UK Property Investments

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UK house price inflation returns to double digits

London, June 2010

 

Nationwide has reported that UK house prices increased by 1% month-on-month in April, pushing the annual rate of inflation into double digits (10.5%) for first time since June 2007.

 

The value of the typical home stood at £167,802 last month, or 10% below its October 2007 peak. However, the lender points out that annual growth for April 2010 reflects the fact that April 2009 was one of the weaker months last year.

 

Given the strong performance of house prices from May 2009 onwards, it will take monthly increases in excess of 1% for the annual rate of inflation to be maintained in double digits going forward.

 

Commenting on the figures Nationwide’s chief economist, Martin Gahbauer, says: “The smoother three-month-on-three-month rate of inflation edged down further from 1.5% in March to 1.1% in April, which primarily reflects the impact of February’s 1% decline in house prices.”

Mr Gahbauer also considers the role played in the housing market recovery by cash transactions and concludes that cash buyers started to decline at exactly the same time as house prices began to rebound.

 

Mortgaged transactions have therefore played a greater role in boosting total market activity since the early 2009 trough.

 

He explains: “Rather than a surge in cash buyers, the more important driver of rising house prices has been the low level of stock for sale, as many homeowners and buy-to-let landlords continue to wait for prices to recover to peak 2007 levels before deciding to sell up or move.”

Looking to the future, the economist expects prices to flatten out as falling levels of new buyer enquiries are overtaken by new instructions from sellers.

 

 

Third of renters 'may never buy?'

London, June 2010

 

A survey of 1326 UK renters by flat and house share website, Spareroom.co.uk, has revealed that a significant 33% of people currently renting don't believe they will ever be able to afford to buy a property.

 

Of those that do, most have resigned themselves to a relatively long wait. Almost two-thirds (65%) of those who responded think it will be more than five years, or at least until the next General Election, before they are in a position to step onto the property ladder.

Meanwhile, more than three quarters (77%) of those surveyed believe house prices will fall by more than 5% in the next 12 months, with almost a third (31%) expecting house prices to fall by more than 10% over the course of the next year.

 

 The Spareroom.co.uk poll also revealed that:

- 52% of renters would be happy to rent long-term or even for life if there wasn't so much pressure to buy

- 89% of people flat sharing are doing so because they can't afford to buy

- 64% - unsurprisingly perhaps - would like to see house prices fall again

 

Matt Hutchinson, director, flat and house share website Spareroom.co.uk, comments, "It's quite something when a third of renters can never see themselves being in a position to buy.

 

“And even though another fall in property prices would be good news for thousands of first-time buyers, it appears that many have still resigned themselves to a long wait before they are in a position to buy, even if prices do drop. And that means many more years of renting in the meantime.

 

“What's interesting is that more and more young people are becoming comfortable with the idea of renting long-term or even for life. Those waiting for the market to get back to 'normal' might be in for a long wait - the property landscape in the UK is changing."

 

 

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