House Price Gloom

Those who rather foolishly rely on the capital appreciation of property (ie house price rises) to provide them with a psychological feeling of being wealthy, are set to be rather disappointed this Christmas.

The Royal Institution of Chartered Surveyors (RICS) reports that house prices kept falling in November, as a result of the slow economy and lack of funding for first-time buyers.

The number of transactions is very low and the overall market subdued.

This moribund market is expecting to continue into 2011.

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Dead Cat Bounce, or Green Shoots?

There are tentative signs of a recovery in the housing market. The Times reports that the Royal Institution of Chartered Surveyors (RICS) have stated that 41% more chartered surveyors are reporting new buyer inquiries rising rather than falling in April, this is the highest reading since August 1999.

RICS also reported that estate agents sold an average of 10.6 properties between February and April, this is up from 9.7 in the three months to March.

On the retail front, the British Retail Consortium (BRC) reported an increase in like for like sales in April of 4.6% (the largest increase in 3 years).

The question is, are these green shoots or merely a dead cat bounce?

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Housing Market Grinds To A Halt

The Royal Institution of Chartered Surveyors (RICS) report that the housing market ground to a virtual standstill last month, as a result of the lack of mortgages.

RICS report that the average number of property sales handled by surveyors, over the past three months, fell to 14.4.

Needless to say the government's botched leak about the possibility of lifting stamp duty for a few months has added to the problems, as people have now delayed making a purchase until the situation is clarified.

Unfortunately the government will not be clarifying its position anytime soon, as the Treasury blames Number 10 for the leak and Number 10 claims it was not responsible.

Brown's government is collapsing around his ears, and is bringing the economy down with it.

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The Engine of The Economy Splutters To A Halt

The engine of the British economy, the housing market, looks set to splutter to a halt. Figures released by the Royal Institution of Chartered Surveyors (RICS) indicate that house price declines in June stayed close to the most widespread decline since RICs began to measure the property market in 1978.

The number of residential property agents and surveyors saying prices fell exceeded those reporting gains by 88%, in May it was 92%.

To add to the market's woes, RICS state that property sales have fallen to the lowest on record. Additionally mortgage approvals fell to the lowest in at least nine years in May, many buyers are finding themselves frozen out by tight lending conditions.

The Bank of England, as it considers what to do with interest rates and easing liquidity, would do well to bear in mind that the housing market is the engine of the economy.

Kill that off, and the economy dies with it.

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Mixed Signals From The Housing Market

Chancellor Alistair Darling told parliament yesterday that the housing market was cooling, as price growth slows down. However, he tried to balance that point by noting that it remains fundamentally strong.

Quote:

"Yes it's true that house prices are slowing down, but this is on the back of many years when house prices have been growing at 10 percent or even more in some parts of the country for many years.

I believe the housing market in this country, although it will slow down, is fundamentally strong."

Well he would say that, wouldn't he?

The Halifax report that house prices fell by 0.3% last month (analysts had predicted a 0.2% fall).

The annual rate of house price growth is now 4.2%.

However, the buy to let sector (which to a large extent has fuelled house price growth) seems to be feeling the effects of the credit crunch, as sources of loans for new entrants are drying up.

The Royal Institute of Chartered Surveyors (RICS) said that the number of landlords instructing estate agents to rent out their properties had fallen by 1% during the final quarter of 2007. This is the first decline in ten years, and compares very unfavourably with the 11% increase the previous three months.

Banks and building societies have increasingly stopped offering buy to let mortgages.

A mixed picture, which indicates unsettled times ahead for landlords, property owners and house hunters.

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Stable Houses

It seems that the UK housing market might experience some near term weakness, but house prices should remain broadly unchanged during 2008.

That at least is the optimistic message from the Royal Institution of Chartered Surveyors (RICS).

RICS expects the Bank of England to lower interest rates to 5% during the first half of 2008.

RICS expects repossessions to rise to 45,000 from 30,000 next year.

Some seasonal cheer at least.

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House Prices Fall

The Royal Institution of Chartered Surveyors (RICS) report that house prices across the UK fell last month, at the fastest rate for two years.

RICS stated that in September, 14.6% more surveyors reported a fall in prices rather than a rise. In August 3.3% more surveyors that reported a fall over a price rises.

In another indication that the property boom is over, new buyer enquiries fell for the tenth consecutive month.

Jeremy Leaf, a spokesman for RICS, is quoted in the Guardian as saying:

"The combination of rising interest rates, the introduction of home information packs and volatility in the financial markets resulting in tightening of lending criteria, has certainly affected the confidence of buyers and sellers.

