Musings of a London Property Finder

The Halifax issued data from it’s house price index yesterday including the news that housing affordability is at it’s most favourable for five years.  The house price to earnings ratio has fallen by 22% in recent months from a peak of 5.84 in July 2007 to an estimated 4.56% in November 2008 reaching a level not seen since the end of 2003.  Affordability is now only 0.56% above the long-term average of 4.0%. 

The most significant drop in the price to earnings ratio can be seen in Greater London where property is significantly more affordable than it was at the peak of the market in July 2007.  Property prices have fallen but wages generally remain static thus far. 

Martin Ellis, Chief Economist at the Halifax commented:

” There was a 2.6% decline in average UK house prices in November.  The combination of high house prices in relation to earnings, constraints on householders’ incomes and spending power and the decline in the availability of mortgage finance since the summer of 2007 has curbed housing demand.  These factors are major contributors to lower house prices and activity.”

House prices have tumbled 10-15% on average in the UK so housing affordability has also dropped.  Deflation and falling oil and food prices plus the lowering of interest rates will start to affect consumer finances.  So the only thing remaining to fix, is credit availability and confidence.  However, until banks start lending and first time buyers can buy at affordable rates with 90% mortgages again, as was possible during the last recession, it’s difficult to see when the slack housing market will start moving. 

Thank goodness for those with good credit ratings or no need for mortgages – they are keeping us London Property Finders and Relocation Agents busy these days.

http://www.hbosplc.com/economy/HousingResearch.asp

Technorati Tags: Credit availability, Halifax house price index, house price index, House price to earnings ratio, Housing affordability, London House Prices, London property affordability, London Property Finder, UK house prices

Tags: Credit availability, Halifax house price index, house price index, House price to earnings ratio, Housing affordability, London House Prices, London property affordability, London Property Finder, UK house prices

Musings of a London Property Finder

Regular Readers will know that we use the Land Registry Index when looking at house price trends because they are based on actual sold prices and are therefore more robust.  Also, we can look at prices regionally and borough by borough using the Land Registry Data.  The benefit of other indices, including that produced by the Halifax is that they are more immediate. 

The Halifax House Price Index (HPI) for September which was published today, showed a 12.4% fall in average house prices since last year.  To put this into context this national house price fall on the Halifax HPI takes prices to a similar level to January 2006.  However we know from analysis of the land registry data and from our knowledge of what is selling to less canny buyers, that prices in London for example rose 10% in 2006 and 13% in 2007.  A subsequent 12% drop would take prices back to price levels of late 2006, ie just wipe out gains made in 2007 – not a disaster except for first-time buyers with little equity who can’t afford their mortgage repayments.

Clearly we are comparing apples and pears, but gains or falls depend on location and although it is interesting to look at national house price data, it is of limited value for the householder.  Better to consider actual sold prices in your street.

On a more positive note, Chief Economist at the Halifax, Martin Ellis said,

“House prices declined by 1.3% in September. The overall price decrease in the three months to September was very similar to that in the previous quarter, indicating that the trend rate of decline may be beginning to stabilise. The ongoing pressures on householders’ income, combined with the reduction in the availability of mortgage finance, however, mean that market conditions will remain challenging.”

Still, with Armageddon definitely occurring in the financial markets and banks falling, bricks and mortar remains the safest bet.  let this London Property Finder do the groundwork for you.
http://www.hbosplc.com/economy/HousingResearch.asp

Technorati Tags: Halifax house price index, House Prices, London House Prices, London Property Finder, South East House Prices

Tags: Halifax house price index, House Prices, London House Prices, London Property Finder, South East House Prices