UK Property Market

With a rise of only 1.1 percent, April took the annual property price inflation down to 10.9 percent, a significant fall from the 11.1 percent of the previous month. One of the reasons for this is the moderation registered by the market in the past month, as the conditions for buying a home have slightly loosened up. Another factor is the constant increase in interest rates since August 2006, which put additional pressure on buyers’ finances and consequently led to a decline in price inflation. At the same time, people’s earnings did not match the inflation, which also contributed to the current easing in home prices.

However, while the demand remains high, the supply is still tight, which translates into house prices gradually going further up. Halifax Revealed that the average home price was £196,745 in April, which means that buyers paid £2,180 more for a property compared with March.

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Recent research from the government shows that home prices went up by over £2,000 on average in March compared with the previous month. This adds up to an increase of 10.9 percent over the last year.

Detached properties saw a decrease of 0.2 percent in the course of the same month, while semi-detached properties ranked first in terms of price growth with 2.2 percent. The second position was occupied by terraces with a 1.5 percent rise.The first-time buyer paid 1.5 percent more for a property, while current owners closed the deal for one percent more in comparison with February. At the same time, London Remains the region with the highest prices, followed by east, south-east, and south-west, while the north-east registers the lowest ones

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According to new surveys, buyers over 55 tend to choose a new home further away from their former residence. The average distance chosen is 48 miles, while with younger age groups this significantly decreases to 14 miles for those in their mid-30 and nine miles for those in their early 20’s.

Research also shows that 66 percent of buyers of all ages want to move within maximum ten miles of their current property. At the same time, it is men who want to move further away from their former homes, with an average distance of 30 miles, in comparison with 22.5 miles for women.

One of the reasons behind these numbers is probably the stress factor associated with changing home, which makes this event rank in third after dramatic ones like death and divorce.

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According to surveys, 25 percent of the landlords who have sold a home in the last two years have benefited from returns of 30 percent or more. At the same time, it was determined that from the 10 percent of landlords who sold their property within this timeframe, only 2 percent suffered a loss.

Those who take the biggest advantage from selling buy-to-let properties are the first-time buyers, who account for 42 percent of the total number of purchasers. They are followed by other owners at 33 percent, while new and current landlords make up for 29 percent of the buyers.

Although this picture looks optimistic, figures point that buy-to-let property prices will stagnate in the near future, so landlords must plan their next steps carefully.

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On May 10th 2007, the Bank of England announced an increase in interest rates from 5.25 percent to 5.5 percent. This change was foreseen by experts, as the property market witnessed three similar moves since August 2006.  However, the reactions of real estate institutions are varied.

At the moment, the rise is likely to have a serious influence on struggling regional markets, as well as on first-time buyers. According to the National Association of Estate Agents, the property prices will gradually attain a natural level, with no dramatic rises in the near future. The Royal Institution of Chartered Surveyors noted that more pressure will be put on first-time buyers because of the higher mortgage bills. In spite of this recent rise, estimations point that it is highly unlikely for the interest rates to see further increases.

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Surveys point that in the course of a year London Home prices go up by at least 3 percent more in comparison with other cities in England And Wales. Last year, the average price of a property in London Increased by 11.6 percent, while home prices in England And Wales Rose by 8.3 percent.  On average, in March 2007 the actual property price in London Was £323,511, compared with £178,423 in the other two regions.

Specialists note that this is the highest annual rise over the last two years.  However, the most dramatic change was recorded in Brighton And Hove, where prices increased by 14.7 percent.  The smallest increase was registered in Nottinghamshire, where property prices went up only by 1.9 percent over the last year.

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Figures reveal that Wales Holds the second position behind East Anglia In the top of annual total investment returns from buy-to-let property.  Wales Generated a 25.6 percent return rate, only 3.4 percent less than the region of East Anglia.

According to specialists, landlords in Wales Will benefit from this increase twice more than their fellows from the rest of UK. Although buy-to-let returns went up in all regions, the North is still behind Wales As 23.9 percent, with South-east and South-west following in at large distance.

Moreover, in the last quarter rents in Wales Rose by 33 percent, accompanying an 18 percent increase in buy-to-let home prices. This trend, which has started with Cardiff, now continues with Swansea And Newport, as more international companies establish their businesses here.

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Surveys show that the cost of moving has decreased by some £500 last year due to the shortage in properties for sale on the market.

It seems that this situation has had a strong influence on owners, who now bargain for better conditions with estate agents and solicitors. Consequently, asking prices are currently reduced only by five percent tops in comparison with ten percent a year ago. Homes are also sold faster, with about 20 percent of properties changing owner within a month from being put on the market. A dramatic drop was also registered in the number of properties which are harder to sell. While a year ago this covered 50 percent of homes, nowadays this affects only 20 percent of them.

Experts point out that at the moment this translates into sellers being favoured by the market, as the demand for properties is higher than what is actually available.

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