Housing Market Indicators
Tuesday, 27 April 2010
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Tuesday, 26 January 2010
2009 was a difficult year for home buyers and sellers. The first half of the year saw prices continue to fall while the second half saw increasing prices in some areas. So what does 2010 have in store for us?
Quick Move Now's summary of the housing market looks to key institutions and market indicators within the finance and house sectors to gain an insight into where the market is and where it is heading.
House Price Index Halifax +1% (monthly change) -15.38% (fall since peak)
House Price Index Nationwide +5.9% (monthly change) -12.87% (fall since peak)
Interest Rates 0.5%
Quick Move FTI 37%
Inflation 2.9%
Economic Growth +0.1%
Unemployment 2.46 million
*Information compiled from various sources. Quick Move Now takes no responsibility for its accuracy. Last updated 20/01/2010
Prospects for the housing market remain very uncertain and 2010 is likely to prove a difficult year for many home buyers and sellers.
Mortgages
In recent days we have seen the UK’s 4th largest building society increase their standard variable rate by 1.45% despite no change to base rate. This makes mortgages more expensive for both current and prospective clients. Many more lenders are expected to follow this move which could add £1000’s to homeowners annual mortgage costs.
At the same time inflation has increased rapidly and now stands at 2.9% well over target of 2%. If this trend continues it could well lead to increasing base rates which would make mortgage repayments even more expensive.
This could lead to mortgages become more expensive as it will stifle demand as people cannot afford to take on larger mortgages. Also after the economic woes of the last 2 years many people are very close to the red line, even a small increase in interest costs could see them slip into arrears. Should there be a big increase in cut-price repossessed properties hitting the market we could see a corresponding market dip.
Election
With a general election widely tipped for May this year we could easily see a new government in power. The housing market is important to millions of voters and is the driving force behind economic growth and stability so housing will have to be a central part of policy for whoever is in government. Some of the policies could have a major impact on the market for instance the Conservatives have already said they will abolish Home Information Packs within weeks of coming into power. Without the prohibitive cost of a HIP many more homeowners will go on the market. Unless attractive mortgage deals become available there may not be enough demand for these houses. If the market becomes flooded with property it may lead to another fall in prices.Over coming weeks and months the parties will launch their manifestoes and we will keep a keen eye on the various plans for the housing market.
Unemployment
Although unemployment figures seem to have a hit a plateau this situation could change rapidly. Global market conditions could easily take a turn for the worse which may finish off many companies who are just hanging on. Huge cutbacks are also expected in the public sector soon after the general election. In many areas the main employer is the public sector and any large redundancies would have a huge impact on the local economy and housing market.
Potential for a double dip in house pricesWell the jury is still out! But I don’t think any sensible industry commentator would rule out a double dip in prices. The more likely scenario is fluctuating prices with little or no annual growth in prices. However as usual the London market is likely to be the powerhouse and many regions will experience very difficult market conditions.
Tuesday, 6 October 2009
Some life has been breathed into the housing market lately. However the picture is extremely mixed across the country and the future remains very uncertain.
Quick Move Now's summary of the housing market looks to key institutions and market indicators within the finance and house sectors to gain an insight into where the market is and where it is heading.
House Price Index Halifax 1.6% (monthly change) -18.14% (fall since peak)
House Price Index Nationwide +0.9% (monthly change) -13.02% (fall since peak)
Interest Rates 0.5%
Quick Move FTI 31%
Inflation 1.6%
Economic Growth -0.8%
Unemployment 2.47 million
*Information compiled from various sources. Quick Move Now takes no responsibility for its accuracy. Last updated 06/10/2009
House price increases have been in the headlines constantly in recent months. However local market conditions vary greatly depending on area, house type, value. We have identified a number of trends which may explain the current market and give us an insight into what may happen in coming months.
What is happening to house prices?
Supply and demand
There is a lot of pent up demand, some people need to buy a house whatever the market conditions (e.g. growing family, job move). At the same time a lack of supply has been caused by most home owners not looking sell their home because of the market conditions. This combination is currently driving prices, however this won’t last forever.
Fluctuating House Prices
House prices always fluctuate and as the market responds to the rapid collapse in prices you would expect significant fluctuations. Indeed analysis of the last house price crash in early 1990’s shows that although there was a prolonged overall trend of falling prices there were occasional months of fairly dramatic price increases as the market tried to stutter to life.
