Housing & mortgage round up: Good news for rural homeowners, whilst asking prices and mortgage lending falls


Housing & mortgage round upThere’s good news this week for rural property owners, whilst more signs emerge of a stagnant housing market as asking prices and mortgage lending falls.

Rents are on the rise again, causing more hardship for first time buyers, trying hard to save a deposit.

Good news for rural homeowners

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A new survey from the UK’s largest mortgage lender, the Halifax, has shown that property prices in rural parts of the country have held up better over recent years than urban homes.

Since the peak of the housing boom, in 2007, properties in rural locations have fallen in value by 20%, compared to 22% in more urban areas.

The survey found that the average countryside home is now worth £201,191, significantly higher than the average property, which is worth around £160,000, according to both the Halifax and Nationwide housing surveys.

However, despite the resilience shown by rural properties, they have risen more slowly over the longer term. Over the past 10 years house prices in rural areas have risen by an average of 36%, compared to 40% in towns and cities.

Experts believe that prices in more rural areas have held up because of the shortage of housing stock, the inability for developers to build on protected land, and the perceived better quality of life.

However, higher prices have made rural locations less affordable, forcing many people to move away from villages into more urban areas. First time buyers have been hit particularly hard, with only one third of purchases being made by first time buyers in the countryside, compared to half in towns and cities.

Martin Ellis, Housing Economist at Halifax, said: “Country living is an aspiration for many Britons: the fresh air; the scenery; the slower pace; it all adds to the attraction – but this has its drawbacks. For many of those tempted, the high prices put rural homes out of their reach. First time buyers in particular are affected by high rural property prices, and consequently they account for a far smaller proportion of homebuyers than they do in urban areas.”

He continued: “The traditional British country pile has become less affordable, and it is proving more and more difficult to find fruitful results when foraging for houses in the country.”

Asking prices fall for third month in a row

New figures from Rightmove have shown that sellers reduced asking prices by 0.6% in August compared to July. According to the estate agent the average asking price fell to £234,858 in August for homes in England & Wales.

The fall in August comes on the back of falls of 1.7% and 2.4% in the previous two months, with houses coming onto the market now an average of £11,000 cheaper than this time three months ago.

Experts believe that the usual summer lull has been compounded by one off events such as the Olympics and the Jubilee.

Miles Shipside, Housing Analyst with Rightmove, said: “The state of the housing market is little different now to this time last year and prices have stagnated as neither buyers nor sellers have been forced to change their behaviours in sufficient quantities to stimulate greater activity.”

He added: “The global squeeze in the credit markets has seriously affected the man on the street’s access to mortgage financing, permanently hampering their ability to finance their journey onto and up the housing ladder.

Mortgage lending falls

Mortgage lending fell slightly in August as the UK housing market remained subdued.

New figures from the Council of Mortgage Lenders (CML) show that gross mortgage lending fell to £12.6 billion in August, down from £12.7 billion in July . Gross lending was also down 4% on the same time last year.

Despite August being a traditionally slow month, the new figures emphasise how subdued the UK housing market, is although experts hope that government initiatives such as the Funding for Lending Scheme and the NewBuy Scheme will give the market a much needed boost in the Autumn.

Bob Pannell, CML Chief Executive, said:  “The (Funding for Lending) scheme is a bold move that has the potential to greatly influence the course of the housing market over the next year or so.”

He continued: “While not a panacea for all housing market problems, the scheme does offer the potential to improve the lending environment. Unfortunately, it will be towards year-end before any initial assessment of its impact can be reached.”

Many mortgage brokers  thought are concerned that the Funding for Lending Scheme will simply make mortgages cheaper for people who can already get a loan and make it no easier for first time buyers, who have found it harder to get a mortgage since the credit crunch.

Rents rise in a blow for first time buyers

New figures have shown that average rents rose to record levels in August, causing more financial hardship for first time buyers.

The survey of 18,000 properties from LSL, a large UK letting agent, shows that the average rent in England and Wales rose to £734 per month, a rise of nearly 3% on the same time last year and a new record level.

Rising rents cause particular problems for would-be first time buyers, trying hard to save a house deposit, which will allow them to get on the first rung of the housing ladder.

Despite the rise in average monthly rents it seems as though fewer tenants are struggling keep up with their payments; te number of tenants with arrears fell in August, according to LSL, to 9%.

Our mortgage adviser, Linda Wood, is here to help you. If you would like advice on your options or you are affected by any of the stories in this week’s housing round up please call Linda today on 0115 933 8433, alternatively enquire online or email linda.wood@investmentsense.co.uk

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