosen to an extent but a strong labour market means those at the margins still remain confident of maintaining stable household finances.

Of the new instructions net balance, 6% more surveyors reported a fall - up from 17% in October, although it still remains negative.

New buyer inquiries improved for the first time in a year - down to 31% compared to October’s 41% - but still remains well below the long run average.

Newly-agreed sales declined at the fastest pace since April 1999 (when the question was first asked) - with 36% more reporting a fall than a rise.

Unsold properly meanwhile jumped by 8.7% following last month’s rise of 9.7% - which means the ratio of completed sales compared to unsold property on the market fell to 33.1% making market conditions the loosest since October 2005.

Surveyor confidence in house prices reached the lowest level since the records began in 1998 with market conditions having a depressing effect on sentiment. It is hoped however the recent interest rate cut may see optimism increase in the coming months.

LONDON (Reuters) - House prices in Britain fell at their sharpest rate in more than twelve years in November, the Nationwide building society said on Thursday, in another sign the property market is cooling fast.

Some economists said the growing signs of a housing market slowdown had strengthened the case for a cut in interest rates. Sterling fell against the dollar after the report was released.

The mortgage lender said the cost of an average home fell 0.8 percent this month — the first decline since February 2006 and the biggest drop since June 1995 — after a 1.1 percent rise in the previous month.

That took the annual rate of growth down to 6.9 percent, its weakest since August 2006, from 9.7 percent in October.

“The growing evidence of a significantly slowing housing activity boosts the case for the Bank of England to cut interest rates by 25 basis points to 5.50 percent in December. The decision currently looks balanced on a knife edge,” said economist Howard Archer at Global Insight.

After years of double-digit growth, Britain’s housing market is expected to slow sharply over the next few months as lending conditions tighten in the wake of the global credit crunch and first-time buyers find it harder to make any purchase.

“Today’s data bring Nationwide in line with recent gloomier reports from (Halifax), pointing to a more unequivocal housing market slowdown which, in turn, will underpin expectations of an imminent ease from the Bank of England despite the decidedly cautious rhetoric emanating from the Bank of late,” said RBS Capital Markets.

The Nationwide data was the main depressant on sterling which fell 0.2 percent against the euro and 0.7 percent against the dollar.

“The house price data this morning is obviously much weaker than expected and we’re likely to see some further negative news with data later today — the mortgage approvals,” said Ian Stannard, senior foreign exchange strategist at BNP Paribas.

The Bank of England is also expected to report a sharp drop in new mortgage approvals for October at 0930 GMT.

The Nationwide is predicting house prices staying unchanged for most of 2008. Financial markets, meanwhile, have been predicting a fall of as much as 7 percent.

“November’s data confirms that the housing market is indeed cooling,” said Fionnuala Earley, Nationwide’s chief economist. “Poor affordability, weaker house price growth expectations and the effect of earlier increases in interest rates have all affected demand in the market.”

“Looking forward, it is clear that there are uncertainties in the market, not least from the continuing turmoil in the UK’s financial markets and the overall impact that this may have on the future performance of the UK economy,” Earley said.

Agents averaged just 282 buyers on their books, compared with 326 in September, according to the latest figures from the NAEA (National Association of Estate Agents).

This was considerably less than the 360 registered buyers last October, but despite this the NAEA insist that falling buyer numbers are typical of the pre-Christmas seasonal slowdown and not just a result of a cooling market.

Property numbers have also declined since September, with an average 65 homes on agents’ books compared to 80 the month before. However, this was marginally up on year-ago levels when there were an average of 64 properties for sale.

Buyers’ Market Turnaround

Further evidence that both buyers and sellers are steering clear of the market was shown in October’s low transaction levels, says the NAEA.

The average of just ten sales per agent was slightly down from September’s average of 11, but significantly less than the 14 recorded last October.

But as a result of falling activity, buyers are finding price negotiations increasingly going their way with the gap between selling and asking price widening to 4.2 per cent.

This illustrates the gradual turnaround to a buyers’ market, as the gap was 3.9 per cent in September, and just 3.1 per cent last October.

