Finance Matters

Posts Tagged ‘demand’

A survey by LSL Property Services has revealed rents in England and Wales continue to surge, with the average rent hitting a further record high last month.

August represented the seventh consecutive month that the average rental cost rose.

Lenders’ deposit requirements, together with unaffordable house prices has meant the rented sector has been in high demand and this has driven up prices.

According to LSL, the average rent stands at £713 – an all-time high – with tenants paying 1.2% more on average to rent a property in the UK in August than they did in July.

Rents increased fastest in Wales and the South East, up 2.1% in the month. However, the West and East Midlands both noted month-on-month falls, with average rents falling 0.4%.

London experienced the largest annual growth with rent up 6.6%, LSL said.

Commenting on its analysis, David Newnes of LSL said: “We are in the thick of the busiest time of year for the rental market, and red-hot demand for properties is driving rents up at their fastest monthly pace in the last 12 months.

According to Mr Newnes, average rents have risen by more than £50 a month in the last two years.

Rents are on an upward trend and LSL believe that it is unlikely that tenants will gain respite any time soon.

Research shows many tenants in rented properties would like to get a foot on the property ladder but are unable to do so unless they have a deposit of around 20% in order to secure a mortgage.

In the meantime, tenant arrears rose for the first time since April, with 10.7% of all UK rent unpaid or late by the end of August, up from 9% in July.

LSL cautions that tenants will face mounting pressure over the medium term, particularly as inflation remains high and public sector job losses take effect.

The Council of Mortgage Lenders (CML) has reported the number of loans for house purchase rose in July.

According to the Council, there were 48,400 loans advanced for house purchase in the month – up by 1,000 from June’s figure but almost 7,000 lower when compared with July 2010.

Commenting on today’s figures, Paul Smee, director-general of the CML, said: “August saw global financial turmoil and unrest closer to home and recent Bank of England approvals figures do not necessarily suggest a continuing upturn in lending in coming months.”

Meanwhile, of the 48,400 loans, 18,200 were provided to first-time buyers – a fall of 1,300 lower when compared to the same month a year ago.

First-time buyers have to put down an average deposit of 20% in order to secure a mortgage, according to the Council.

With house prices edging higher for the year to date, the average new mortgage has gone back up to £120,000, the CML said, meaning affordability remains a major issue for first-time buyers.

Meanwhile, remortgaging also edged higher in July, with 31,500 loans worth £4 billion – up 1% on June’s figure.

Remortgaging has remained subdued during the historically low interest rate environment but soaring inflation over the last few months has led to speculation that interest rates will be lifted.

The British Bankers’ Association (BBA) recently announced house purchase approvals came in at 33,417 for July, activity having gathered pace since June (32,123) and exceeded the previous six-month average (30,695).

However, while the CML said the UK mortgage market is holding steady, many still believe that activity and mortgage lending is expected to remain subdued throughout the remainder of the year as a result of uncertainty surrounding the economy and rising unemployment.

In other news today, the Royal Institution of Chartered Surveyors (Rics) said just 14 homes were sold per estate agent in the three months to August – the lowest level for over two years.

Furthermore, more surveyors reported price falls than price rises in August, the Rics said.

The housing market in England and Wales is “in broad equilibrium” despite prices continuing to edge lower, according to Hometrack, which recorded a 0.1% fall in the value of the typical dwelling in July, compared with June. However, there are wide regional variations: prices moved higher across 8% of postcodes (primarily in London) and were [...]

The Society of Motor Manufacturers and Traders (SMMT) have revealed UK car sales fell by 6.2% in June compared with the same month in 2010. The SMMT said the number of new cars sold in the month was 183,125 – representing the twelfth consecutive monthly fall in sales. Meanwhile, registrations in the first six months [...]

The Society of Motor Manufacturers and Traders (SMMT) have revealed UK car sales fell by 6.2% in June compared with the same month in 2010. The SMMT said the number of new cars sold in the month was 183,125 – representing the twelfth consecutive monthly fall in sales. Meanwhile, registrations in the first six months [...]