The average deposit reached 43 per cent in September, up from 30 per cent in December 2006.
It is a fresh blow to first-time buyers as it equates to £70,000, based on average house prices. This is almost three times the average salary and £20,000 more than the deposit required four years ago.
However, it is not the highest average deposit since records began four years ago. Levels reached 49 per cent in December 2008 as the credit crisis began to tighten its grip.
It comes after the Bank of England warned last week that banks are becoming even stricter about who they will lend money to amid fears that higher unemployment will lead to home owners defaulting on their loans.
The latest mortgage research by surveyors e.surv also found that not all buyers are being treated equally. Those buying cheaper properties are being squeezed the most, typically needing a 35 per cent deposit compared to 25 per cent four years ago. It means they can borrow 11 per cent less than previously.
By contrast, those buying properties worth at least £500,000 can borrow just 4 per cent less.
Richard Sexton, business development director of e.surv said: “Tighter loan to value criteria have hurt everybody, but those at the bottom of the ladder have been hit disproportionately.
“One in five borrowers wants to buy a home worth less than £125,000. They are the classic first-time buyers, but they are still trailing far behind wealthier home buyers in their access to finance.
“Those financing homes in the £500,000 price bracket are only around one twentieth of buyers. For them, it’s as if the credit crunch hardly happened. This is a concern as first-time buyer participation is central to any sustained recovery in house prices.”
It comes after property experts warned declining house prices are “inevitable” after Nationwide revealed its latest house price index last week.
It reported typical values rose 0.1 per cent in September to £166,757 compared with the previous month. But this was not enough to halt the drop in annual house price growth, which slid from 3.9 per cent in August compared with the previous year to 3.1 per cent in September.
Mr Sexton added: “House prices today are almost exactly at the same level as four years ago, but the size of deposit needed has risen £20,000 to buy a typical home.
“Lenders are nervous about the state of the economy and the future direction of house prices, and their ability to fund their mortgage lending is constrained by the demands from regulators to bolster their capital reserves.
That means only the best quality borrowers are offered loans, and on much tighter criteria than before.”
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Showing posts with label uk property prices. Show all posts
Showing posts with label uk property prices. Show all posts
Friday, 8 October 2010
Friday, 1 October 2010
UK mortgage approvals hit 16-month low as housing market slows
Published: 10:35AM BST 23 Sep 2010
The number of mortgages approved for house purchase in Britain slumped to a 16-month low in August as activity in the housing market continued to decline.
For most of the year the number of loans approved for people buying a home has been running below 36,000 - a level economists consider to be consistent with house price falls Photo: Reuters
Only 31,767 loans were approved for people buying a property during the month, the lowest level since April last year, according to figures from the British Bankers' Association on Thursday.
It was the third consecutive month during which mortgage approvals fell, despite the fact that the property market usually sees a bounce in activity during the summer months.
The number of loans approved for people buying a home has been running below 36,000, a level economists consider to be consistent with house price falls, for most of this year.
David Dooks, BBA director of statistics, said: "Demand for mortgages continues to be weak despite more properties coming on to the market.
"Even with stable or falling house prices, the current economic climate makes it unlikely that demand will pick up in the near future."
Today's figures are the latest in a run of gloomy data on the housing market, with Nationwide reporting price falls of 0.9% in August.
The Council of Mortgage Lenders said earlier this week that lending in August fell to its lowest level for the month for a decade, while HM Revenue & Customs reported a fall in the number of homes changing hands during the month.
The drop in activity since the beginning of this year has prompted some economists to predict the market could be heading for a double dip.
But others have said recent falls in house prices are not unhealthy as the recovery in the property market had got ahead of improvements in the wider economy.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "The BBA data showing mortgage approvals sinking to a 16-month low in August heightens our belief that house prices will trend down over the coming months.
"We suspect that house prices will fall by around 10pc between now and the end of 2011.
"In our view, the housing market really has not got much going for it at the moment, apart from low mortgage rates - and that is if you can get a mortgage."
But there was some slightly better news in the BBA figures, with net lending, which strips out redemptions and repayments, rising to £2.55bn - its highest level since February.
However, the figure was well down on the £3.35 billion advanced in August 2009.
The BBA attributed the ongoing weakness in net lending to the fact that homeowners were focusing on paying down their mortgage.