First-Time Buyers Increase

In response, first-time buyers increased their market share as prices begin to fall from their interstellar highs. First-timers claimed a 9.2 per cent market share in October compared to 8.8 per cent the previous month.

However, there is still a long way to go before they reach year-ago levels when their proportion of property purchases reached 16.4 per cent.

Commenting on the figures, NAEA President, Stewart Lilly, said: “The market place at present is experiencing a seasonal slowdown, which you would normally expect at this time of year.

“However, there are potentially delicate times ahead – particularly if the government presses forward with the final phase plans for home information packs too soon.

“All consumers need a period of stability in order to build up their confidence. We are pleased to see that the Bank of England has suggested it will be lowering interest rates over the coming months, which should go some way to restoring confidence.”

FindaProperty.com

UK house price inflation is continuing to slow, according to the latest set of government figures.
Prices rose by 0.3% in September, the Department of Communities and Local Government (DCLG) said, compared with rises of 0.5% in August and 2% in July.

The annual rate of house price inflation also fell to 10.8%, down from 11.3% in August.

The figures are based on actual completions and so lag behind other house price surveys.

DCLG calculated that the average price of a home in the UK is now £220,111.

Source: bbc.co.uk

The Estates Gazette Rich List 2007 reveals an average individual fortune of just over £230m for each of the 500 entrants, an increase of 15% on last year.

The 500 wealthiest UK property owners have amassed a combined net worth of £117bn, new research shows.

The Duke of Westminster retains his title as the wealthiest man in property, topping the list with property assets worth £7bn, up from £6.6bn in 2006.

There is a marked increase in the number of self-made success stories - less than a quarter of the wealth in the 2007 list was inherited.

Julia Cahill, editor of the EG Rich List states: “Property has always been a breeding ground for entrepreneurial, driven and colourful characters, but the extraordinary property boom of the past few years has seen these players’ wealth augment at breakneck speed.”

She cited a “shrewd nose for a deal and an impeccable sense of timing” as common attributes in the entrants, some of whom started out as bricklayers, postmen or taxi drivers.

Such entrants are typified by residential property entrepreneur Simon Morris, who at 30 years old is the youngest to make the list with a portfolio worth £70m.

Ms Cahill warned that despite this year’s success, 2007 might be as good as it gets for many on the list.

She said: “As the property market enters a period of slowdown after an unprecedented bull run, there are bound to be adjustments to their wealth next year.”

The Intermediary Mortgage Lenders Association (IMLA) has insisted that the dip in house prices growth does not signal an imminent crash.

Peter Williams, executive director of IMLA has warned people against jumping to conclusions over the latest set of house price figures, saying that it does not necessarily mean a housing market crash is on the horizon.

“It was inevitable that the housing market would experience a slowdown in activity and pricing levels following the disruption in the financial markets which led to a temporary reduction in the availability of mortgages, tightening of lending criteria and upward pressure on pricing alongside successive Bank of England interest rate rises,” said Williams.

“With the well-publicised problems at Northern Rock, consumers have been quite understandably adopting a wait-and-see approach, not because they fear the worst but because they are unsure of what the immediate future holds.

“This doesn’t affect the fundamentals of the market, which remain solid. Employment remains high, interest rates remain historically low – despite recent volatility – and the economic backdrop remains positive. As far as lenders are concerned, a number have been affected by the tightening of availability of wholesale funding in the money markets and the virtual closure of the securitisation markets on the back of (unfounded) worries that there could be contagion over here from the US sub-prime problems. owever, this was a temporary issue and the markets are now slowly coming back to life.”

“There is now a good supply of funds available to the consumer. Plenty of lenders have plenty of money to offer to creditworthy customers, and in most cases there’s no reason for a shortage of funds to be an impediment to normal home buying or remortgaging activity. The housing market is likely to continue to tick over at both lower and slower levels for a number of months, but there is no reason to expect any major falls in property prices.”

The buy-to-let market is in crisis as 40 per cent has been wiped off the value of new purpose-built investment properties in the past year, a survey by The Daily Telegraph has found.

Investors have been left facing losses of thousands of pounds on their properties.

