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House
prices predictions for the UK are varied from different quarters of
the property markets experts. However at the moment house
prices may be more or less static overall, but latest figures from the
Land Registry show that house prices in Wales shot up in the last
quarter.
House prices in the principality went
up by 7.42% for the three months ending in September 2005. Blaenau
Gwent rose by 27.98% and Merthyr Tydfil by 27.75%. This is the third
consecutive quarter that these two authorities have topped Land
Registry’s property price figures. Wrekin in the West Midlands saw
the greatest reduction with house prices falling by 6.29%.
The average house price in England
and Wales for the quarter is £194,589 compared with £187,971 a year
ago, an average rise of 3.52% compared with the same period in 2004.
But the volume of sales decreased by 15.41% from 309,101 in 2004 to
261,481 for the same period in 2005.
Some 1,140 properties over £1
million were sold compared with 1,230 for the same period in 2004. At
the other end of the scale, 78,559 properties were sold for less than
£120,000, the starting point for stamp duty, compared to 95,190 for
the same period in 2004.
In London, where property prices are
highest, the average property price increased by 4.47% from £287,470
in 2004 to £300,329 for the same period in 2005. Here again the
volume of sales decreased by 15.87% from 39,692 in 2004 to 33,393 for
the same period in 2005. London also saw 634 properties over £1
million sold compared to 727 for the same period in 2004.
Commenting on the Land Registry
figures, Milan Khatri, chief economist at the Royal Institution of
Chartered Surveyors (Rics) said: ‘According to Land Registry figures
for the third quarter of 2005, average house prices in Greater London
have topped £300,000 for the first time ever, though current rises
continue to be strongest in areas away from London.
‘The figures show a further
slowdown in house price inflation to 3.5% in the third quarter, down
from 5.4% in the second quarter. A year ago, house price inflation on
the Land Registry measure was 16.3%.'
He pointed out that as Land Registry
figures are based on actual transactions and lag mortgage approvals,
the recent upturn in the market reported by a variety of lenders and
property websites would not be seen in Land Registry figures until the
end of this year.
‘Completed transactions fell by
15.4% in the third quarter from levels a year ago, though the pace of
decline is less than 34.8%, recorded in the year to the end of the
first quarter of this year. This is consistent with recent evidence
that housing market activity has shown a rebound following the August
interest rate cut.
‘More timely Rics statistics show
that buyers have become more confident as the much predicted housing
market crash has failed to transpire. Rics expects the upturn in
housing activity to be sustained, supported by steady growth in the
number of jobs and incomes. However, with further significant interest
rate cuts unlikely in the foreseeable future, a renewed housing market
boom is quite unlikely,’ Khatri said.
Jim Buckle, managing director of
property website, propertyfinder.com said: ‘The Land Registry data
confirms what our own research is telling us. The property market is
on the mend. It is very important not to get hung up on year over year
figures as they do not reveal the current trends.
‘Despite being lower than a year
ago, the Land Registry is showing that transactions rose 20% in the
third quarter compared to the second quarter, with the recovery even
stronger in the London area.’
But according to website
SmartNewHomes.com, prices of new properties have been falling. The
average price of a new home in the UK was £255,327, down 2.4% on the
same time last year and a drop of 0.2% from the previous month.
SmartNewHomes says its statistics for
new properties dispels hopes that the housing market has fully
recovered from the downturn in prices and activity which has blighted
it since the end of last year.
‘Although the worst of the downturn
looks to be over with annual inflation now at minus 2.4% compared with
minus 8.0% at its lowest point in spring this year, continuing
negative quarterly inflation would indicate that a return to the
strong positive growth rates of the last few years is some way off,’
it said.
Average new home prices in London,
the South West, West Midlands and the North suffered the worst of the
wider market slowdown, whilst East Anglia and Wales saw prices rise.
The readjustment in prices was
mirrored across all property types with the exception of apartments
which, as well as seeing prices rise 1.7% over the last month,
continue to dominate the market making up over half of all new homes.
Townhouses saw the largest price drop of 6.6% over the last quarter.
David Bexon, managing director of
SmartNewHomes, said: ‘It has been a difficult year for the UK
housing market, reflected in new home price inflation and activity.
‘Although the market is certainly
out of the woods and the likelihood of a crash recedes significantly
every month, it is still in a delicate state with buyers acting
cautiously, slowing down activity across the board.’ He is
predicting that prices could pick up again in the New Year.
However there is little consistency
in housing market reports with wide geographical discrepancies and big
differences depending on the type of property. The October report from
Propertyfinder.com says that house hunters’ confidence is rising,
with expectations of fat City bonuses boosting the market.
Some 54% of respondents expect house
prices to rise over the next 12 months, says the Propertyfinder
report, ‘signalling that the recent recovery in volumes of
transactions can be sustained. In London and the South East, the two
regions that benefit most when City institutions pay big bonuses, 61%
of respondents now expect prices to rise.’
The report points out that since the
spring, transaction volumes have risen slowly but steadily from
117,000 in April to 153,000 in September according to figures from the
Office of National Statistics. Transaction volumes are up by 3% on
this time last year.
Buyers in October on average made
offers 6% below the asking price, while sellers are currently prepared
to accept offers 5.5% below their asking price. With buyers and
sellers now closely matched, the potential for sales to be agreed is
much greater.
Propertyfinder says that people are
now borrowing on average 58.5% of the value of the property, up from
just 54.0% at the beginning of the year. This is also being encouraged
by the rash of very attractive mortgage rates that have been on offer
in recent months and once again is enhanced by expectations of a good
Christmas bonus round in the City, the report says.
The reason most commonly given why
property prices will rise is that people moving into their area will
create increased demand, mentioned by 26.5% of respondents.
Expectations that interest rates will be cut again was cited by just
20.4% of respondents.
Jim Buckle of Propertyfinder said:
‘At a time when homebuyer confidence is running high, a cut in rates
could be just what the doctor ordered to spur the market forward. We
don’t expect rates to be cut this week, and home buyers are clearly
not banking on one, but still think there is a strong likelihood that
the MPC will act to lower the cost of borrowing early in the new
year.’
report by citywire.com
November 2005
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