As a result, some would-be buyers are turning to the rental market."

Mr Leaf is of the view that the housing market is in for a soft landing, rather than total collapse, on the assumption that there are no other shocks to the economy.

London, as ever, showed a small rise in prices; as the market there is boosted by wealthy foreigners and those on multi digit bonuses.

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Broken HIPs

The much derided and incompetently drafted Home Information Packs (HIPs) legislation has been given another sound battering, this time by the Royal Royal Institution of Chartered Surveyors (RICS).

RICS has highlighted a loophole which renders the HIPs unnecessary and costly box ticking procedures useless.

New rules put forward in Parliament state that packs must be commissioned when a home is put on the market. However, and here is the clever bit, RICS say that no purchase of the same pack is necessary before exchanging contracts.

RICS state that vendors can exploit this, by completing the sale but never going through with the £400 purchase of a HIP.

Spokesperson Jeremy Leaf said:

"This is another example of rushed policy that fails to meet the needs of consumers and the housing industry.

Unless the Government can show us the regulation that says a property cannot be sold without a HIP, consumers and industry will draw their own conclusion."

It is a sad reflection of the current government that many pieces of their headline grabbing legislation have been rushed, and have been very poorly drafted.

The irony with HIP's is that Labour have been pushing this idea since 1997. You would have thought that they could have ironed all the problems out in that 10 years.

Evidently not!

Needless to say the Association of Home Information Pack Providers (AHIPP), who of course were relying on all that lovely money that HIPs would have earned them, are not best pleased with the RICS view of reality.

Mike Ockden, Director General of AHIPP, said:

"The allegation made today by RICS, claiming to have found a loop-hole in the latest Home Information Pack regulations, which will not require sellers to produce a HIP at the exchange of contracts, is nothing more than the typical anti-HIP propaganda we have learned to expect.

Following our own investigations into the regulations, this allegation is totally unfounded."

The astute amongst you will notice that despite his venom, Ockden has not bothered to explain why they dispute the RICS viewpoint.

A cynic might argue that AHIPP, since they were relying on the future income stream, would say anything to guard their income income stream.

I think it is fair to say that, whatever the views of AHIPP, HIPs are in effect so fatally fractured that they will die a death.

Good riddance to bad rubbish!

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Slow Down In Housing Market

The UK housing market slowed slightly in May, as housebuyers started to take on board the effects of the recent interest rake hikes by the Bank of England.

The Royal Institution of Chartered Surveyors (RICS) issued its regular monthly report, which said that a balance of +24% of its members reported house prices rising in May, lower than the 29% in April and below the +26% predicted.

RICS spokesman, Jeremy Leaf, said:

"With interest rates expected to rise even higher and some home owners fearing the end of fixed rate deals, affordability conditions are set to worsen across the board and will herald a cooling market."

RICS noted that the effect of the rates rises have had on new buyer enquiries has so far been quite limited, with the absolute level of demand still high in light of buoyant economic conditions.

This modest slow down augurs for a further rate rise, as the Bank of England will wish to temper the housing market further.

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Rate Hikes Yet To Be Fully Absorbed

The recent interest rate hikes by the Bank of England have yet to be fully absorbed by the UK housing market.

That at least is the conclusion of the Royal Institute of Chartered Surveyors (RICS).

Quote:

"The full impact of current rate hikes on the housing market should not start to appear until after the summer."

It would seem that there are indications that there is some cooling off in the housing market. The Land Registry survey for April showed that prices are being buoyed by London, while house prices fell in four English regions. Figures from the Bank of England showed mortgage approvals fell for the third month running in April.

It is expected that the Bank of England will raise rates at least one more time this year.

Belt tightening time is upon us.

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Rental Property Slowdown

In further worrying news for those with a stake in the housing market, figures show that the demand for rented properties in the UK suffered its worst slowdown for two years in the three months to April.

The lettings survey from the Royal Institute of Chartered Surveyors showed demand being hit.

RICS spokesman, Jeremy Leaf, said:

"Housebuyers are returning to the market to avoid rising borrowing costs, signalling a drop in demand for rental property.

Rising borrowing costs and a subsequent drop in yields have also contributed to a worrying time for landlords."

New landlord instructions, an indicator of how many people are buying to let, fell slightly in the quarter to April.

Leaf added:

"The fall in activity has been driven by a continued reduction in yields and signs that underlying house price growth is beginning to slow.

Interest rate rises later in the year will have a further dampening effect, but the underlying strength of the economy and an active housing market should ensure a soft landing for many."

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