so what’s new with the housing market
Friday 23 September 2011
Summer holidays are over and a glorious autumn has truly set in. Christmas is only 94 days away (I hear shrieks and yells as I drop the bomb shell on my colleagues) and in 100 days time we will be celebrating a somewhat austere, yet hopeful New Year. So what do we know about the property market as it moves into its final quarter?
Well it's not all bad news! Although the bigger economic picture conveys a decrease nationally in average house prices, the regional picture is very different.
The latest house price survey by Nationwide indicated that quarterly price growth in London remained robust with a seasonally adjusted increase of 2.6%. Whilst London was the only region to see a year on year rise in house prices (up 2.9% on the same quarter a year ago), the strong growth in the capital is seen to be rippling out to neighbouring counties. Of particular note are Kent and the South East where buyers are finding their money can go a lot further whilst remaining within easy reach of London.
The August RICS UK housing market survey also indicates an upward trend towards the end of 2011 with London and the surrounding areas reporting the strongest performance - with prices just below their 2007 peak.
Sub-regional analysis sees Kent's house prices up by 1% this quarter, and Kings Hill is certainly holding its own with new sellers' average asking prices up by 0.7% this month. (Rightmove blog - September 2011).
The reasoning behind London and the South East's resilience is partly due to the lack of stock being developed - substantially below the recently updated projections for household growth over the next couple of decades. This lack of new supply is likely to prevent any decline in house prices and is a key factor in leading to national recovery.
The rebound in the capital's economy has been surprisingly strong which, together with healthy interest from foreign buyers, has supported demand. With the supply-side of the property market more constrained than the rest of the country (i.e. less scope to build), strong demand for family homes in popular areas drives house prices higher. This in turn sees lenders becoming more willing to channel more finance into the mortgage market, indeed UK mortgage approvals rose to their highest level in 15 months in the month of August this year. A recent decline in average mortgage rates has made property buying more affordable, and low interest rates are likely to continue to help in this respect.
A further factor which has been driving housing demand is the fear of stock markets which have been yo-yoing violently in previous years. Together with low annuity rates on pensions, this has seen many of our older generation deciding to put their retirement savings into buy-to-let properties instead. Unlike buying stocks and shares, investing in bricks and mortar gives the owner a tangible asset.
So although we are in times of general economic uncertainty, we can expect to see prices for property in popular areas creeping up towards the end of the year and hopefully well into 2012.