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