UK asking prices getting lower

A recent report has shown how asking prices on properties in the UK are getting lower with a fall of an average 3.2% in asking prices over recent weeks. The data comes from property experts Right Move. Many experts have already predicted that the housing market will continue to cool down over the coming year, and there has already been much evidence that the housing market is far more subdued than it was earlier in the year, with a number of factors dampening the housing and mortgage sectors.

One of the factors that is thought to have affected the housing market is the roll out of Home Information Packs, which were rolled out to all residential properties being marketed for sale in England and Wales from the middle of December 2007. This has caused “further confusion at a sensitive time for the property market” according to some experts. However, experts from Right Move have added that there is always a slowdown at this time of year.

Asking price averages have also fallen because there are now more smaller, lower prices properties coming onto the market rather than larger, more expensive properties, state experts. There was an average fall in asking prices of 6.8% in the London area according to figures, and this has also been partly blamed on the level of smaller properties coming on the market rather than larger houses and apartments.

One Right Move expert stated that over the coming year house prices are more likely to stagnate than actually crash. He also said: “New listings are low at this time of year so the artificial wave of ‘low-end’ sellers has really distorted the average prices of properties new to the market.”

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Caution advised for first-time buyers looking overseas

As recent studies reveal more and more first-time buyers are looking to make their first steps on the property ladder overseas, it is important they are aware of the possible pitfalls.

A report from UK National Savings & Investments discovered 84 per cent of 18- to 30-year-olds believe buying property abroad is a more feasible option than buying in the UK.

But some industry insiders have been quick to point out that the situation for first-time buyers looking to invest overseas is generally similar to that in the UK.

Helen Adams, managing director of FirstRungNow.com, warned: “People aren’t going to be giving really big mortgages to people who are … renting in the UK.”

She added that “the best thing to do is to find out where you’re interested in buying and then speak to a mortgage specialist in that field”.

The warning comes as the major political parties look to bring the issue facing first-time-buyers to the forefront of the political agenda ahead of a possible election.

The Conservatives pledged recently to remove stamp duty for houses valued between £125,000 and £250,000, which currently stands at one per cent.

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House price growth slows

UK house prices have risen at their lowest rate this year, with Home Information Packs (Hips) and interest rates being named as the reasons.

May house prices increased by an average of just 0.4 per cent, with some regions actually seeing prices fall.

The east Midlands, west Midlands, north, and north-west of England all saw the average price come down but areas such as London and East Anglia saw strong rises.

The figures come from estate agent Rightmove and the firm says that with the introduction of Hips now just days away, it is almost impossible to predict what will happen to the market.

“It’s all rather confusing at the moment,” said Miles Shipside from the firm. “The future direction of the market is very hard to read with two external influences likely to coincide at once.

“You have the potential of Hips artificially increasing the supply of property and, within the same month, a six-year high in interest rates potentially depressing the number of buyers.”

If prices continue to level out it will be good news for those seeking to get a mortgage, particularly first-time buyers who are struggling to get onto the property ladder.

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FTBs struggling more than ever

It is more difficult for a first-time buyer (FTB) to get onto the property ladder now than it has ever been before.

That is according to housing charity Shelter which has carried out a study into FTBs and found that increasing house prices are leaving them without a chance of making a purchase.

Shelter found that it is nearly twice as hard for an FTB to get onto the property ladder today than it was ten years ago.

This conclusion is based on the gap between how much people earn and the costs of a mortgage, with the gap today being larger than ever.

“These figures show the gulf between those who can afford to buy and those who can’t is widening at an alarming rate,” explained Adam Sampson, chief executive of Shelter.

“For first-time buyers, the housing ladder is becoming a housing tightrope. Buying a home is becoming an ever-more distant dream for first-time buyers and as housing becomes increasingly unaffordable, repossessions are likely to spiral and more families will face the nightmare of homelessness.”

Although the outlook is bleak for the majority of regions in England, Shelter points out that the South East and the East Midlands have shown slight improvements in affordability.

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House prices make Olympic gains

London’s successful bid for the 2012 Olympic Games has driven house prices up in parts of the city.

Since the announcement, three London postcodes, all of which are close to Olympic sites, have seen property prices rocket by around 15 per cent.

Leytonstone (E11) properties have risen in price by 23 per cent since mid-2004, while homes in Hackney (E8) are 21 per cent more expensive and Clapton (E5) has seen an 18 per cent rise.

The figures, which have been collated by Halifax, are inline with those seen in previous Olympic host cities. Barcelona, Atlanta, Sydney and Athens all saw house prices rise above the national average in the build-up to the games.

Although rising house prices may not make good reading for anyone looking to take out their first mortgage, Tim Crawford from Halifax says now is the time to invest in these parts of London.

“London’s winning Olympic bid has boosted regeneration spending in the East End and this has had a positive effect on local house prices,” he commented.

“There has been an increase in interest from first-time buyers and investors alike. The strongest recent gains have been in Leytonstone and Hackney.

“Despite recent rises, there are eight postal districts close to the Games site where house price are more than 25 per cent below the London average, which highlights the area’s still relatively affordable property prices,” added Mr Crawford.

First-time buyers may find that investing in a property close to an Olympic site will prove to be a good investment, with the average Olympic city seeing prices rise by 19 per cent.

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First-time buyers face unaffordable homes

First-time buyers were faced with the least affordable homes ever during November 2006.

That is according to the Council of Mortgage Lenders (CML), which has compiled data showing that the average homes cost 3.29 times the combined income of the buyers.

These figures represent the situation before the recent interest rate rises, meaning the market is likely to become even harder to get on to.

During November, the average mortgage for a first-time buyer was £113,877, with analysts saying that the recent interest rate rises will add a further £200 per year to the average mortgage.

“Month-on-month we see affordability constraints becoming more pronounced for first-time buyers, and last week’s interest rate rise will increase these pressures,” said Michael Coogan, CML director general.

Homeowners are now spending a record-breaking 17.8 per cent of their income on mortgage interest payments, but this has not stopped people from entering the market.

CML data shows that the number of first-time buyers is steadily increasing. In total, 37,000 people bought their first home in November, up from 35,300 in October.

“First-time buyers are clearly still keen to get on to the property ladder despite the growing financial hurdles, and it is essential that anyone wanting to buy their first home should look carefully at their finances and take a realistic view as to whether they can afford the costs of home-ownership if rates continue to rise,” added Mr Coogan.

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