UK property prices rising but lending still constricting the market

UK property prices rising but lending still constricting the market

There has been a sprightly start to the UK property selling market in 2013 and while market activity remains patchy across locations and property type, some agents are reporting their busiest new year since the onset of the credit crunch.

However, while encouraging, it’s far too early to pop the champagne corks as certain sectors will remain on ice until the return of wider spread mortgage availability, according to the latest monthly report from Rightmove. It says that new sellers increased their asking prices by 2.8% this month, injecting renewed optimism into the market and at £235,741 the average asking price is the second highest it has ever been in the month of February.

Asking prices increased 5.2% in the North West, 5% in Wales, 4.6% in the West Midlands, 3.8% in the North and 2.7% in Yorkshire and Humberside. There were also rises of 1.7% in the East Midlands, 1.1% in the South West, 1.2% in Greater London, 0.9% in East Anglia, and 0.4% in the South East.

‘This illustrates the slow but steady recovery in prices, which has taken five years, though it must be noted that the national average can mask the divide in the market between those with access to equity and finance and those without,’ said Miles Shipside, director and housing market analyst at Rightmove. ‘Whilst all regions have recorded a rise this month, some of the more dramatic increases reported in the northern regions are effectively rebounds from substantial falls measured on the low levels of new listings in November and December,’ he added.

Further Rightmove research indicates that those with access to equity and finance will be the main drivers of the property market in 2013 with some 71% who intend to sell aged over 45. The two most active age ranges are the 45 to 54 bracket, making up 25% of those planning to put their properties on the market in 2013, and the 55 to 64 year olds who add another 30%. Those aged over 65 contribute a further 16%, leaving just 29% of intending sellers under 45.

Quote from : “I’m pretty new to anything related to real estate and property investment so I really could need some help I’m moving to a bigger flat in London and don’t really know what to do with my old flat. Should I sell it or let it for rent? Is it a good idea to keep properties at the time or sell them? The flat is located in London Islington and has about 50 square meters.”

Half of those who intend to buy will be doing so for at least the third time so with the proportion of those intending to buy for the first time making up just 22% of all prospective buyers in 2013, the main activity is concentrated on those who have bought before. Some 29% state they are buying for the second time, while for 49% this will be at least their third purchase.

‘The experienced old hands who have built up equity through previous properties are at an advantage as they can raise the substantial deposits required by lenders. Interestingly, they are often the ones who benefit most from the very low interest rates facilitated by the Funding for Lending Scheme (FLS),’ explained Shipside.

‘While the scheme was intended to make loans more readily available to those struggling to raise finance in the business and housing sectors, it would appear that many risk averse lenders are subsidising the better off who could fund a move anyway. With those trying to buy for the first time stuck at around a quarter of all purchases, nearly half pre credit crunch levels, in many instances the FLS is not yet supporting the mass market where the improvement on transaction levels could be much more dramatic. It appears this cheap money frenzy is mostly prompting more transactions among the equity blessed, some of whom will be purchasing buy to let investments,’ he added.

The Rightmove report also says that downsizing is the number one reason for selling in nine out of ten regions in the UK. A move for lifestyle reasons was the second main driver overall, with the need for more space taking third place nationally but first place in London. This underlines the affluence of the London market, where sellers who can afford to trade up outnumber those seeking to trade down, a marked contrast to the rest of the UK.

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