In a comprehensive assessment of the housing and mortgage market Jon Round, chief executive of First Complete, has pulled together statistics from across the market and shares his views with Mortgage Introducer.
He said: “Approvals with an LTV of over 75% accounted for a third of all lending in September, however lenders have not substantially changed their stance over the last month. While there has been a slight drop in the amount of mortgage lending in September compared to August, Council of Mortgage Lenders figures show a substantial rise in remortgage activity, spurred on by a number of very competitive remortgage products coming onto the market since August.
“The number of remortgages has grown considerably and despite e.surv’s mortgage monitor showing that we have returned to lower average LTV lending of about 60%, the number of high LTV mortgages available has increased and appears to continue to increase every week.
“At the same time the amount of interest from consumers appears to buck every trend and continues to rise so that the number of house purchases is much higher than is usual at this time of year.
“For those who can raise a high enough deposit, mortgage finance is cheaper than ever before as lenders lend at record low rates and the number of mortgage products in the market continues to rise.
Surveyor view
“House prices dropped in September after small incremental rises in July and August. The monthly drop of just 0.3% however, means that house prices remain pretty static with a difference of less than £6000 from the highest average prices of £224,322 in March this year, to September’s average of £218,650.
“The positive is that stable house prices give first time buyers the opportunity to save for a deposit in a way that they never could when house prices were rising by 10% a year. The increased activity in the market is a reflection of this; many buyers also feel that property represents good value and are gaining confidence in the fact that we no longer have the wild fluctuations in house prices that we did previously.
“As always, each part of the UK has its own unique market with rises and falls, and even within a town or a region there will always be houses and locations that are more desirable than others.
“In September on a regional basis, the North saw the biggest average fall in house prices of 2.1% while the West Midlands, Wales and Yorkshire experienced rises of 0.5%; again London bucked the trend with average rises of 1.1%.
Estate agency view
“Normally we would expect house sale transactions in September to be 9.5% lower than in August but LSL Acadametrics showed that instead, house purchase transactions rose dramatically in August and remained at the same level in September, bucking all previous trends for these months.
“September 2011 has exceeded the number of house sales compared to the same month in 2010 and looks likely to hit levels last seen in October 2009 with 66,500 properties sold in the month.
“Comparing the three months June to August 2011 with the preceding three months of March to May 2011, housing transactions have increased by 26% against an anticipated increase of 16% for the period.
“The largest percentage increase was in East Anglia which experienced a 32% rise in transactions, with the smallest increase in the North West still seeing a 17% rise quarter on quarter.
“In 2011 between January and June, the sale of detached, semi-detached and terraced houses has risen compared to 2009 levels. However the number of flats has continued to decline to a level where the number bought and sold is just 25% of what it was back in 2007.
Letting agency view
“LSL Buy-to-let index in September revealed that rents rose in every region in the country for the first time on record. The average rent in England and Wales rose by 0.7% to £718 taking the annual rental increase year on year to 4.3% or £29 per month.
“Rents hit a record high in six regions: London, the South East, Yorkshire and the Humber, the East of England, Wales and the East Midlands. London rents increased fastest of all rising by 5.8%, followed by the South West and the West Midlands where rents rose 5.4% and 5.1% respectively.
“Such rises would lead one to believe that tenant arrears may have risen similarly, but instead they dropped significantly to their lowest level since April 2010. Just 8.6% of all UK rent was unpaid or late by the end of September, down from the 10.7% of rent unpaid or late in August.
“However total annual returns on a rental property dropped back after taking into account the fall in year on year property prices. The average total annual return in September was 1.8%, the equivalent of £3,005 – £7,661 in rent, with a capital loss of £4,666.
“However, property price changes in the last quarter have held up better than in the previous twelve months, and if they maintain the same trend as the last three months, a property investor could expect to make a total annual return of 8% over the next 12 months.”
