Musings of a London Property Finder

House prices have risen in May 1.2% according to statistics produced by Nationwide, however Chief Economist Martin Gahbauer warns that rises are due to decreased supply and cheap prices and are not necessarily signs of a recovery, although he says they are evidence of some improvement in the property market.

Commenting, Gahbauer said “Although the short-term trend in house prices has clearly improved from where it was at the beginning of the year, it is still too early to say that the market is turning definitively.” 

€œDuring the downturn of the early 1990s, there were many months during which prices rose, only to fall back down again in subsequent periods.  In the current downturn, the combination of rapidly rising unemployment and tight access to credit implies that the last of the price declines has probably not been seen yet€œ, added Mr Gahbauer.

In other news this week, the British Bankers€™ Association said the number of mortgages approved for house purchases rose by 4% in April compared with the previous month, rising from 26,671 to 27,685 approvals.  However, compared with April 2008, this represented a fall of 15.5%.

The average house price now stands at £154,016. This is 11.3% lower than a year ago, much better for house sellers than the 15% annual decline reported in April.

Gahbauer added that during the downturn of the early 1990s, there were many months during which prices rose, only to fall back down again in subsequent periods.  He concluded: €˜Survey evidence suggests that buyer interest has picked up strongly in response to lower prices and lower interest rates.  If this buyer interest translates into actual sales and outweighs any potential increases in supply, then the recent moderation in price falls may continue. For the moment, however, it is unclear how the balance between supply and demand will ultimately work through in the coming months.€™

But as with other indices showing house price rises recently, market commentators were quick to advise caution about any hopes of a sustained recovery.  

On a positive note, for property purchasers, property porn afficionados and Property Finders like us the long-term prognosis looks good for buyers now.  As the graph above shows, prices have now dipped to in line with the long term real house price trend, so although they may well drop further in the short term, buying the right property at the right price now should bode well for the future, in the long term at least.

Technorati Tags: house price trends, House Prices, London property finders, Nationwide House Price Index, Property Finders

Tags: house price trends, House Prices, London property finders, Nationwide House Price Index, Property Finders

Property price analysis from a Property Finder

Nationwide have published their house price data which measures agreed sales figures at the point of mortgage approval and without taking into account the seasonal adjustments Nationwide’s economists make, agreed prices for the UK are up for the second month in a row.  This brings faltering house prices to par with figures from December08/January 09 at an average of £151,861.  If only, I hear those London-based first time buyers cry!

Interestingly, Nationwide would clearly anticipate higher volumes/price increases for this time of year as they have marked the figures down on the seasonally adjusted price index, which in a healthy market, compensates for the seasonal peaks and trough Property Finders and other property professionals like us have come to know and love.

So does this mean pricing has reached rock bottom in the UK?  We don’t think so.  We still think Scotland is over-priced, although we are seeing value in country estates.  London pricing particularly in prime areas has fallen swiftly in recent months, but we feel that overall London property prices are still not sustainable so we expect prices to continue to fall slightly for the rest of this year.  Ditto most of the Home Counties.

Looking at the first time buyers price: earnings ratio produced by Nationwide, only the North, Scotland, Wales and the East Midlands look sustainable, but most areas are still higher than the 3 or 4 times average earnings one would expect in a healthy market.  London and the South East are now at a more realistic 5.4 times and 4.3 times respectively which brings affordability back to levels last seen in 2003 for London and 2002 in the South East which should give further comfort to buyers new to the property market.

And the view of a UK Property Finder to all this?  We like a flat market.  It’s competitive but it separates the men, or should I say, women from the boys.  We didn’t buy much in 2007 because we felt the London market was very over-priced.  We’ve not been slow to advise Clients to walk away when vendors won’t accept reasonable offers, so for us, it’s a good thing.  This UK Property Finder thinks there is never a wrong time to buy, as long as you pay the right price.

Technorati Tags: House Prices, Nationwide House Price Index, UK Property Finders

Tags: House Prices, Nationwide House Price Index, UK Property Finders

Musings of a London Property Search Agent

According to house price data released by the Nationwide Building Society average house prices across the UK have dropped 8.1% in the last 12 months.

Nationwide don’t publish monthly regional prices to the same depth as the Land Registry, which is one of the main reasons we concentrate on those of the latter. Prices and the housing market in general can vary enormously across London and in different corners of the South East, both of which have a tendency to out-perform the rest of the market.

The Nationwide methodology differs from that of the Land Registry in two fundamental respects. Firstly, the Nationwide index is based on prices at the time of mortgage approval, post survey, whereas the Land Registry index is based on actual sold prices. This means the Nationwide index is arguably more responsive to the market, but some people prefer to use the Land Registry, because ‘you can’t argue with a ’sold’ price.’

Secondly, Nationwide have developed a statistical ‘mix adjusted’ system which essentially means they track representative house prices over time, whereas the Land Registry takes a simple average. Nationwide have adopted the system they have to ensure their prices are not South East-centric and to avoid excessive activity in a given location or a particular section of the market artificially altering the results.

The flaw with this system is that different parts of the market inevitably perform differently and if you are not really interested in the whole market but only the micro-market in which you intend to sell or buy, it is of limited value, although note the responsiveness issue above. The Land Registry report published earlier this week showed that sales of homes worth over £2million are down significantly less than lower value property. It also showed which London boroughs are outperforming the London market at the moment - details which are of use to the home-buyer.

The two indices have different aims and should therefore be read differently. In her report Chief Economist Fionnuala Earley stated that estate agents are reporting that 40% of sales are falling through at the moment and quoted the Bank of England Agent’s report published yesterday which suggests that this is partially because vendors are unwilling to accept low offers.

Is it a leap too far to surmise that vendors accept a low offer goaded on by their estate agent who persuades them that if they are moving up they will be able to save even more on their next house, only to find the vendors of their dream home unwilling to negotiate to the extent they need? These low offers which don’t necessarily proceed to sales may then contribute to the Nationwide’s statistics.

If that’s what has happened to you, you may be best to back out or purchase from a distressed vendor - there aren’t as many about as you might think from reading the press, but this London Property Search Agent can help you find them if you decide to proceed with your sale.

Technorati Tags: House Prices, London House, London Property Search Agent, Nationwide House Price Index

Tags: House Prices, London House, London Property Search Agent, Nationwide House Price Index