Finance Matters

Posts Tagged ‘Property News’

House prices have fallen for the first time in six months, with the decline attributed to changes in stamp duty.

The average house price in March was £163,327, 0.9 per cent lower than in March 2011.

It was the largest fall in house prices since June last year.

Nationwide’s figures showed a fall in nearly every region of the UK, compared with the previous quarter.

However house prices increased by 0.6 per cent in the north of England.

They also increased in Scotland, and Greater London.

Stamp duty changes also affected mortgage approvals, which dropped to 48,986 in February, the lowest level for three years, according to figures released by the Bank of England.

The figure was 9,000 lower than in January, when first-time buyers were rushing to buy a property before the end of the stamp duty holiday.

Temporary changes introduced in 2010 meant that properties worth between £125,000 and £250,000 were exempt from the 1 per cent stamp duty, but this was re-introduced on 24 March.

The number of mortgage approvals in January reached a 25-month high but analysts warned that a dip was likely when the stamp duty was re-introduced.

In contrast, the Building Societies Association (BSA) also released new figures today, showing that mortgage approvals by building societies and other mutual lenders increased in February 2012.

Compared with February 2011 they were 31 per cent higher and they also increased, by 29 per cent, compared with January 2012.

According to the BSA’s figures there were £2.2 billion-worth of mortgage approvals in February.

Adrian Coles, director-general of the BSA, said: “Gross lending and new mortgage approvals by mutuals continued to rise year on year in February, despite growth across the market as a whole remaining relatively flat.

“The strong financial results released by a number of mutual lenders in recent months show that the sector is well positioned to offer market leading products to its customers and are open for business.”

The number of £2m-plus homes sold in England and Wales fell to 103 in December 2011, 18 per cent lower than the figure for December 2010.

Eighty of the £2m-plus properties sold during the month were located in London, where prices have been rising faster than in other parts of the UK.

The most popular price bracket in December was £100,000 to £150,000, with a total of 14,385 homes in this range sold.

These properties benefited from the 1% stamp duty holiday which ends tomorrow, when homes sold for more than £125,000 will be subject to the tax.

In Wednesday’s budget the chancellor announced that the level of stamp duty on residential properties over £2m would increase to 7 per cent with immediate effect.

It was previously 5 per cent for all properties over £1 million.

The new charge means that stamp duty on a £5 million property will now cost £350,000, an increase of £100,000.

The Chancellor has also introduced measures to ensure that stamp duty is paid on properties purchased through an offshore company

A loophole in the law previously allowed wealthy purchasers to avoid paying stamp duty by purchasing properties in this way.

However, in future such properties will be subject to stamp duty of 15 per cent.

The move is expected to raise £65 million a year for the Treasury.

The Land Registry said that February was the fourteenth conservative month of declining house prices, although the rate of fall slowed from the previous month.

On an annual basis, house prices fell by 0.6 per cent in February, compared with 1.1 per cent in January.

However prices increased in London and the south of England.

The average price of a house in England and Wales was £161,588 in February, compared with £161,368 in January.

UK house prices increased by £3,687 to £236,939 in March, a 4.9 per cent increase compared with the 2011 first quarter.

The figures, from Rightmove’s house price index, represent the largest first-quarter rise in property prices since 2004, boosting hopes for an continued improvement in the market for the rest of the year.

In London, where interest from overseas buyers has soared, house prices increased by 7.3 per cent compared with the first quarter of 2011, to £455,159.

The average asking price in Kensington and Chelsea exceeded £2 million for the first time.

Rightmove director, Miles Shipside, spoke out against the end of the stamp duty holiday on properties valued between £125,000 and £250,000.

The 1% stamp duty on houses in this price range will be imposed again from 24 March.

Mr Shipside said: “For a first time buyer it’s already hard enough to raise the necessary deposit and now, as well as potentially losing between £1,250 and £2,500 in stamp duty exemption, asking prices for their target property types have increased by over £5,000 in the last year as well.”