A study of nearly all the new-build flats that have come up for auction in recent weeks shows they are selling for, on average, just 60 per cent of what property investors paid for them.

While official figures suggest that the UK property market – including buy-to-let – is in fair health, there are growing numbers of new-build flats being repossessed in cities such as Manchester, Leeds, Birmingham, Norwich and Nottingham.

The prices being achieved by the auction houses are invariably well below the original prices.

Last week a two-bed flat in the canal side area of Bingley, West Yorkshire, fetched £105,000 – a far cry from the £179,995 that it was originally sold for in July last year. Others have been sold for similarly large discounts.

Many investors who have had their fingers burnt claim that they were duped into paying too much.

Meanwhile, property experts warn that the problem could get worse, with local authorities granting planning permission for hundreds of blocks of flats each week and developers still offering generous incentives to potential investors.

Matthew Loades, an investor who is losing money from his buy-to-let properties, said: “I think there are tens of thousands of people out there who like me jumped on the apartment bandwagon thinking they were on to a winner. Now they are feeling the pain.”

Recent research also suggests that two-thirds of buy-to-let investors are not making enough from their rental income to meet their mortgage payments.

This is because the interest rate hikes over the last year has left investors, who generally take out variable mortgages, facing much higher monthly repayments.

The Association of Residential Letting Agents, which represents buy-to-let mortgage lenders, said 67 per cent of all landlords were making rental returns of five per cent or less in August – much lower than the very best buy-to-let mortgages of 5.5 per cent.

Supporters of buy-to-let say most investors should not be hit by the mortgage squeeze because they are sitting on large profits made in the boom of the last couple of years.

Official Government figures show that purpose-built flats have climbed in price by 16 per cent over the last two years.

However, in Nottingham 10 flats are on sale in Brook Court, Nottingham for £89,950 – a sharp fall on the £139,000 that the developer was selling them for as recently as December last year.

The UK may have to cut interest rates to tackle slower growth following recent stock market turmoil, the Organisation for Economic Co-operation and Development (OECD) warned today.

The financial turbulence - coupled with the impact of five interest rate hikes since August 2006 on house prices - posed a threat to growth, the global economics group said.

“Although indicators of economic activity have been robust in 2007 to date, there is now a risk that growth will be weaker going forward, which could imply a need for interest rate reductions,” the OECD’s latest survey of the UK economy said.

“The interest rate increases over the last year, together with recent financial market volatility, are expected to slow the housing market,” the report added.

Source: metro.co.uk

The Liberal Democrats issued a stark warning to homeowners today that the property market is set to crash.

Deputy leader Vince Cable said a decade of mismanagement by Gordon Brown had led to a “collective madness” around house prices which threatened to derail the economy.

Speaking at the party’s conference in Brighton, he lambasted the “professional optimists” who had convinced the public that values could keep going up for ever.

“History tells us that bubbles burst; and every housing boom is followed by a crash whatever the papers say,” he insisted.

Mr Cable’s intervention came as the panic around troubled bank Northern Rock continued, with customers withdrawing billions of pounds in the wake of the “credit crunch” caused by irresponsible lending.

A study has also indicated that younger people are increasingly relying on rising property prices to pay for their retirement.

Mr Cable laid the blame for the crisis squarely at the door of Mr Brown, saying that he had done nothing to prevent the housing market overheating during his 10 years as Chancellor, and now “chickens were coming home to roost”.

History demonstrated that the housing “bubble” had to come to an end, he insisted.

“I deeply distrust the professional optimists - the banks, estate agents, government ministers - who seem to believe in an economic version of levitation,” Mr Cable told delegates.

“This is something Gordon Brown understood ten years ago when he said in his first budget: ‘I will not allow house prices to get out of control and put at risk the sustainability of recovery.’

“But that is exactly what he did. Why? Why did he exclude housing from the measure of inflation? Why did he not give the Bank of England responsibility for this, the most important and destabilising element in inflation?

“Why has he taken 10 years to produce a housing policy? Why was council and other social housing drastically curtailed forcing families into owner-occupation they cannot afford?

“Why was he so frightened of tackling the banks over debt promotion, unfair charges and irresponsible lending?

