Gross mortgage lending totalled an estimated £11.3 billion in May, a 7% increase from £10.5 billion in April and up 10% from £10.2 billion in May 2009, according to new data from the Council of Mortgage Lenders.
The market remains subdued and, while more buoyant than a year ago, turnover is a little below that seen towards the end of 2009. Gross lending may marginally undershoot the existing CML forecast of £150 billion for 2010.
CML economist Paul Samter commented:
“The ground has been cleared for next week's Budget to be the start of an austerity drive to get the public finances onto a more sustainable footing. We do not expect it to include housing and mortgage specific direct tax measures. But the market will inevitably be affected by how policy impacts on the wider economy - particularly on household finances and confidence.
“Financial sector regulation is a further source of uncertainty. The Chancellor has announced that the Bank of England is to take on regulatory responsibility for the banking system. As well as regulating individual firms, the Bank will have "macro prudential" powers and be accountable for the stability of the system as a whole. But it is not yet clear what levers it will have at its disposal to do so.”
Stuart Law, of Assetz said:
"As expected, the latest figures from the CML show that gross mortgage lending increased again in May, following a pre-election dip in April, suggesting that consumer confidence has increased now that the Lib-Con government is in place.
"The latest data from the Assetz House Price Watch, an amalgamation of the five major UK indices – CLG, Nationwide, Halifax, Acadametrics and Rightmove, shows that average house prices are now less than 7% below the peak recorded in 2007 and they have climbed by over 3% for the year to date, rubbishing fears of an imminent second dip in the housing market.
“All signs suggest that the property market continues to prosper and we are now in the throes of a consistent housing market recovery, despite the potential tax increases which are likely to be announced in the budget next week.”
http://firsttimebuyersupermarket.co.uk/
Monday, 21 June 2010
House price growth remains robust
Latest figures show that average house prices were 7.8% higher in May than at the same time in 2009.
The Assetz House Price Watch compiles monthly average figures taken from five of the major house price indices to offer a more accurate picture of house price trends.
The average house price in May was £200,347, representing annual growth of 7.8% from May 2009 – falling back from the high rate of annual growth recorded in April (9.1%). Despite the reduced rate of annual growth, average prices continued the steady rise seen over the last 12 months, remaining at the highest level recorded in nearly two years (July 2008).
The six month rolling average continues to indicate a period of market stability, with figures maintained at a sustainable level, fluctuating only 1-2%, for the year to date. This is in stark contrast to data recorded during 2009 when the market began its correction.
Stuart Law, Chief Executive of Assetz, said:
“Since the start of 2010, the annualised House Price Watch data has been pointing towards a more stable outlook for the market and this is now being reflected in the monthly figures recorded across the indices.
"As expected the rate of UK house price growth slowed in May. However, it still remains at a robust level with the average house price climbing for the fourteenth consecutive month, barring a very minor fall during the usual slowdown in December.
“Average house prices are now less than 7% below the peak recorded in 2007 and they have climbed by over 3% for the year to date. All signs suggest that this figure will continue to edge up slowly to reach my prediction of 5% growth for 2010 as a whole.”
http://firsttimebuyersupermarket.co.uk/
The Assetz House Price Watch compiles monthly average figures taken from five of the major house price indices to offer a more accurate picture of house price trends.
The average house price in May was £200,347, representing annual growth of 7.8% from May 2009 – falling back from the high rate of annual growth recorded in April (9.1%). Despite the reduced rate of annual growth, average prices continued the steady rise seen over the last 12 months, remaining at the highest level recorded in nearly two years (July 2008).
The six month rolling average continues to indicate a period of market stability, with figures maintained at a sustainable level, fluctuating only 1-2%, for the year to date. This is in stark contrast to data recorded during 2009 when the market began its correction.
Stuart Law, Chief Executive of Assetz, said:
“Since the start of 2010, the annualised House Price Watch data has been pointing towards a more stable outlook for the market and this is now being reflected in the monthly figures recorded across the indices.
"As expected the rate of UK house price growth slowed in May. However, it still remains at a robust level with the average house price climbing for the fourteenth consecutive month, barring a very minor fall during the usual slowdown in December.
“Average house prices are now less than 7% below the peak recorded in 2007 and they have climbed by over 3% for the year to date. All signs suggest that this figure will continue to edge up slowly to reach my prediction of 5% growth for 2010 as a whole.”
http://firsttimebuyersupermarket.co.uk/
Thursday, 3 June 2010
House prices move closer to 2007 peak
The price of a typical UK property rose by a seasonally adjusted 0.5% month-on-month (m/m) in May, following a 1.1% increase in April, reveals the latest Housing Market Review from Nationwide.
Commenting on the figures Martin Gahbauer, Nationwide's Chief Economist, said:
"The smoother 3 month on 3 month rate of increase rose from 1.1% in April to 1.7%, as February's fall in house prices dropped out of the most recent three month average. The annual rate of house price inflation dropped from 10.5% to 9.8%, which reflects the weaker pace of increase in May 2010 relative to May 2009.
"Since reaching a trough in February 2009 – following a drop of 19.3% from their October 2007 peak – house prices have risen by 12.2% and are now just 9.5% below the October 2007 peak.