Credit card repayments were higher than new spending during the month, but once interest and charges were factored in, outstanding plastic debt rose by £172m.
Borrowing through loans and overdrafts contracted for the 16th consecutive month, with consumers repaying £187m more than they borrowed.
Savings levels bounced back in August to reach their highest level since March, when figures are often boosted by the approaching end of the tax year.
The amount consumers deposited rose by £2.19bn, up from an increase of £514m in July.
The number of mortgages approved for house purchase in Britain slumped to a 16-month low in August as activity in the housing market continued to decline.
For most of the year the number of loans approved for people buying a home has been running below 36,000 - a level economists consider to be consistent with house price falls Photo: Reuters
Only 31,767 loans were approved for people buying a property during the month, the lowest level since April last year, according to figures from the British Bankers' Association on Thursday.
It was the third consecutive month during which mortgage approvals fell, despite the fact that the property market usually sees a bounce in activity during the summer months.
The number of loans approved for people buying a home has been running below 36,000, a level economists consider to be consistent with house price falls, for most of this year.
David Dooks, BBA director of statistics, said: "Demand for mortgages continues to be weak despite more properties coming on to the market.
"Even with stable or falling house prices, the current economic climate makes it unlikely that demand will pick up in the near future."
Today's figures are the latest in a run of gloomy data on the housing market, with Nationwide reporting price falls of 0.9% in August.
The Council of Mortgage Lenders said earlier this week that lending in August fell to its lowest level for the month for a decade, while HM Revenue & Customs reported a fall in the number of homes changing hands during the month.
The drop in activity since the beginning of this year has prompted some economists to predict the market could be heading for a double dip.
But others have said recent falls in house prices are not unhealthy as the recovery in the property market had got ahead of improvements in the wider economy.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "The BBA data showing mortgage approvals sinking to a 16-month low in August heightens our belief that house prices will trend down over the coming months.
"We suspect that house prices will fall by around 10pc between now and the end of 2011.
"In our view, the housing market really has not got much going for it at the moment, apart from low mortgage rates - and that is if you can get a mortgage."
But there was some slightly better news in the BBA figures, with net lending, which strips out redemptions and repayments, rising to £2.55bn - its highest level since February.
However, the figure was well down on the £3.35 billion advanced in August 2009.
The BBA attributed the ongoing weakness in net lending to the fact that homeowners were focusing on paying down their mortgage.
Credit card repayments were higher than new spending during the month, but once interest and charges were factored in, outstanding plastic debt rose by £172m.
Borrowing through loans and overdrafts contracted for the 16th consecutive month, with consumers repaying £187m more than they borrowed.
Savings levels bounced back in August to reach their highest level since March, when figures are often boosted by the approaching end of the tax year.
The amount consumers deposited rose by £2.19bn, up from an increase of £514m in July.
Friday, 13 August 2010
Is a double dip fall in UK house prices on its way?
LONDON - The London-based research group downplayed recent reports indicating the house-price recovery is fading saying "forecasters projecting a double dip have got it wrong" and have "ignored the housing market fundamentals".
Last week, there were concerns among homeowners amid news that UK House prices dropped for the first time in 15 months in July, causing the annual rate to weaken for the first time in over a year, according to property data company, Hometrack. This followed claims by Nationwide and Halifax, two of the UK's largest mortgage lenders that the robust recovery in house prices is drawing to an end.
Despite this correction the CEBR said prices will increase 4% per cent this year and continue rising until 2014, mainly due to a shortage of homes in the UK and low interest rates.
As always with all news relating to the UK property market, the sensational headlines have been appearing fast with the rational facts slow to follow.
I agree with the CEBR's view that the fundamentals point to an increase in property prices, especially in London, and adds that The majority of our South African clients are astute investors, steered by facts and not by media hype. This has been evident in the surge of new enquiries since January from high net worth South Africans looking for help in acquiring property in London for investment purposes. These investors share our view that a tight supply of new housing and an increase population on this small island will drive UK house prices upwards.
Both domestic and foreign property investors have seen the weaker Pound, lower property prices and interest rates of just 0.5% as a buying opportunity too good to miss and reports now suggest that more than 46% of all purchases in London over the last few months can be contributed to foreign buyers.