Regional Variation
When the dust settles on this recession the North South divide could be bigger than ever and may stay that way. In many area’s of the country house prices are still falling and could do so for a prolonged period. In the south east there is generally a housing shortage while in a lot of the rest of the country there is an oversupply.
What will happen to future house prices:
A number of factors will cause continued house price instability in coming months/years.
Limited Pool of Home Buyers:
• Few home buyers have 15-30% deposit to put down.
• Most buyers have to sell a house in order to buy. It is often still difficult to sell and therefore many house sales stall before they even get going.
• Unlike in previous years buyers with a poor credit rating just won’t get a mortgage now.
• A lot of potential buyers are still not confident that the market has settled down and don’t want to risk seeing their asset lose value in the future.
Number of house sales
The number of home owners selling their houses is still well below healthy, long-term levels. Indeed house sale transactions in June this year were 60% down on same month in 2007. The constrained volume of house sales is leading to a temporary skew in demand/supply which will not last.
Mortgage lending
As lenders try to re-coup losses and limit further exposure to housing market fluctuations, mortgages remain difficult and expensive to secure.
• Amount of mortgage finance available is below historic levels as banks try to limit exposure to housing market.
• After getting their fingers burned with sub-prime, banks are now unlikely to give lending to those with poor credit.
• In an attempt to balance the books, the banks are charging higher fees and interest margins.
• Should interest rates increase over coming months it will severely impact affordability.
Unemployment
UK unemployment is nearing 2.5 million and is expected to keep increasing. Latest unemployment figures from the USA are running at a 26 yr high which may indicate what is to come this side of the pond.
Unemployment is not uniform and in areas that are worst effected house prices may fall as demand dries up.
Dramatic cuts in government spending are also expected and public sector jobs will go. Many area’s of England and Wales are very reliant on government jobs and in these area’s the impact could be drastic.
Repossessions
Huge numbers of home owners are in mortgage arrears. In normal circumstances they would have been repossessed but due mostly to government pressure and concern over results/share prices a lot of this “bad news” has been deferred. An influx of a large number of repo’s will further depress prices. Repossessions are normally listed very competitively to ensure the house sells. Normal house sellers then try to compete and the whole market is dragged down.
Wednesday, 6 May 2009
Good news is still hard to find. Prices continue to fall and sale volumes remain depressed.
Quick Move Now's summary of the housing market looks to key institutions and market indicators within the finance and property sectors to gain an insight into where the market is and where it’s heading.
House Price Index Halifax -1.7% (monthly change) -22.55% (fall since peak)
House Price Index Nationwide -0.4% (monthly change) -18.37% (fall since peak)Interest Rates 0.5%Quick Move FTI 33%Inflation 2.9%Economic Growth -1.9%Unemployment 2.10 million*Information compiled from various sources. Quick Move Now takes no responsibility for its accuracy. Last updated 06/05/2009
The UK property market continues to struggle in the global downturn, with prices falling and transaction volumes remaining at historically low levels.
The background to this has been economic data which has been nothing less than shocking. Economic growth has fallen at fastest rate since the O.N.S. began compiling figures and unemployment continues to rise rapidly. At the same time banks are still trying to recover from the credit crisis and balance the books.
All this means that confidence and lending remain deflated, until these return we cannot expect a housing market recovery.
Confidence is low. Unemployment and job insecurity are common and in these conditions most buyers are holding back. Even those with secure employment need much larger deposits and with prices falling very few are willing risk their hard earned savings.
Previously the property market has been stoked by easily arranged, cheap credit. Mortgage lending has decreased rapidly as banks try to reduce exposure to a falling market and repair profit margins. Therefore most buyers will require very large deposits to gain access to favourable interest rates and anyone with even a slightly dubious financial history may find agreeing a mortgage next to impossible. This excludes a huge volume of buyers who in recent years have driven the market forward.
Historic levels of credit availability are a long way off and with such a shock to banks and governments worldwide future regulation may limit credit permanently.
Demand drives competition, which in turn drives prices. As long as buyers are unwilling or unable to enter the market things are not going to improve.
Recent analysis of the 1990 price crash by Quick Move showed that property market recoveries can be very slow. According to the Nationwide it took 12 years for prices to recover to their pre-crash level.