“Housing market conditions remain characterised by thin transaction volumes and a relative scarcity of properties for sale, despite a slow return of more sellers in recent months. The current supply-demand balance on the market is still consistent with relatively stable to modestly upward trending prices.”
Impact of capital gains tax changes on house prices depends on timing of implementation
"The coalition agreement between the Conservatives and Liberal Democrats contains plans to increase the rate of capital gains tax (CGT) charged on the disposal of non-business assets, potentially including second homes and buy-to-let investment properties.
"Currently the CGT rate on such assets is 18%, and the coalition plans are to raise the rate to a level "similar or close to those applied to income. Precise details, however, will not be known until the Emergency Budget announcement on 22 June.
"With regard to what the short-term impact will be on the housing market and house prices, the key question is around the timing and implementation of any CGT increase.
"If there is a significant time lag between the announcement of the increase and its actual implementation, then some second home owners and buy-to-let landlords may decide to sell in advance of the higher rate being introduced.
"Such a development could lead the supply-demand balance to shift more in favour of buyers and relieve the current upward pressure on house prices. However, it is difficult to know with any precision how many people would bring forward a decision to sell.
"The incentive to try to beat the higher tax rate is most pressing for those who have owned their properties for a relatively long period of time and therefore have relatively large unrealised gains.
"Conversely, those who bought their second homes or investment property within the last five years have little incentive to sell early in order to beat the tax change. House prices have only risen back to their mid-2006 level and the first £10,100 of capital gains is currently tax free.
"If the new rate comes into effect immediately on 22 June, then supply conditions are unlikely to be affected materially as any potential sellers would not have time to react.
"There are some examples of where tax changes have had a significant short-term impact on the housing market. Most prominent was the March 1988 announcement to end double Mortgage Interest Relief At Source (MIRAS) for cohabiting couples.
"The implementation of the tax change was postponed until August of that year, which prompted a rush of buyers to try to beat the deadline. The result was a temporary surge in property values, with house prices increasing by 18% between Q1 1988 and Q3 1988 alone.
"However, the most recent change in CGT rates announced in the 2007 Pre-Budget Report did not have any discernable impact on the supply of property on the market. At the time, the existing CGT rates of 24-40% - depending on taper relief and income status - were cut to a flat rate of 18%.
"New instructions to sell property remained very low even after the tax changes were introduced, although this may also have been due to the very weak market conditions prevailing at the time."
http://firsttimebuyersupermarket.co.uk/
Commenting on the figures Martin Gahbauer, Nationwide's Chief Economist, said:
"The smoother 3 month on 3 month rate of increase rose from 1.1% in April to 1.7%, as February's fall in house prices dropped out of the most recent three month average. The annual rate of house price inflation dropped from 10.5% to 9.8%, which reflects the weaker pace of increase in May 2010 relative to May 2009.
"Since reaching a trough in February 2009 – following a drop of 19.3% from their October 2007 peak – house prices have risen by 12.2% and are now just 9.5% below the October 2007 peak.
“Housing market conditions remain characterised by thin transaction volumes and a relative scarcity of properties for sale, despite a slow return of more sellers in recent months. The current supply-demand balance on the market is still consistent with relatively stable to modestly upward trending prices.”
Impact of capital gains tax changes on house prices depends on timing of implementation
"The coalition agreement between the Conservatives and Liberal Democrats contains plans to increase the rate of capital gains tax (CGT) charged on the disposal of non-business assets, potentially including second homes and buy-to-let investment properties.
"Currently the CGT rate on such assets is 18%, and the coalition plans are to raise the rate to a level "similar or close to those applied to income. Precise details, however, will not be known until the Emergency Budget announcement on 22 June.
"With regard to what the short-term impact will be on the housing market and house prices, the key question is around the timing and implementation of any CGT increase.
"If there is a significant time lag between the announcement of the increase and its actual implementation, then some second home owners and buy-to-let landlords may decide to sell in advance of the higher rate being introduced.
"Such a development could lead the supply-demand balance to shift more in favour of buyers and relieve the current upward pressure on house prices. However, it is difficult to know with any precision how many people would bring forward a decision to sell.
"The incentive to try to beat the higher tax rate is most pressing for those who have owned their properties for a relatively long period of time and therefore have relatively large unrealised gains.
"Conversely, those who bought their second homes or investment property within the last five years have little incentive to sell early in order to beat the tax change. House prices have only risen back to their mid-2006 level and the first £10,100 of capital gains is currently tax free.
"If the new rate comes into effect immediately on 22 June, then supply conditions are unlikely to be affected materially as any potential sellers would not have time to react.
"There are some examples of where tax changes have had a significant short-term impact on the housing market. Most prominent was the March 1988 announcement to end double Mortgage Interest Relief At Source (MIRAS) for cohabiting couples.
"The implementation of the tax change was postponed until August of that year, which prompted a rush of buyers to try to beat the deadline. The result was a temporary surge in property values, with house prices increasing by 18% between Q1 1988 and Q3 1988 alone.
"However, the most recent change in CGT rates announced in the 2007 Pre-Budget Report did not have any discernable impact on the supply of property on the market. At the time, the existing CGT rates of 24-40% - depending on taper relief and income status - were cut to a flat rate of 18%.
"New instructions to sell property remained very low even after the tax changes were introduced, although this may also have been due to the very weak market conditions prevailing at the time."
http://firsttimebuyersupermarket.co.uk/
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