Not surprising when you consider that residential rental rates in the UK are now close to levels last seen in early 2008, before the financial crisis and fall in housing prices. The Residential Landlords Association (RLA) says the number of new tenants seeking rental properties increased markedly in June, as more than 18,000 Britons decided to rent a home. This represents a 22% rise in the number of new tenants compared to figures from May and continues a trend which began at the beginning of the year. The number of tenants renting residential properties has now increased by 16% since January, bringing more than 50,000 new tenants into the buy-to-let sector over a period of just six months, yet the number of new residential properties available on the rental market has decreased by 6% since April.
This sharp spike in demand, coupled with relatively low supply of rental properties is the main factor behind the continued rental increases since the start of 2010. Monthly rents increased by 1% in June, crowning five straight months of rental rises. This means the average rent in the UK's private buy-to-let sector has now increased by 3.2% over the past 12 months. This is equivalent to an average of £23 extra income per tenant each month, bringing the average UK rent to £673. As always London rentals continue to rise faster than in other parts of the country as first-time buyers find it difficult to afford a home in the capital. London-area landlords experienced the highest rental increases in the country - close to double the national average. Rents in the capital rose by 1.9%, bringing the average monthly rent to £942.
The property pessimists would have you believe that property in the UK is doomed, but this ignores the fact that housing is not stocks and shares. Owning a home is an emotional desire, a must-have aspiration for most Britons, and the demand for property in Britain remains high. Yes, prices may have fallen slightly, but investors in the UK and abroad will simply see this as another good purchasing opportunity.
*Mike Smuts is managing director of Smuts & Taylor, a South African investment firm based in London.
Last week, there were concerns among homeowners amid news that UK House prices dropped for the first time in 15 months in July, causing the annual rate to weaken for the first time in over a year, according to property data company, Hometrack. This followed claims by Nationwide and Halifax, two of the UK's largest mortgage lenders that the robust recovery in house prices is drawing to an end.
Despite this correction the CEBR said prices will increase 4% per cent this year and continue rising until 2014, mainly due to a shortage of homes in the UK and low interest rates.
As always with all news relating to the UK property market, the sensational headlines have been appearing fast with the rational facts slow to follow.
I agree with the CEBR's view that the fundamentals point to an increase in property prices, especially in London, and adds that The majority of our South African clients are astute investors, steered by facts and not by media hype. This has been evident in the surge of new enquiries since January from high net worth South Africans looking for help in acquiring property in London for investment purposes. These investors share our view that a tight supply of new housing and an increase population on this small island will drive UK house prices upwards.
Both domestic and foreign property investors have seen the weaker Pound, lower property prices and interest rates of just 0.5% as a buying opportunity too good to miss and reports now suggest that more than 46% of all purchases in London over the last few months can be contributed to foreign buyers.
Not surprising when you consider that residential rental rates in the UK are now close to levels last seen in early 2008, before the financial crisis and fall in housing prices. The Residential Landlords Association (RLA) says the number of new tenants seeking rental properties increased markedly in June, as more than 18,000 Britons decided to rent a home. This represents a 22% rise in the number of new tenants compared to figures from May and continues a trend which began at the beginning of the year. The number of tenants renting residential properties has now increased by 16% since January, bringing more than 50,000 new tenants into the buy-to-let sector over a period of just six months, yet the number of new residential properties available on the rental market has decreased by 6% since April.
This sharp spike in demand, coupled with relatively low supply of rental properties is the main factor behind the continued rental increases since the start of 2010. Monthly rents increased by 1% in June, crowning five straight months of rental rises. This means the average rent in the UK's private buy-to-let sector has now increased by 3.2% over the past 12 months. This is equivalent to an average of £23 extra income per tenant each month, bringing the average UK rent to £673. As always London rentals continue to rise faster than in other parts of the country as first-time buyers find it difficult to afford a home in the capital. London-area landlords experienced the highest rental increases in the country - close to double the national average. Rents in the capital rose by 1.9%, bringing the average monthly rent to £942.
The property pessimists would have you believe that property in the UK is doomed, but this ignores the fact that housing is not stocks and shares. Owning a home is an emotional desire, a must-have aspiration for most Britons, and the demand for property in Britain remains high. Yes, prices may have fallen slightly, but investors in the UK and abroad will simply see this as another good purchasing opportunity.
*Mike Smuts is managing director of Smuts & Taylor, a South African investment firm based in London.
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