With the depth of the current recession already eclipsing anything on record we could find recovery slow and long process.
Tuesday, 3 February 2009
The New Year gives us an opportunity to assess the impact of the extreme conditions of 2008 and take a look at what we can expect from 2009. Quick Move Now's summary of the housing market looks to key institutions and market indicators within the finance and property sectors to gain an insight into where the market is and where it’s heading.
House Price Index Halifax -2.2% (monthly change) -20% (fall since peak)
House Price Index Nationwide -1.3% (monthly change) -19.1% (fall since peak)
Interest Rates 1.5%
Quick Move FTI 39%
Inflation 3.1%
Economic Growth -1.5%
Unemployment 1.92 million
*Information compiled from various sources. Quick Move Now takes no responsibility for its accuracy. Last updated 03/02/2009
What does this all mean?
* UK officially in recession- Gross Domestic Product fell by 1.5% in the last quarter of 2008 representing the greatest fall since 1980. Following on from the -0.6% GDP of the previous quarter this means that we are now officially in a recession.
* House price indices- House prices continue to fall in excess of 2% per month, and have now contributed to a drop of 20% in sale prices since the peak. The consistency of these falls would imply that we are still a long way off the bottom of the market.
* Repossessions Soar- Quarter 3 of 2008 saw the number of repossessions grow in excess of 13,000, which was 92% higher than the same period of 2007.
* Unemployment still on the up- Unemployment is already nudging the 2 million mark and there is more sobering news to come. The impact of high profile closures in the retail sector along with massive negative growth in the manufacturing sector will see the pace of unemployment pick up in the next official figures.
* Aborted chains- There was little change to the Quick Move Fall Through Index which remains around 40% of sales aborting before completion. This demonstrates a lack of confidence in house prices from buyers and mortgage lenders alike.
What to expect for the rest of the year!
The problems all started in the US with the sub-prime lending crisis. The subsequent financial meltdown has had a worldwide impact with nearly every country, industry, company and person directly affected in some way.
Unfortunately there is no quick fix and stability is unlikely to return to the UK housing market until three main issues are resolved.
Confidence- With fear of unemployment and a depreciation of assets, people stop spending. In turn retail, manufacturing and service industries freeze and the cycle becomes increasingly exaggerated.
House buyers also worry about further depreciation of the value of property after purchase and this coupled with general financial insecurity mean they delay buying.
Lending- Despite government attempts there is no miracle cure to get banks to lending again. Inter bank lending and in turn mortgage lending remains contracted as banks struggle to take account of bad debt. Mortgage products have been adjusted to limit banks risk with 25% of all deals now on offer requiring a 40% deposit. The requirement for large deposits makes life especially difficult for first time buyers who normally form the foundation of a healthy property market.
Cash- With increasing unemployment, lower salaries and bonus payments people simply have less cash to spend. In such conditions people do not want to commit to buying a new home or increasing their financial liabilities
Unfortunately the complicated inter-related issues contributing to the current property slump do not have a speedy cure. Through a combination of public and private initiatives and normal market mechanisms- confidence, lending and cash will gradually return to the system allowing the property market to stabilise. Unfortunately this is unlikely to occur in 2009 although we hope the corner would be turned in 2010.
What to do if you need to sell!
The important thing if you need a quick sale is not to allow idle marketing, if a property does not receive viewings it will not sell. Every property has a price, to say ‘nothing is selling in my area’ is hiding from the truth and your asking price is probably too high!
Although being competitively priced will give you an edge it won’t guarantee the quick sale you need. With buyers being very cautious over what they buy and high numbers of aborted sales, completion timescales are lengthy and uncertain.
However Quick Move Now has a solution!
We can buy your home to the timescales you dictate and because we use our own cash to purchase the uncertainty of a sales chain is removed. So if you need a Quick Sale don’t hesitate, contact us today!
Who are Quick Move Now?
Quick Move is the UK’s leading home buyer. We buy your house for cash ensuring a quick, secure and efficient house sale. Operating since 1998 and having bought over 2,500 properties Quick Move is the largest and most respected company in the field. If you wish to learn more about the company visit About Us and read our Ethical Charter.
If you would like to discuss our service further contact us or complete an online form to receive an online estimate of our likely offer level.