“As long as the boom has gone on, he has been able to avoid answering these questions but his day of reckoning cannot be far off.”

Mr Cable said there was now a widespread belief that the housing market was a “one way bet”, which had led “reckless” banks to lend up to six times people’s income in mortgages.

“We can see the frenzied signs of collective madness which always accompany an economic bubble,” he said. “Until it bursts the bubble has a logic of its own, inflated by uncontrolled credit expansion and rampant speculative demand.”

Developers across the country had been buying property and land and often leaving it vacant, contributing to the housing shortage, according to Mr Cable.

“Yet the Government’s answer is to blame local councils and planning rules and it threatens to destroy the delicate balance between development and over-development.”

Research by the International Longevity Centre indicated that the proportion of 25 to 34-year-olds contributing to pension funds halved between 1995 and 2005, as people increasingly stretched their finances to get on the housing ladder.

Source: The Observer

Britain’s house price growth will be halved next year as the global financial crisis exacerbates the impact of rising mortgage rates, according to Nationwide, the biggest mortgage lender.
After the dramatic bail-out of high street bank Northern Rock underlined the impact of the American ’sub-prime’ mortgage crisis on Britain’s financial sector, Fionnuala Earley, Nationwide’s group economist, said she expected house price inflation to slow to around 3 per cent next year.

Thousands of anxious customers queued outside Northern Rock branches for a second day yesterday, ignoring calls for calm from the Chancellor, Alistair Darling, and the bank’s management, and sparking fears of a full-blown ‘run’ on the bank.

Speaking to Channel 4 News last night, Darling said he had been assured by the Financial Services Authority that Northern Rock was capable of meeting its financial obligations to its customers.
In the first signs of political fallout from the crisis, David Cameron accused Gordon Brown of failing to rein in public and private borrowing over the last decade, saying the nation’s economic growth is based on a ‘mountain of debt’. Writing in today’s Sunday Telegraph, the Tory leader says: ‘This government has presided over a huge expansion of public and private debt without showing awareness of the risks involved.

‘Though the current crisis may have had its trigger in the United States… under Labour our economic growth has been built on a mountain of debt.’

House price growth was running at just below 10 per cent in August, but Nationwide believes it will have dropped to 7 per cent by December and continue slowing throughout next year.

The worldwide credit crunch that pushed Northern Rock to the brink of collapse could make a housing market slowdown worse, Earley warned. ‘I think all it can do is make it [the market] cooler: that comes through sentiment, and through expectations.’

With base interest rates at a six-year high of 5.75 per cent, economists said that the feelgood factor was already evaporating and that the Northern Rock crisis could deal a fresh blow to confidence.

‘This confirms some of the fears that people had, and reinforces the idea that they need to be more circumspect, and that money is tighter,’ said Richard Hyman, director of retail research firm Verdict.

‘It couldn’t have come at a worse time: consumer confidence was already heading south,’ said Kevin Hawkins, director general of the British Retail Consortium, though he added that, as long as Northern Rock was the only casualty, the effects could be short-lived.

A report from property website Rightmove, released on Friday, showed that property prices fell in the last month for the first time in three years. It is expected that, although there will be overall growth in the housing market, some areas of the UK could suffer significant price decline.

Meanwhile, Northern Rock apologised to customers last night, saying it was ‘disappointed to see uncertainty caused’. The apology came amid growing speculation of a takeover bid, with HSBC and Lloyds TSB both being mooted as potential suitors. Insiders are predicting that a takeover could occur within weeks to secure the bank’s future. One plan currently being looked at by City bankers is to divide the company’s £100 billion mortgage portfolio between some of the major banks.

Savers have been rushing to pull out their cash since it emerged last Thursday that Darling had sanctioned an emergency loan from the Bank of England to prevent Northern Rock going bust.

One couple had even camped outside Northern Rock’s Cheltenham branch in Gloucestershire overnight, desperate to withdraw the £1m proceeds of a house sale. ‘We were told that because our money was in an online account we wouldn’t be able to withdraw it there and then,’ said Fiona Howard. ‘That money is our lifeline, as we are living in rented accommodation at present.’