Housing & mortgage round up: House prices fall, or do they? Two surveys, two different answers


Housing & mortgage round upTwo house prices surveys and two different results, one saying prices are falling and the other that they are rising. Read on to find out more about this and also why many tenants are getting into arrears with their rent.

Land Registry: House prices fell in April

Figures released by the Land Registry show that house prices fell by 0.3% in April and by 1% over the past 12 months.

According to the Land Registry house prices have now fallen for 16 consecutive months and the average house in England and Wales is now worth £160,417.

The fall in April was partly based on the end of the Stamp Duty holiday for first time buyers, although experts point out that rising mortgage interest rates, tight mortgage lending criteria and a generally sluggish economy will all have played a part.

Despite the fall across England and Wales, London bucked the trend showing a huge rise of 5.1% in April alone.

Commenting on their figures the Land Registry said that house prices were on a “slow, downward grind” over the next few months.

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Nationwide: House prices rose in May

In contrast to the Land Registry figures the Nationwide Building Society’s House Price Index showed that house prices actually rose in May.

The country’s largest building society released figures last week which showed a 0.3% rise in house prices last month.

According to the Nationwide the average property in the UK is now worth £166,022, down 0.7% over the past 12 months even taking into account the small rise in May.

60th anniversary of the Nationwide House Price Index

This year marks the 60th anniversary of the Nationwide House Price Index.

The Index has charted the highs and lows of the UK housing market with the average house rising in value over 88 times during the past six decades.

When the index started the average UK house was worth £1,891, despite the most recent slump in the housing market the average UK house is now worth £166,022, with house prices rising significantly faster than inflation over that time.

The Nationwide’s Chief Economist, Robert Gardner, said: “Dramatic increases might be expected over such a long timeframe, but over the last eighteen months, house prices have been fairly stable, despite the challenging economic backdrop.”

He continued: “May’s data provides some comfort that this pattern is being maintained. Prices were up by a modest 0.3% over the month, and were just 0.7% lower than May last year, even though the UK economy dipped back into recession in quarter one, and showed few signs of a significant pickup in economic activity at the start of quarter two.”

“Demand for homes remains subdued on the back of weak labour market conditions, but the lack of homes coming onto the market is providing support for prices. This is in part a reflection of the low rate of building in recent years which has failed to keep pace with household formation.”

More tenants face problems with arrears

The Consumer Credit Counselling Service  (CCCS) has highlighted the growing problems tenants are facing with rent arrears.

The charity, which helps provide impartial advice to people in debt, said that it had 10,246 requests for help with rent arrears in 2011; a 27% rise on 2010. The average tenant was £760 in arrears, although the average debt to private landlords was higher at £924.

The problem has been blamed on rising rents and relatively high inflation at a time when wages have broadly remained static; the average tenant contacting CCCS had a monthly shortfall in their finances of £82.

Delroy Corinaldi, CCCS Director of External Affairs, said: “A very large number of people are struggling to keep up with their rent payments and with rents near record highs, the problem is getting worse, not better.”

He continued: “Household finances are being squeezed as it is and for many people another rent hike will be the straw that breaks the camel’s back.”

Kay Boycott, Director of Communications, Policy & Campaigns at Shelter, said: “These figures paint a worrying picture of the rising numbers of families who face a monthly battle to keep a roof over their head. As high unemployment and the rising cost of living continue to take their toll, more and more people are feeling the strain. Often just one thing like an unexpected bill can be enough to tip people over the edge and may put their home at risk.”

She continued: “Getting advice early can help to stop things from spiralling out of control. Anyone worried about debt or housing costs should seek independent advice as soon as possible.”

Mortgage lending rises….slightly

Figures from the Bank of England have shown that mortgage lending rose slightly in April compared to the previous months and forecasts.

51,823 mortgages were approved in April, up marginally from 51,067 in March and just above the predicted level.

The number of mortgage approvals is still only around half the level seen in the last housing boom and is an indication of just how stagnant the UK housing market is.

Andrew Goodwin, Senior Economic Advisor to the Ernst & Young ITEM Club, said: “The secured lending figures are a little stronger than the previous month, but nothing to get particularly excited about. Activity is still down on the levels reported at the end of last year. However, it is heartening that at least we haven’t yet seen any evidence of the sharp tightening in mortgage availability which the latest Credit Conditions Survey had predicted.”

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