Thursday, 4 December 2008
Here is Quick Move Now's summary of the housing market for Dec 4. As you can see, the outlook is still poor, with growth still at -0.5%, the lowest for over 15 years.
House Price Index Halifax -2.6%
House Price Index Nationwide -0.4%
Interest Rates 2%
Quick Move FTI 39%
Inflation 4.5%
Economic Growth -0.5%
Unemployment 1.82 million
*Information compiled from various sources. Quick Move Now takes no responsibility for its accuracy. Last updated 04/12/2008
Wednesday, 26 November 2008
The housing market fluctuates and is influenced by many external factors. You can’t accurately predict market movements but if you want to buy or sell a house it should be based on informed decisions.
The following are key indicators* of the health of the housing market:
House Price Index Halifax -2.2%
House Price Index Nationwide -1.4%
Interest Rates 3%
Quick Move FTI 39%
Inflation 4.5%
Economic Growth -0.5%
Unemployment 1.82 million
*Information compiled from various sources. Quick Move Now takes no responsibility for its accuracy. Last updated 20/11/2008
Unfortunately the housing market is going through a very difficult period. The credit crunch has had a devastating impact and we are now entering what could be a severe and prolonged recession.
What the stats tell us:
- House price indices are showing continued monthly falls in house prices. With the average price of a £170,000 house falling £3,500 a month, prices are now over 14% lower than a year ago.
- The credit crunch has meant that banks have reduced mortgage availability. Lenders require deposits of 15%+ for the best deals and won’t touch anyone with dubious credit history.
- Increased repossessions. As well as the obvious impact on the home owner, selling on of repossessions further distorts the market and drags prices down.
- Aborted chains - the Quick Move Fall Through Index shows around 40% of sales abort before completion. Well over historic levels.
- Unemployment is rising and expected to top 3 million in 2009. As jobless numbers increase and those in work find wages and bonuses squeezed, fewer people want the financial commitment of buying a home.
- Negative economic growth for the first time in 16 years. It is now widely accepted that we are at the start of a deep recession.
- Good news is that inflation should fall rapidly. This will enable the Bank of England to reduce interest rates further to try and invigorate the economy.
Outlook
It now looks like the UK is well and truly in recession. Few areas of the economy will avoid the slowdown and historically the housing market is hit harder than most.
As the recession bites consumer spending will be reigned in. At the same time the continuing credit crisis will mean further tightening of the mortgage market.
With money tight and employment uncertain demand from house buyers will fall. Leading to lower sales volumes and prices as home sellers compete hard for buyers.
Most agree that the housing market and wider economy will slide into a prolonged period of recession the only argument is about how long it will last.
This is likely to be a global recession caused and prolonged by lack of confidence in financial markets. Until confidence returns to financial markets and bricks and mortar we are unlikely to see a recovery in the housing market or UK economy.
What should you do?
The advice you will receive is to stay where you are, keep working hard, reduce outgoings and keep up mortgage payments.
However the reality is that circumstances change. Families grow, people fall ill, get made redundant or an opportunity arises in property or business. In short whatever is happening in the wider market some people have to sell their home.
So happens if you do need to sell your home?
Be Realistic
If you need to sell your house, be realistic from day one. Setting your asking price too high will discourage interest and you may fail to sell your home and see its value plummet.
E.G. If prices continue to fall at 2% per month:
A house worth £400,000 now could be worth £300,000 in 12 months!
A house worth £170,000 now could be worth £130,000 in 12 months!
Sell Your House Quickly
The best option is to sell your house quickly. This meets your immediate need and enables a quick house sale to release equity or buy a new home. It is also means you cash in your property at its current value rather than letting its value continue to erode as the market falls.
Unfortunately quick house sales are very difficult to achieve in the current market. Even at realistic prices buyers struggle to secure mortgages and/or sell their own homes and so can’t get in a position to buy your home. This is where Quick Move Now can help.
Who are Quick Move Now?
Quick Move is the UK’s leading home buyer. We buy your house for cash ensuring a quick, secure and efficient house sale. Operating since 1998 and having bought over 2,500 properties Quick Move is the largest and most respected company in the field. If you wish to learn more about the company visit About Us and read our Ethical Charter.
If you would like to discuss our service further contact us or complete an online form to receive an online estimate of our likely offer level.
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