A recent report by the Building Societies Association suggested that consumer optimism in the housing market is returning.

Four out of 10 people surveyed in the 2012 first quarter said they expected house prices to rise during the year, according to the BSA’s Property Tracker study.

Optimism is greatest in south east England, where 53 per cent expect property prices to rise.

In contrast, just 30 per cent of those surveyed in Wales, said they expected an increase.

Although there was a general mood of optimism, 56 per cent were pessimistic about employment, and said that job insecurity was a barrier to the property market recovering.

Stamp duty was also seen as a barrier to recovery, with 12 per cent of those surveyed saying that stamp duty was a problem, compared with 10 per cent in the final quarter of 2011.

Rents on private accommodation fell by 0.6 per cent last month, to an average of £707, according to the latest Buy-to-Let Index from LSL, a provider of residential property services.

The agency suggests that the fall is likely to be temporary as it is related to an increase in the number of tenants deciding to purchase a property.

Many potential first-time buyers have been rushing to take their first step on the property ladder before the end of the 1 per cent stamp duty exemption on properties worth between £125,000 and £250,000, which takes effect on 24 March.

According to LSL’s figures, the annual inflation rate for private rents fell from 4.3% in January to 3.5% in February, but this is likely to increase again in the medium-term.

Commenting on February’s figures, David Newnes, a director of LSL, said: “With fewer tenants than usual actively competing for properties, combined with a slight improvement in the number of rental properties becoming available, many landlords priced less aggressively to avoid the prospect of a void period.

Despite the fall in February, on an annual basis rents increased by 3.5%, representing a £24 increase over the past year.

However buying a property is still cheaper than renting across most of Britain according to new figures from property website Zoopla.co.uk .

Paying a mortgage is cheaper than paying rent in 84 per cent of the country, including 42 of Britain’s top 50 towns and cities, Zoopla said.

According to Zoopla’s figures, monthly rent in Britain fell by an average of £9 over the past three months, to £1,470 per month in February

Nicholas Leeming of Zoopla.co.uk said: “Despite a recent increase in first-time buyer activity, demand from consumers remains strong and is keeping rental levels at historic highs.

“This, along with historically low borrowing costs, makes it as good a time to buy as it ever has been.”

Signs are emerging that the UK property market is slowly starting to improve.

According to the latest figures from The Royal Institution of Chartered Surveyors (RICS), the number of house sales increased in January, helped by first-time buyers rushing to secure a purchase before the end of the stamp duty exemption on homes under £250,000.

RICs reported that average sales per estate agent branch increased from 15.7 to 16 in February.

However, house prices continued to fall during the month, but at their slowest rate for 18 months.

Surveyors are not expecting prices to fall further, and anticipate that sales will continue to increase for the next three months.

Alan Collett, RICS housing spokesman, said: “With the recent upturn in activity brought on by the end of the stamp duty holiday, it seems that a renewed sense of optimism may be slowly returning to the property market.

“However, with affordable mortgage finance still out of reach for many potential first time buyers, it remains to be seen whether the more optimistic outlook for future sales can be sustained beyond the expiry of the stamp duty holiday.”

According to The Department for Communities and Local Government (DCLG) the average UK house price increased by 0.7% in January to £206,523.

In January 35,600 home loans were approved, a 22 per cent increase compared with January 2010, but 25 per cent lower than December according to the Council for Mortgage Lenders.

Yesterday the government launched two schemes designed to boost the housing market.

The NewBuy scheme offers 100,000 mortgages on newly built homes, requiring a deposit of just five per cent of the property value.

It is designed to help first-time buyers afford a mortgage on their first home while offering lenders some protection against borrowers defaulting on their mortgage.

The Right to Buy scheme has also been re-launched, giving up to two million social tenants the opportunity to buy their council home with a discount of up to £75,000 – treble its current level in most parts of the country.

Further changes to the scheme mean that additional properties sold must be replaced with new affordable homes for rent.